A special form of capitalism


Finance Minister Euclid Tsakalotos said recently that Greece did not have a normal capitalist system before the crisis. He is absolutely right about that. There is a threat, however, that the greedy, parasitic version of capitalism that’s harmed us will not only survive on his watch, but grow stronger, and that we will miss a big opportunity to regain our footing on firmer ground.

There is something of a get-rich-quick culture in our neo-Hellenic DNA. This is evident now that the economy is starting to turn the page. Bankrupt businesses reappear in the hands of the same failed owners through a variety of tricks which new legislation offers them in abundance. Some take out fake loans from their friends so they can get the go-ahead from friendly creditors for their restructuring plans.

What did Greek capitalism offer? A large portion of it was controlled by the state, often in the form of procurements. It included many special arrangements and artificial barriers to competition. Whoever claims to have reduced the extent and strength of this part of the Greek private sector is truly naive. Even the institutions have given up hope that this will change.

A second factor that set Greek capitalism apart was the necessity of a local “facilitator” to guide well-intentioned foreign investors wanting to risk their money in Greece. Without this, every foreigner was like a tourist in the jungle without an experienced, and armed, guide. Even this did not change. On the contrary, outsiders have become accustomed to this idea.

Where things are different is in the banking system and that will bring about great changes in the long run. “Crony capitalism” has been weakened because there is a curb on such activity today, both internally and externally. We’ve reached the other extreme now, where banking staff are frequently in contact with investigators and prosecutors. Maybe this is just a stage we have to pass through before a proper balance is found.

It is indeed a healthy and positive development that the younger generation of bankers make decisions based on banking criteria rather than taking their personal relationships and problems into account.

There is an important part of the private sector that is strong and does not live off the state, and it has managed to survive the crisis. It operates with confidence and equality, it obeys the rules and is less entangled with the deep state. Nothing less, nothing more. In a normal country, this would be the best and strongest ally of a government that wanted to really reform itself. Unfortunately, many in the government prefer the old cushy, state-owned establishment.

We find ourselves at a very crucial juncture. It’s no coincidence we went bankrupt. Now that the economy is showing signs of turning a corner, it’s vital that growth emerges from a strong rather than flimsy base.