False alarm, nothing to see here, move along. Greek premier Papandreou cancelled the referendum on the bailout and austerity plan. Probably the tongue-lashing he got from Merkel and Sarkozy at the G-20 summit played its part; a split in his party did too; but now he claims it was just a coy ploy from the start, a way of blackmailing the opposition for support.

It’s fascinating, really, how widespread was the condemnation of a proposal that (in the words of a rare pro-vote pundit) “though a long shot gamble, was a possible way out — registering a national consensus, giving Mr. Papandreou a mandate for reform, and sending a message to Europe to stop squeezing a stone.” But hold on. Europe didn’t want a national consensus. The bankers didn’t want a mandate. They wanted action, and this messy talk of mandates and messages and ballots got in the way. So the plan goes forward, and the tear gas keeps the rioters at bay, and the commentators tut-tut that “modern states are far too large and complex for direct democracy,” even if the only alternative is “corrupt, complacent and long-lasting oligarchies,” because at least you know how to get the corrupt, complacent oligarchies on the phone when you need something done.

Modern Greek democracy, a very imperfect thing, has been good at spawning corrupt oligarchies. The polity never really recovered from the wrenching civil war that followed World War II; that bloody strife between Communists and rightists killed more than 50,000 and left the nation polarized, fearful, and resentful. Conservative paranoia about the left led to the colonels’ coup in 1967, and a seven-year nightmare of torture, xenophobia, and endless martial music. The democracy rebuilt after the junta’s ignominious exit was based on an uneasy parity between the two great factions; the parties agreed to the alternation of power, but doled massive patronage to their supporters as long as they held the reins. Corruption eased the sting for politicians who knew they could occasionally be voted out of office, but would take a tidy sum out the door.

The system, in other words, sucked. It lacked transparency or real accountability. Successive governments from both sides simply lied through their teeth about the debt they were accumulating.

Still, a true liberal — a true democrat — would insist: the fix for such a massive #FAIL of democratic process is more democracy. You repair the system by giving the people the power to clean it up, to build new mechanisms malleable to their real demands and desires.

By this standard, there are no true liberals or democrats anymore. The expert solution to the Greek crisis is: less democracy. Mistakes have been made, and the people have to pay. The less say, the better. Too many cooks clutter the kitchen. Citizens have to settle for the recipe they’re served — or served in, as the case may be.

How did this mess start?

Greece was allowed in the European Union in 1981. As with Spain and Portugal five years later, it was a reward for a smooth transition to democracy. The EU saw itself (as it still does) as the democrats’ club. When Greece joined the Euro in 2000, however, it meant — mixed with the many advantages — loss of democratic control over economic decisions.

The advantages were vivid. The euro brought unified interest rates across the whole currency zone. This made it easier for governments with weaker economies to borrow; the strong economies of Germany and France pressed their fingers on the scale, and tilted the overall interest rate downward. Money poured into Greece and Portugal and Spain, from lenders confident the Eurozone would safeguard all its members’ debts. “Bonds issued by southern European nations were taken to be as safe as German ones. ”

The disadvantages came home when the world economy shrivelled. Greece’s lenders started wanting their money. The Socialist government found out its conservative predecessor had covered up the true amount of the deficit (as the Socialist government before that had too.) And the problem was that two of the three courses governments usually take in such situations were now out of their hands. Greece couldn’t devalue its currency — print more money to pay for its debts and stimulate its economy — because it didn’t have its own currency. That decision had to be made by the European Central Bank. And it couldn’t lower interest rates to get its strangled economy growing. That decision had to be made by the European Central Bank. Only the third response remained under its control: to cut spending to the bone, and devote the money to settling debt.

Governments rarely choose that strategy alone without some version of the other two, because they’d lose all legitimacy by inflicting pure unadulterated pain on the population. But as long as it remained in the Eurozone, Greece’s economy was in the hands of Brussels, Paris, and Berlin. Tremble, puny politicians! The bankers are in charge.

The irony is that its entry into the EU, which came as a recognition of democratic success, launched a process that snatched power over the economy from the country’s democratic leaders. Now Greeks are told they have to eat the spoiled meat of the austerity plan, and only after that can they vote on it. How can you have your vote before you eat your rotten meat?

When democracy can no longer decide the issues closest to people, people lose faith in democracy. The Guardian sees an ambiguously hopeful anarchism in this:

Greek people are realising they are left with what they had at the outset – that is, absolutely nothing to hope for from the mainstream political scene. Thousands of workers are to be put on reduced pay schemes across the country and hundreds are being fired on a daily basis. The government has raised already existing taxes and introduced a variety of new ones across the board, while slashing salaries and pensions in both the public and private sector. Official unemployment rose by more than 35% year-to-year and now stands at just under 20%; homelessness is on an enormous increase across the country, while tax on food consumption has shot up from 13 to 23%. At the same time, public transport is being dismantled and hospitals across the country barely function. … Yet at this very moment – when it is not only the rules of the game that are challenged but the game itself – they seem to feel empowered to act in ways that would not have appeared feasible in the past: they physically attack politicians, mock and cancel military-inspired national public parades and humiliate army officials attending them, participate in neighbourhood assemblies and mass demonstrations (irrespective of the amount of tear gas thrown against them by the police), create grassroots trade unions to demand their labour rights, occupy workplaces, disrupt public services and protest in violent, impulsive, unpredictable ways. In these peculiar times, when there is nothing to lose for so many, everything becomes possible.

But of course, when people lose faith in democracy, there are darker options.

There have been democratic success stories in confronting the financial and human crisis — Iceland is one — but far too many democratic governments have failed. Some, like Greece, found to their paralyzed surprise they had lost authority over the economy altogether. The UK let an antiquated electoral system create a hodgepodge government hellbent on an austerity program that few feel they voted for, and that will likely make the depression worse. In the US, the polarization of an angrily divided public reinforces the deadlock of separated powers, and makes the government look like a terrified wiseguy with his feet in concrete, about to be taught to swim.

In the late ’20s and ’30s, a wave of revulsion at democratic impotence swept much of the (non-colonial) world. By 1936, democracy was wizened and waning across Europe, and casting ballots was outmoded as dancing the gavotte. It’s hard to recapture now how much Franklin D. Roosevelt was adulated by Europe’s remaining liberals as the man who saved democracy, proving it could confront the crisis with compassion and strength. Thomas Mann modeled the hero of his Joseph novels (which I used to call the only great liberal fiction of the 20th century, the only one to show a complex character in full harmony with his society) explicitly on Roosevelt, whom he hailed as the redeemer of civilization.

Hope and change aside, we don’t have a Roosevelt on hand. The bankers are throwing the ideals and methods of democracy in the trash. For the out-of-work, the rejected, the uncertain, the abolished and redundant and afraid, where are the alternatives? How many will invent new forms of solidarity to sustain them, and offer a pattern for another kind of society? How many are learning to listen and to work together? How many are learning to hate?