From great expectations to a great trilemma

Like many other countries, Greece faced a trilemma in the last 15 years: Could it, somehow, reconcile democracy, economic growth and globalization? No, as it turns out. The 2008 crisis saw its economy shrink, and in a big way too – to the tune of 40% of its citizens’ disposable income – while democracy also came under a lot of pressure, but managed to survive, mainly, I believe, thanks to being a part of the European Union – thanks, that is, to the country’s involvement in globalization, which calls for large economic entities.

Greece became a part of the European Economic Community, according to Konstantinos Karamanlis, less for economic reasons and more to bolster its democratization in the wake of the 1967-1974 dictatorship and strengthen its international standing, mainly vis-a-vis Turkey. Karamanlis said as much in speeches and interviews. I imagine that any astute politician would have done the same in his place, though it did not come without consequences.

The country then went through a lengthy process of democratic training for its citizens, which entailed meeting the great expectations formed after the fall of the junta – expectations that could and were largely met, mainly by PASOK. On the one hand, a very large number of Greeks who had been on the outside and unable to enjoy the fruits of power joined the game; on the other, massive leeway for public borrowing allowed the Greek socialists – albeit for a relatively short period of time – to satisfy sundry demands even if they were beyond the economy’s capabilities. They tried to build a welfare state without the proper organizational capacity or economic conditions.

This was the framework in which democracy was able to take firm root in Greece, even if the experiences of the past decades may not have been satisfactory compared to how democracy functioned in other Western countries. So, democracy was here to stay – but at what a price!

Why? Because the story was much different in the area of economy, which throughout the Metapolitefsi was used as a mechanism for financing political activity that consistently dodged the responsibility of dealing with all the important problems that constantly cropped up. And this was the framework that gave rise to various groups which could take advantage of their influential position in the economic process and which were able to secure – and still do – special privileges for their members.

Throughout the Metapolitefsi, the economy was used as a mechanism for financing political activity that consistently avoided dealing with all the important problems

The free riders became a regime in the same way that rent seekers were able to benefit from preferential treatment they did not deserve. This situation persists to this day and plays a dramatic role in intense social injustices.

For a long time, the economy languished under this regime, as the country’s political elite flagrantly ignored the constraints demanded by globalization. They believed that some last-minute maneuvering and support from Europe could help them deal with the impasses that loomed, just as France – which chose a similar path – took less than three years to turn the ship around.

It became clear in the early 1990s, of course, that this situation could no longer continue, prompting a push to get the country into the European Economic and Monetary Union – another inspired idea for automatically solving all of Greece’s problems. Then as soon as Greece joined the eurozone, the prevalent notion became that all other efforts could be abandoned and the country could sit back and reap the fruit of paradise. Any measure that challenged powerful interests was doomed and prompted all sorts of ludicrous reactions, like university students protesting against pension reform.

We know what happened next.

Now that we have a completely different landscape in terms of the global accumulation of wealth compared to 1974-2008, now that democracy is coming under intense pressure worldwide, that globalization is being shaken to its core, and that climate issues are changing a lot of what we know in terms of economic activity, to what extent are we in a position to acknowledge these threats and create the conditions that will allow the country to deal with these challenges? That is the question.

Kostas Kostis is a professor of economic and social history at the University of Athens.