John Kampfner: Greece may be the epicentre – but this is a European crisis

Which politician will be brave enough to tell voters the days of abundance are over?

Elections grip the imagination because they combine drama with the rare moment of public participation in politics. Few elections are as significant as yesterday's in Greece, amid dire warnings from Europe's elite that voters must continue to embrace German-imposed austerity to stave off financial collapse.

The outcome will, in the short term, have a considerable impact on the livelihoods of millions of people, not just in Greece but far beyond. Last night's early indications of an inconclusive result, with the centre-right pro-bailout New Democracy party running neck-and-neck with the radical-left anti-austerity Syriza, will only sharpen the mood of emergency. The result appeared merely to confirm the previously messy elections in May, which were seen as adding to the atmosphere of instability and fear. It is now likely to take days, if not weeks, for a new government to be formed, amid worries of a run on the banks and the need for the ECB and others to step in. As world leaders were gathering in Mexico for a G20 summit, the markets will look to them for instant reassurance, otherwise known as rhetorical sticking-plaster.

But for all the doom-laden predictions, the verdict of Greece's despondent and angry voters will not influence the longer-term historical cycle: for what we are watching is the inexorable, albeit now-accelerated, decline of a political bloc wedded to two competing economic orthodoxies, each as self-indulgent as the other. While both models appear to be at loggerheads, they are each jointly and separately responsible for the mayhem that took hold in 2008 and continues to this day.

In one corner are the disciples of unbridled free markets. With their simplistic notions of the profit motive as a driver of growth, their selective disdain for state intervention (abhorrent except when it comes to propping up casino banks), and their dogged refusal to factor in broad consequences for their actions, they have propelled Europe and the US not just to the brink of financial ruin but to social strife.

In the other corner are the myopic advocates of the high-tax, high-subsidy model, based around 20th-century notions of a bloated public sector and unsustainable welfare. In Britain, low productivity remains endemic. In France, a laughably short working week requires industrious employees to take large chunks of time off in order not to get their bosses in trouble. In Spain, over-manning was long seen as a means of guaranteeing employment.

What unites these two approaches is a sense of entitlement, particularly among the post-war, baby-boom older generation. Just as CEOs of the most powerful private-sector corporations are intensely relaxed – to coin a Mandelsonian phrase – with exponential salary rises, so public authorities have felt little remorse in awarding ludicrous bonuses and pay-offs to their friends. Doctors in the UK complain about broken promises on pensions, but did they, or anyone else in a similar position for that matter, ever wonder about the sustainability of paying people large sums lasting decades?

Underpinning both flawed practices was a consumerist feeding frenzy that took hold in the 1990s, the era of post-Communist Western political and economic hegemony, the so-called "End of History". Governments behaved recklessly, encouraging banks to encourage individuals to copy them.

In Greece, profligacy was boosted further by corruption. It was hard to resist the temptation to screw the system because pretty much everyone was doing it, led by the political and financial elite. Now that the music has stopped, as ever, the people being punished are not the ones who caused the problems to begin with.

With the recession in Greece now into its fifth year, the suffering for many is real and intense. It seems likely that the Greeks will be allowed to renegotiate parts of the bailout, but probably only at the fringes of the deal. It seems hard to imagine a time when the country will get back on its feet and when, or if, they do, it seems harder still to see the private sector producing the necessary impetus to growth. Under the straitjacket imposed by the ECB, IMF and the German government, the public sector will have nothing to offer.

Even if their medicine is far too severe, driving unemployment higher and choking growth, the German diagnosis of the original ailment is beyond dispute. The conspicuous consumption produced by the easy money of globalisation was never going to last. The more productive and less spendthrift Teutonic approach has, for all its sombreness, the merit of sustainability.

Austerity was always going to be hard sell, even if we were all going to be in it together. As we saw pretty much from the outset, that was not going to happen. The culprits – the bankers and their many associates – have emerged almost completely unscathed. The then Labour government in Britain had the opportunity, back in 2008-09, to punish them. Instead, ministers rolled over. The Coalition has since produced a series of reforms that are so lightweight as to be virtually meaningless.

Across Europe, the sense of dislocation is tangible. In Greece, this will be exacerbated among many by resentment at having been bullied into voting the "right way". If, after years of misery, the Greeks, and not just the Greeks, feel that ordinary people have borne the pain, while the global super-rich have got even richer, playing the currency, equities and property markets, then nobody will be surprised if political extremism takes hold.

Greece may be the epicentre of the crisis, but this is a European crisis – of greed and irresponsibility. It will take far more than bailouts and exhortations to voters to solve. What is needed is a new economic paradigm that does not depend on public- and private-sector excess. But which politician anywhere in Europe will be brave enough to tell voters that the days of super-abundance are over and that societies will have to find less materially exuberant ways of determining success? In short, this is a matter of managing decline, as fairly as possible. But that is an election slogan that nobody, whatever their views on the bailout, the euro or the Germans, wishes to hear.

John Kampfner is author of 'Blair's Wars' and 'Freedom For Sale' Twitter: @johnkampfner