Thieves! Thieves!" cry the protesters outside the Greek parliament in Syntagma Square, although thief is not the most colourful allegation being levelled at the Greek ruling class.

The scenes are now familiar to TV viewers across the world: the angry banners, the scuffles or sometimes more serious violence, the petrol bombs and tear gas, the world's media, including battle-tested war reporters, descending.

The latest wave of Hellenic protesters call itself Aganaktismenoi, in the spirit of the Spanish indignados, a broad-based and non-party-political movement. The silent majority is, at last, finding a voice. Around me, in Athens, the fear, outrage, despair are palpable. But there is also a profound sense of bewilderment at a situation from which there appears no escape, and to which the only response is a call for more economic pain made by some of the same people who created the fiasco.

How did it come to this? How fair is this charge of "Thieves"? Did Greek politicians simply loot their own country, and EU taxpayers, for personal gain? There is truth in this tale, but like any Greek tragedy, there are multiple narratives, none of them pretty. The protesters' cry of "We don't owe anything, we won't pay" doesn't impress German taxpayers, who feel they are bailing out the country, but for some sections of Greek society, it's an understandable reaction.

It helps to recognise that Greece is very different from other Western European societies. There are, in fact, more similarities to states run by political oligarchies than anyone in the EU hierarchy would like to admit. Shocking examples of kleptocracy by the political elite certainly form part of the explanation for the ferocity of the reaction we are now seeing on the streets of Athens. And it is this ferocity which has intensified the risk of a default, the repercussions of which would reverberate throughout Europe and threaten the existence of the euro as we know it.

Greece is not a mature democracy, nor does it have a flexible economy. Up to 1974 it was either a colony or a dictatorship. Greece has had a clan-based rather than a class-based structure, and a public sector accustomed to giving favours to family or other interest groups. Its politics is characterised by cronyism, restrictive practices, bureaucracy and corruption. In researching my new book, I found that joining the EU and the single currency, and gaining access to huge inflows of global capital, actually exacerbated these unhealthy dynamics, rather than bolstered Greek democracy.

The Siemens bribery scandal was the most notorious. Investigators found that the company's Greek branch had an annual slush fund of some €15m to pay "commissions" for politicians who helped secure contracts. There have been arrests and prosecutions – but by authorities in the US, Switzerland and Germany, not in Greece.

The political class, meanwhile, benefits from Article 62 of the constitution, which means parliamentarians accused of crimes have to be tried by fellow parliamentarians. Payment of taxes is erratic, with some individuals hit hard with demands, while others escape almost entirely. Domestic Greek interest groups are not without blame. From 2001 to 2009, trade unions seized their opportunity for annual pay rises without links to productivity. With easy access to borrowing hard currency, and a big incentive to buy votes, both the left-wing Pasok and its right-wing counterpart New Democracy duly indulged. As long as they had access to easy loans, they could buy enough social peace to deflect attention from scandals and mismanagement. Now the money has run out.

Cronyism has meant that much government wealth stayed within ministerial families. The assiduous Leandros Rakintzis, head of a public spending watchdog trying to rein in the excesses, has uncovered shocking cases. In one example, a retired former culture ministry employee was found to have had €9m in his bank account that he was unable to justify according to his income.

Ordinary private sector workers, on the other hand, benefited from none of this orgy of borrowing or debt; they have lost most and are being asked to pick up the bill. They have some of the lowest wages and longest hours in Europe; they pay high taxes yet they receive limited public services. A recent study by Patrick Artus, chief economist of French bank Natixis, showed that they worked much longer hours than workers in Germany, countering a recently expressed view by German Chancellor Angela Merkel.

Living standards for most Greeks have collapsed. Regulated and controlled markets with no competition combined now with higher taxes have led to some of the highest petrol and supermarket prices in the continent. Greece has the third highest prices at the pump, behind only Denmark and the Netherlands. Lack of full competition in supermarkets mean that the typical shopping basket is about 25 per cent more than the European average.

This all adds to the sense of betrayal. The misconduct of the elite means that, just as the pain of IMF-dictated austerity is intensifying, there is little or no sense of social solidarity. As in Spain, youth unemployment is high, further eroding a sense of hope. Violent crime, once rare in Athens, is on the rise.

Yet my country's politicians and senior officials are not the only villains. Europe's leaders may well lament that chaos in Greece is putting the very peace and stability of the EU at risk. But it was they who refused to learn the lessons of Argentina's currency peg or the European exchange rate mechanism, and proceeded with monetary union before economic convergence. Goldman Sachs colluded with Greek politicians to make the deficit in 2001 appear smaller than it was, in a manoeuvre that simply passed the debt into the future – and made it more expensive.

At the same time, a wave of deregulated capital came in search of easy gains. With eurozone interest rates kept low to prevent overheating in Germany, vast amounts were loaned to property developers, especially in Ireland and Spain. And searching for a bit of extra yield on government bonds, much went to the Greek government. Investors were reassured by official statements that the euro could not be allowed to fail, so the belief grew that the loans were as safe as Germany's, only with a higher yield. This is how a small, semi-developed economy came to borrow an unsupportable €300bn. As recently as 2009 and even early 2010, serious voices in Brussels were denying the unsustainability of the ballooning sovereign debt in the eurozone's periphery. In early 2009, the then economics commissioner Joaquin Almunia claimed the Greek economy was "the strongest" in the EU. There is still a refusal by EU officials to admit that economic convergence was never achieved, and that the euro was mis-sold to its citizens. It was a good idea, not done badly, done very badly. So the demonstrators venting their outrage at the Greek parliament tell a part of the story, but not the whole story. Some are innocent victims; others have had a hand in creating this economic, social and political catastrophe.

But their voices will have to be acknowledged, because the high-decibel volume reflects the scale of the crisis that confronts us all. As Thucydides observed, justice will not come to Athens until those who are not injured are as indignant as those who are.