Dependence on foreign aid

The «Report on the Economic Problem in Greece,» written in 1952, served as a point of reference but also provoked intense debate among nearly all politicians in postwar Greece. Over time, references to the text have become fewer, though it has remained an object of study and inspiration for academics in economics, politics and history, its timeless value thus underlined. The current edition includes the full text of the report, archive material and the various reactions it provoked. In his prologue, Ioannis Pesmazoglou manages in just a few lines to communicate the value and substance of the text. Also praiseworthy is the contribution by Athens University Professor Costas P. Kostis, whose 60-page piece, modestly titled an introduction, presents a critique not only of the report itself but of Varvaressos’s entire political and scientific oeuvre. It is extremely difficult to look at the book on its own, without reference to various aspects of Varvaressos’s own life and the country’s political history. Varvaressos, who was born in 1884, was of humble origins (his father was a tailor), but went on to study economics at Athens University’s law school where he completed his doctoral thesis on Malthus. He continued postgraduate studies with the great German socialist teacher and friend of the British Labor party, L.J. Brentano. On his return to Greece, Varvaressos served in various administrative posts under Eleftherios Venizelos. He was elected a temporary professor of political economy at Athens University in 1918. During his lifetime he was to experience two world wars, the 1922 Asia Minor catastrophe, the crash of 1929, the Metaxas dictatorship (during which he remained for a time at his post in the Bank of Greece, for which many never forgave him), and the wartime goverment in exile. He contributed to the substantial growth of the National Bank of Greece and the foundation of the Bank of Greece, and attended major international meetings, where he often sat at the same table as John Maynard Keynes. The core of Varvaressos’s ideas was already clear in 1945, when they were met at best with reservations. One reaction to them was contained in a book titled «Mr Varvaressos, Where Are You Heading?» comprising seven hostile articles against him, most of them anonymous. One of these, «The Greek,» closes by urging Varvaressos to «come back down to earth.» The issue here was whether to impose new taxation. There was an attempt to present Varvaressos as a leftist, even as a pro-communist, who had embraced Leninist theory in order to bring about the destruction of the middle class. After that, although he continued to offer real assistance to Greece, Varvaressos began to move away from center stage, restricting himself to offering advice about the management of foreign aid resources (from UNRRA and the Marshall Plan). One cannot but emphasize Varvaressos’s timely view that while in Greece it is always necessary to make use of international aid, one should gradually wean the country off dependence upon it. On perusal of the book today, the question is not whether one should accept Varvaressos’s views as correct. Reading a book so rich in thought rouses an envy and awe that could be best expressed in two questions: First, why does modern economic thought so rarely produce books such as this and debates of such quality? And second, why are proposals and studies that could restore the reputation of politics and its importance to the economy so absent from public debate, and not just in Greece? Interesting approaches such as these should be sought today in the debate on globalization or the supposed disappearance of class divisions. What is certain is that Varvaressos’s «Report» is of a standard that makes it useful in many ways to understanding the modern world. «Report on the Economic Problem in Greece,» by Kyriakos Varvaressos, prologue by Ioannis Pesmazoglou and introduction by Costas P. Kostis. Edited by Athanassios Lykyiannis, Savvalas Publications, 2002. *Manos Koundouris is a lecturer at Athens University’s faculty of economic science.