Why Did the "Varvaressos Experiment" Fail?

After the liberation that ended World War II, successive Greek governments did little to address the catastrophic mess caused by the war and the ruthless exploitation by the Axis occupiers. In June 1945, a reform program to revive the economy was undertaken by Kyriakos Varvaressos, the governor of the Bank of Greece, who, after a long period of deliberate exclusion from government affairs, was co-opted into the cabinet on British insistence. Varvaressos tried to update the country's essentially laissez faire capitalism with the hasty introduction of several aspects of state economic management. To tackle the causes of inflation--rampant budget deficits, unequal distribution of income, and severe shortages of goods--he imposed special taxes on the rich, established a system of price controls, and attempted to enforce a degree of official control over production and distribution. Despite initial success, Varvaressos failed to achieve any of his major objectives, as his policies provoked an avalanche of hostility from powerful interest groups within Greek society. Using British, American, and Greek archival sources, this article explains the nature and course of the so-called "Varvaressos Experiment" and analyses the opposition it aroused and the controversy surrounding its failure.