From the Series: Beyond the "Greek Crisis": Histories, Rhetorics, Politics
Like many other peoples, the Greeks believe they’re unique. It’s just as true in regard to their good qualities as their bad. That’s why the Greek crisis has been presented in official narratives as purely a Greek phenomenon. But the question is how can you continue to pull that off with the global economy in collapse the past three years? When the cunning and decidedly portly Greek vice-president pronounced last September before the parliament that “we ‘ate’ it [i.e. the money] together” (oloi mazi ta fagame) he basically was attempting to shape the narrative of the crisis in the minds of Greek voters. There was no need to provide complicated mathematical equations and graphs. It was enough to refer to the barely hidden secret of Greek society: that everything works better in the gray economy.
Greece is a country that actually doesn’t differ much from other Mediterranean (and some South American countries). Patronage relations were the traditional means by which the Greek political elite interacted with citizens. Given the absence of a dynamic liberal bourgeois class these relations have persisted. Greece, like the U.S., due to its revolutionary history was one of the few states that in the 19th century granted universal suffrage to the unpropertied—or at least predictable segments of them. By 1844, 90% of Greek (males) voted. This democratic idiosyncrasy saved poor Greeks (the majority of the population at the time) from the fate of the poor in other countries like Great Britain (urbanization and violent proletarianization).
Small-property ownership remained the dominant form of capital accumulation. The ratio of wage earners to the total working population was 35% in 1950 and reached 50% in 1980, when in other western countries the ratio was 80-90% or even higher.
For good or for bad the modernization of Greece remained “incomplete,” assuming only a few of the characteristics from Western Europe.
In Greece for instance the concept of the social welfare state never developed in the way it did in Western Europe. Pensions and welfare were basically non-existent, or in the best case meager, so people depended for their old age on family relations and the accumulation of wealth in homes or gold. As a young state, Greece got involved quite frequently in wars, something that did not build confidence in its economy or its currency. There was no heavy industry or big business, and the stock market had a decidedly robber baron quality. So homes represented the most reliable form of capital accumulation for neo-Hellenes, something that explains why 85% of Greeks live in a house they own.
This “incomplete” modernization, the lack of a large working class and the civil war of 1944-1949 made the emergence of a social-democratic party impossible until the end of the dictatorship in 1974. Political debate—whenever it was allowed—was confined to patronage and patriarchal relations (parties were formed around individuals), especially on the right, which remained in many aspects monarchist, morally conservative and pre-modern. The liberal bourgeois were not welcome right until 1974.
That means, practically speaking, that political parties resembling those in western postwar states did not take shape in Greece until 1974. Konstantinos Karamanlis created the new right (new democracy party) drawing as much on the support of liberals, as on patronage relations, while Andreas Papandreou (father of the current prime minister) created a modern social democratic party (Pasok).
Just after 1981 and the coming of Pasok to power, the Greek state tried to create some kind of social welfare state. A public health system, pensions for all and an ambitious program of redistribution of wealth and investment, Keynesian-style. This new infrastructure and the social safety net for citizens was set up quite quickly and haphazardly with the result that the government did not attempt to inspire in people a new relationship with the state. As if that wasn’t enough, the system of redistribution that Pasok implemented seemed more like the familiar old patronage relations, rather than that of a modern bureaucracy. First, because there was no modern bureaucracy and secondly because Pasok was more interested in establishing power quickly in a country in which, since 1945, the “left” had only ruled for three tumultuous years leading up, in fact, to a dictatorship.The plentiful and non-meritocratic criteria for public hiring, the funds that were handed out to friends of the party, the pensions to employees with only fifteen years of service, the funds from the European community that were siphoned into the pockets of party favorites were some of the basic motifs of the Pasok state. From a certain perspective, Papandreou’s politics were successful. They led to a real redistribution of wealth through increases in wages and pensions and created a solid social alliance that since then has dominated Greece. The downside was that this alliance reproduced the old patronage model in post-dictatorship Greece.
Another downside was that the new–by Greek standards–idea of the social state did not have time to take root. 1983 was not 1963 and Keynsianism was the new devil in the years of monetarist theology. Thus the new politics started to unravel after 1983 and definitively after 1985, making the new relationship between citizens and the state even more tentative. In effect, citizens used the plentiful government subsidies to continue to do what they knew how to do best: to accumulate wealth in real estate and in the family.
Maybe tax evasion is in the DNA of Greeks after all? Of course not. The Greek state does not have and was never interested in acquiring a modern tax collecting structure.
They say that in Greece tax evasion is the “national sport.” Hundreds of thousands of Greeks have special tax status (various categories of professionals, residents of remote islands, taxi drivers, retailers, tax collectors themselves—the list goes on) something that, practically speaking, means that tax evasion is legal. Another major category of undeclared income comes from moonlighting and the small businesses that comprise the majority of the Greek economy. But big businesses are also basically granted indirect tax h(e)aven status. Maybe tax evasion is in the DNA of Greeks after all?
Of course not. The Greek state does not have and was never interested in acquiring a modern tax collecting structure. Actually the state was never particularly interested in the economic activities of its citizens and for income depended on indirect taxes and monopolies. The state’s expenses in any case–due to the lack of social welfare–were not great.
Until the middle of the 1980s the income of most small businesses was “estimated” through a process of negotiation between the businessman and the tax agent. Private doctors, lawyers, electricians, plumbers and various other categories of professionals were considered (and still are considered) untaxable. This of course created a great margin for corruption among state employees and the tendency for Greeks to accumulate wealth in what they trusted most: the family. The fact that this took place in a spontaneous and ad hoc way of course led to great inequalities in Greek society. “Work to eat and steal to save” (doulepse gia na fas kai klepse na ’heis) is a classic phrase that defines Greek “exceptionalism.”
Example: Greece has a system of public education but despite this, spends 85 euro per year per student in private expenditure (in Spain they spend 9.5 euro, in italy 7 and in Germany less than .02 euro). Most of these practices are undocumented, invisible as far as taxes are concerned and can be ethically dubious since they often involve public school teachers seeking to supplement their income, which was meager until recent years. All of this creates a feeling of entanglement and illegality around how income is produced. And this is exactly what the vice-president attempted to exploit in his now notorious statement.
After 1990 Greece pretty much openly followed along with the global narrative of the “end of history.” At the same time the euro increased the power of Greek's to buy, especially imported goods that served as success symbols (i.e. cars, electronic goods, etc.). This process made the Greek’s feel richer, hiding the real redistribution of wealth that was occurring behind the scenes. Labor around the world was losing value while wealth was being concentrated in a few hands. The same party that spearheaded the redistribution of wealth in favor of the poor in 1981, now–with the very same promise–is doing exactly the opposite. There isn’t a more characteristic example of this reversal in redistribution than the stock market frenzy of 1998-2000, which the socialist government encouraged.
The Olympics were maybe the last big moment for the narrative of “communal feast.” The scenario was set up in a way that a handful “ate” the biggest portions, leaving the rest to nibble at the crumbs. Over the last decade, businesses have steadily reduced their tax contributions while the state has depended on borrowing to cover deficits. Politicians themselves got involved in scandals and kickbacks for state commissions, while everything was cloaked under the mantle of legal amnesty. The state itself at regular intervals legitimized tax evasion with blanket emergency tax contributions for freelancers and small businesses (i.e. 300-500 euro a year per person).
Thus when the banking crisis came along, the Greek state found itself the 5th most indebted country in the world with its debt at 105% of GDP (Italy was 4th), at the same time that total private debt did not surpass 95% of the GDP, arguably one of the lowest in the eurozone. The U.S. had 250% at the same time. And that 95% was an explosive rise from less than 50% of the GDP in 2000. That was when the vice-president remembered that we “ate” the money together, yet again generating a reductive narrative to hide the huge inequities in Greek society and the great responsibilities of the political system.