I arrived in Thessaloniki at the end of October, one hundred years almost to the day after the Greeks marched in to claim the city, ending centuries of Ottoman rule. I’d been invited to a conference commemorating the centenary but it was the current crisis that was on everyone’s mind. A general strike called to protest against the Eurozone summit had just ended. Still, in Thessaloniki history pulls in the crowds and rouses passions; the auditorium was packed. As Yiannis Boutaris, the city’s charismatic mayor, approached the podium twenty young people rose from their seats chanting slogans. It was hard to read the black banner they tried to unfurl. The letters ‘YFANET’ meant nothing to me, but ‘No to the State’ provided a clue. Mainstream politics might be in retreat in Greece but anarchism is alive and well. The demonstrators scattered fliers and then left. I picked one up: ‘One hundred years of Greece, patriarchism, capitalism are enough.’ YFANET turned out to be the name of a long-abandoned textile factory some of the activists have been occupying. Their protest was directed against Boutaris, who they believe wants to evict them. (You would think he had more pressing matters to deal with.) Boutaris stood impassively on stage until they finished: he knew they’d go away eventually.

In one form or another, anarchism has been around in Greece for most of the last century, although nothing substantial has been written on its history. Parties of the far right are a more recent introduction. On the seafront outside the conference hall a group of men were fishing. One was wearing a Golden Dawn T-shirt. The party’s poll ratings are steadily improving even without its having to abandon the Sieg Heils and criminality that have customarily been an impediment to electoral success in Europe. It’s bewildering to see an avowedly Nazi party doing so well in a country with such bitter memories of German occupation. In Thessaloniki its office is on the upper floor of an apartment block, next door to a sex shop and overlooking the railway yards from which the city’s Jews were deported. Golden Dawn hasn’t made the inroads here that it has in Athens. Thessaloniki has certainly suffered from the crisis, but over the past decade money didn’t pour into the city the way it did into Athens, and it hasn’t drained away as quickly either. There aren’t any areas, as there are in the capital, where the basic infrastructure has almost entirely collapsed. In the Athens suburbs, Golden Dawn has presented itself as a welfare organisation, handing out food to thoroughbred Greeks. But Thessaloniki is a city of migrants; few of its Greek inhabitants could trace their connection with it back even to 1912. Many Chinese and Albanian migrants are now moving away, but this has less to do with Golden Dawn’s thugs than with the general lack of money. In the quiet tree-lined roads west of Aristotle Square, largely inhabited by the Georgians and Black Sea Greeks who arrived after the Soviet breakup, things were quiet and the people on the streets looked thin. As well as more orthodox activities, the crisis has hit the gun-running and drugs business the Georgian gangs dominate.

Thessaloniki’s municipal government is under huge strain. In the 2010 local elections Thessaloniki, like Athens, turned its back on the establishment and voted in an outsider. A darling of the international press, Boutaris is an unusual politician. He is a successful wine producer, has been active for years in the ecological movement, and is happy to speak up for gay rights He is 70 years old, lean and lined, with a tattoo on his wrist and an earring; he hardly ever wears a tie. He isn’t shy of confrontation.

But his power is limited. He rode in on a wave of revulsion against the corrupt and myopic conservatives who had governed the city for more than two decades, backed by a coalition that extended from the old Eurocommunist left to businessmen on the right. Many in his own circle are entrepreneurs, and though shrewd and energetic, they haven’t much political experience. He’s found it hard to persuade the public that he’s not out merely to serve his own interests and those of other local tycoons. Tens of thousands of Turks – a huge increase – now visit the city annually to visit Atatürk’s birthplace and perhaps that of their grandparents too. Some say Boutaris welcomes them only so he can sell them wine.

His pursuit of privatisation hasn’t helped matters. Privatisation, he says, is necessary because local government, packed with several decades’ worth of political appointees, is a nightmare; he talks of a ‘bypass’ and has cut the municipal budget by 30 per cent. But not everything can be bypassed and a stand-off with sanitation department workers has led to overflowing bins. Rats now infest the old Upper Town and residents are complaining. Many thought Boutaris would be able to reach an agreement with the binmen, whose grievances predate his election, and his failure to do so is a major disappointment. The national government is even less popular. Since the crisis began, successive administrations have found it easier to cut public sector salaries than make structural reforms. A few years ago young professionals were returning to Greece from Britain, the US and Germany, but now, after a 30 per cent pay cut last year, and the likelihood of another 25 per cent this year, they think they’ve made a terrible mistake.

Growing vegetables is suddenly popular, and on the hillsides above Thessaloniki there are tomato plants and herbs everywhere. Residents have started organising markets so that producers of potatoes, olive oil, flour and the like can sell direct to consumers. A friend, an anthropologist, was queuing at his local tax office in a Thessaloniki suburb when he saw an old man arguing about his bill with an official. Finally the man burst out: ‘So, you even want to take my trousers? Here, have them.’ And he took them off in front of everyone. The police were called but said that the old man hadn’t committed a crime: he still had his underwear on. Everyone applauded and people started shouting: ‘Let’s all take off our trousers!’

A pervasive sense of unfairness is destroying the legitimacy of Greece’s political class. Support for the old socialist governing party, Pasok, has dropped from 44 per cent to 12 per cent in two years. If the Samaras government falls, his party, New Democracy, will probably go the same way. But the politicians don’t seem to realise what a mess they’re in. ‘Sinking Ship/Vanished Crew’, a new song by a Thessaloniki-based band called Plastic Flowers, quotes the now infamous words of the former Pasok deputy prime minister Theodoros Pangalos: ‘We all binged together.’ He is still repeating the line on TV to publicise his new book, but it’s the feeblest of excuses for politicians who were happy to take the credit for Greece’s modernisation. ‘At least we have clean hands,’ the Golden Dawn leader, Nikos Michaloliakos, says. It’s a message that seems to be getting across.

Athens is in a state of collapse. Over the past two decades, Tsakalof Street in Kolonaki became an upmarket shopping destination for newly rich Athenians. Now half the shops are boarded up. I saw a young salesman peering forlornly out of the Gucci store onto an almost empty street. It was raining hard. On the wet marble steps of an interwar apartment block opposite the university buildings on Solonos Street an old man was begging. Further down the street, the Estia bookshop struggles on. I spoke to one customer, a man in his sixties, with a houndstooth jacket, sweater and tie – he turned out to be a retired civil servant. A translator, he had recently retired after a lifetime working for the government, but his pension, which was inadequate to start with, had now been cut. Had he retired a year ago, he’d have got a reasonable lump sum: this was no longer on offer. He didn’t know how he would manage. He handed me his card in case I heard of anyone who might need his services.

Yet the Athenian bookshops are still more plentiful and comprehensive than Manhattan’s: the crisis hasn’t stifled everything. A profound shift is taking place, however, in the leftist subculture that flourished after the junta fell in 1974. While neoliberalism took hold in the rest of the world, Greeks kept on talking about socialism and denouncing capitalism. A powerful and pervasive sense of social solidarity still links union members, intellectuals and even some of the country’s businessmen. But what does this mean in an era of austerity and right-wing extremism? Syriza rocketed to prominence, becoming the main opposition party in the June elections, but its talk of ‘united fronts’ and ‘popular uprisings’ doesn’t constitute a political programme. Publicly it seems to think revolution is finally at hand, with Greece as the vanguard in the global overthrow of capitalism. In private the party is split between those who believe this, and those who don’t but feel it’s a winning strategy.

Syriza’s strongest critics come from its own intellectual and cultural world. The photographer Paris Petridis is in his early fifties. Working on a PhD in Marxist political economy in New York in the 1980s, he was conscious of the growing division between Greek and American attitudes towards capitalism. The left had disappointed him. ‘OK, the crisis is real,’ he said to me. ‘But everyone is dramatising it too – like they want to be in on the end of Weimar. Maybe this time, they fantasise, they can defeat the Nazis. They are not serious, none of them – the anarchists, Syriza, Pasok. And the ones who talk the most about how serious the crisis is are the ones who are suffering least.’

Many people express a similar disappointment with Syriza’s performance and everyone takes it as read that the Troika’s prescriptions are self-defeating. News that the former prime minister George Papandreou wanted to take time off from Parliament for a stint as a lecturer at Harvard was greeted with a shrug. As for Alexis Tsipras, Syriza’s leader, nobody thinks his time in student politics was a sufficient testing-ground. Slavoj Zizek’s appearance at the Syntagma Square rallies last year and his endorsement of Tsipras raised a bitter laugh: Zizek, it was said, parachuted into a situation he did not really understand, desperate to find revolutionary potential somewhere. An old friend spelled it out: ‘At least these days everyone has woken up and is talking about politics. That is a good thing. We walked through the past ten years talking about nothing but 4x4s and where we were going on holiday. The young kids are now impatient with all this. Everyone sees the need for change. But changing the way people do politics is harder.’ He worried that the right was becoming an accepted part of the political landscape. ‘Right now, people have voted for Golden Dawn on a completely casual basis. One man I talked to asked me: shall I vote communist or Golden Dawn? But it isn’t surprising: down at the Piraeus docks, there is 60 per cent unemployment. In some apartment blocks, they have simply switched off the electricity because no one can pay for it. There are real problems with gangs and drugs. Old people are afraid to go out. The state does nothing for them. The left doesn’t bother with the question of social solidarity. Golden Dawn does. Of course they do it on a totally racist basis. But the left is culpable: they think of nothing like that. Their meetings revolve around the struggle for political power and nothing more.’

One of my oldest friends in Greece teaches at Athens University. His prognosis was grim: ‘If we insist on the same policies, then given the situation of the Greek political elite, in six months the political polarisation will be much worse than it is now. And this polarisation will not offer the possibility of a solution to the economic problem. On the contrary it will force us to turn to the drachma. Worse still, it will lead us to lose all our democratic achievements since the fall of the dictatorship. Not that our democracy was perfect, but soon nobody will believe in this democracy at all.’

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