After Crisis, Greeks Work to Promote 'Social' Economy
After Crisis, Greeks Work to Promote 'Social' Economy
By Andrew Higgins /

ALONIA, Greece — The feisty owner of a small family business that makes detergents has never had time for anticapitalist firebrands. So he was suspicious and skeptical when he was approached by left-leaning activists campaigning to purge “profiteers” from the market.

But, struggling to keep his business afloat under the weight of unpaid invoices and constant demands for bribes, the owner, Savvas Mavromatis, decided to give their proposal a shot. He started selling his products directly to consumers for cash at fixed prices through a nonprofit collective, instead of to shops and traders as he had always done.

Fourteen months later, he credits the group with saving his enterprise from a Greek economic meltdown that rivals the Great Depression.

“We are in the middle of a terrible crisis and are just looking for solutions,” said Elias Tsolakidis, the driving force behind the so-called no-middlemen movement here in northern Greece, a small, quixotic but surprisingly successful effort to redefine the terms of commerce. “We don’t have a magic wand. We are not communists and we are not capitalists, but we are trying to help people survive.”

The company joined with Voluntary Action Group to sell in smaller markets. Angelos Tzortzinis for The New York Times

In their search for solutions, Greeks are tinkering with a new kind of economy with little precedent in modern Europe. The collapse of the Greek economy is challenging not only the survival of Greeks, but also some of the basic mechanisms of capitalism in a nation where the economy has shrunk by about 25 percent since 2008.

In the view of widening numbers here, Greece’s market-driven system has broken down, a victim of endemic corruption, budgetary mismanagement by the state and the overbearing demands of global financial markets.

In response, experimental ventures like the one Mr. Mavromatis joined have sprung up on the margins in towns and cities across Greece. While they may not offer a long-term solution, and are too small to alter the overall shape of the economy, they represent a bottom-up effort to address an economic crisis whose closest antecedent may be the aftermath of World War II.

Attacks on modern profit-driven capitalism are hardly new in Greece, where Syriza, a coalition of radical leftist forces, narrowly lost the last national election in 2012 and, according to opinion polls, is now the country’s most popular party. Its leader, Alexis Tsipras, decorates his party’s office in Athens with a poster of the revolutionary icon Che Guevara.

But Syriza, like many other left-wing parties across Europe, has had a hard time matching fiery criticism of “neo-liberal” economics with concrete actions to ease economic pain, including 27 percent unemployment. It has focused mostly on denouncing job cuts, particularly in the bloated public sector, and attacking austerity measures imposed by Greece’s international creditors in return for $328 billion in bailouts.

As the left remains deeply committed to much of the status quo, the task of answering calls for a new economic order and bringing some relief to Greece’s misery has fallen to people like Mr. Tsolakidis, who organizes the ranks of the no-middlemen movement in his region through a local nonprofit collective called the Voluntary Action Group of Pieria.

The movement seeks to cut out wholesalers, shop managers, state bureaucrats or anyone else between producers and consumers who once took a share of profits and added to the costs of goods. Instead, Mr. Tsolakidis’s group runs a website where orders are placed in advance and then distributed at markets to customers for a fixed price paid in cash.

His group takes a small cut to cover expenses, but it does not pay salaries to its members, more than 3,500 volunteers who have jobs or are unemployed. It is a small link in a long chain of ventures seeking to create a parallel “social” economy, starting with what became known as the “potato revolution,” a now nationwide movement that has slashed the price of potatoes by getting farmers to sell directly to customers.

In addition to its regular no-middlemen markets, held in parking lots across the region, the Voluntary Action Group operates a free health clinic staffed by volunteer doctors and a pharmacy stocked with donated drugs.

Christos Kalaitzis, 53, a convert to the cause who grows kiwis, olives and chickpeas with his wife on their farm near Mount Olympus, acknowledged that he, too, had initially been skeptical but had gotten so fed up with not being paid by big wholesalers and exporters that went bust after taking his products that he had taken the chance.

“The goal is not to destroy the old market system but just to slow it down and get it to change,” Mr. Kalaitzis explained. “Maybe this is a bit romantic, but why should I sell to big companies if their checks bounce? If the free market in Greece worked properly, none of this would be necessary.”

By cutting out marketplace middlemen and avoiding appeals to the state for help — the customary approach of many Greek leftists — the activists hope to address, they say, the passive despair felt by many Greeks, who may need a generation or more to climb out of their economic hole.

“This is a whole new concept for Greece,” said Fiori Zafeiropoulou, an expert on ways to mix social goals and business initiatives who advised officials drafting a new law that gives legal status to “social cooperative enterprises,” entities that combine both business interests and social benefits. Unlike left-leaning activists, however, she does not want to upend market forces, only to make them better serve the underprivileged.

Progress, she said, has often been slow because “in Greece there is a problem, and the problem is called corruption” — what she defined as a whole culture that revolves around getting favors from the state, as well as demanding bribes and kickbacks.

Mr. Mavromatis, the detergent maker, said the purchasing managers at supermarkets, whether owned by Greeks or foreigners, all demanded bribes just to agree to a meeting so he could present his products. They also asked for money to ensure good display for his goods, he said. The price varied depending on which shelf he wanted his detergent placed on, with the shelf near the floor costing less. On average he paid about $1,300 a transaction, plus gifts at Christmas and other holidays.

He said that when he started selling through the no-middlemen group, “I had been dealing with supermarkets for so long I kept waiting for them to ask for money under the table. But nobody ever asked, and I have not paid anything.”

“I could not understand why they were doing all this for free,” Mr. Mavromatis, 46, added. “I was very suspicious and kept thinking: ‘Where is the catch?’ ”

He said he believed in the free market, but not in Greece, where it is distorted by corruption at every level, public and private.

Mr. Mavromatis said he had invested about $680,000 to upgrade his production line on a promise from the government that he would be partly reimbursed from “cohesion funds” provided to Greece from the European Union. But the government, he said, diverted the money earmarked for business development to pay for relief work after a series of forest fires. He said that the government still owed him about $273,000, but that he does not expect it any time soon, if ever.

On top of that, he is owed $404,000 from shops and other buyers who purchased his detergents and paid for them with bad checks. “In the beginning, I went to court to sue them, but they had no money,” he said, opening a ledger stuffed with worthless checks.

Today Mr. Mavromatis is a regular at the no-middlemen markets. While he said he got a slightly lower price than before, he no longer has to worry about paying bribes or getting checks that bounce. Struggling families, meanwhile, get to buy household detergent, fruit and a host of other goods at a fraction of the normal market price.

Flush with cash for the first time since Greece’s economy went into a nose dive in 2008, Mr. Mavromatis recently bought a new Mercedes-Benz truck to transport his detergents from his factory in a village near the town of Katerini, the regional capital, and has expanded his product line to include toilet paper.

Even after six straight years of recession, he said, “people need to wash clothes, do their dishes and go to the bathroom.”

Dimitris Bounias contributed reporting from Athens.

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After Crisis, Greeks Work to Promote 'Social' Economy