The subsequent general elections of June 17 led to a flood of attention in the international media and blatant foreign intervention due to their potential economic implications for the Euro currency zone and the global economy. Observers were concerned that a Greek exit from the Euro would have a catastrophic impact on other ailing European states, damaging the US and the entire global economy. There was an unprecedented campaign orchestrated by the Eurocrats, the German government and the German media, which amounted to the blackmailing of the Greek electorate to vote against the parties that want to end the draconian austerity and neoliberal policies.

E.U. officials disregarded the norm of neutrality concerning an independent national election and expressed their opinion about their preferred outcome of Greeks’ vote, threatening “Grexit,” i.e., forcing Greece out of Euro zone, if the radical left wins. The intervention crescendo came on the eve of the election with an open letter of Germany’s Bild newspaper to Greek voters. The tabloid warned:

“Tomorrow you have elections but you do not have any choices….If you don’t want our billions, you are free to elect any left- or right-wing clowns that you want…For more than two years, though, your ATMs are only issuing euros because we put them there. If the parties that want to end austerity and reforms win the elections, they will be breaching all agreements and we will stop paying.”

But it was not only threats by the media and the Euro-area governments. After the May election results, part of Greece’s next aid payment (1billion Euros) was postponed as a warning to Greek politicians and voters to stick to the austerity program.

Repeated Eurocratic interventions over the month before the election of June 17 implied a deep disapproval of potential choices by free citizens. This began in February, when German Finance Minister Wolfgang Schaeuble made the incredible suggestion that Greece should hold off the election and allow the interim government led by the banker Lucas Papademos to stay in power. This revealed a neoliberal German and European Union leadership that has become scared of democracy, unable to deal with the uncomfortable realities that elections can produce.

The foreign led “Grexit” campaign was combined with a domestic “Drachmageddon” terrorist campaign that propagated the notion of total catastrophe if Greece were to go back to the Greek national currency the Drachma, orchestrated by the media with close relations with the corrupt ruling parties of New Democracy and PASOK.

Those of us who have studied foreign interventions in Greece in the past can’t recall such a blatant foreign interference, with its effective co-ordinated scaremongering. As a result, the elections on June 17^th produced a vote of fear to avert a bleak Greek future, superseding the vote of anger against the corrupted political system of the elections of May 6^th.

It is also crucial to note that the great majority of Greeks has repeatedly expressed in polls and also on May 6^th elections in favor of the Euro, though clearly against the  “memorandum,” i.e., the draconian austerity bailout program, enforced by the troika, EU, IMF and ECB. That is why the Eurocrats and the Greek ruling forces tried and succeeded to transform the elections of June 17 into a referendum about Euro and not about the memorandum. Angela Merkel herself had called the Greek President to suggest the official transformation of the election into a referendum in favor of the currency. Hence, scaremongering campaigns for “Grexit” and “Drachmageddon” defined the June 17^th elections to be a de facto referendum on Greece’s future with the Euro, between leftist Alexis Tsipras’s Syriza Party, which opposes the terms of the country’s latest bailout, and its conservative rival, Antonis Samaras’s New Democracy party, which largely supports the bailout program, the ND with PASOK together are the “ancient regime.” Nonetheless, while the June election amounted to a referendum on whether Greece would become the first country to be forced out of Euro, it is quite certain that if a real referendum about the austerity bailout program, the vast majority of suffering Greeks would have voted against it.

The elections results

After all these orchestrated campaigns, on June 17, the conservative New Democracy (ND) came in the first place with 29.66%, from 18.9% in the previous vote, getting 129 seats in the parliament, including 50-seat bonus that goes to the leading party. The leftist SYRIZA jumped to 26.89% from 16.8%, holding 71 seats. It is followed in third place by the socialist PASOK, which fell to 12.28% from 13.2%, now holding only 33 seats, down from 157 in 2009.  The newly formed nationalist populist party of Independent Greeks which managed to get 10.6% in May is now in fourth place with 7.51% votes and 20 seats. Unfortunately for the Greek democracy, Golden Dawn came in fifth. This extreme neo-fascist party, with members who have been linked with violent attacks on African and Asian immigrants, maintained its power 6.92% (7%) and occupies 18 seats, down from the 21 it elected in May. The moderate “Democratic Left” came in sixth, with 6.26% (from 6.11%) and 17 seats. Last, in seventh, was the Greek Communist party KKE, which only got 4.50% (down from 8.5% in May) and 12 seats, refusing  any cooperation with SYRIZA.

The polarization of voting between ND and SYRIZA squeezed small parties like the Ecologist Greens, Popular Orthodox Rally (LAOS) and “Drasi,” which this time all fell well short of the 3 percent threshold needed for them to enter Parliament. A new abstention record was reached, 37.53%, higher than the 34.9% in May. About half of the young voters between 18-29, suffering from 50% unemployment, voted for SYRIZA, and those over 60, fearful pensioners and women over 55, voted ND for staying with the Euro.

Hence, Greece’s second national elections produced a narrow victory for the conservative New Democracy by 2.4 percentage points over leftist SYRIZA. However, Mr. Samaras of the New Democracy party, who declared that “Athens would honor its commitments” made in exchange for rescue loans from the EU and IMF, has only 129 of Parliament’s 300 seats, and lacks enough MPs to govern alone. He sought allies among his traditional rival, the pro-bailout PASOK, which came third, and the small Democratic Left party, which, while opposing the country’s harsh austerity program, has declared it will help to form a strong government. So, these three parties managed to forge a pro-euro and pro-bailout coalition government, backed by 179 out of 300 MPs.

The ND narrow victory, the coalition government and the real winner

Antonis Samaras was sworn in as prime minister of a three-party coalition government promising to uphold Greece’s international bailout commitments. Samaras two coalition partners, PASOK leader Evangelos Venizelos and Fotis Kouvelis of Democratic Left, have decided not to provide MPs for cabinet positions.

The real election winner is, though, in my judgment, SYRIZA, which saw its percentage of the vote rocket from less than 5 percent in 2009 to 17 percent in May to 27 percent in June. SYRIZA has made clear that it will not take part in any government or national negotiation team for a better memorandum. SYRIZA, with the anti-austerity wind in its sails, will be a powerful opposition force, insisting that the memorandum lacks popular legitimacy, having been effectively annulled by the strong anti-austerity vote in May. Mr. Tsipras, campaigning to reject the bailout terms and yet keep Greece in the euro, repeatedly stressed his party’s commitment to the common currency. To defend against the conservative pro-Euro arsenal, he eschewed any reference to radical positions the party holds on repudiating the national debt or nationalizing the banks.

In my view, unlike its name as a Coalition of Radical Left, SYRIZA is by no means  a communist radical movement; this is clear to the well informed American administration and media, which were not polemically against its leader Alexis Tsipras. SYRIZA, like the initial PASOK in the 80s under Andreas Papandreou, is a leftist reformist, multi-group coalition, attracting  mostly young people, the leftist intelligentsia, and the now state dependent middle strata, which has been disappointed by PASOK.  SYRIZA can play a modernizing role against the corrupted political system, similar to the role played by PASOK in 1981 against the prolong right wing rule. In its effort to be able to form the next government after a predicted failure of the present pro-bail out government, SYRIZA will be transformed into a governmental party, obliged to abandon its leftist radicalism, and gradually, like the PASOK governments, will disappoint its leftist followers. Rather than victory now, 38 year old Tsipras very well may be happier to emerge as a formidable and strengthened opposition leader, waiting for his leftist movement to become mature as a governmental party in order to succeed the coalition government’s predestined failure and short life.

Post elections assessments and prospects

The June elections has temporarily enabled Greece to avoid “Grexit” and “Drachmageddon,” and relieved the EU leaders with the formation of a pro-austerity government. One could argue that it is another temporary win for the Ancien Regime, which will just encourage Greece overlords to be more draconian. A government made up of the same political parties carrying the burden of the same old sins is incapable of resolving the Greek crisis. Without substantial European help, it will collapse soon.

In my judgment, if SYRIZA had won, it by no means would have resulted in a Armageddon for Greece and EU; because such a victory would have triggered drastic economic and political changes in Greece and in Europe more broadly. Europe’ s leaders, and Germany’s in particular, would have been forced to find the resources and imagination to reform the euro zone and advance the European integration.

Unfortunately to this point, following the election, Germany, IMF and the EU continue to demand that Greece honors the terms of the crucifying bailout that unrealistically assumes a quick economic recovery despite draconian austerity and crushing debts. Germans sadistically insist that Greece must continue take its disciplinary medicine – a 25% fall in GDP, collapse in living standards and youth unemployment of 50% – and pursue a neoliberal reform of its economic structures. For Germany, Greece’s draconian disciplinary austerity experiment is providing important lessons for other southern European “PIIGS.” But even if Grexit and losses  of the Greek debt might be containable, what would not be containable is the fear among member states  such as Ireland, Portugal, Spain and Italy that their countries could suffer the same fate as Greece.

After the financial problems in Portugal, Ireland and now in Spain, it is obvious that  the Greek crisis is not endemic and its cause is not the unruly Greeks. We have seen how many weak links there are in the European chain, which have nothing to do with Greece. As famous American economists, notably including Paul Krugman and Joseph Stiglitz, have argued, the origins of crisis that is tearing Greece apart, and threatens to spread across Europe, can be found in the deeply flawed European monetary system. There must be a wholesale redesign of the EU economic structure. This and not the destruction of the Greek economy is the answer to the crisis.

Will the new Greek government be offered further forgiveness of its foreign debts, a moratorium on further cuts in the social wage and an opportunity to stimulate the economy with a range of infrastructure projects financed by European funds? Greece and Southern Europe need something closer to a Marshall Plan than more austerity, but the German neoliberal government and its northern partners refuse to acknowledge this. Instead, they will continue half-measures and moralistic lessons that have resulted in the destruction of the Greek economy and society, and which have grown to present a threat to EU as a whole.

The revival of the parliamentary left in France, Italy and Greece, plus the sorely needed, from the point of view of Greece and Europe, re-election of President Obama in the U.S., bring some hope for a developmental turn against the irrationality of austerity in the European crisis and democratic reforms in the European Union. The concept of a unified Europe has been shaken to the core. If the Greek election serves as a wake up call and has promoted a recognition of a necessary change of course, it will be a real democratic win for the people of Europe, and beyond.

In this post, Minas Samatas, Professor of Political Sociology, University of Crete, reports that while the Greeks said no to draconian austerity, no to the two ruling parties, and no to European threats of Greece’s exit from euro zone, “Grexit,” they suggested a new path for a democratically legitimate European Union. -Jeff

Μay 6^th elections in Greece have sent a loud and clear message: the Greek people said no to the draconian austerity measures that have devastated the country in exchange for dead-end bailouts from the troika of European Union (EU), European Central Bank (ECB) and International Monetary Fund (IMF). Designed by IMF and Eurocrats, the bailout “memorandum” does not guarantee a safe path to move Greece away from disaster, even if implemented in full. The austerity policy gives absolute priority for paying creditors at the expense of citizens’ incomes, without any future prospect of development and growth. It promotes sharp reductions in public spending, shattering the healthcare and educational system, and the “Balkanization” of Greece with salaries under 200 Euros comparable to Bulgaria. The Greek electorate rejected this in no uncertain terms.

They also, and very importantly, said no to the two ruling parties, punishing the socialist PASOK and conservative New Democracy (ND). They are responsible for the dramatic economic crisis and signed the disastrous austerity program (memorandum) to protect the foreign creditors and the banks at the expense of the most vulnerable. The outcome of the ballot expressed anger against the corrupted political elite and its policies. It expressed dismay at the lack of punishment of those responsible for the crisis. It was a call for social justice for those who suffer from the crisis. The election results express the fear and despair of the Greek people affected by the memorandum’s inhumane policy, lurching deeper into poverty and despair by sharp salary and pensions cuts, unfair tax increases, 22% unemployment (with 922 people losing their job per day over the past year), leaving no future for the young people but immigration, leading to over 3,000 persons to suicide.

The results:

The conservative New Democracy (ND) came in first place with only 18.9% of the vote, followed by the leftist SYRIZA (16.8%) and by the socialist PASOK (13.2%) in third, followed by the Independent Greeks (10.6%) a splinter party from ND in fourth, and in fifth the Greek Communist party KKE (8.5%), which refuses to cooperate with anyone in government, followed by Golden Dawn, the  extreme right-wing party, 7% (the big shock) in sixth, and the moderate “Democratic Left,” a party which gathered splinter deputies from SYRIZA and PASOK with 6.11 % of the vote in seventh. The Ecologist Greens with 2.93 % and Popular Orthodox Rally (LAOS) (2.9%) failed to enter the parlament, given the 3% minimum entry. Also a group of small, neo-liberal, pro-business parties “the Democratic Alliance” “Drasi,” and “Creativity Again” failed to enter parliament. A record 34.9% of voters abstained.

These results are a clear defeat of the pro-memorandum forces (PASOK and ND), which want to keep Greece in the euro zone (EZ) at any cost and signed the latest loan agreement. They gathered a combined record low of 32 %. This is a rejection of the governing parties since 1974. The political patron client system collapsed because the two parties can no longer accommodate their clients due to the state bankruptcy.

The elections were won by those who are against the memorandum, but want to stay in euro zone, though not on “Merkozy” and IMF austerity terms. Only the Greek Communist Party (KKE) unambiguously calls for Greece’s exit from both EU and EZ.

There are dangers revealed in the results. Austerity and national humiliation by the crude scapegoating of Greeks abroad has caused anger, racism, xenophobia and ultra nationalism. Hence the ballot brought the neo-Nazi “Golden Dawn” in parliament, with 21 out of 300 seats. The first neo-Nazi party to enter a European parliament since WWII won votes throughout the country, even in places devastated by the Nazis. Along with the “Golden Dawn,” the hard-right nationalists “Independent Greeks” entered the parliament, using rabid nationalism and anti-immigrant rhetoric.

The results also suggest new promise. The surprise winner in May 6^th election was SYRIZA, the Coalition of the Radical Left, which easily beat PASOK, sweeping all of the greater Athens region and Thessaloniki. Led by 38 years old Alexis Tsipras, the party is in favor of remaining in the euro zone and the European Union, unlike the Communist Party, but has opposed the loan agreement. SYRIZA’ s charismatic leader succeeded in integrating a broad spectrum of anti-memorandum forces: disillusioned PASOK voters, the indignant protesters in the squares, the young occupiers of schools and government buildings, the organizers of solidarity networks and barter alternative exchange systems. Based on his party’s remarkable surge to 16.78 %, Tsipras has written to EU officials to declare the memorandum deal null and void because a total of 68 % of voters rejected the terms of the EU-IMF bailout.

With seven parties in Parliament and none gaining more than 20%, the elections destroyed the post-dictatorial political system of the past 38 years and opened the way for new political forces, which however are not eager for cooperation, both before the elections and after. Yet, the ballot does not give enough parliamentary seats for a majority government. Therefore, it seems that the deadlock will be resolved by new elections in June 17, which are considered anathema for the established parties and creditors. It seems that democracy is not really welcome in the euro zone, which prefers appointed technocrats, like ex-bankers Monti in Italy and Papademos in pre-election Greece. But the new election suggests the possibility of a new beginning, despite the concerns of the European establishment.

Has Germany and its northern European partners got the loud message of the Greek elections into easing their fiscal demands on Greece or make them push Greece out of the euro zone? Can Greece negotiate the memorandum terms with its creditors without risking its place in EZ? The Troika and especially Chancellor Merkel have blatantly threatened a Greek euro zone exit, “Grexit,” if Greeks don’t accept and implement the painful memorandum.

Although they want the euro, the Greeks voted in defiance of IMF and EZ threats. And I think it is important to recognize that despite scaremongering by the pro–memorandum forces and media, Greece still has negotiating power, because the Greek crisis is a European one. In my judgment, sooner rather than later, foreign lenders will realize they have imposed an unsound policy, transforming Greece into a Weimar type of republic, providing a foretaste of what will happen to Portugal, Spain, Italy, or even France.

Grexit should not be the cost Greeks have to pay to get rid of a rotten political system and get back their dignity and autonomy. The potential new Greek, European and global catastrophe can be averted if the Greek defiance is backed by other “revolting Europeans.” The practical reasonableness of this approach has been underscored by Paul Krugman. Opposition to market dictatorship and the euro zone unilateral austerity in Southern Europe is the way to restore the “European project” with a policy of growth, promoting closer integration through democratic mandate. The Greek election has presented an important new beginning.

My New School colleague Michael Cohen’s new book Argentina’s Economic Growth and Recovery: The Economy in a Time of Default provides the first detailed account in English of one of the remarkable episodes in recent economic history.  Cohen’s rendering of 21^st century Argentine political economy is detailed, nuanced, filled with summaries of political debates and standoffs and with a rich appreciation of the unequal ways in which the economic benefits are shared as the Argentine economy recovered from its macroeconomic collapse in 2001.

The book is a fast-paced (at times blow-by-blow) account, of macroeconomic extremes in terms of debt, exchange rates, government budget and trade balances and fiscal and monetary policy in Argentina.  But when I finished reading the book (and took a big exhale) what struck me — not an expert on Argentina by any stretch — were the many ways that the Argentine experience contradicts the conventional economic wisdom.  Without much explicit attention to issue of conventional economic wisdom (other than the attack on World Bank and IMF structural adjustment policies imposed on Argentina in the 1990s), Cohen’s account nonetheless forces us to think critically about some widely-held views in economics and especially development economics.  Let me describe seven different ways in which Argentina’s experience in the 21^st century should make us revisit some of the accepted aspects of economic wisdom.

To continue reading Will Milberg’s review of Argentina’s Economic Growth and Recovery by Michael Cohen, click here.

My New School colleague Michael Cohen’s new book Argentina’s Economic Growth and Recovery: The Economy in a Time of Default provides the first detailed account in English of one of the remarkable episodes in recent economic history.  Cohen’s rendering of 21^st century Argentine political economy is detailed, nuanced, filled with summaries of political debates and standoffs and with a rich appreciation of the unequal ways in which the economic benefits are shared as the Argentine economy recovered from its macroeconomic collapse in 2001.

The book is a fast-paced (at times blow-by-blow) account, of macroeconomic extremes in terms of debt, exchange rates, government budget and trade balances and fiscal and monetary policy in Argentina.  But when I finished reading the book (and took a big exhale) what struck me — not an expert on Argentina by any stretch — were the many ways that the Argentine experience contradicts the conventional economic wisdom.  Without much explicit attention to issue of conventional economic wisdom (other than the attack on World Bank and IMF structural adjustment policies imposed on Argentina in the 19990s), Cohen’s account nonetheless forces us to think critically about some widely-held views in economics and especially development economics.  Let me describe seven different ways in which Argentina’s experience in the 21^st century should make us revisit some of the accepted aspects of economic wisdom.

Conventional wisdom #1.  Conventional wisdom is that default on foreign debt will have disastrous consequences for economic growth, economic suicide.  The country that defaults, the thinking goes, immediately shuts itself out of international capital markets for an unpredictably long period of time, brings on a long-term collapse of the exchange rate, requires a long-term recession as the country is forced to “live within its means.”

Argentina defaulted in early 2002 and then:

*one year later was borrowing considerable  from the World Bank and Inter-American Development Bank.

*between 2002 and 2006 inward FDI rose at a rate of 26% per year  (much from Brazil)

*by 2006 was experiencing rapid economic growth rates, funding new social programs aimed at reducing poverty and was considered fiscally very sound.

Conventional wisdom #2.  Conventional wisdom runs that globalization is a process that drastically reduces the power of the nation-state, since increased capital mobility means that capital’s interests no longer coincide with those of the nation state and, anyway, the state’s influence over capital and the economy generally is diminished because capital (and labor) can simply move or shift production locations if domestic policies put it at a disadvantage.

Argentina’s example in a time of default is increased power of the national government, first over the decision to default on foreign debt, and then to run very active jobs and redistributional policy. Nestor Kirchner’s “strong state” was even criticized for being too powerful at time.

Conventional Wisdom #3. A corollary of this conventional wisdom about the diminished power of the nation state in the era of globalization is that one size – that is the neoliberal policy package – fits all.  Fiscal and monetary restraint, current and capital account liberalization, removal of subsidies are the basic requirements of any structural adjustment.  As a result of this thinking (which Cohen shows originated in the US and Europe), these policies became the basics of IMF and World Bank conditionality attached, in one form or another, to loans made throughout the later part of the 20^th century.

Cohen’s account of Argentina in the run-up to default is a case of “the (neoliberal) operation was a success but the patient died.”  Hyperinflation was cured but the debt became unsustainable.  Cohen’s account since default is a description of a complicated set of deviations from this policy prescription – and with considerable success: Higher taxes, pro-poor redistribution and spending, job creation programs, loose monetary policy with careful attention to a competitive exchange rate.  This was the political foundation for the rapid growth of the 2000s.

Conventional wisdom #4. Latin American wisdom (from  1950’s structuralist views on economic development made famous in the writings of Raul Prebisch and Hans Singer) says that developing countries should actively seek to avoid a pattern of specialization which is too reliant on commodities and primary goods – they have a low income elasticity of demand and are standardized goods for which no market power and no labor bargaining can take place.

What happened in Argentina in the 2000s was a period of rapid economic recovery strongly supported by the global commodities boom that drove an explosion of exports and which had a considerable multiplier effect across the Argentine economy – continuing to this day.  The terms of trade — driven to a great extent by high world prices for soybeans — is up over 50% in the last decade.  And this has come even in a period of depreciation of the Peso against the Brazilian Real. (Note that Cohen also questions whether the main source of economic growth was domestic demand.  When the peso was devalued in 2002, import substitution took place, raising demand for domestic goods and services.  Government spending also grew.  These, he argues, were the basis for the “demand-led recovery.”

Conventional wisdom #5: With the rise of China, consensus is growing around the view that the autocratic is most able to promote development.  Increasingly, Chinese success is connected to the autocratic nature of the political system.  It is this absence of democratic accountability in China, the conventional wisdom goes, that has allowed the Chinese government the ability and nimbleness to harness labor and capital investment in a massive industrialization effort.  Argentina’s remarkable era of democratically-elected governments belies this consensus view.

Conventional wisdom #6: Conventional economic wisdom is that a tide of economic growth will raise all boats.  The friendly World Bank amendment to this has been that one also needs good institutions, i.e. clear property rights protections.  The conventional wisdom is that economic growth per se is the central means to the improvement of well-being and the reduction of poverty.

The Argentine case shows that growth alone was not adequate and Cohen attributes progress on the poverty and employment front to Kirchner government efforts to support housing, health care, job creation, social protection and infrastructure.

Conventional wisdom #7. Conventional wisdom is that the international financial institutions are more powerful than domestic political forces – thus the old joke that the World Bank has brought down more governments than have national revolutionary movements.

Cohen’s account tells the fascinating story of a country that defaults on its foreign debt in the face of enormous IMF pressure not to do so.  Then, just a few years later, the government elected with the largest plurality in decades finds itself in an unwinnable battle about export taxes with the powerful and large domestic farmers.  These huge corporations, profiting greatly during the commodities boom of the 2000’s succeed with a lockout (keeping produce and meat off the domestic market), protests, influence peddling in the Senate, control of the media.  So what’s new?  Argentina defies the conventional wisdom.

Perhaps what is the most unconventional part of this book is the way Cohen tells the economic story of Argentina in a time of default.  Contrary to the economists, Cohen argues that all economic processes must be understood as political, that economic change comes generally with a “major realignment of political power.” Even more interesting is Cohen’s insistence that you can’t assess economic policy in some pure way, but only in the context of its institutional and political overlay.  This leads him to strongly resist the notion of the end of history or the end of politics in Latin America.  The book resounds with a very hopeful view of the possibilities of creativity and innovation in policy making and poverty reduction, management up urban development, but also with a realistic sense of the limits of politics.

Cohen’s views on these issues are closest to those of Peter Evans and his notion of “embedded autonomy.” The idea is that the most effective developmental states are those most closely connected to economic and civil society actors, but which also have sufficient autonomy  (a) to be able to implement policy effectively even when the impact of a policy shift is not favorable to one or more group of actors, and (b) to implement policies with long-term developmental consequences rather than short-term ones. Embedded autonomy is a particularly useful lens with which to think about economic policy making in Argentina, with its history of Peronism, military dictatorship and now a vigorous democracy.  Embedded autonomy remains particularly relevant in the Kirchner era, which at various moments was accused of being too embedded and at times too autonomous.

Finally, I would be remiss if I didn’t speak of Cohen’s own problem of “embedded autonomy.”  Cohen has been personally friendly with the Kirchner’s over many years and  they have supported the Latin American Observatory at the New School.  So the big question as I opened the cover of the book for the first time was whether Cohen would pull his punches in his assessment of the Kirchner governments.  The answer is that he does not hide his colors – he is mostly supportive of the Kirchner governments and their efforts at redistribution and poverty alleviation.  But he does this within a distinct analytical frame and from a clear sense of principles – that economic growth alone does not alleviate problems of extreme inequality, persistent poverty and lack of access to health care.  While the rapid recovery following default is remarkable, Cohen does not let the reader lose sight of the perhaps more remarkable feat which is the recovery from a brutal military dictatorship in 1976-1983 to a strong democracy that seems to have come not just with ambitions of voting rights but also of economic rights.  And he is critical of the Kirchner’s in a number of places, mostly for ignoring important aspects of long-term social well-being related to the development of science and technology, infrastructure and the apparent collapse of energy production over the last decade that may cripple the economy going forward.

Recent economic reports indicate that Argentina is once more on the edge:  The economy may well be spiraling into another crisis — exchange rate overvalued once again, capital flight, expansionary fiscal policy, inflation taking off.  Rumor is that the government may be falsifying the published rate of price inflation.  And while Cohen covers the politics of this in much detail, he is insufficiently critical of the government in its dangerous politicization of inflation data.  The recent law regarding the accountability of the central bank makes sense in that public accountability is in general a good thing, but the political pressures this creates for monetary policy to finance public deficits are not necessarily good over the long term.

Argentina’s Economic Growth and Recovery: The Economy in a Time of Default reflects a deep appreciation for the political culture, the economic history, the geographical complexity, the class differences and the international pressures that Argentines have struggled with over the past two decades.  It is an important treatise in political economy and Cohen tells it in detail and with a lot of passion and even, at times, frustration.  My sense is that these two sentiments – passion and frustration — are conventional sentiments for most Argentines.

The crisis here in Greece is not just financial, but also social and moral. People suffer, while the political elite and the establishment survive, untouched, although they are responsible for the current state bankruptcy. Given the history of the recent past, after the bloody civil war (1947-1949), during the police state (1949-1967) and the military dictatorship (1967-1974), and especially after the dictatorship up to the present, the crisis is not surprising. Greek tragedy has returned.

After the end of the dictatorship, democracy was restored and Greece joined the European Union (EU) and eventually the Euro-zone for political reasons, not based on economic fiscal criteria. As a consequence, the Greek people enjoyed thirty five years of stable democratic life and relative prosperity, albeit a false one. The state apparatus, dominated by the two political parties, the conservative “New Democracy” and the socialist “PASOK,” was thoroughly corrupt and mismanaged with a highly elaborate system of patronage. There was little real economic development. The economy was based on tourism, EU agricultural subsidies and other EU funds. Many Greek citizens, based on their political connections, were employed in the inflated public sector, and avoided their tax obligations, violated building regulations, and received permits and easy loans from the state controlled banks.

Through loans or from EU funding, these were good years for Greeks and their European partners, especially the Germans who took advantage of the great Greek party, i.e., Athens 2004 Olympics. Their outrageous cost and the ensuing corruption seriously contributed to the present debt crisis and the actual bankruptcy of the whole post dictatorial state and society. Beyond the Olympics, European and other multinational corporations have fully exploited Greece’s corrupt and disorganized system so as to multiply their profits in relation to other countries. The real party was in arms deals in the billions, which involved huge kickbacks. The Greek Parliament covered up the Siemens’ kickback scandal and several others. No one has been sentenced to jail. No one has been punished.

With the international fiscal crisis and aggressive international markets, the good times are now over for Greece and its European partners. Greek citizens, especially the lower middle class, who were unable to have money exported to Switzerland and other off shore safe havens, are getting poorer and poorer with drastic salary and pensions cuts. We are very angry with politicians, with the Greek establishment, with German chancellor Angela Merkel, with the IMF, and the banks. We do not accept the international shame and the unjust generalization, the slander of Greeks as lazy and cheats, and the German demand for what amounts to a permanent tutelage. I find the populist German front pages that present the Parthenon as being for sale particularly ridiculous.

The highly educated who speak foreign languages, having no future in a bankrupted country, are choosing emigration. The challenge to rebuild the Greek state from the ground up and reinforce Greek democracy and the Greek economy is both urgent and next to impossible. Social cohesion may be destroyed. There is a real danger of spreading violence. While in the ancient Greek tragedies people suffered due to the gods’ will, in the end there was catharsis, i.e., a just end by a Deus ex machina who gave justice and cleansed away all blame. In the current Greek drama, people indeed do suffer, but there is no apparent prospect for catharsis.