During the great recession that followed the crisis of 1929 in America, different ideological and political struggles developed on what should be done, the measures and policies that would halt the decline of the economy and herald a recovery.

The conservatives in America with President Herbert Hoover in charge, who was elected in 1928 a few months before the major crash with a 58% rate, insisted on a balanced budget, demanded absolute control of the budget deficits, would not accept the bare minimum relief for the unemployed, who were wasting and withering away in lines outside soup kitchens and only allowed a few resources to go towards public words, such as the famous dam named after the President.

Hoover, who was a mining engineer, vehemently supported efficiency in the state and private sector, similarly to the current European policies where the competition in the private sector and clamping down on state expenses are the solution to the great recession.

He had also ascribed theological characteristics to his policy, it was exceptionally brutal, however it did not yield the necessary results and failed to mitigate the recession.

During 1928-1932, the clash with the Democrats escalated to mythic proportions, as intellectuals and economists from all over the world, such as John Maynard Keynes, joined the debate.

The letters exchanged between the British economist and the governor of New York Franklin Roosevelt, have left a mark in history, as they systematically refuted the balanced budget policy during a recession and favored policies to support employment through an extensive public works program.

Additionally they explained how important it was at the time for the people to have a job and income, without which they would be unable to turn around the constant financial retreat.

In the 1932 elections Roosevelt defeated Hoover and in 1933 began implementing his broad employment support plan, via an extensive cycle of public works and a new social agreement between employees and employers.

The famous economist John Kenneth Galbraith, who was also one of Roosevelt’s closest partners, spectacularly illustrated that effort in “A Journey Through Economic Time”.

However Galbraith never claimed that Roosevelt’s effort yielded what was expected. The American economy struggled with low growth rates for years and, as he explains in his book, it was the war economy that ultimately changed things and American finally overcame the huge crisis.

The American economy was revived and expanded from 1939 onwards – at first by preparing for the war and then alter entering the war in 1941, the entire heavy industry was called upon to cover the uncountable needs – and later dominated when peace prevailed.

The American experience from managing the great American crisis has been evaluated and continues to fuel the ideological and political conflicts over the economy.

We experienced such a conflict during Andreas Papandreou’s first tenure, between 1981 and 1985.

He adopted policies of active demand, increased wages and pensions along with the State’s consumer and investment expenses, without however achieving the desired growth rates. The economy remained stagnant, public deficits ballooned along with the debt and worst of all, the external balance of trade suffered to the point where the economy ran out of foreign currency. The slogan for the general elections of June 2nd in 1985 was “better days”.

Andreas Papandreou won the elections, but the crisis with the balance of payments resulted in a currency devaluation and the imposition of a three-year stability program, along with a turn to austerity policies, reducing wages and expenses while increasing taxes.

That program though was suspended prematurely for obvious political reasons. Since then the country has gone from program to program, alternating between periods of tension and cuts and periods of leisure and waste. This carried on until 2009 when the Greek crash came and since then we have been struggling with the recession. There is no easy answer to the quest of what to do. The solution that Mr. Tsipras presented in Thessaloniki may be the launching pad for debate and discussion, but it cannot guarantee any future growth and development.

Nor is it easy to jeopardize the four-year effort to exit the crisis.

Unless we are looking forward to a war economy…

Antonis Karakousis