Iceland – political implications of the financial crisis of 2008 and the road to changes in the economic policy and in the model of democracy | Forum Scientiae Oeconomia
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    Published : 2013-06-14
    Vol. 1 No. 1 (2013)

    Iceland – political implications of the financial crisis of 2008 and the road to changes in the economic policy and in the model of democracy

    Piotr Ostaszewski



    Abstract

    The global financial crisis first hit Iceland, which until 2008 had remained a symbol of the economic boom and the successful experiment of the transition from state interventionism to the stage of gradual privatization and then total liberalization of the market, in which the banking sector played the leading role. In a short time it became a negative symbol of the destruction of the system creating sustainable development, rational economy and a high standard of living of citizens. The model of liberalized economy based on the principles generally considered as unshakeable foundations of liberalism, a free game of market entities led by an invisible hand of the market, suddenly crashed. In the case of Iceland, however, the point was not just the excessive liberalization, but the basic question about the possibility of joining the European Union by this small country as the only lifeline for the economy plunged into destruction. After several years of digressions, Iceland was skeptical about the concept. The Eurozone crisis questioned the European monetary union. Moreover, skeptics began to doubt the fate of the united Europe. On the other hand, Iceland seems to be conceiving their own way out of the crisis, not only by reforming the economy (but the effects will be long-lasting), but also the political system by holding a public referendum on constitutional issues and even by creating the social constituent assembly. Icelandic solutions can take place in a small society of 320 thousand people with deep – rooted values and democratic procedures. However, more thought should be given to the Icelandic model of fighting the crisis, as well as to its impact on changing the model of the democracy system and the functioning of state institutions. In other words, the fundamental question is to what extent the reforms undertaken since the early 1990s have proved to be positive for the political system and the state institutions and to what extent the financial crisis has stimulated citizens to demand political changes affecting both the political world and the model of the state institution that it shapes. 

    Keywords:

    democracy, political implications, liberalizations, Iceland



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    Ostaszewski, P. . (2013). Iceland – political implications of the financial crisis of 2008 and the road to changes in the economic policy and in the model of democracy. Forum Scientiae Oeconomia, 1(1), 55–74. Retrieved from https://ojs.wsb.edu.pl/index.php/fso/article/view/88

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