Albania illustrates crisis of confidence

All economically advanced societies are structured and bound by a common faith — the belief that money has value. It is this trust that generates the order that holds a nation — and increasingly the world — together. The everyday use of cash, checks, credit cards and other forms of monetary exchange is grounded in a common understanding of their exact worth. When this trust is undermined, a society can quickly unravel.
Such is the case in Albania, where 50 percent to 90 percent of the residents lost their life savings by investing in fraudulent pyramid schemes. The collapse of the schemes brought about a series of demonstrations and uprisings demanding compensation and the resignation of Albanian President Sali Berisha. Unfortunately, the government had no means nor actual responsibility to reimburse its citizens, and when Berisha refused to step down, the country quickly disintegrated into lawlessness.
The chaos was marked by widespread looting of stores and arms depots, and random gunfire that drove many Albanians off the streets. Government authorities lacked any ability to quell the violence. Meanwhile, the population faced shortages of food, fuel and other necessities. As the situation decayed, the U.S. and several European nations evacuated their citizens and more than 12,000 Albanians fled to Italy.
Albania is not the only nation forced to face a social crisis brought on by the collapse of faith in a financial institution. During the 1920s, many average Americans invested heavily in over-inflated stocks, hoping to strike it rich. When the market crashed in 1929, many lost their life savings, the economy faltered and the Great Depression ensued. Fortunately, the nation’s strong civic traditions and a series of government programs restored American faith in financial and economic structures. But without a strong democratic tradition to fall back on, Albania faces a more daunting future.
The world’s horror at the Albanian situation is twofold. First is the obvious dismay at the human tragedy. But deeper is the fear of how far and fast a society can fall. Countries with fragile developing economies are particularly susceptible to the kind of havoc corrupt entrepreneurs can wreak. As the global economy becomes more complex and interconnected, faith in money has the power to unite societies and bring developing nations into the world economic community. But the ideal of a self-regulating marketplace is painfully exposed in places like Albania.
Just as the people of Albania were oppressed by a totalitarian state, they are also oppressed by an unstable economic free-for-all. Albania became bloody when that ethereal faith in money collapsed; there was little or no political or social mechanism to deal with the crisis. The poorest country in Europe, Albania was primed for the very type of tragedy that came to pass.
In recent weeks, a tentative stalemate settled on Albania. For this small country to avoid falling farther into violence and economic chaos, Albania will need some semblance of democracy to stabilize and regulate its economy. No small task in a country where citizens now brandish AK-47s as casually as umbrellas.