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The wealth of Greece

Writing an economic history of 20th c. Greece
La richesse d’une nation : écrire une histoire économique de la Grèce du xxe siècle
Kostis Kostas

Texte intégral

  • 1 Kostis and Petmezas 2006, p. 21.

1Economic history was one of the primordial fields contributing in the development of Greek historiography in the period following the fall of the Dictatorship of the Colonels. The circumstances of the time, the political climate, and the interest expressed by various banks to organise their historical archives and create related research programmes, led to a burgeoning of this field of inquiry. However, conditions changed from 1990 onwards, and the profusion of 1980s-era research projects was succeeded by a period of paucity1.

2Things appear to be changing again with the present economic crisis, towards the benefit of economic history. Economists and historians profess a particular interest in economic history, attempting through a study of the past to reveal models of behaviour that will allow them (or so they believe and often argue) to understand what has been happening the last few years in Greece.

  • 2 Kostis 2019.

3In this context, I decided to publish a book that had been many years in the making, believing that the piecemeal approaches of various periods, as has been the case in the vast majority of publications regarding Greek economic history, acquire a very different meaning if viewed from a more long-term perspective2.

  • 3 Please forgive the reference to my project Kostis 2013, pp. 552-592.

4The Wealth of Greece (Ο Πλούτος της Ελλάδας), therefore, examines the production as well as the destruction of wealth in Greece in the 20th and 21st century. The chronicle begins at the Balkan Wars, since the Greek state as we know it is a creation of the years 1912-19223. The end of the period considered in the book is now, today, with Greece desperately searching – without success – for a productive model that will allow the country to stand on its own two feet in circumstances of globalisation.

5More specifically, my intent in this book is to follow the transformation of a poor agricultural economy of Southeast Europe into an economy that belongs, even after the income losses suffered to revenues over the recent decade, among the wealthiest states of the world. This is a development that should not be considered either self-evident or irreversible, as the experience of the past few years has shown.

  • 4 Kostis and Petmezas 2006.

6At this point, it is necessary to make a clarification. Economic history as this has been formed in Greece bears no resemblance to the international example. A primary reason for this turn of events is that economic history was mainly practiced by graduates of the history and archaeology departments of the philosophical schools, and was accordingly far removed from the economic science departments of the country’s universities4.

7This had its consequences, and despite the fact that studies on the development of the Greek economy exist, the results are uneven. The reason is simple. All too often in Greece, we decide to speak about the economy without possessing the proper tools. I could give innumerable examples to support this view. In each case, however, the result is nothing more than a patchwork of information lacking any coherence in the way it is presented. If, therefore, we wish to follow the transformation of the Greek economy during the past century, we need all those tools that will organise the events, clarify causal relationships and facilitate our understanding of the consequences of the sequence of information we possess.

  • 5 Chouliarakis and Lazaretou 2014

8The same problems arise when one examines things from the opposite perspective. The crisis of 2008 prompted many economists to engage in history, not always with honourable results. We thus saw economists comparing the crisis of 1929 with the Greek crisis of 2009, indifferent to the fact that in 1929, Greece was an agricultural country while in 2009 it was a country with a service economy. They tried in this way to draw “lessons” for the current reality, an endeavour that in the best case can be called naïve5.

9In the same way, even today they often use completely outdated theoretical models, which by definition already possess the answers to the questions posed. The various theories of dependence, for example, are not in a position to allow us to understand the development of the Greek economy any more than we already do. And yet they are still used, often indeed by young academics.

10In Greece, but not only, there are often discussions aimed at justifying the existence of two categories of economic history, one economic history for historians and another for economists. I do not believe in this distinction and, just as there are no good and bad types of music but rather good and bad music, so in the case of economic history, there is good and bad economic history. Because only one economic history can exist, one which respects the rules of the game, of both economics as well as history. Each type of argument in economic history, to be considered serious, must consistently and coherently use tools from economic and developmental theory. Everything else is just a compilation.

11Apart from this, however, economic history must also satisfy a narrative compulsion, a demand which many economists would say they do not face in their field. Nevertheless, this compulsion does exist in economic history and requires recourse to tools from political science and social theory, thus escaping the narrow confines of economics. The experience of recent years is enough to convince even the most dubious that what exactly is happening in the Greek economy will remain utterly incomprehensible to the outside observer if he does not take into consideration the political and social reality that frames and determines the economic activity in our country today. This is the basic weakness of many analyses by mainly British and North-American authors regarding Greece of today.

12Based on the above, it will have become clear that I do not adhere to the grand theories that, according to their proponents, are positioned to explain everything as one single scheme. Additionally, I sympathise with those objections raised by mostly development economists, who support that the process of development cannot be contained within general schemes, and therefore each situation retains its singularity. Besides, history itself is a study of specifics.

13Subsequently, I will not attempt to present the Wealth of Greece. What I will aim to do is place today’s Greek economic reality within a historical perspective, a feat which proved more difficult that I had initially imagined.

14The starting point is just over a century ago, when after a decade of war, the Greek state became more or less what it is today in terms of its borders and population.

15Much has been written about this period in Greek history. Nevertheless, I shall insist on one point: Greece comes out of the years of war and the National Schism – in other words, a period which allowed it, as I already mentioned, to double in size and population – a defeated nation.

  • 6 The ottoman territories either conquered by Greece during the two Balkan wars (1912-1913) or annexe (...)
  • 7 Kofinas 1914. The text is an excerpt from a report by Kofinas dated 26 February 1913.

16It has been argued that the expansion of the borders of the Greek state alone was a factor beneficial for the Greek economy. All Greeks were optimistic at that time regarding the economic opportunities and business horizons that opened wide in the so-called New Lands6. They would soon discover that things were much more complicated than they thought7.

17The new territories, to meet the expectations that the governments had at the time, should have seen significant investments: with much more primitive economic structures in comparison to Old Greece, they suffered from a dramatic lack of infrastructure, while even their basic agricultural exploitation required large works which would prevent flooding, make the ground irrigable and would combat malaria, which each year managed to strike up to even half the population of several provinces in New Greece. Georgios Modis, a public servant and later member of parliament for the Liberal party, wrote at the time:

  • 8 Modis 2004, p. 285.

The Greek valleys were hotbeds of disease, and in the summer and fall most of our farmers lay sick. […] In 1916-1918, the French and English suffered greater losses at the Macedonian front due to malaria than to enemy fire8.

18Beyond all this, the New Territories required administrative assimilation, something which proved to be exceedingly difficult, however, given the circumstances of the period, and made even worse by the fact that a large portion of the population there did not look favourably on the Greek administration.

  • 9 Kostis 2013, p. 610ff.

19Finally, the difficulties would increase with the population movements of the period and especially with the influx of refugees and the attempts to feed and house them, which required human and other resources extremely scarce in Greece. At this point, we should not forget that the refugees were not particularly welcome in our country, and in most cases of their agricultural settlement – and no small number of urban cases – they were seen as enemies9.

  • 10 Kostelenos et al. 2007, p. 166.

20In purely economic terms, I must underscore the fact that the most basic indicator of prosperity that we possess, the Gross Domestic Product per capita and at constant prices, shows us that only in 1936 does Greece re-gain the level it had in 1911, the last year before the war-period10.

  • 11 Kostelenos et al. 2007, p. 195.

21The reduction is impressive not only on an absolute scale, but also in relative terms. We see therefore that the undertaking of national expansion and integration led the Greek economy to diverge significantly from that of the other European countries, at a time when, before the wars, it had covered a significant part of the distance separating them11.

  • 12 For the Greek economy from the end of the First World War until the Asia Minor catastrophe, see Kos (...)

22From all points of view, the greatest blow came from the Asia Minor campaign. While in 1919 Greece could claim the status of a strong regional power, three short years later it wound up being considered just a Balkan power and indeed not one of the leaders12.

23In the late Interwar period, the country had managed to confront many of the wounds inflicted by the war years, and beyond that had managed to materialise an enormous programme of refugee settlement; by comparison, todays situation on the islands of the East Aegean can only be seen as a bad joke.

  • 13 Kostis 2013, p. 593ff.

24At the same time, absolute priority was given to education, an education which indeed was aimed at erasing differences and assimilating the populations of the country into a single nation. In the same vein, attempts were made to shape higher education so that it would be friendlier to the economy, to combat the obsession with theoretical studies. Finally, of equal importance was the attempt to create an elite in this country, which could govern it in the future, and civil servants capable of administrating13.

25On the eve of the Second World War, Greece could feel that it once again stood on its feet. Of course, it was a very poor agricultural country, but given the circumstances of the time, it had managed to record remarkable progress in all sectors and was in the position to offer its citizens a better quality of life.

  • 14 Especially for the demographic indicators and the improvement they show during the period 1913-1940 (...)

26A huge wave of reforms – many of which, it is true, were imposed by the country’s creditors, just as now – had completely changed the institutional landscape. The colossal effort made by the country was reflected, in an impressive way, not only in the economic indicators, but in indicators of education, health, justice, and demographics14.

  • 15 Kostis 2019, p. 180ff.

27And all this happened in an international environment that was anything but favourable for economic development. The intense de-globalisation that characterised the period was not without cost for small economies such as Greece, while for the greater part of the period, Greece did not have access to the international markets15.

28In a similar manner, the domestic political scene was not beneficial to the economic development of the country, and given the circumstances of the era, the very survival of the democracy became a difficult undertaking. Nonetheless, there is something we should not fail to mention: the lines of economic policy were basically the same for all political factions. This practice would not change until the post-dictatorship years and following.

29The success of the Interwar years and the radical changes that were made could only have made sense if the predicted return to normalcy after the First World War had actually occurred.

30But this is not what happened. All the toil and all the effort that was expended in the Interwar years seemed to literally evaporate during a second decade of war, that of 1940-1949.

  • 16 Regarding this, see Kostis 2019, p. 280.

31Greece had to wait until 1950 to find itself, at least in quantity, at the same production level it had been in 1938, before the onset of the Second World War. And this was only achieved thanks to the assistance provided by her Allies; if it were not for this aid, I am loath to imagine what the outcome would have been, since Greece was not able to secure even the sustenance of its population16.

32In any case, the important thing is that in 1950, the country was there where it had been twelve years prior, and perhaps even a bit worse, given that its ability to finance its economy was limited: for example, bank deposits represented only 25% of those before the war as a result of gold hoarding and the lack of trust in the drachma, while the international markets were also closed to Greece and would stay that way for many years to come.

33The starting point was therefore very low. In nearly all the international statistics, our country competed against Portugal as to which of the two would occupy the lowest position among the countries of Western Europe.

34In the wake of the Civil War, Greece still continued to be a very poor agricultural country, with astonishing contrasts between the cities and the villages.

  • 17 The data presented below derives from the Centre for Planning and Economic Research, Σχέδιον προγρά (...)

35Let me present some examples17. Even in 1962, the country-wide per capita GDP amounted to just $400. For Attica, the corresponding amount was $627, so one can imagine what was happening in the rest of the regions. If we assume that Attica represents 100, Thrace was at 59.2%, mainly due to tobacco, and the Peloponnese at 56.7%. All the rest of the districts ranged below 50%.

36Another example from the same year: the per capita consumption of electricity in the area of Athens was 833 kilowatt hours, while for Thrace it was 34, Epirus 48, and the Ionian islands 66. And Greece, as a country, was in last place in electricity consumption throughout Western Europe.

37Private cars in the area of Athens amounted to 168 per 10,000 residents. In Thrace, this number was just 8, in Epirus, 7, and the Ionian islands, 12.

38And all these indicators derive from 1962, a year which had been preceded by some years of rapid development. In the early 1950s in Greece, the per capita income was $140 while the average daily dietary consumption per resident was 2520 calories, a marginal amount, at a time when in Germany, a country defeated and destroyed in the war, the number was 3000. Even worse, in the Greek case, only 13% of the daily caloric consumption came from animal products, while in Germany the corresponding amount was 34%.

39An image of the period is given in an excerpt from an autobiographical account by an important and serious journalist, Panos Loukakos, who describes his impressions from the 1950s:

  • 18 Loukakos 2013, pp. 24-25.

The houses in the villages were half demolished or burnt, the children dressed in rags and looked sickly. They stared with curiosity at the few cars that passed through their villages. Sometimes they even threw stones at us. […] A few years after the Occupation and the Civil War, these children and their families had lived through so much and had seen even more. And they instinctively feared anything unknown to them, like Athenians visiting with their automobiles18.

40If I insist on all this, it is because we often forget – or to be more precise, try to forget – that Greece started the post-war period as a wretchedly poor, devastated agricultural country. It took a great effort and many sacrifices by its people to right itself. Characteristically, I mention the waves of emigration, a traumatic process for the people of the time, but without which the country’s balance of payments could not have stabilised and concomitantly the development that followed could not have taken place.

  • 19 The most complete work on the post-war Greek economy is by Iordanoglou 2008.

41The rhythm of change from 1950 until 1979 is certainly very impressive, and in just twenty years our country has changed profile. It would cease to be a country in which the agricultural sector was predominant; industry has become the basic mechanism of transformation19.

42An international context of shallow globalisation, which allowed national policies to be implemented without difficulty, a Ford-like model that made it easy for countries like Greece to develop rapidly simply through the movement of its population from the less-productive agricultural sector to highly-productive activities, in Greece and abroad, permitted our country to confront poverty and deprivation that were the terror of every Greek politician.

43At the same time, the macroeconomic policy regime that placed absolute priority on industrialisation with price stability was respected by all governments, and certainly led to the successful transformation of the country.

44I am not a fan of analogies in history, nor do I believe that one can learn by studying the past. I also do not believe that there are cycles in national histories, nor in automatic mechanisms for solving national problems that draw from the idea of national specificity.

45On the other hand, I do believe that by studying the mechanisms of production of national wealth with a long-term perspective, we can locate the strong and weak points of the economic models that dominated in each period.

46After the fall of the dictatorship of the Colonels, the data for each sector change radically. The collapse of the Bretton Woods system and the energy crisis created an environment diametrically opposed to that which came before. A deep globalisation comes to be gradually imposed, completely changing the rules of the international economic game. If until 1974, it was possible to implement national policies, after that year, the ability in this regard grew ever more limited. This is a fact, which we were slow to grasp, if we have indeed understood it at all.

  • 20 Voulgaris 2001.

47Greece entered this new era without a doubt as a pioneer in the branch of globalisation known in the bibliography as democratic globalisation. No one could question Greece’s ability to restore democracy and subsequently strengthen it, even despite the weaknesses that we could trace20.

  • 21 Kostis 2019, p. 432ff.

48Nevertheless, with regard to the second pillar of globalisation, economic globalisation, our country did whatever it could to avoid reality, essentially seeking to avoid the cost involved in the necessary effort21.

49It is a matter of discussion as to how far Greece’s reactions were conscious. In the economic field, I am entirely convinced that the initial choices did not take into consideration the data of a global economy undergoing change.

50The team of politicians surrounding Karamanlis was, in my view, completely out-of-date regarding its economic choices; in other words, it was incapable of surpassing the economic model it had in mind, a model, which remained exactly the same since the post-war period.

51This is apparent in all sectors. Konstantinos Karamanlis, signing the Treaty of Accession for Greece to join the European Economic Community, said characteristically:

  • 22 Αρχείον Κωνσταντίνου Καραμανλή 1997, p. 447.

I would like to emphasise that Hellas does not wish to join solely for financial reasons. It wishes it primarily for political reasons, which are none other than the stability of democracy and the future of the nation […] Because it is now clear that Hellas, integrated in Europe, will succeed in strengthening its external security and safeguarding the democratic system22.

52Thus, the participation in a large economic union, a fundamental need for a country like Greece given the new reality of globalisation, is not made for reasons that would justify it as an economic choice, but rather for the stability of democracy. This is a characteristic contradiction of the era.

53However, Karamanlis’ successors, with Andreas Papandreou at the head, through the theories of dependence and of centre-periphery also saw and understood all the problems of the Greek economy as stemming from the evil foreigners and not from the social behaviours that gradually became the norm in our country. We are well aware of the economic performance of this period, and we also know the costs it had down the line; I do not need to repeat them here.

54At the same time, other countries which until the early 1970s operated on economic terms similar to Greece were successful in extricating themselves from the trajectory of an outdated model and follow high-tech economic standards.

55South Korea is perhaps the best example of this category of economies, a country which until that time had followed a course similar to Greece’s, in economic terms. Socialist France, which in the first years of François Mitterrand’s presidency had also experimented with outmoded models, quickly realised the impasse to which it had been led and changed tack.

56And thus we arrive at today. Many friends and others whom I particularly admire, reproach me for my pessimism regarding the future of the country and of course my own. I would reply that they are wrong. I firmly believe in the principle that the fruit of one’s labour is proportional to the effort one has made. And also that to try to avoid reality is a grave mistake, which comes at a high price.

57I mean it. I believe it is time to talk based on the facts of our country. It is time to talk with realistic terms. Wishing and hoping is no help to anyone, and is the vehicle that will drive Greece to depths even lower than where it is now. Also, the view held by many that something will come through at the last minute and the situation will be salvaged is not befitting a country that wants to have ambitions for its future and the future of its children.

58Let us look at the facts of the problem, as these have taken shape over the past forty-plus years, with particular emphasis of course on the past decade.

59Up until 2007, Greece impressively converged with the European Union average. Policies of the Greek state adapted to reality from the time of Mitsotakis’ government until 2001, but it was the period after 1994 that saw a significant dynamic convergence of the Greek economy. I would like to emphasise only that the country’s political leadership during those years entirely consented to the showcasing of Greece’s participation in the Eurozone as a national target and adapted the country’s policies accordingly.

  • 23 Thomadakis 2015, p. 25.

60However, after Greece joined the Eurozone, no attempt was made to push through the structural changes necessary for the smooth incorporation of Greece into the common European currency. A characteristic and justifiably often quoted example is the abandonment of efforts to reform the social security system under the ministry of Tassos Giannitsis in 2001, which also marked the abandonment of any attempt by the Greek economy to adapt to the demands of a constantly-shifting global economy23.

  • 24 The data I use below derives from official publications by the Hellenic Statistical Authority and c (...)

61The fatal consequence was that that the global crisis of 2007-2008 deeply affected our country. The losses to per-capita revenues were in the range of 25%, or around the same as during the decade 1912-1922, a decade marked by wars. In reality, the losses to disposable income, i.e. after taxes, was around 40%, a magnitude that all agree seems inconceivable24.

62Although, at the moment, we are at the level we were in 2000, which at first glance most would say is satisfactory, the reality is that the distance separating us from the European Union average is the same as it was in 1960. If that is not enough, countries that once were far behind Greece in terms of per-capita income performance have nearly caught up, such as Rumania and Croatia, Bulgaria is fast approaching, and Slovenia has already surpassed us.

63Greece desperately needs to increase the tempo of development if it does not want to be left even further behind its partners. In such a case, even its position in the Eurozone, for which so many sacrifices were made, would be put at risk, as it would no longer be tenable.

64But for the economy to increase its rate of growth, investments are needed. It should be remembered that even today, consumption of capital remains higher than gross fixed capital investments, or in other words, we destroy more capital than we create. At the same time, public investments are limited to benefits linked to election-campaign promises.

65Thus, something must be done to encourage mass investment. Officials speak of an investment explosion in the range of 60 to 100 billion Euros which would be necessary if Greece is to enter a trajectory of quick and sustainable growth.

66But it must be stipulated that in today’s climate, not every kind of investment will do. Greece does not need low value-added or low-tech investments, we need precisely the opposite if we want to avoid competition based on labour costs, an area in which we certainly trail behind our neighbours.

67We need a new economic model, but I do not see anyone dealing with this matter. There is only one study by a private company made seven or eight years ago, but personally I was not convinced of its solid foundations.

  • 25 See indicatively, “Γκέρχαρντ Κοχ, ‘Γιατί δεν θα επένδυα στην Ελλάδα’”, Τα Νέα, Weekend 3-4 February (...)

68Let’s for the moment assume there is interest in making investments in Greece: what final decision one can suppose the investors will take, given the developments in cases such as Hellas Gold, the decommissioned airport at Elliniko or the Port of Piraeus? According to some evidence I was able to gather, a primary concern for foreign investors in Greece is the administering of justice, and only secondarily, the high interest rates, bureaucracy, high energy costs25.

69I am speaking of foreign investors. In a country with meagre savings, it is obvious that the mass investments we require can only come from abroad. This model also has its disadvantages, but we have no alternatives. Despite this, we do everything in our power to make investing in Greece from abroad even more difficult. We tax investments at a rate of 29% while our neighbours range from 10 to 15%.

  • 26 Foundation for Economic and Industrial Research (IOBE), Εκπαίδευση και αγορά εργασίας στην Ελλάδα: (...)

70And I will add another thing. The future of economies lies in two areas: biotechnology and artificial intelligence. States have more or less made their choices and those in the lead pull further and further ahead of the rest. Clearly, Greece is not on the boat of pioneers, and there is no doubt that the primary reason for this is our educational system, which is outdated and we are doing everything possible to make it entirely useless26.

71It is no coincidence that the president of the Hellenic Federation of Enterprises relatively recently noted that it was not possible to fill 60,000 job positions. And this occurs in a country with an unemployment rate of 20%, much higher among young people. We squabble over the new Law School, which is totally useless, instead of asking for the specialisations that are necessary for the new economy. The recent mergers of technical institutes and universities was nothing less than the coup de grâce.

72The third dimension to this problem is the matter of the social state; it should not become a burden to the economy but ought to offer a guarantee of social justice. On the cost of social security not much needs to be said, its burden is depressing for the economy and creates anti-incentives for entrepreneurial activity. However, the issue of social justice is also of great concern.

  • 27 The information provided below is drawn from Τα Νέα, 15.9.2014 and Καθημερινή, 19.11.2017. It can n (...)

73The failure of the post-dictatorship social model is something more than obvious if we take into consideration the performance of Greece in this sector. The Bertelsmann Stiftung calculates a Social Justice Index for the EU-2827. The index takes into consideration six factors: poverty prevention, access to education, access to the labour market, social cohesion and non-discrimination, health, and intergenerational equity.

74The image of Greece in both 2014 and 2017 is disheartening. Both years, our country occupies the last place among all other countries of the European Union.

75Greece’s performance is relatively decent in the areas of access to education as well as in expected lifespan, but in the rest of the areas the image is depressing, and even worse, shows no signs of improvement over the two most recent dates for which we have calculated indexes.

76To be more precise, the improvement recorded between the two years is smaller than the EU average. Greece continues to be last, and is in a worse position even than countries that were once considered our potential economic “colonies”, such as Rumania and Bulgaria. Indeed, between 2014 and 2017, the distance that separates us from those states grew.

77Apart from all this, however, there are also problems that I cannot at the moment see how they can be solved in a manner satisfactory to the country and without very unpleasant consequences.

78First and foremost is the social security system. Right now, a sort of balance has been achieved in this area, but it is temporary. With a ratio of workers to pensioners that approaches a single digit, it is not sustainable and sooner or later the problems will re-appear.

  • 28 Giannitsis 2016, p. 17.

79Let me remind you that according to calculations made by Tassos Giannitsis, 80% of the public dept before the crisis was due to the financing of the pension system, i.e. to borrowing so that the country could have a luxurious retirement plan, a system that exceeded its abilities and continues to do so28. Based on the current data, as the country’s population is getting older, the social security system will generate more and more poor people.

80The second issue is related to the first: demographics. The trajectory of ageing of Greeks is non-reversible, but Greece could derive some, perhaps great, benefit if its policies on the immigration issue were more dexterous and smart. Just remember the Interwar period and the saga of refugee rehabilitation.

81The next generation of Greeks will include a large number of Greeks whose parents and/or they themselves will not have been born in Greece. This will occur even if we do not like it; all studies on the immigration issue show it to be so.

82It is within our power to profit from this and integrate them economically, politically and socially in an effective manner. We can only gain by this. I am just afraid that our few efforts in this area are contrary to common sense and are determined by short-sighted choices.

83A great oversight on my part in this unit is the international context. I limit myself to noting simply that we live in an era of exceptionally fluid international relations, in a world that is very polarised and therefore prone to conflicts, and that if Donald Trump’s policies continue, we might even find ourselves facing a trade war in which only our closer connection to the EU can help us.

84But even within our narrower environment, the situation is difficult and I think that without an economy that stands on its own two feet, it is difficult to survive without paying a price. Defence spending and its increase will sooner or later become an issue; will we be in a position to respond?

85All these comprise the elements of a new phase in de-globalisation. We do not know how long it will last nor how deep it will go. We cannot, however, ignore it.

  • 29 Rodrik 2012.

86Based on the data presented above, I think that Greek reality is a match for a scheme that has been proposed, albeit with other aims, by the important economist Dani Rodrik, professor at Harvard University29.

87In my opinion, Greece, over the next decade or two, will find itself confronted by the need to make a choice between development, globalisation with its participation in the zone of the Euro, and democracy. If we find ourselves facing such a trilemma, it means we will have lost the ground gained by the great effort made from 1945 and following to lift the country out of poverty and establish democracy on solid foundations.

  • 30 N. Vettas, “Και η ανάπτυξη;”, Τα Νέα, 24-25.2.2018, p. 29, “Τέλος μνημονίου χωρίς ανάπτυξη φοβούντα (...)

88This is not about optimism or pessimism. There are some facts and either we take them into consideration or not. These facts do not lend themselves to easy solutions. On the contrary, professional assuagers should tell us what the profit is from reassuring people. The IMF is particularly sceptical about the future of Greece for the next 20 years, estimating that the average rate of growth will be around 1%. This is very low to provide solutions to the difficulties that we face30.

89In late 2017, Tassos Giannitsis published an amazing newspaper article describing the state of the country and the foreseen future. I quote:

  • 31 T. Giannitsis, “Πώς γλιστράει η ιστορία;”, Το Βήμα, 30.12.2017.

If the heart of the crisis is economic, its roots are moral, cognitive, and cultural, and the handling of the crisis is political. They all point to factors such as our knowledge and perceptions, our collective intelligence and the functioning of our society as a whole, as well as of the sections that are “on top”, in the “middle” and “on the bottom”. Here lies the greatest problem: the harsh and widening chasm between Greece and “advanced” countries of Europe concerns the available forces of each side, which historically play a promotional role in the development of their country. Our difference is not in the problematic situations. It is in the absence of a critical mass of forces that think about the tomorrow of our society and understand the significance of the great developments that occur in Europe, Asia, the world, in the economy, politics, the climate, and the relations between societies31.

90In a country that is fond of complacency and does not look at all favourably on negative judgements about its future, the words by Tassos Giannitsis published as I said just before the end of 2017 were ignored. I cannot recall anyone even commenting on them, even as they succeed in quite accurately describing the Greek problem today. Therefore, the basic problem that Greece faces today, and that prevents it from escaping the dead-ends in which it finds itself, is the absence of a group of people who, conscious of the problems, will shoulder the burden of dealing with them.

91In actual fact, the problem that Greece faces is far from being an economic one. It is purely a political problem, and it appears to be reaching its apex. If the political system of the country is that which led it into the catastrophic crisis, the same system appears to be incapable of pushing it towards the exit and putting it on a course of convergence with the rest of the European countries, the only chance the country has in facing sufferings much worse than those it has endured so far. Not only this, but the experience of 2014-2015 shows that the moment when something could have actually been done, it was the political system itself which prevented Greece from taking a breath.

92The political system of the country as it has been shaped is now a closed system which concerns itself mainly with its own reproduction, completely indifferent to the consequences that its choices have for the country as a whole. This can now be seen on a daily basis, but just observing the attempts at constitutional reform is enough to convince.

93These observations do not relate to one particular political party – I insist on this – but to the sum total of the system, which as it stands now would find it nearly impossible to self-transform into a model more friendly to the reforms that the country needs, hence to economic growth.

94I am not in a position to explain how we can extricate ourselves from the trap into which we have fallen. We have built a country that lives on its own flesh, which does not create wealth for its residents but rather destroys the wealth that exists, ignoring the future. At the same time, the institutions which favor this wealth-extracting model still operate, as well as those intensifying the intergenerational inequality and inhibiting the active population are always present.

95The Interwar and post-war years have demonstrated that the country has the ability to confront tough challenges and indeed under much more difficult circumstances.

96Something must be done, but in order for that something to be done, the first step is to begin to face reality head-on. Something which we carefully avoid to do. I would like to point out that this phenomenon was a significant factor leading us to the point where we find ourselves today.

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Andréadès 1928 = Andreas Andréadès, “Les finances publiques”, in Andreas Andréadès (ed.), Les effets économiques et sociaux de la guerre en Grèce, Paris and New Haven, Publications de la Dotation Carnegie pour la paix / Les Presses Universitaires de France and Yale University Press, 1928 [?].

Αρχείον Κωνσταντίνου Καραμανλή 1997 = Αρχείον Κωνσταντίνου Καραμανλή, Athens, 1997, vol. 8.

Chouliarakis and Lazaretou 2014 = George Chouliarakis and Sophia Lazaretou, “Déja vu ? The Greek crisis experience, the 2010s versus the 1930s. Lessons from history”, Working Papers 176, Bank of Greece, 2014.

Giannitsis 2016 = Tassos Giannitsis, Το ασφαλιστικό και η κρίση, Athens, 2016.

Iordanoglou 2008 = Chrysafis Iordanoglou, Η ελληνική οικονομία στη « Μακρά Διάρκεια », 1954-2005, Athens, 2008.

Kofinas 1914 = Giorgos Kofinas, Τα οικονομικά της Μακεδονίας, Athens, Karabia, 1914.

Kostelenos et al. 2007 = Giorgos Kostelenos et al., Ακαθάριστο Εγχώριο Προϊόν 1830-1939, Athens, KEPE & IATE, 2007.

Kostis and Petmezas 2006 = Kostas Kostis and Socrates Petmezas, “Εισαγωγή”, in Kostas Kostis and Socrates Petmezas (eds), Η ανάπτυξη της ελληνικής οικονομίας τον 19ο αιώνα, Athens, Alexandreia, 2006, p. 21.

Kostis 1984 = Kostas Kostis, “Η συναλλαγματική πολιτική της Ελλάδας στη διάρκεια της μικρασιατικής εκστρατείας”, in Thanos Veremis and Kostas Kostis, Η Εθνική Τράπεζα στη Μικρά Ασία (1919-1922), Athens, MIET, 1984.

Kostis 2013 = Kostas Kostis, “Τα Κακομαθημένα Παιδιά της Ιστορίας”. Η διαμόρφωση του νεοελληνικού κράτους 18ος-21ος αιώνας, Athens, Polis, 2013.

Kostis 2019 = Kostas Kostis, Ο Πλούτος της Ελλάδας. Η ελληνική οικονομία από τους Βαλκανικούς πολέμους μέχρι σήμερα, Athens, Patakis, 2019.

Loukakos 2013 = Panos Loukakos, Η αθέατη όψη. Τύπος και πολιτική στη Μεταπολίτευση, Athens, Hestia, 2013.

Modis 2004 = Georgios Modis, Αναμνήσεις, Thessaloniki, Ekdoseis Panepistimiou Makedonias, 2004.

Rodrik 2012 = Dani Rodrik, Το παράδοξο της παγκοσμιοποίησης. Η δημοκρατία και το μέλλον της παγκόσμιας οικονομίας, Athens, Κριτικη, 2012 [The Globalization Paradox: Democracy and the Future of the World Economy , New York, W. W. Norton & Co, 2011].

Siampos 1973 = Georgios S. Siampos, Δημογραφική εξέλιξις της Νεωτέρας Ελλάδος (1821-1985), Athens, Ανωτάτη Σχολή Οικονομικών και Εμπορικών Επιστημών, 1973.

Thomadakis 2015 = Stavros Thomadakis, “Growth, Debt and Sovereignty. Prolegomena to the Greek Crisis”, in Hellenic Observatory Papers on Greece and Southeast Europe (London School of Economics and Political Science), May 2015.

Voulgaris 2001 = Giannis Voulgaris, Η Ελλάδα της μεταπολίτευσης. 1974-1990. Σταθερή δημοκρατία σημαδεμένη από τη μεταπολεμική ιστορία, Athens, 2001.

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1 Kostis and Petmezas 2006, p. 21.

2 Kostis 2019.

3 Please forgive the reference to my project Kostis 2013, pp. 552-592.

4 Kostis and Petmezas 2006.

5 Chouliarakis and Lazaretou 2014

6 The ottoman territories either conquered by Greece during the two Balkan wars (1912-1913) or annexed after World War one and the treatises of Neuilly (1919) and Sevres (1920), and which remained Greek even after the country’s defeat at the Greek-Turkish war of 1919-1922 (i.e. Epirus, Macedonia, western Thrace, Crete and a certain number of Aegean islands). Invariably called New Territories or New Greece by opposition to Old Greece, i.e. Greece in its pre-1912 borders.

7 Kofinas 1914. The text is an excerpt from a report by Kofinas dated 26 February 1913.

8 Modis 2004, p. 285.

9 Kostis 2013, p. 610ff.

10 Kostelenos et al. 2007, p. 166.

11 Kostelenos et al. 2007, p. 195.

12 For the Greek economy from the end of the First World War until the Asia Minor catastrophe, see Kostis 1984, pp. 79-133; See also Andréadès 1928, pp. 1-102.

13 Kostis 2013, p. 593ff.

14 Especially for the demographic indicators and the improvement they show during the period 1913-1940, see Siampos 1973, p. 68ff.

15 Kostis 2019, p. 180ff.

16 Regarding this, see Kostis 2019, p. 280.

17 The data presented below derives from the Centre for Planning and Economic Research, Σχέδιον προγράμματος οικονομικής αναπτύξεως της Ελλάδος, 1966-1970, Athens, 1965, pp. 174-176.

18 Loukakos 2013, pp. 24-25.

19 The most complete work on the post-war Greek economy is by Iordanoglou 2008.

20 Voulgaris 2001.

21 Kostis 2019, p. 432ff.

22 Αρχείον Κωνσταντίνου Καραμανλή 1997, p. 447.

23 Thomadakis 2015, p. 25.

24 The data I use below derives from official publications by the Hellenic Statistical Authority and can be found on its website. The comparative magnitude comes from the European Commission, Directorate-General for Economic and Financial Affairs, Statistical Annex of European Economy, various volumes.

25 See indicatively, “Γκέρχαρντ Κοχ, ‘Γιατί δεν θα επένδυα στην Ελλάδα’”, Τα Νέα, Weekend 3-4 February 2018, p. 23. Also “Τόμας Βίζερ, ‘Ελάφρυνση του χρέους αλλά με επιπλέον όρους’”, Καθημερινή, 14.1.2018.

26 Foundation for Economic and Industrial Research (IOBE), Εκπαίδευση και αγορά εργασίας στην Ελλάδα: Επιπτώσεις της κρίσης και προκλήσεις, July 2018.

27 The information provided below is drawn from Τα Νέα, 15.9.2014 and Καθημερινή, 19.11.2017. It can naturally be found on the website of the Bertelsmann Stiftung itself.

28 Giannitsis 2016, p. 17.

29 Rodrik 2012.

30 N. Vettas, “Και η ανάπτυξη;”, Τα Νέα, 24-25.2.2018, p. 29, “Τέλος μνημονίου χωρίς ανάπτυξη φοβούνται οι θεσμοί”, Καθημερινή, 10.2.2018.

31 T. Giannitsis, “Πώς γλιστράει η ιστορία;”, Το Βήμα, 30.12.2017.

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Kostis Kostas, « The wealth of Greece »Bulletin de correspondance hellénique moderne et contemporain [En ligne], 1 | 2019, mis en ligne le 01 décembre 2019, consulté le 19 juin 2024. URL : ; DOI :

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Kostis Kostas

Professor, National and Kapodistrian University of Athens

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