Spoiled child goes to the market: two conflicting narratives about the fall of Greece

Are the Greeks the victims of unjust circumstances, or are they sinners for whom paytime is justly at hand? The international discourse about Greece has been debating this question since the beginning of the Greek crisis in 2009.

Most economists generally focus on the inherent errors of the euro to show that Greeks, not unlike other people in the European periphery, were doomed to be the ultimate losers of a common currency which lacked federal institutions for fiscal and monetary policy. In its purity, this is the “economic narrative” that steers clear of cultural and political idiosyncrasies. After all, Italy, Spain, Portugal, Ireland and Greece are all quite different and yet they have ended up in a similar mess. The theoretical basis of the “economic narrative” is to look macroscopically at the economic forces that led, inexorably, to the current situation: a small, uncompetitive country burdened with a debt that it cannot possibly repay and whose default threatens the future of the Eurozone.

Political scientists and cultural moralists offer a different narrative for the Greek tragedy: Greeks are like a spoiled child that cooked its books and grew fatter with cheap loans it never deserved. Then, when it came time to pay, the spoiled child threw a tantrum (elections of May 6) and cried ” no”. Furthermore, the brat demanded that its creditors should keep on feeding it, or else all hell may break loose upon them. The rise of the Greek Left (Syriza party – close to 26% of the vote), as well as of fringe parties to the Right like Golden Dawn and Anexartitoi Ellines (together around 15% of the vote) seems to confirm this “cultural” narrative. Interestingly, what all these parties have in common is a belief in conspiracy theories: the “West” is trying to destroy Greece because it is jealous of its past glories, “market vultures” have their eyes in the “rich” oil and gas deposits in the Aegean, etc. They also share a belief that it is all a poker game and that Greeks ought to call Europe’s bluff.

The latest furor about the comments of Christine Lagarde, head of the IMF, is telling of the conflict between the two narratives. Lagarde took the cultural moralist position when she admonished Greeks for their tax evasion habits. Interestingly, voices to the defense of the Greeks rose mostly from the political left of center. Market ideologues and liberals, presumably closer to IMF’s economic philosophy, stayed numb and silently approved of Lagarde; which goes to show the amount of confusion that exists with the two conflicting narratives.

Like in physics where we have two theoretically unreconciled narratives (General Relativity and Quantum Mechanics) that describe the world, so in the case of Greece we have two narratives that confound us with an explanation gap. The “economic narrative” shows Greece as a victim while the “cultural narrative” presents it like a dishonest player that must be punished.

Many may rush to suggest that there is no explanation gap. In fact, many analysts have been trying to combine the narratives by suggesting that the political and social culture of Greece is what caused the huge debt as well as the current crisis of trust. However this causality claim is paradoxical. Because if we take the position that the cultural idiosyncrasies (e.g. tax evasion, rent-seeking state, tendency to believe in conspiracy theories, etc.) of Greece have led it to the current mess then we implicitly accept that market forces do not apply equally to everyone, but are subject to cultural differences. If this is true then economic theory becomes culturally relativistic.  The consequence of this is not trivial; the international system of credit is based  on assumptions about a market where players act according to their self-interest, not according to their cultural characteristics. If the latter is true, then there would always be people and countries, like Greece, which will be branded by cultural moralists as “beyond market repair” , and be doomed as the eternal pariahs of the world economy. Alas, such a conclusion begs the obvious – and rather troublesome – question: by what, or whose, criteria should we choose the cultural moralists in a world of cultural relativism?


  1. Thanasis

    The explanatory power of the economic narrative is far stronger. Its predictive power has also proved to be quite good. It was very easy to predict that in a crisis situation Greece would be the first of the PIIGS to go “belly up” (The difficult thing to predict was the magnitude and the timing of the crisis itself). Of course the politicians will have to play the blame game (a.c.a. sell a cultural narrative) but the economic fundamentals will dictate the future of this god forsaken country. Which is not good, due mainly to demographic factors. Thanks George for continously providing food (of excellent quality) for thought.

  2. thodoris

    “by what, or whose, criteria should we choose the cultural moralists in a world of cultural relativism?”

    This is a misleading question. We never had or have the chance to choose the cultural moralists. At least in the world of ethnic countries as we know it. Of course always the morals of the most powerful country is the “right” and the others are “wrong”. The morals of the Europe’s leading countries are simple: idividualism, progress through hard work and liberal economy for all, and cultural evolution. We are wrong by any of this criteria to belong in Europe. If we believe in a different narative we should not be afraid to leave Europe. The most revealing point in this whole situation is that almost 100% of Greeks want stay in Europe at any cost.

    To add my personal opinion, I belive that the morals change and transform as the world change. This is not relativism in the strict sense, because the simple things are always the same (dont do to others what you dont like them to do to yourself), but the way that these morals are translated to big things is in constant change. I believe that countries that are so strongly sovinistic, like Greece and Serbia are not so moraly corect in the modern Europe.

  3. Renee

    George, your insights are great. I appreciate how you end your work with rhetorical questions. Having lived in Europe and being married to a German, I appreciate the intensity and higher level reasoning you bring to a critical perspective such as this. On a lighter note, I’ve long been fascinated by Greece and look forward to a first trip this summer. Any recommendations of something off the beaten path for an adventure traveler? Thanks, Renee

  4. George Zarkadakis

    Thanks for your comment Renee. If you guys like hiking I would definitely recommend Epirus, the northwestern province of Greece. There are wonderful beaches as well, along the Ionian coast and splendid hiking through Vikos gorge and the cluster of small, traditional villages called Zagorochoria.

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