One of the important characteristics of the modern state is that it has a fiscal apparatus – a functioning bureaucracy if you will – that collects taxes from its inhabitants effectively. The ability to collect taxes underpins the state’s ability to borrow money. In the period when the modern state emerged called the early modern period, spanning roughly from the sixteenth to the eighteenth centuries, governments that were able to borrow money at reasonable rates held a distinct advantage in an age of constant war, and they were able to do so because they were able to levy and collect taxes reasonably competently, often with the political agreement and consent of the taxed and the existence of financial and banking institutions. The United Provinces (the Dutch Republic) and England later Great Britain are good examples of such states for whom money was relatively cheap, in contrast to Spain and France which were more than a match in terms of military prowess and resources yet could not borrow money cheaply.
Greece seems to be a pre-modern state in this respect. Stories, some of them possibly apocryphal, circulate in the press of the inability of the Greek state to collect taxes, that are read in a strangely gleeful horror by the law-abiding tax-paying citizens of other eurozone countries. Whatever happens in the coming days and months, whether Greece remains within or leaves the eurozone, and if the latter regardless the orderliness or disorderliness of ‘Grexit’, Greece will have to find a way to balance its books, instead of cooking them.
If a last-minute deal is done, and Greece remains within the eurozone, then austerity continues under another name and in a different tone, checked by the troika ‘institutions’. Greece will have to demonstrate that it is on course with its structural reforms and can operate within budgetary constraints. In case of ‘Grexit’, Greece will still have to find a way to live within its own means: no one would lend money to Greece. Even if Greece defaults on all debts, its budget will have to be balanced or show a surplus.
There is no doubt Greece will have to become a modern state in terms of fiscal institutuions, whoever is in power, and whatever happens to its membership of the single currency. The life for many people in Greece will likely to remain bad or become even worsen for the foreseeable future.