Written by: Arben Malaj
During my engagement as Honorary Consul of Austria in Albania, on an official visit to Vienna, I had the opportunity to discuss with Austrian colleagues the political legacy of their country. My question was simple: “Who is considered your best chancellor after the Second World War?” The answer was unanimous: Bruno Kreisky. This social democratic leader, who governed from 1970 to 1983, remains in history for a principle that today seems almost heretical in the eyes of financial technocrats. In a period of severe global crises, he declared with great integrity: “A few billion more debt causes me less headache than a few hundred thousand unemployed people.” This stance of Kreisky was not just political rhetoric, but a genuine economic strategy known as “Austro-Keynesianism.”
Instead of following the austerity policies that were spreading across the rest of Europe, he chose to prioritize full employment.
He believed that the role of the state was to protect the middle class and the poor, even if this required temporary budget deficits.
Through this model, he undertook profound reforms in the legal, educational, and social systems, turning Austria into a model welfare state and strengthening social cohesion at a time when the world was being shaken by the oil crisis.
For the Albanian transition and our structural reforms, this example carries vital importance.
Contemporary studies on anti-crisis packages show a worrying trend: they are often based on the formula of 1/3 revenue growth and 2/3 spending cuts. This cut is mainly focused on social spending, which brings negative structural effects. When parties, whether left or right, are forced to follow these cold macroeconomic rules, they often forget the human cost that comes behind the numbers.
I. CONTRAST ANALYSIS: SHORT-TERM BENEFITS VS. LONG-TERM COSTS
Austerity policies are often advertised for their immediate “benefits.” They aim to quickly stabilize fiscal indicators, reduce inflation, the deficit, and appease financial markets or international creditors. However, this “improvement” is often an accounting illusion, paid for at a high social price. In the long run, the structural costs are devastating. When cuts affect education and health, we are actually damaging “human capital” – the main source of the pace and quality of economic growth.
Increased unemployment and poverty are not just statistics; they translate into a loss of professional skills, increased crime, and a massive brain drain. This kind of “austerity” produces an anemic economy, where social cohesion is significantly weakened.
II. THE 2026 CRISIS AND THE FAILURE OF THE WASHINGTON CONSENSUS
In 2026, the world is facing new challenges that are testing the resilience of our states. The bitter experiences of transition in Eastern Europe showed that externally imposed reforms, known as the “Washington Consensus” (Washington 1) and its later revised version (Washington 2), failed to produce widely distributed prosperity.
The fundamental criticism of Harvard professor Dani Rodrik remains more relevant today than ever: international financial institutions (IFIs) often forget the historical and cultural specificities of each country.
His message is clear: “One size does not fit all.” Imposing standard reforms without understanding the local context has produced rising inequality and democratic disillusionment.
III. GOOD GOVERNANCE AND THE BURNOUT FROM EPIDEMIC CORRUPTION
Good governance is the indispensable condition for alleviating the challenges of social cohesion. A state that functions with integrity ensures that public resources are distributed fairly, strengthening citizen trust in institutions. However, this process is severely sabotaged by “epidemic corruption” and “state capture”. When narrow private interests dictate public decision-making, social solidarity ceases to exist. The consequences of state capture are vital and devastating. It not only diverts funds from health and education into oligarchic pockets, but it distorts the very meaning of reforms.
Warning analyses by the Department of State (DASH) and progress reports by the European Union (EU) have consistently emphasized that high corruption stifles competition and discourages investments that create decent employment.
International indices, such as those of “Transparency International” or the “World Justice Project”, show a frightening correlation: countries with high levels of perceived corruption and state capture have the lowest level of social cohesion and the highest degree of economic insecurity. This phenomenon produces a great moral fracture: citizens feel abandoned by their state, which leads to the “death” of human solidarity. When the law is not equal for all, the social contract is torn and the result is a fragmented society, where structural inequality becomes insurmountable.
IV. INTEGRITY AS A COMPASS IN NEW SOCIAL POLICIES
In the academic debate, the voices of Nobel laureates such as Joseph Stiglitz and Paul Krugman support the idea that social cohesion is a prerequisite for economic stability. For the Albania of 2026, the main recommendation is to move from a “forced reformatting” towards a leadership with integrity, which fights the capture of the state as the highest act of social protection.
Kreisky's model teaches us that the true stability of a country does not come from the accounting books, but from the social security and justice that citizens feel. The integrity of a leader is measured by the courage to say "no" to recipes that impoverish the people in the name of abstract numbers and by the determination to dismantle the networks of corruption that hold our common future hostage.
In my book on the power of integrity, this remains proof that the economy must always be a tool at the service of man and human solidarity.
References
I. Nobel Contributions and Economic Theory Stiglitz, JE (2012). The Price of Inequality: How Today's Divided Society Endangers Our Future. WW Norton & Company. (A profound analysis of how misguided policies increase inequality and undermine social cohesion).
Krugman, P. (2012). End This Depression Now!. WW Norton & Company. (Extensive discussion of the failure of austerity policies and the importance of public investment).
Rodrik, D. (2007). One Economics, Many Recipes: Globalization, Institutions, and Economic Growth. Princeton University Press. (Source of the “one size fits all” principle and critique of standard IFN recipes).
I. International and Institutional Reports * US Department of State (DASH). (2025- 2026). Investment Climate Statements: Albania. (Annual reports on the investment climate, highlighting epidemic corruption and lack of transparency as structural obstacles)
* European Commission. (2025). Albania Report (Enlargement Package). Brussels. (EU analysis on the rule of law, state capture and progress in social protection).
Transparency International. (2026). Corruption Perceptions Index (CPI). (Comparative data on the level of corruption in transition countries).
III. Studies on the Austrian Model and Transition
* Seidel, H. (2005). The Austrian Economy in the 20th Century. (For details on the “Kreisky” era and the policies of Austro-Keynesianism).
World Justice Project. (2026). Rule of Law Index. (An index that measures the relationship between justice, good governance, and social stability).
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