The $140-billion support package that the Greek government has finally received from its European Union partners and the International Monetary Fund (IMF) gives it the breathing space needed to undertake the difficult job of putting its finances in order.

Deep down, the crisis is yet another manifestation of what I call "the political trilemma of the world economy": economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we must jettison democracy. And if we want democracy along with globalization, we must shove the nation-state aside and strive for greater international governance.

The history of the world economy shows the "trilemma" at work. The first era of globalization, which lasted until 1914, was a success as long as economic and monetary policies remained insulated from domestic political pressures. These policies could then be entirely subjugated to the demands of the gold standard and free capital mobility. But once the political franchise was enlarged, the working class got organized, and mass politics became the norm, domestic economic objectives began to compete with (and overwhelm) external rules and constraints.