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Greece: The Crisis Behind the Crisis and the Challenges Facing the Left

Neoliberalism created a disaster. Now, the Syriza party and the Greek left have much work to do to build a just economic and social order.

Neoliberal policies created a disaster in the country now shredded by austerity measures. The Syriza party and the Greek left have much work ahead if they are to build a just and sustainable economic and social order.

When the global financial crisis of 2008 reached Europe’s shores sometime in late 2009, the eurozone, with its faulty design and distinct neoliberal policymaking framework, experienced its first major crisis since the introduction of the euro as a single currency; the danger of an imminent collapse was suddenly all too real. From the beginning, there were warnings about the dire consequences of introducing a single currency into a region with sharp economic and cultural differences, but the European political elite turned a deaf ear on the skeptics.(1) European business interests were too big to be compromised over concerns about future financial busts or speculations about the risk of adopting a foreign currency without the backing of a federal treasury and a central bank acting as lender of last resort. Indeed, like the owner of the Titanic who told the captain to go full speed although several warnings had been received about icebergs ahead, European policymakers at the time could not resist the temptation to launch euro as a cash currency in spite of the fact that the Eurosystem was built on a weak institutional foundation. And they compounded the error by allowing highly problematic candidates to join the union, thereby violating the principles of optimal currency areas.(2)

Unfit to Join the Euro

The first crack in the EU wall occurred in Greece, the weakest link of the currency union. Economically, socially and culturally, Greece was ill prepared to join the euro when it did back in 2001, but the country managed nevertheless to do so mainly because of its legacy of contribution to the development of Western culture.(3) The nation’s domestic political and economic elite were eager to join Euroland not just because of the perceived benefits, but also because they were very much in need of a psychological boost: if you are weak and marginal, and incapable of change and improvement, joining a group of strong and rich nations gives you the illusion that you are on a par with them.(4) Hence the hilarious statement of then Greek Finance Minister, Yannos Papantoniou, who described the joining of the euro as “‘an historic day that would place Greece firmly at the heart of Europe,”‘ or the equally laughable statement of then prime minister Costas Simitis, who propounded that “we all know that our inclusion in EMU (European Monetary Union) ensures for us greater stability and opens up new horizons.”

Apparently, both of these political midgets felt that what shapes a nation’s economy is its currency, not its productive base, technological know-how, human skills, etcetera. Be that as it may, the euro produced, for the most part, a rocky ride for Greece (GDP increased, but both public and private debt levels reached new heights while competitiveness declined significantly) that ten years later crashed against the brick wall erected by international credit markets when they refused to extend further lending on account of the country’s massive fiscal deficit and humongous public debt burden. And perhaps not without coincidence, both of the aforementioned euro cheerleaders ended up having reigned over the longest unbroken period of political corruption in the modern period of Greece, courtesy of neoliberal “socialist” governance.(5)

When the global financial crisis erupted, the Greek economy had already entered a downturn phase, with GDP expansion having slowed down in 2008. The industrial sector, in fact, had entered a phase of recession as far back as 2005. In 2008, the industrial production indicator had fallen by 4.2 percent and reached a 10 percent decline in 2009.(6) Yet, when the crisis initially reached Greece, everyone was in an apparent and inexplicable state of denial, including leading EU officials. Thus, in October 2008, Kostas Karamanlis, then Greece’s prime minister and leader of the conservative New Democracy party, declared in a speech to his cadres that the Greek economy was largely “shielded” from the effects of the economic crisis thanks to the structural adjustments his government had initiated. And his main political opponent, PASOK leader George Papandreou, assured the citizenry that “there was plenty of money around” and that, if elected, his government would exhibit “‘the political will”‘ to find money for the toiling population, just as it had been found for the bailouts of the banks. But the most problematic example of unwillingness on the part of leading public officials to recognize the trouble that lay ahead for Greece came from the EU chiefs themselves: thus, EU Commissioner Joaquín Almunia announced as late as February 2009 that “the Greek economy is in better condition compared with the average condition in the Eurozone, which is currently in recession.”(7)

Why were the Greek and EU political elites unable and unwilling to face up to the gravity of the Greek situation before things got out of hand? This question remains vital as the Greek economic crisis is now turning into a humanitarian crisis and EU leaders continue to ignore the pressing reality of the situation, intent on pushing forward with the destructive policies of austerity and fiscal adjustment.

But Greece’s sovereign debt crisis did not come out of the blue. It may have been precipitated by the financial global crisis of September-October 2008 (the deficit had climbed to 15.4 percent of GDP, although there are accusations made from a former employee of the Greek Statistical Authority, Zoe Georganta, a professor of economics at the University of Macedonia, that the official figures for the 2009 budget deficit had been inflated by the Papandreou government in 2010 in an apparent attempt to legitimize the harsh austerity measures that came along with the bailout plan orchestrated by the European Union and the International Monetary Fund (IMF); an inquiry is now underway by Greek prosecutors). But it had long been in the making. It was, in effect, a time bomb waiting to explode. The Greek economic model of growth was highly flawed: growth was not based on economic fundamentals; income tax rates were always very low, tax evasion massive, and Greek governments ran a continual deficit – building up an immense stock of national debt consistently well over 100 percent of GDP.

The Triple Nature of the Greek Crisis

Still, the Greek crisis must be seen as something much more than the simple outcome of corrupt government practices, although corruption, including tax evasion, is a major component of the economic ills facing the country today. It is the story of a kleptocratic state and a parasitic capitalist elite who got caught in the web of the eurozone’s flawed design when the US financial crisis of 2007–2008 hit Europe’s shores.(8) It is also the story of an economy that did not meet the prerequisites for entering an alleged optimum-currency area, nor did it make much attempt to fit in properly. But it is also the story of the general failure of the global neoliberal project, the financialization of the economy and free-market orthodoxy.(9) Indeed, how else could eurozone countries with such dissimilar economies – Greece, a statist and highly corrupt economy; Ireland, a poster-child for neoliberal capitalism; Spain, a faithful follower of EU dictates about deficits and debt – end up suffering the same fate?

The reason is rather simple: because they all orbited the same central entity, the black hole of European neoliberal capitalism. As such, political and ideological differences between social democratic and conservative political parties have long ago vanished. Thus, in Greece, Spain, Portugal and elsewhere, “‘social democratic”‘ governments long ago discarded even the pretext of being agents of progressive reform.(10) Hence the ease with which such governments went along with the EU/IMF dictates in imposing unprecedented cuts and austerity measures that have drastically reduced the standard of living for the working people in their respective countries. In sum, the Greek crisis:

  • stands as a severe fiscal and public debt crisis (during the 1980s and 1990s, annual government expenditures exceeded revenue by an average of more than 8 percent of GDP, while the national debt exceeded 100 percent of GDP) stemming from the deep and long-term structural problems of the Greek economy and the deformities of the domestic political and cultural system
  • represents a European crisis due to the intricate trade and financial ties between Greece and the other eurozone member-states, and
  • reflects the deadly failure of the neoliberal project, which has become institutionalized throughout the EU’s operational framework, all while the IMF remains the world’s single most powerful enforcer of market fundamentalism.

At the heart of the neoliberal vision is a societal and world order based on the prioritization of corporate power, “free” markets, and the abandonment of public services. The neoliberal claim is that economies would perform more effectively, producing greater wealth and economic prosperity for all, if markets were allowed to function without government intervention. This claim is predicated on the idea that “free” markets are inherently just and can create effective, low-cost ways to produce consumer goods and services. Subsequently, an interventionist or state-managed economy is wasteful and inefficient, choking off growth and expansion by constraining innovation and the entrepreneurial spirit.

This is the version of neoliberalism developed by Milton Friedman and the Chicago School and usually associated with the Pinochet regime in Chile, and, later, with the free-market policies of Margaret Thatcher and Ronald Reagan – an ideological revolution that was long in the making but that gained ascendancy over Keynesianism with the appearance of stagflation.(11) And it is by far the most dangerous ideology of our time (12), spreading havoc with its “economics of social disaster.”(13)

In April 2010, with the bond vigilantes having woken up as a result of Dubai’s debt crisis in late 2009, Greece was shut out of the international bond markets and – facing the prospect of a default – sought refuge under an EU/IMF financial rescue scheme. Months prior, the Papandreou government (14) had approached the IMF to extend its “‘technical know-how and experience”‘ to the EU by administering a dose of shock therapy. Greece needed to be “rescued,” and the Europeans needed not only the Fund’s expertise but also to add an element of legitimacy to the austerity experiment that was about to be performed on a peripheral member-state. In this context, the invitation to the IMF to join in the operation on an ailing European patient served multiple purposes.

The neoliberal quacks were quick to rush to judgment about the roots of the Greek crisis – allegedly, a bloated public sector that wasted too many resources on lazy, unproductive citizens and hindered the potential of the private sector – and lost no time in recommending brutal austerity measures. What if the facts did not fit this narrative? Indeed, all the available data showed that the Greek public sector, while inefficient and corrupt, was actually smaller than the public sector of many other European nations; that Greeks worked on average more than most other Europeans; and that even Greek productivity in the years leading up to the crisis compared favorably with that of Germany.(15) And what if there were huge imbalances in the eurozone, with the core states running huge surpluses and the peripherals running huge deficits?(16) Greece was judged to be solely responsible for the sad state of its fiscal condition in the age of the euro and had to be punished, both as penance for its sins and as a warning to its southern cousins that the same fate awaited them if they didn’t put their own fiscal houses in order.

It is this cynical, brutal perspective that led to Greece becoming an unwilling test subject for the EU’s neoliberal vision and kept Germany’s game going when things got rough in Euroland. Most of the German banks were overexposed to Greek debt and nearly insolvent. The May 2010 bailout of 110 billion euros (with a usurious interest rate of 5 percent) was orchestrated by the EU and the IMF – the twin monsters of neoliberal capitalism – in an apparent attempt to have Greece keep up with its debt payments to foreign banks: hence the rejection of even the slightest consideration of a debt restructuring, even though this would have been the quickest and safest way to allow Greece some breathing room. Helping its economy recover through the coordinated implementation of a large-scale development plan would also have been appropriate in a proper economic and monetary union. Indeed, such moves could have secured the confidence of international bond investors in the euro’s sustainability and might even have prevented contagion in the rest of the periphery. They would certainly have prevented the spread of an otherwise avoidable contagion from the periphery to the center, which is clearly underway as of last year. But with the adoption of punishment as policy, contagion in the periphery became inevitable, and with the deficit economies in the periphery wrapped in an austerity straightjacket, the surplus economies of the center were bound to feel the effects of their insane and brutal policies. The economies of both Germany and France contracted in the last quarter of 2012. GDP in the eurozone as a whole fell by 0.5 percent last year, and, more significant, 2012 will go down in history as the first year since 1995 in which no quarter produced growth.(17)

The Catastrophic Effects of Austerity

Indeed, as a policy, the bailout scheme proved to be a dismal failure on every possible front, save for ensuring that debt payments kept flowing to foreign banks. The crude macro-stabilization program and the harsh austerity measures that accompanied the loan to Greece (amounting to 11 percent of the country’s GDP) had the opposite of the intended effect on the markets and choked off all prospects of recovery for the Greek economy: demand plummeted due to the deadly combination of massive budget spending cuts, reductions in wages and pensions, and sharp tax increases, causing thousands of small businesses to go bankrupt and forcing several multinationals to move their production facilities to nearby Balkan countries, thereby producing explosive unemployment rates, sharply diminishing state revenues and substantially increasing the debt-to-GDP ratio.(18) The policy pursued by the EU/IMF duo is so fundamentally flawed that Keynes must be rolling over in his grave. Still, economic dogmas ought, apparently, to be respected, no matter what results they produce, so in the mind of the neoliberal zealots, they should be pursued to the bitter end. Thus, less than two years later, a second “bailout” of 130 billion euros was extended to beleaguered Greece, with terms and conditions for allegedly turning the economy around that are much harsher than the first “rescue” attempt. The “pay while you bleed” and “suffer for your sins” policy of the twin monsters should by now be clear to everyone.

In drafting the document for the so-called Second Economic Adjustment Program for Greece, the EU’s neoliberal lackeys contended that “Greece made mixed progress towards the ambitious objectives of the first adjustment program.”(19) On the positive side, it is noted, the general government deficit was reduced “from 15.75 percent of GDP in 2009 to 9.25 percent in 2011.” On the negative side, the recession “was much deeper than previously projected” because, it is claimed, factors such as “social unrest” and “administrative incapacity” (including a lack of effectiveness in combating tax evasion) “hampered implementation.” The antigrowth “fiscal and structural adjustment” program was perfectly designed and would have produced all the anticipated results if the government were better able to carry out the policies (perhaps it should have ordered the police and the army to arrest all public administrators and have them shot for disobeying the troika’s commands), and if the citizenry did not on occasion make some fuss about the austerity program by staging demonstrations here and there, or by occupying the square outside the Greek parliament building. In essence, this is what the neoliberals’ above comments are saying.

The feeble excuses of the EU bureaucrats for the fiscal consolidation program’s causing a much sharper economic decline than “previously projected” fly in the face of the recent partial concessions made by the IMF: that the policies carried out in Greece ended up having much more adverse effects on the economy because the IMF miscalculated the impact of the fiscal multiplier. Indeed, the executive summary of the Second Economic Adjustment Program for Greece goes on to state unequivocally that, insofar as the prospects of the success of the second adjustment program are concerned, “the implementation risks … remain very high” but the success of the program “depends chiefly on Greece.”(20)

The neoliberal economics applied to Greece by Germany, the EU and the IMF did not simply cause a greater decline in Greek GDP than “originally projected” or make the debt grow substantially bigger in the course of the last two years (from 126.8 percent in 2010 to 180 percent in 2012). It also produced an economic and social catastrophe of proportions unparalleled in peacetime Europe. In May 2010, when the first bailout was approved and the austerity measures kicked into high gear, the unemployment rate in Greece stood at 12 percent. It has since climbed to 27 percent, and the youth unemployment rate has reached 62 percent. According to the Greek Statistical Authority, the actual number of unemployed reached 1.35 million in November 2012, with the number of employed standing at 3.642 million.(21)

Poverty is also spreading rapidly, affecting all groups in society, including children. In a recent report released by Eurostat, 31 percent of Greeks had a standard of living in 2011 that was close to the poverty line,(22) while the Labor Institute of the Greek General Confederation of Labor (INE-GSEE) states in its monthly publication Enimerosi that by the end of last year, 3.9 million people had fallen below the poverty line.(23) Income levels for workers have also taken a big hit over the last two to three years, and there is more wage suppression to come. According to research data released by the INE-GSEE, incomes dropped by 22.8 percent, or 19 billion euros, during 2010-2011, with a projected decline of 33 billion euros in available income in 2012.(24)

Perhaps most indicative of the catastrophic impact of the EU/IMF austerity measures imposed on Greece is that many schools throughout the country have gone on for a second year without heating oil (the nation was shocked recently by the death of two college students who died in their sleep due to inhalation of carbon monoxide from a makeshift stove as they could not afford heating oil, whose cost has gone through the roof because of the government’s ingenious scheme to find extra revenues by raising the taxes on heating oil by 450 percent), the public health care system has collapsed to the point that even medication for cancer patients is not available, and suicides, for a nation that used to have the lowest recorded suicide rates in Europe, are taking place at a record pace.

The aim of the EU/IMF structural adjustment program with regard to the Greek labor market (employment and wages) is crystal clear: total liberalization, minimum wages comparable to those in Bulgaria and Romania (two relatively backward-looking Balkan nations, and with levels of corruption equal to those in Greece), and a potential ban on strikes. The first two elements of the subversive neoliberal labor market policy are well advanced, while the third one is in the works. Again, these measures have an official stamp of approval from the Greek government, including the current administration, a tripartite coalition consisting of the leader of the conservative party as prime minister and the leaders of the Socialist party and the Democratic Left as vice presidents. Moreover, as with every Greek administration since the outbreak of the crisis, the Ministry of Finance serves as a Trojan horse for inflicting the scorched-earth policy of the EU and IMF on Greece’s economy and its people.

“The Left’s Moment”: Problems and Challenges

The scorched-earth policies pursued in Greece over the last three years by Germany and the twin monsters of neoliberalism, i.e., the EU and the IMF, have produced an economic and social catastrophe of unprecedented proportions for a nation in peacetime conditions. For the past three years, Greece has been a guinea pig for the policy prescriptions of a neoliberal EU under the command of Germany and its northern allies. A public debt crisis has been used as an opportunity to dismantle the social state, to sell off profitable public enterprises and state assets at bargain prices, to deprive labor of even its most basic rights after decades of hard-fought struggles against management, and to substantially reduce wages and pensions, creating a de facto banana republic – all with the support of a significant segment of the Greek industrial/financial class and with the assistance of the domestic political elite.

Greece is a nation experiencing a catastrophic crisis of immense proportions inside one of the world’s richest regions, yet its government celebrates the fact that the deficit has been reduced as a result of the fiscal adjustment efforts (when virtually all other economic and social variables have gone from bad to worse every year) and expects the citizens to offer more “blood, tears, toil and sweat.” At the same time, it is launching a brutal frontal attack on the left, using lies and propaganda and, increasingly, the iron fist of the state, as public opinion polls show consistently for the last few months that the conservative party of New Democracy (which is at the helm of the tripartite government currently ruling the nation) and Syriza, the Coalition of the Radical Left, are in a neck-and-neck race.

The political landscape of Greece has changed radically as a result of the economic crisis. First, the socialists, the true masters of calculated political and ideological duplicity, the real maestros of corruption in Greece, are all but finished as a political force. In the 2012 national elections, the Socialist Party received 12.3 percent of the popular vote, and the latest polls show that its popularity has dropped to about 7 percent. This is the price paid for surrendering Greece to the EU/IMF rescue mechanism in May 2010 and for collaborating since the 2012 elections with the conservatives in finalizing the conversion of Greece into a neoliberal zombie society.

Second, the conservatives, under the leadership of the current prime minister, Antonis Samaras, have shifted from being opponents of the memorandum of agreement with the EU and the IMF when they were the opposition to become its obsequious servants. Their credibility and base support has weakened considerably in the course of the last couple of years, but the conservative constituency in Greece feels trapped and has few options other than perhaps to throw its support behind Golden Dawn, the neo-Nazi party of Greece. To be sure, a good percentage of conservative voters have already done so: the neo-Nazis received 7 percent of the popular vote in the 2012 elections, and their numbers seem to be growing in spite of (in fact, maybe because of) being nothing more than preachers for hate and thugs who carry out organized attacks against immigrants throughout Greece. Ideologically, they embrace Hitler’s National Socialism doctrine, strive for racial purity and openly envision the reestablishment of concentration camps for leftists and communists.

Greece’s neo-Nazi political party represents a real threat to the social fabric of Greece; however, it remains to be seen how the appeal of the extreme right will be countered when society itself is facing a meltdown because of the harsh austerity measures and the traditional political establishment is morally bankrupt and has lost much of its legitimacy.(25)

The emergence of Syriza as the second-largest party (pulling 26.89 percent of the vote against 29.66 percent for the conservatives) represents the biggest change in the Greek political landscape. In many ways, this is indeed the “left’s moment in Greece,”(26) but the reality of the support rate that the left enjoys is more complicated than what the numbers report. Most of its votes in the 2012 elections came from former Pasok voters. This is not to imply that Syriza may eventually rise to power on a protest vote, but it does mean that the left finds itself in the uncomfortable situation of having the backing of a huge percentage of “political orphans.” Even more troubling is the fact that many former Socialist Party hacks look to relaunch their political careers by seeking to attach themselves to Syriza’s political cause. These are, of course, political opportunists of the highest caliber, and Syriza must turn its back on them if it wishes to keep intact the left’s overall mission, vision and core principles.

The general impression among analysts and an increasing number of average citizens is that Syriza is about to become a “new Pasok.” This is not far from the truth, especially as some elements close to the leadership of the party appear to be willing to make whatever compromises may be necessary in order to have Syriza rise to power. The party also lacks a clear and coherent agenda for change, and its position on the current crisis has shifted remarkably in the course of the last several months from calling for the abolition of the EU/IMF fiscal adjustment program (but without having an overall strategy for managing the crisis, or even solid support at the grassroots level) to renegotiations of the agreement (when the “troika” – the European Commission, the IMF, and the European Central Bank, or ECB – supervising the fiscal consolidation effort has opposed outright any attempt aiming towards renegotiations of its terms of agreement for the bailout schemes). Conscious, perhaps, of the immaturity of Greek citizenry, but also reflecting its own political and ideological ambiguities, Syriza has also opted not to confront direct exit from the euro as a possible policy option, even though this may, in the final analysis, be the only effective strategy (but with a potentially huge short-term cost) for stopping the permanent decline of the nation’s economy. Indeed, as things stand, the current eurozone is doomed to fail, and the peripheral nations will go on experiencing worsening economic and social conditions as the core remains adamantly opposed to any policy options that would mutualize the debt in the eurozone, provide relief for the beleaguered south, or end austerity.

To be sure, Syriza faces daunting challenges ahead, while finding the resolve to deal with them is undermined by the cacophony of views that prevail inside the party and by its lack of apparent influence among working-class organizations and trade unions. The extent to which the organization might be able to find qualified members among its ranks for the tormenting task of turning around a highly inefficient public administrative system and managing an economy which, by the end of the current year, will have seen its GDP shrink by an incredible 25 percent since the onset of the global financial crisis of 2008, is also highly debatable. For a party of the left, Syriza has also shown reluctance, or unwillingness, or inability to embark on an open discussion about the country’s future political culture, having chosen, instead, to consume itself scoring political points over the way political corruption was sustained in the past by the conservative and socialist parties.

Yet, if there is anything that the economic crisis in Greece reveals, other than the fact that neoliberal policies wreak havoc on the standard of living and produce massive unemployment and widespread poverty, and that a way must be found to restart the engine of the economy and get the unemployed back to work, it is the need to come to terms with the norms and patterns of the nation’s political culture, including revisiting questions of civic virtue, fairness and social provision, expectations and obligations, and articulating visions of a good and decent society.

Having said all that, Syriza remains in Greece today the only political force that can offer hope for the future, put an end to the ongoing catastrophe, and, under certain conditions, work its way toward the realization of a sustainable economic and social order based on those core principles that have long defined progressives worldwide: employment opportunities for all, decent wages, a vigorous and efficient welfare system, free health care services, free education, quality social services, a progressive tax system, democratic accountability, environmental protection, respect for the “other,” democratic participation at the workplace, sound business practices, and incentives for new business undertakings.

In politics, there is a huge gap between theory and practice, so Syriza should be neither idealized nor undermined for what it is trying to do, which is to answer history’s call and try to rescue the country that gave birth to democracy from becoming ultimately a wretched society and a failed state inside one of the world’s richest regions.

C. J. Polychroniou is a policy fellow at the Levy Economics Institute of Bard College. Certain parts of the above article are included in a recent Policy Note (2013/1) published by the Levy Institute and titled “The Tragedy of Greece: A Case Against Neoliberal Economics, the Domestic Political Elite, and the EU/IMF Duo.” The views expressed here do not necessarily represent those of the Institute’s board nor its advisers.


Some of the most dire warnings against the launching of the euro came from inside Germany itself. Wilhelm Hankel, Karl Albrecht Schachtschneider, Joachim Starbatty, and Wilhelm Nφlling were four renegade professors who opposed the euro from the start and tried to stop it with a legal challenge to Germany’s highest court. Obviously, they lost the case. They tried again 12 years later against a German bailout of Greece. They lost again. Their basic claim all along has been was that the euro was an architectural flaw which would lead to the downfall of European economies. Moreover, and in sharp contrast to the original arguments in support of the creation of a single currency zone in Europe, the euro has led to greater economic and social inequality among the various national economies, has exacerbated the problem of unemployment in the peripheral economies, and has produced huge transfers from the periphery to the core.

The original optimal currency area approach was laid out by Robert Mundell in his article “A Theory of Optimum Currency Areas,” American Economic Review Vol. 51, No 4 (1961), pp. 657–665. See also R. I. McKinnon, “Optimum Currency Areas,” American Economic Review Vol. 53, No. 4 (1963), pp. 717–725.

Greece gained entry into the eurozone by fabricating – with significant help from Goldman Sachs – the true state of the country’s fiscal condition. The EU political elite was clearly aware of Greece’s actual fiscal condition, but opted to look the other way.

This is the reason that, in spite of the irreparable damage that three years of catastrophic austerity measures – part of the bailout agreements orchestrated by the European Union (EU) and the International Monetary Fund (IMF) – have caused, both to the national interests and to Greece’s social fabric, the discussion of exiting the euro remains a taboo virtually across the political spectrum.

The conservative government of Kostas Karamanlis, which came to power in 2004 and governed until 2009, proved to be equally, if not even more, corrupt and immensely incompetent. In fact, from the 1980s onwards, the socialists and the conservatives had ruled the nation in a similar fashion, both of them using the state and its coffers as a means to enrich themselves and their parasitic capitalist partners and to cater to the needs and demands of their political clientele in order to maintain an army of faithful party voters, making it thus virtually impossible to tell which of the two political parties has caused greatest damage to the common good. Both have been implicated in various large-scale scandals that involved exploiting state resources in order to transfer wealth from the public to the private sector and to redistribute wealth from the bottom to the top. Both of them, as well as the private sector, squandered European Union structural funds with reckless abandon, in the process allowing the destruction of vital sectors of the economy to take place (e.g., agriculture). Insofar as the culture of corruption – which the elite saw fit to let spread throughout society, thus creating a system of “corrupt legality” – is concerned, foreign actors also had a major role in it. The German industrial giant Siemens was in the habit of handing out bribes to political figures in order to gain preferential treatment over business deals (i.e., gain state contracts). This was a global practice of Siemens’, and it is estimated that the bribes to Greek officials in both main political parties may have been as much as 100 million euros over a ten-year period. Charges were filed in 2008 for money laundering and bribery, but a parliamentary investigative committee that had been formed to examine the Siemens scandal conveniently swept the case under the rug.

Greek Statistical Authority (March 18, 2010). See

Cited on the web site of the Greek Embassy in Washington, DC. See

See Dimitri B. Papadimitriou and L. Randall Wray, “Euroland’s Original Sin,” Policy Note 2012/8. Annandale-on-Hudson, N.Y.: Levy Economics Institute of Bard College (July 2012). Online:

C. J. Polychroniou, “The Greek and the European Crisis in Context,” New Politics Vol. 13, No. 4 (Winter 2012), pp. 49–56.

See C. J. Polychroniou, “The Mediterranean Conundrum: Crisis in the European Periphery,” Economic and Political Weekly, Vol. XLVII, No. 21 (May 26, 2012), pp. 35-41.

A fine new source discussing the history and the policies of neoliberalism is that of Daniel Stedman Jones, Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics ( Princeton, N.J.: Princeton University Press, 2012).

Among the many profound pieces by Henry A. Giroux on the ideology of neoliberalism, see in particular his latest one “The Politics of Disimagination and the Pathologies of Power,” Truthout (February 27, 2013). Online:

See C. J. Polychroniou, “Greece’s Bailouts and the Economics of Social Disaster,” Policy Note 2012/11. Annandale-on-Hudson, New York: The Levy Economics Institute of Bard College (September 2012). Online:

George Papandreou, son of Andreas Papandreou, founder of the Panhellenic Socialist Movement (Pasok) and prime minister of Greece for almost ten years, after having won three national elections, became prime minister in October 2009. With no charisma whatsoever and lacking in intellectual prowess and administrative and leadership skills, his failure as a top political dog was all but ensured. He resigned in November 2011, after having ruled the most excruciatingly amateurish and agonizingly incompetent government in modern Greek history, but will always be remembered as the prime minister who “masterminded” the unconditional surrender of Greece to Germany and the IMF and imposed brutal austerity – the prime minister whose ultimate vision was “one working person per family.” He is still the leader of The Socialist International, one of the most shameful contemporary political organizations, allegedly at the service of democratic socialism but whose members included, among other “devotees to the cause of socialism and democracy,” Egypt’s Hosni Mubarak and Tunisia’s Zine al-Abidine Ben Ali; and, the irony of all ironies, he gets paid hefty fees to lecture for a few weeks at prestigious institutions like Harvard and Columbia, probably on how to ruin an economy and destroy a nation’s sovereignty.

See Dimitri B. Papadimitriou, Gennaro Zezza, and Vincent Duwicquet, “Current Prospects for the Greek Economy: Interim Report,” Annandale-on-Hudson, New York: Levy Economics Institute of Bard College (October 2012). Online:

See Jörg Bibow, “The Euro Debt Crisis and Germany’s Euro Trilemma.” Working Paper No. 721. Annandale-on-Hudson, New York: Levy Economics Institute of Bard College (May 2012). Online:

Philip Blenkinsop and Annika Breidthardt, “Euro Zone Economy Falls Deeper than Expected into Recession,” Reuters (February 14, 2013). Online:

C. J. Polychroniou, “Greece’s Bailouts and the Economics of Social Disaster,” Policy Note 2012/11. Annandale-on-Hudson, New York: The Levy Economics Institute of Bard College (September 2012). Online:

European Commission, “European Economy: The Second Economic Adjustment Programme for Greece,” Occasional Papers 94 (March 2012), p. 1.

European Commission, “European Economy: The Second Economic Adjustment Programme for Greece,” Occasional Papers 94 (March 2012), p. 4.

Greek Statistical Authority, “Labour Force Survey: November 2012,” Press Release (February 14, 2013).

Cited in “3.4 Million Greeks near Poverty Line in 2011, Eurostat Reports,” (December 3, 2012). Online:

INE-GSEE (Labour Institute of the Greek General Confederation of Labour), Enimerosi, No. 200 (December 2012), p. 1.

INE-GSEE (Labour Institute of the Greek General Confederation of Labour), The Greek Economy and Employment: Yearly Report (2012), p.21.

Greece’s two main political parties, the conservatives (New Democracy, or ND) and the socialists (Pasok), used to draw, until recently, over 75 percent of the combined vote. In the 2012 elections, both parties together managed to attract less than 35 percent of the popular vote – and if elections were held today, it is unlikely that they would get more than 28 percent of the combined vote.

The phrase is borrowed from the title of an article by Costas Lapavitsas, which appeared in The Progressive, Vol. 76, Issue 7 (July 2012).

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Please give what you can — because by supporting us with a tax-deductible donation, you’re not just preserving a source of news, you’re helping to safeguard what’s left of our democracy.