'What Politics Taught Me': Yanis Varoufakis

 

Techno-Feudalism has replaced Capitalism

 

The Left has Failed; Capitalism morphs into Techno-Feudalism

 

Carpe Diem! Join the movement, It's never too Late

 

How to run Markets Without Capitalism

 

"They don't want to extradite Assange. They want to kill him."

 

Yanis Varoufakis: How Capitalism Works--and How It Fails

My plan to revive Europe can succeed where Macron and Piketty failed

Under my Green New Deal, €500bn a year can be created without raising taxes – and it may tempt Britain back to the fold writes Yanis Varoufakis in The Guardian

 

‘Historians will mark Emmanuel Macron’s failed reform agenda as a turning point in the EU, perhaps one that is more significant than Brexit.’ Photograph: François Lenoir/Reuters


If Brexit demonstrates that leaving the EU is not the walk in the park that Eurosceptics promised, Emmanuel Macron’s current predicament proves that blind European loyalism is, similarly, untenable. The reason is that the EU’s architecture is equally difficult to deconstruct, sustain and reform.

While Britain’s political class is, rightly, in the spotlight for having made a mess of Brexit, the EU’s establishment is in a similar bind over its colossal failure to civilise the eurozone – with the rise of the xenophobic right the hideous result. 

Macron was the European establishment’s last hope. As a presidential candidate, he explicitly recognised that “if we don’t move forward, we are deciding the dismantling of the eurozone”, the penultimate step before dismantling of the EU itself. Never shy of offering details, Macron defined a minimalist reform agenda for saving the European project: a common bank deposit insurance scheme (to end the chronic doom loop between insolvent banks and states); a well-funded common treasury (to fund pan-European investment and unemployment benefits); and a hybrid parliament (comprising national and European members of parliament to lend democratic legitimacy to all of the above).

Since his election, the French president has attempted a two-phase strategy: “Germanise” France’s labour market and national budget (essentially making it easier for employers to fire workers while ushering in additional austerity) so that, in the second phase, he might convince Angela Merkel to persuade the German political class to sign up to his minimalist eurozone reform agenda. It was a spectacular miscalculation – perhaps greater than Theresa May’s error in accepting the EU’s two-phase approach to Brexit negotiations.

When Berlin gets what it wants in the first phase of any negotiation, German chancellors then prove either unwilling or incapable of conceding anything of substance in the second phase. Thus, just like May ending up with nothing tangible in the second phase (the political declaration) by which to compensate her constituents for everything she gave up in the first phase (the withdrawal agreement), so Macron saw his eurozone reform agenda evaporate once he had attempted to Germanise France’s labour and national budget. The subsequent fall from grace, at the hands of the offspring of his austerity drive – the gilets jaunes movement – was inevitable.


The great advantage of our Green New Deal is we are taking a leaf out of Franklin Roosevelt’s original New Deal in the 1930s

Historians will mark Macron’s failure as a turning point in the EU, perhaps one that is more significant than Brexit: it puts an end to the French ambition for a fiscal union with Germany. We can already see the decline of this French reformist ambition in the shape of the latest manifesto for saving Europe by the economist Thomas Piketty and his supporters – published this week. Professor Piketty has been active in producing eurozone reform agendas for a number of years – an earlier manifesto was produced in 2014. It is, therefore, interesting to observe the effect of recent European developments on his proposals. 

In 2014, Piketty put forward three main proposals: a common eurozone budget funded by harmonised corporate taxes to be transferred to poorer countries in the form of investment, research and social spending; the pooling of public debt, which would mean the likes of Germany and Holland helping Italy, Greece and others in a similar situation to bring down their debt; and a hybrid parliamentary chamber. In short, something similar to Macron’s now shunned European agenda.

Four years later, the latest Piketty manifesto retains a hybrid parliamentary chamber, but forfeits any Europeanist ambition – all proposals for debt pooling, risk sharing and fiscal transfers have been dropped. Instead, it suggests that national governments agree to raise €800bn (or 4% of eurozone GDP) through a harmonised corporate tax rate of 37%, an increased income tax rate for the top 1%, a new wealth tax for those with more than €1m in assets, and a C02 emissions tax of €30 per tonne. This money would then be spent within each nation-state that collected it – with next to no transfers across countries. But, if national money is to be raised and spent domestically, what is the point of another supranational parliamentary chamber?

Europe is weighed down by overgrown, quasi-insolvent banks, fiscally stressed states, irate German savers crushed by negative interest rates, and whole populations immersed in permanent depression: these are all symptoms of a decade-long financial crisis that has produced a mountain of savings sitting alongside a mountain of debts. The intention of taxing the rich and the polluters to fund innovation, migrants and the green transition is admirable. But it is insufficient to tackle Europe’s particular crisis.

What Europe needs is a Green New Deal – this is what Democracy in Europe Movement 2025 – which I co-founded – and our European Spring alliance will be taking to voters in the European parliament elections next summer.

The great advantage of our Green New Deal is that we are taking a leaf out of US President Franklin Roosevelt’s original New Deal in the 1930s: our idea is to create €500bn every year in the green transition across Europe, without a euro in new taxes.

Here’s how it would work: the European Investment Bank (EIB) issues bonds of that value with the European Central Bank standing by, ready to purchase as many of them as necessary in the secondary markets. The EIB bonds will undoubtedly sell like hot cakes in a market desperate for a safe asset. Thus, the excess liquidity that keeps interest rates negative, crushing German pension funds, is soaked up and the Green New Deal is fully funded.

Once hope in a Europe of shared, green prosperity is restored, it will be possible to have the necessary debate on new pan-European taxes on C02, the rich, big tech and so on – as well as settling the democratic constitution Europe deserves.

Perhaps our Green New Deal may even create the climate for a second UK referendum, so that the people of Britain can choose to rejoin a better, fairer, greener, democratic EU.

Why Germany Cannot and Should Not Pay to Save the Eurozone

Yanis Varoufakis at the Leibnitz Institute

In silencing Euroscepticism, Italy’s president has gifted its far right

Yanis Varoufakis in The Guardian

Italy should be doing well. Unlike Britain, it exports considerably more to the rest of the world than it imports, while its government spends less (excluding interest payments) than the taxes it receives. And yet Italy is stagnating, its population in a state of revolt following two lost decades.

Italian president names interim prime minister until fresh elections


While it is true that Italy is in serious need of reforms, those who blame the stagnation on domestic inefficiencies and corruption must explain why Italy grew so fast throughout the postwar period until it entered the eurozone. Was its government and polity more efficient and virtuous in the 1970s and 1980s? Hardly.

The singular reason for Italy’s woes is its membership of a terribly designed monetary union, the eurozone, in which the Italian economy cannot breathe and which consecutive German governments refuse to reform.

In 2015 the Greek people elected a progressive, Europeanist government with a mandate to demand a new deal within the eurozone. In the space of six months, under the guidance of the German government, the European Union and its central bank crushed us. A few months later, I was asked by the Italian daily newspaper Corriere della Sera if I thought European democracy was at risk. I answered: “Greece surrendered but it was Europe’s democracy that was mortally wounded. Unless Europeans realise that their economy is run by unelected and unaccountable pseudo-technocrats, committing one gross error after another, our democracy will remain a figment of our collective imagination.”

Since then, the pro-establishment government of Italy’s Democratic party implemented, one after the other, the policies that the unelected bureaucrats of the EU demanded. The result was more stagnation. And so, in March, a national election delivered an absolute parliamentary majority to two anti-establishment parties which, despite their differences, shared doubts about Italy’s eurozone membership and a hostility to migrants. It was the bitter harvest of absent prospects and withering hope.

After a few weeks of the kind of post-election horse-trading common in countries like Italy and Germany, the Five Star Movement and League leaders Luigi Di Maio and Matteo Salvini struck a deal to form a government. Alas, President Sergio Mattarella used the powers bestowed upon him by the Italian constitution to prevent the formation of that government and, instead, handed the mandate to a technocrat, a former IMF employee who stands no chance of a vote of confidence in parliament.

Had Mattarella refused Salvini the post of interior minister, outraged by his promise to expel 500,000 migrants from Italy, I would be compelled to support him. But, no, the president had no such qualms. Not even for a moment did he consider vetoing the idea of a European country deploying its security forces to round up hundreds of thousands of people, cage them, and force them into trains, buses and ferries before sending them goodness knows where.

No, Mattarella chose to clash with an absolute majority of lawmakers for another reason: his disapproval of the finance minister designate. Why? Because the said gentleman, while fully qualified for the job, and despite his declaration that he would abide by the EU’s rules, had in the past expressed doubts about the eurozone’s architecture and has favoured a plan of EU exit just in case it was needed. It was as if Mattarella declared that reasonableness from a prospective finance minister constitutes grounds for his or her exclusion from the post.

What is so striking is that there is no thinking economist anywhere in the world who does not share concern about the eurozone’s faulty architecture. No prudent finance minister would neglect to develop a plan for euro exit. Indeed, I have it on good authority that the German finance ministry, the European Central Bank and every major bank and corporation have plans in place for the possible exit from the eurozone of Italy, even of Germany. Is Mattarella telling us that the Italian finance minister is banned from thinking of such a plan?


Beyond his moral failure, the president has made a major tactical blunder

Beyond his moral failure to oppose the League’s industrial-scale misanthropy, the president has made a major tactical blunder: he fell right into Salvini’s trap. The formation of another “technical” government, under a former IMF apparatchik, is a fantastic gift to Salvini’s party.

Salvini is secretly salivating at the thought of another election – one that he will fight not as the misanthropic, divisive populist that he is, but as the defender of democracy against the Deep Establishment. He has already scaled the moral high ground with the stirring words: “Italy is not a colony, we are not slaves of the Germans, the French, the spread or finance.”

If Mattarella takes solace from the fact that previous Italian presidents managed to put in place technical governments that did the establishment’s job (so “successfully” that the country’s political centre imploded), he is very badly mistaken. This time around he, unlike his predecessors, has no parliamentary majority to pass a budget or indeed to lend his chosen government a vote of confidence. Thus, the president is forced to call fresh elections that, courtesy of his moral drift and tactical blunder, will return an even stronger majority for Italy’s xenophobic political forces, possibly in alliance with the enfeebled Forza Italia of Silvio Berlusconi.

Marx predicted our present crisis – and points the way out

Yanis Varoufakis in The Guardian


For a manifesto to succeed, it must speak to our hearts like a poem while infecting the mind with images and ideas that are dazzlingly new. It needs to open our eyes to the true causes of the bewildering, disturbing, exciting changes occurring around us, exposing the possibilities with which our current reality is pregnant. It should make us feel hopelessly inadequate for not having recognised these truths ourselves, and it must lift the curtain on the unsettling realisation that we have been acting as petty accomplices, reproducing a dead-end past. Lastly, it needs to have the power of a Beethoven symphony, urging us to become agents of a future that ends unnecessary mass suffering and to inspire humanity to realise its potential for authentic freedom. 

No manifesto has better succeeded in doing all this than the one published in February 1848 at 46 Liverpool Street, London. Commissioned by English revolutionaries, The Communist Manifesto (or the Manifesto of the Communist Party, as it was first published) was authored by two young Germans – Karl Marx, a 29-year-old philosopher with a taste for epicurean hedonism and Hegelian rationality, and Friedrich Engels, a 28-year-old heir to a Manchester mill.

As a work of political literature, the manifesto remains unsurpassed. Its most infamous lines, including the opening one (“A spectre is haunting Europe – the spectre of communism”), have a Shakespearean quality. Like Hamlet confronted by the ghost of his slain father, the reader is compelled to wonder: “Should I conform to the prevailing order, suffering the slings and arrows of the outrageous fortune bestowed upon me by history’s irresistible forces? Or should I join these forces, taking up arms against the status quo and, by opposing it, usher in a brave new world?”

For Marx and Engels’ immediate readership, this was not an academic dilemma, debated in the salons of Europe. Their manifesto was a call to action, and heeding this spectre’s invocation often meant persecution, or, in some cases, lengthy imprisonment. Today, a similar dilemma faces young people: conform to an established order that is crumbling and incapable of reproducing itself, or oppose it, at considerable personal cost, in search of new ways of working, playing and living together? Even though communist parties have disappeared almost entirely from the political scene, the spirit of communism driving the manifesto is proving hard to silence.
To see beyond the horizon is any manifesto’s ambition. But to succeed as Marx and Engels did in accurately describing an era that would arrive a century-and-a-half in the future, as well as to analyse the contradictions and choices we face today, is truly astounding. In the late 1840s, capitalism was foundering, local, fragmented and timid. And yet Marx and Engels took one long look at it and foresaw our globalised, financialised, iron-clad, all-singing-all-dancing capitalism. This was the creature that came into being after 1991, at the very same moment the establishment was proclaiming the death of Marxism and the end of history.

Of course, the predictive failure of The Communist Manifesto has long been exaggerated. I remember how even leftwing economists in the early 1970s challenged the pivotal manifesto prediction that capital would “nestle everywhere, settle everywhere, establish connexions everywhere”. Drawing upon the sad reality of what were then called third world countries, they argued that capital had lost its fizz well before expanding beyond its “metropolis” in Europe, America and Japan.

Empirically they were correct: European, US and Japanese multinational corporations operating in the “peripheries” of Africa, Asia and Latin America were confining themselves to the role of colonial resource extractors and failing to spread capitalism there. Instead of imbuing these countries with capitalist development (drawing “all, even the most barbarian, nations into civilisation”), they argued that foreign capital was reproducing the development of underdevelopment in the third world. It was as if the manifesto had placed too much faith in capital’s ability to spread into every nook and cranny. Most economists, including those sympathetic to Marx, doubted the manifesto’s prediction that “exploitation of the world-market” would give “a cosmopolitan character to production and consumption in every country”.

As it turned out, the manifesto was right, albeit belatedly. It would take the collapse of the Soviet Union and the insertion of two billion Chinese and Indian workers into the capitalist labour market for its prediction to be vindicated. Indeed, for capital to globalise fully, the regimes that pledged allegiance to the manifesto had first to be torn asunder. Has history ever procured a more delicious irony?

Anyone reading the manifesto today will be surprised to discover a picture of a world much like our own, teetering fearfully on the edge of technological innovation. In the manifesto’s time, it was the steam engine that posed the greatest challenge to the rhythms and routines of feudal life. The peasantry were swept into the cogs and wheels of this machinery and a new class of masters, the factory owners and the merchants, usurped the landed gentry’s control over society. Now, it is artificial intelligence and automation that loom as disruptive threats, promising to sweep away “all fixed, fast-frozen relations”. “Constantly revolutionising … instruments of production,” the manifesto proclaims, transform “the whole relations of society”, bringing about “constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation”.

 

Composite: Guardian Design

For Marx and Engels, however, this disruption is to be celebrated. It acts as a catalyst for the final push humanity needs to do away with our remaining prejudices that underpin the great divide between those who own the machines and those who design, operate and work with them. “All that is solid melts into air, all that is holy is profaned,” they write in the manifesto of technology’s effect, “and man is at last compelled to face with sober senses, his real conditions of life, and his relations with his kind”. By ruthlessly vaporising our preconceptions and false certainties, technological change is forcing us, kicking and screaming, to face up to how pathetic our relations with one another are.

Today, we see this reckoning in millions of words, in print and online, used to debate globalisation’s discontents. While celebrating how globalisation has shifted billions from abject poverty to relative poverty, venerable western newspapers, Hollywood personalities, Silicon Valley entrepreneurs, bishops and even multibillionaire financiers all lament some of its less desirable ramifications: unbearable inequality, brazen greed, climate change, and the hijacking of our parliamentary democracies by bankers and the ultra-rich.

None of this should surprise a reader of the manifesto. “Society as a whole,” it argues, “is more and more splitting up into two great hostile camps, into two great classes directly facing each other.” As production is mechanised, and the profit margin of the machine-owners becomes our civilisation’s driving motive, society splits between non-working shareholders and non-owner wage-workers. As for the middle class, it is the dinosaur in the room, set for extinction.

At the same time, the ultra-rich become guilt-ridden and stressed as they watch everyone else’s lives sink into the precariousness of insecure wage-slavery. Marx and Engels foresaw that this supremely powerful minority would eventually prove “unfit to rule” over such polarised societies, because they would not be in a position to guarantee the wage-slaves a reliable existence. Barricaded in their gated communities, they find themselves consumed by anxiety and incapable of enjoying their riches. Some of them, those smart enough to realise their true long-term self-interest, recognise the welfare state as the best available insurance policy. But alas, explains the manifesto, as a social class, it will be in their nature to skimp on the insurance premium, and they will work tirelessly to avoid paying the requisite taxes.

Is this not what has transpired? The ultra-rich are an insecure, permanently disgruntled clique, constantly in and out of detox clinics, relentlessly seeking solace from psychics, shrinks and entrepreneurial gurus. Meanwhile, everyone else struggles to put food on the table, pay tuition fees, juggle one credit card for another or fight depression. We act as if our lives are carefree, claiming to like what we do and do what we like. Yet in reality, we cry ourselves to sleep.

Do-gooders, establishment politicians and recovering academic economists all respond to this predicament in the same way, issuing fiery condemnations of the symptoms (income inequality) while ignoring the causes (exploitation resulting from the unequal property rights over machines, land, resources). Is it any wonder we are at an impasse, wallowing in hopelessness that only serves the populists seeking to court the worst instincts of the masses?

With the rapid rise of advanced technology, we are brought closer to the moment when we must decide how to relate to each other in a rational, civilised manner. We can no longer hide behind the inevitability of work and the oppressive social norms it necessitates. The manifesto gives its 21st-century reader an opportunity to see through this mess and to recognise what needs to be done so that the majority can escape from discontent into new social arrangements in which “the free development of each is the condition for the free development of all”. Even though it contains no roadmap of how to get there, the manifesto remains a source of hope not to be dismissed.

If the manifesto holds the same power to excite, enthuse and shame us that it did in 1848, it is because the struggle between social classes is as old as time itself. Marx and Engels summed this up in 13 audacious words: “The history of all hitherto existing society is the history of class struggles.”

From feudal aristocracies to industrialised empires, the engine of history has always been the conflict between constantly revolutionising technologies and prevailing class conventions. With each disruption of society’s technology, the conflict between us changes form. Old classes die out and eventually only two remain standing: the class that owns everything and the class that owns nothing – the bourgeoisie and the proletariat.

This is the predicament in which we find ourselves today. While we owe capitalism for having reduced all class distinctions to the gulf between owners and non-owners, Marx and Engels want us to realise that capitalism is insufficiently evolved to survive the technologies it spawns. It is our duty to tear away at the old notion of privately owned means of production and force a metamorphosis, which must involve the social ownership of machinery, land and resources. Now, when new technologies are unleashed in societies bound by the primitive labour contract, wholesale misery follows. In the manifesto’s unforgettable words: “A society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells.”

The sorcerer will always imagine that their apps, search engines, robots and genetically engineered seeds will bring wealth and happiness to all. But, once released into societies divided between wage labourers and owners, these technological marvels will push wages and prices to levels that create low profits for most businesses. It is only big tech, big pharma and the few corporations that command exceptionally large political and economic power over us that truly benefit. If we continue to subscribe to labour contracts between employer and employee, then private property rights will govern and drive capital to inhuman ends. Only by abolishing private ownership of the instruments of mass production and replacing it with a new type of common ownership that works in sync with new technologies, will we lessen inequality and find collective happiness.

According to Marx and Engels’ 13-word theory of history, the current stand-off between worker and owner has always been guaranteed. “Equally inevitable,” the manifesto states, is the bourgeoisie’s “fall and the victory of the proletariat”. So far, history has not fulfilled this prediction, but critics forget that the manifesto, like any worthy piece of propaganda, presents hope in the form of certainty. Just as Lord Nelson rallied his troops before the Battle of Trafalgar by announcing that England “expected” them to do their duty (even if he had grave doubts that they would), the manifesto bestows upon the proletariat the expectation that they will do their duty to themselves, inspiring them to unite and liberate one another from the bonds of wage-slavery.

Will they? On current form, it seems unlikely. But, then again, we had to wait for globalisation to appear in the 1990s before the manifesto’s estimation of capital’s potential could be fully vindicated. Might it not be that the new global, increasingly precarious proletariat needs more time before it can play the historic role the manifesto anticipated? While the jury is still out, Marx and Engels tell us that, if we fear the rhetoric of revolution, or try to distract ourselves from our duty to one another, we will find ourselves caught in a vertiginous spiral in which capital saturates and bleaches the human spirit. The only thing we can be certain of, according to the manifesto, is that unless capital is socialised we are in for dystopic developments.

On the topic of dystopia, the sceptical reader will perk up: what of the manifesto’s own complicity in legitimising authoritarian regimes and steeling the spirit of gulag guards? Instead of responding defensively, pointing out that no one blames Adam Smith for the excesses of Wall Street, or the New Testament for the Spanish Inquisition, we can speculate how the authors of the manifesto might have answered this charge. I believe that, with the benefit of hindsight, Marx and Engels would confess to an important error in their analysis: insufficient reflexivity. This is to say that they failed to give sufficient thought, and kept a judicious silence, over the impact their own analysis would have on the world they were analysing.

The manifesto told a powerful story in uncompromising language, intended to stir readers from their apathy. What Marx and Engels failed to foresee was that powerful, prescriptive texts have a tendency to procure disciples, believers – a priesthood, even – and that this faithful might use the power bestowed upon them by the manifesto to their own advantage. With it, they might abuse other comrades, build their own power base, gain positions of influence, bed impressionable students, take control of the politburo and imprison anyone who resists them.

Similarly, Marx and Engels failed to estimate the impact of their writing on capitalism itself. To the extent that the manifesto helped fashion the Soviet Union, its eastern European satellites, Castro’s Cuba, Tito’s Yugoslavia and several social democratic governments in the west, would these developments not cause a chain reaction that would frustrate the manifesto’s predictions and analysis? After the Russian revolution and then the second world war, the fear of communism forced capitalist regimes to embrace pension schemes, national health services, even the idea of making the rich pay for poor and petit bourgeois students to attend purpose-built liberal universities. Meanwhile, rabid hostility to the Soviet Union stirred up paranoia and created a climate of fear that proved particularly fertile for figures such as Joseph Stalin and Pol Pot.

I believe that Marx and Engels would have regretted not anticipating the manifesto’s impact on the communist parties it foreshadowed. They would be kicking themselves that they overlooked the kind of dialectic they loved to analyse: how workers’ states would become increasingly totalitarian in their response to capitalist state aggression, and how, in their response to the fear of communism, these capitalist states would grow increasingly civilised.
Blessed, of course, are the authors whose errors result from the power of their words. Even more blessed are those whose errors are self-correcting. In our present day, the workers’ states inspired by the manifesto are almost gone, and the communist parties disbanded or in disarray. Liberated from competition with regimes inspired by the manifesto, globalised capitalism is behaving as if it is determined to create a world best explained by the manifesto.

What makes the manifesto truly inspiring today is its recommendation for us in the here and now, in a world where our lives are being constantly shaped by what Marx described in his earlier Economic and Philosophical Manuscripts as “a universal energy which breaks every limit and every bond and posits itself as the only policy, the only universality, the only limit and the only bond”. From Uber drivers and finance ministers to banking executives and the wretchedly poor, we can all be excused for feeling overwhelmed by this “energy”. Capitalism’s reach is so pervasive it can sometimes seem impossible to imagine a world without it. It is only a small step from feelings of impotence to falling victim to the assertion there is no alternative. But, astonishingly (claims the manifesto), it is precisely when we are about to succumb to this idea that alternatives abound.

What we don’t need at this juncture are sermons on the injustice of it all, denunciations of rising inequality or vigils for our vanishing democratic sovereignty. Nor should we stomach desperate acts of regressive escapism: the cry to return to some pre-modern, pre-technological state where we can cling to the bosom of nationalism. What the manifesto promotes in moments of doubt and submission is a clear-headed, objective assessment of capitalism and its ills, seen through the cold, hard light of rationality.

 

Composite: Guardian Design

The manifesto argues that the problem with capitalism is not that it produces too much technology, or that it is unfair. Capitalism’s problem is that it is irrational. Capital’s success at spreading its reach via accumulation for accumulation’s sake is causing human workers to work like machines for a pittance, while the robots are programmed to produce stuff that the workers can no longer afford and the robots do not need. Capital fails to make rational use of the brilliant machines it engenders, condemning whole generations to deprivation, a decrepit environment, underemployment and zero real leisure from the pursuit of employment and general survival. Even capitalists are turned into angst-ridden automatons. They live in permanent fear that unless they commodify their fellow humans, they will cease to be capitalists – joining the desolate ranks of the expanding precariat-proletariat.

If capitalism appears unjust it is because it enslaves everyone, rich and poor, wasting human and natural resources. The same “production line” that pumps out untold wealth also produces deep unhappiness and discontent on an industrial scale. So, our first task – according to the manifesto – is to recognise the tendency of this all-conquering “energy” to undermine itself.

When asked by journalists who or what is the greatest threat to capitalism today, I defy their expectations by answering: capital! Of course, this is an idea I have been plagiarising for decades from the manifesto. Given that it is neither possible nor desirable to annul capitalism’s “energy”, the trick is to help speed up capital’s development (so that it burns up like a meteor rushing through the atmosphere) while, on the other hand, resisting (through rational, collective action) its tendency to steamroller our human spirit. In short, the manifesto’s recommendation is that we push capital to its limits while limiting its consequences and preparing for its socialisation.

We need more robots, better solar panels, instant communication and sophisticated green transport networks. But equally, we need to organise politically to defend the weak, empower the many and prepare the ground for reversing the absurdities of capitalism. In practical terms, this means treating the idea that there is no alternative with the contempt it deserves while rejecting all calls for a “return” to a less modernised existence. There was nothing ethical about life under earlier forms of capitalism. TV shows that massively invest in calculated nostalgia, such as Downton Abbey, should make us glad to live when we do. At the same time, they might also encourage us to floor the accelerator of change.

The manifesto is one of those emotive texts that speak to each of us differently at different times, reflecting our own circumstances. Some years ago, I called myself an erratic, libertarian Marxist and I was roundly disparaged by non-Marxists and Marxists alike. Soon after, I found myself thrust into a political position of some prominence, during a period of intense conflict between the then Greek government and some of capitalism’s most powerful agents. Rereading the manifesto for the purposes of writing this introduction has been a little like inviting the ghosts of Marx and Engels to yell a mixture of censure and support in my ear.

Adults in the Room, my memoir of the time I served as Greece’s finance minister in 2015, tells the story of how the Greek spring was crushed via a combination of brute force (on the part of Greece’s creditors) and a divided front within my own government. It is as honest and accurate as I could make it. Seen from the perspective of the manifesto, however, the true historical agents were confined to cameo appearances or to the role of quasi-passive victims. “Where is the proletariat in your story?” I can almost hear Marx and Engels screaming at me now. “Should they not be the ones confronting capitalism’s most powerful, with you supporting from the sidelines?”

Thankfully, rereading the manifesto has offered some solace too, endorsing my view of it as a liberal text – a libertarian one, even. Where the manifesto lambasts bourgeois-liberal virtues, it does so because of its dedication and even love for them. Liberty happiness, autonomy, individuality, spirituality, self-guided development are ideals that Marx and Engels valued above everything else. If they are angry with the bourgeoisie, it is because the bourgeoisie seeks to deny the majority any opportunity to be free. Given Marx and Engels’ adherence to Hegel’s fantastic idea that no one is free as long as one person is in chains, their quarrel with the bourgeoisie is that they sacrifice everybody’s freedom and individuality on capitalism’s altar of accumulation.

Although Marx and Engels were not anarchists, they loathed the state and its potential to be manipulated by one class to suppress another. At best, they saw it as a necessary evil that would live on in the good, post-capitalist future coordinating a classless society. If this reading of the manifesto holds water, the only way of being a communist is to be a libertarian one. Heeding the manifesto’s call to “Unite!” is in fact inconsistent with becoming card-carrying Stalinists or with seeking to remake the world in the image of now-defunct communist regimes.

When everything is said and done, then, what is the bottom line of the manifesto? And why should anyone, especially young people today, care about history, politics and the like?

Marx and Engels based their manifesto on a touchingly simple answer: authentic human happiness and the genuine freedom that must accompany it. For them, these are the only things that truly matter. Their manifesto does not rely on strict Germanic invocations of duty, or appeals to historic responsibilities to inspire us to act. It does not moralise, or point its finger. Marx and Engels attempted to overcome the fixations of German moral philosophy and capitalist profit motives, with a rational, yet rousing appeal to the very basics of our shared human nature.

Key to their analysis is the ever-expanding chasm between those who produce and those who own the instruments of production. The problematic nexus of capital and waged labour stops us from enjoying our work and our artefacts, and turns employers and workers, rich and poor, into mindless, quivering pawns who are being quick-marched towards a pointless existence by forces beyond our control.

But why do we need politics to deal with this? Isn’t politics stultifying, especially socialist politics, which Oscar Wilde once claimed “takes up too many evenings”? Marx and Engels’ answer is: because we cannot end this idiocy individually; because no market can ever emerge that will produce an antidote to this stupidity. Collective, democratic political action is our only chance for freedom and enjoyment. And for this, the long nights seem a small price to pay.

Humanity may succeed in securing social arrangements that allow for “the free development of each” as the “condition for the free development of all”. But, then again, we may end up in the “common ruin” of nuclear war, environmental disaster or agonising discontent. In our present moment, there are no guarantees. We can turn to the manifesto for inspiration, wisdom and energy but, in the end, what prevails is up to us.

The Shakespeare Lecture - Shaking the Superflux

by Yannis Varoufakis



Since brevity is, indeed, the soul of wit, let me begin by stating the obvious: I am as qualified to deliver an annual Shakespeare lecture in this splendid theatre as an ant that walks in wonder on an iPhone is able to explain the mystery that goes on under its feet. When Professor Richard Wilson approached me out of the blue, during some political event in London, with the bewildering proposal that I appear before you tonight to talk about Shakespeare I was simultaneously flattered and incredulous. “But, Richard”, I protested “I am as far from being a Shakespeare scholar as anyone can possibly be.” Richard retorted that it is because, rather than in spite, of my not being a Shakespeare scholar that he thought I was a good fit, going on to recite – to my amazement – a long string of references I had made in books and speeches to the Bard’s lines, plays and plots.

The immediate thought that came to mind was that dropping Shakespearian quotes is often the last resort of the uninspired scoundrel and most certainly an insufficient qualification for delivering tonight’s talk. But, on top or just below the surface of that thought came the remembrance of something that gave me pause – and made me, within a minute or so, accept Richard’s kind invitation. What was this something? It was the memory of what a tremendous import drama in general and Shakespeare in particular had made to the development of my thinking about our troubled world while in geographical and cultural transit from my native Greece to England.

Arriving at the University of Essex as a 17 year old in the Fall of 1978, a few months before the Winter of Discontent, I faced two immediate challenges. The first was the sense of impotence at the realisation that, while my English was passable, by leaving Greece I had lost the capacity to persuade; a capacity which I had worked hard to acquire in my own tongue as a politicised teenager during the course of a fascist dictatorship’s reign and after its collapse in the summer of 1974. The second challenge was how to take seriously my economics lecturers whose narratives of what makes societies tick seemed to me at once technically fascinating and utterly unfit to illuminate human economies. Shakespeare became my aide and counsel in the attempt to face both challenges.

While finding my feet here in England, I recalled how my Greek had improved through exposure to ancient Greek drama, how Antigone’s and Prometheus’ dilemmas had informed my politics and, yes, the resonance I felt when reading a copy of Hamlet that my father had lying about in our living room – a splendid modern Greek translation that pushed the boundaries of demotic Greek to limits usually reserved for original texts. Back then, in Athens, I had become intrigued with Jean Paul Sartre’s Marxist existentialism and was overjoyed to encounter the Prince’s existentialist angst without the tedium and obfuscation of French philosophy. And so it was that, weeks after arriving in this country, I invested in a cheap edition of Shakespeare’s collected works. The original motive was, I confess, instrumental: I was dying to improve my English so as to elevate my powers of persuasion in a new environment where, as I declared in a students’ union assembly, “We Greeks, perhaps along with the Irish, are the blacks of Europe”. Nevertheless, very, very soon I realised that Shakespeare’s plays could also shore up my courage to confront my economics textbooks and lecturers – indeed to look at them with a combination of sympathy and pity, before switching degrees from economics to mathematics. (Why stick to third-rate mathematics, which is a fair assessment of mainstream economics, when one can read mathematics-proper and, in one’s spare time, read the classic works of political economy that modern Universities, to their detriment, never teach anyway?) Thus, during my undergraduate years I spent my spare time immersed in two splendid Anglo-Celtic traditions:

On the one hand, there were the beautiful classic texts of David Hume, Adam Smith, Alfred Marshall and John Maynard Keynes. And on the other hand, the Bard. The contrast was astonishing. Searching for the roots of contemporary economic thinking, I hit upon David Hume’s Treatise of Human Nature. In it I discovered a striking axiom: “We speak not strictly and philosophically when we talk of the combat of passion and reason. Reason is, and ought only to be the slave of the passions, and can never pretend to any other office than to serve and obey them.” Our acts, in other words, spring naturally from our passions with Reason playing the role of a pair of impartial scales weighing up the passions and instructing us to act in a manner that serves the mightiest of them all, with no capacity whatsoever to trump any passion as irrational or wrong. Our sense of right and wrong is, in Hume’s thinking, an illusion, albeit a terribly useful one. For Hume, a convention emerges that we ride our horses on the left hand side of the road simply because if no such convention prevails we shall keep bumping into one another. Then, without realising it, the prediction that the next rider we come across will keep left becomes transformed into a normative belief that the next rider ought to keep left. Soon we believe deeply that riders who do not keep left are… morally defective! Having acquired this moral veneer, having become an ‘artificial virtue’ (Hume’s term), the convention becomes evolutionarily more stable when we are morally outraged whenever someone violates it. Thus conflict is minimised and, eventually, the convention turns into Common Law. Adam Smith, Hume’s disciple, took matters further in establishing an economic theory in defence of the market societies that were emerging then and which prevail to this day – capitalism in one word: Have you noticed how economists defend free-market capitalism as the best antidote to the inevitability of human belligerence? It is this pessimistic take on human nature that lies behind the celebration of markets as realms in which, as Adam Smith claimed, the common good is best served as long as people have no interest in serving the common good, too busy pursuing their private passions relentlessly. Provided markets are allowed to work without interference, harsh forces of demand and supply motivated by our greed power up an invisible hand which, behind our backs, harnesses our vices and channels our energies to serve the common good. Celebrating the selfish entrepreneur, Adam Smith wrote in the Wealth of Nations: “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.” Private vices, in short, lead to public virtues as long as Hume’s sacralised conventions provide the legal framework. But they do so as long as we are motivated not by public virtues but, instead, by our private vices. Paradoxically, conflict driven by selfishness is at once the guarantor that market societies work harmoniously and the cause of its own demise.

To a young, leftist Greek, reading the British political economists from the original was at once enthralling and deeply dissatisfying. I could see that their argument was intriguing, superb and packed the mighty punch that only paradox can deliver. But in my bones I knew they had utterly missed the point about human nature the moment they assumed, along with Hume, that Reason is a mere slave of passions which, after Jeremy Bentham had finished with them, had boiled down to a single passion: a passion for a uni-dimensional thing called satisfaction or utility. Thankfully, the excited anger I felt at these brilliant political economists found an outlet. Theatre in general, and Shakespeare in particular, were my solace and the support mechanism that quelled my anger. “Unity, however desirable in political agitations”, I remember reading from a preface George Bernard Shaw wrote to one of his plays, “is fatal to drama.” No conflict no drama. “And without drama human reason atrophies”, I wrote on the margin. “The quintessential drama”, continued Shaw, is “at its best in conflict with the first broken, nervous attempts to formulate its own revolt against itself as it develops into something higher.” “That’s it!”, I surmised. That’s what is missing in Hume, in Smith and, much more so, in the infinitely inferior modern economics textbooks: the creative power of conflict without which human reasoning cannot rise higher, above that of cats, dogs and computers who also possess an instrumental Reason, a Reason that is the slave of their passion, their programming; a Reason lacking the ability to ask itself the hard question: “I crave X. I am programmed to crave X. But should I crave X?” The very question that is at the heart of the ancient Greek tragedies and, of course, Shakespeare.

Every time I felt exasperated by political economy’s sad depiction of humanity I would turn to my, by now, tattered Shakespeare volume. And when I was ready to put together my first single-authored book, under the telling title Rational Conflict, published eventually by Blackwell’s in 1991, I turned it into a battleground on which Shakespeare, Aeschylus and Sophocles clashed mercilessly with the economists’ army of assumptions and models. In the Preface I wrote that, while a world without conflict is a laudable objective, unless we understand the creative function of conflict in helping to fashion the individual and shape society, a conflict-free utopia will move further away as our grasp of our present circumstances, which engender hideous conflicts, remain incomplete. Of course, there is no doubt that, at times, we all wish that our Reason became Sovereign leading, with the help of the invisible hand of unintended consequences, to a benign equilibrium which negates conflict. Enlisting Hamlet to make the point that he put to Horatio, I quoted:

…and bless’d are those/ Whose blood and judgement are so well comingled,/ That they are not a pipe for fortune’s finger/ To sound what stop she pleases. Give me that man/ That is not passion’s slave, and I will wear him/ In my heart’s core, oy, in my heart of heart,/ As I do thee (Act III, ii, 73)

And there’s the rub, which economists cannot recognise: How to comingle our blood and judgment without being our passion’s slave. Economists love to think of themselves as the scientists of society. In that book I angered my profession by arguing that economists are merely storytellers. Indeed, we tell meta-stories, stories about stories (also called social theories) the purpose of which is to help us understand a social world that is constantly under construction around us, and within which we are both active contributors and incessant interpreters. Incapable of a genuine Archimedean perspective, from which to judge simultaneously both our world and our account of it, we resort to analysing and re-analysing the sort of stories we tell ourselves about our selves. In a chapter entitled “The economist as playwright” I asked the question: Can good theatre be written without violating the axioms of economics? And if it can’t is this proof that theatre has little to teach us about economic life or, more plausibly, that economics misses the essence of society – thus explaining how a smart woman like Margaret Thatcher could have concluded, once she immersed herself into neoliberal economics, that there is no such thing as society – only individuals doing what they like and liking what they do?

How did Macbeth, I asked, choose his path after having listened to the witches’ prophecy that he will become King of Scotland? If his choices were predetermined, the play becomes processional and… boring. But could an economist ever conceptualise Macbeth’s choices as genuinely hard and ex ante indeterminate? Recall that for economists we are all bargain hunters incapable of resisting anything that will increase our net expected utility gains by a smidgen of an iota. We only hesitate in front of equally profitable options. So, for Macbeth to hesitate before plunging his dagger into Duncan’s sleeping body, his expected gains from committing and not committing the first crime in the Scottish play must have been equal. But then how did he, in the end, choose? The only answer an economist can give without abandoning her theoretical take is by imagining that he decided by tossing a coin. And similarly with Sophocles’ depiction of Antigone’s impossibly hard choice to burry or not to burry her fallen brother; to respect the rule of law or to follow her conviction that a higher, an ethical law, compelled her to break her state’s law. My conclusion was simple: If Macbeth and Antigone, Shakespeare and Sophocles, made these choices as if by randomising, the resulting plays would have been confined long ago to the dustbin of cultural history. And this tells us that there is something profoundly amiss with the economists’ logic. But what exactly is it that is amiss?

It is, I continued, the possibility that a rational person, unlike any cat, dog or computer algorithm, has the capacity to defy the programming that nature and nurture has hardwired into her mind. Unlike any android or animal, Macbeth and Antigone can defy their dominant strategy for rational reasons external to their calculus of utility, passion, preference or desire. They can reason in ways that Hume and the economists would never concede. Even if we rarely rise to the occasion, even if we live life mostly as automata, the very fact that we can, with good reason, potentially deviate from the path that would ostensibly best serve our existing passions and preferences is what makes us human – and plays like Macbeth and Antigone timeless. With this capacity in the air, the audience, on the edge of their seats, suddenly expect the unexpected at every moment because ‘uniqueness’ no longer guarantees determinism. They anticipate dramatic choices not only when the alternatives are equally inviting for the characters but even when they are not!

On this account, Aeschylus raised Prometheus from the obscurity and banality of the Hesiodic tale by empowering him to experiment with a subversive, a deviant act whose merits escape anyone motivated solely by the question: “What’s in it for me?” Of course, other more cynical interpretations are always available. Prometheus could simply be suffering from imperfect information; failing to predict the punishment Zeus would inflict on him for giving humanity the gift of fire, of technology. Even worse, Prometheus could have enjoyed martyrdom, in a masochistic sort of way, or might have cared for his heroic profile enough to think of the ensuing, interminable pain a reasonable price to pay – a form of investment. However, these interpretations cheapen the character created by Aeschylus. No tragedy is worth its salt if it is based on the exploits of a hero who simply miscalculated or who unexpectedly learnt how to derive masochistic pleasures when things turned out differently to his original plan.

These musings gradually culminated, toward the end of my book, to the conclusion that high theatre, just like free will, is impossible without radical indeterminacy. But even if we agree that indeterminacy is a prerequisite for a good play, it is not enough. Something must help us understand the manner in which the protagonist eventually dissolves the indeterminacy and chooses her actions. And that something better not be a randomisation, the tossing of a coin. We may never be able to put our finger on it but, and this is the stuff of good theatre, as the drama unfolds we recognise the reasons that led her to the deviant actions. Macbeth adds crime to crime, as a result of successive choices that he ‘fell’ into when ‘murder’ was one of several options. He then emerges defeated while simultaneously victorious. Powerless while fully in power, and more powerful than ever in defeat! When he achieves clarity toward the play’s end, he tells us that he wished his ‘beliefs’ were expunged:

Canst thou not minister to a mind diseas’d,/ Pluck from the memory a rooted sorrow,/ Raze out the written troubles of the brain,/ And with some sweet oblivious antidote/ Cleanse the stuff’d bosom of that perilous stuff/ Which weighs upon the heart (Macbeth, V,iii,40-44)

But at the same time when forced to choose between a dignified and a humiliating death he re-discovers his dignity:

…Lay on Macduff,/ And damn’d be him that first cries, ‘Hold, enough!’ (Macbeth, V,vii,62-3)

The economist, I argued, can only see in Macbeth an irrational agent who miscalculated or who was imperfectly informed. What they ignore purposely is the absurdity of their axiom that Macbeth’s motivation, his personality, determines unidirectionally his choices. They need to make this assumption because, once choice contaminates motivation, motivation cannot fully determine the choice. Indeterminacy is, therefore, irrepressible not just as the stuff of good theatre but also as a prerequisite for human development and a decent understanding of economic life. Here is where I must introduce another Greek word, praxis, which I shall juxtapose against its English equivalent: action or choice. The difference of praxis, in the ancient Greek meaning, from a mere act or choice is the potential to generate not only events but also to re-shape the actor, the decision-maker, the doer. The importance of praxis for deciding what kind of theatre and economics we want is not hard to discern: Macbeth’s tragedy is not so much about his fate and final destruction, not about the outcome per se, as it is about the transformation of his self through praxes – a transformation that the theoretical economist cannot concede without losing a capacity to solve her models and to deliver economic forecasts. Even sophisticated economics, that takes a Darwinian view and depicts behaviours as memes that adapt and mutate, can only solve their model if these ‘mutations’, our deviant actions, are statistically uncorrelated ‘mutations’ – in other words, actions which, unlike praxes, cannot be causally linked to the evolution of character.

If we are to make room for a proper two-way process, from self to action and from action to self (the process that I call praxis), theatre regains its potency and meaning while the models economists teach in our universities collapse into a heap. Why? Because no mathematical model of behaviour can be solved if it allows for this two-way street, where motives beget actions and actions alter the motives. This backwards and forwards between motives and actions renders the models indeterminate – something like a system of two equations in more than two unknowns. Still, praxis is the very essence of good plays like Antigone and Macbeth where acts flow from motives but then shape who they truly are. The great danger here is that we go from the extreme of the economists’ determinism to a relativism which, while acknowledging indeterminacy, portrays Macbeth’s actions as arbitrary and non-rational – as a postmodern agent for whom any behaviour is as good as any other. The essence of good theatre, and good economics, I tried to convince my readers and students, is the possibility of having a complete, modernist, riveting script without determinism. The key is the admittance into the plot of twists that defy the protagonists’ ostensibly most profitable, their optimal strategy, and in so doing capture the audience’s imagination while explaining how history accelerates when humans rationally defy, in today’s parlance, their own software. It is only when characters who reasonably and purposely deviate from some uniquely attractive choice that we learn something momentous about both the said characters and the human condition – for example Prometheus’ theft of fire on behalf of humanity or Brutus’ decision to put the Republic above his friendship with Julius Caesar. The question, then, becomes: Where does the rationality of deviant behaviour come from if not from the calculus of desire or the Humean balancing act between competing passions? The difference, I submit, between a hero and a rational lunatic is elusive when the reasons supporting an action are strictly internal to one’s passions, desires, preferences. If Prometheus had reasons for serving humanity exclusively internal to his passions, or Brutus was a personal gratification maximiser who computed that his inter-temporal net utility was maximised by murdering Caesar, their choices would not be dissimilar to those of a terrorist who blows himself up in a crowded square calculating that his expected net gains from martyrdom in Heaven outweigh the damage he is about to inflict on Earth. Indeed, toning down the drama, let’s for a moment think of the difference between a kleptomaniac and a shoplifter. The kleptomaniac acts on pathological reasons external to any Humean calculus of passions or desire. The shoplifter on the other hand is a calculating agent acting on internal reasons. The question is: Unlike in the case of the kleptomaniac who is incapable of rational control over of his external reasons for action, can external reasons be marshalled by a rational will? Prometheus and other heroic figures may only be different from fanatics to the extent that they choose rationally to ignore what passes through the Humean gate of instrumental reasoning. They act upon principles of what is right that set aside as irrelevant their passions or any prospective satisfaction from their action. Of course, every sword is double-edged. Richard the Third gate-crushes this discussion of rational heroes because he too struggles to will himself to actions underpinned by reasons external to his calculus of preference. Except that he wills himself to be evil! Perhaps Shakespeare’s most precious lesson, for me at least, is that external reasons for action – reasons that economists can by definition never grasp – are the true makings of both true heroes and true villains.

Now, I have been talking about Sophocles, Aeschylus and Shakespeare in the same breath. It is often said that Shakespeare differs from the Greeks in that he is happy to leave his plays open-ended, content to put indeterminacy on the stage and leave it there as the curtain falls. In contrast, the Greeks need their catharsis, often brought onto the stage by a Deus ex Machina. While I understand this argument, I do not share it. Catharsis takes many different forms. For instance Brutus running toward the sword held by a loyal servant is cathartic, especially in view of Anthony’s eulogy later. Or Prospero’s final act of giving up his sorcery and his books as justice is restored. Indeterminacy also takes many different forms and is as much part of the Greek tradition as it is prevalent in Shakespeare. What makes it so is a readiness to infuse rationality with irrationality in the defence of deviance and rebelliousness. Yes, Prometheus in the end is spared but the real catharsis for the audience comes from his rational selection of a seemingly irrational but worthy choice. Medea commits the most heinous crime known to man, maddened by pain, but her defiant act is a supreme, rational and very contemporary rebellion against women’s objectification. How the play ends does not matter much, at least to me. It is how a play is staged that brings out the sheer beauty and creative power of resolved indeterminacy. Run-of-the-mill Hollywood movie makers and economists alike think of actors as people shedding their personality, stepping into predetermined roles, and struggling to impersonate some character whose entire presence flows from the script. But, what distinguishes high theatre and great movies from third-rate drama is that it gives actors a chance not to impersonate the character but to personify the character. They get an opportunity to bring on stage their selves, their own interpretation of the inner conflict that characterises the choice of some deviant strategy with no need either for a predetermined take on events or for an open-ended, relativist, postmodern, multi-player video game-like, script. Since the coexistence of Reason and Unreason in the same behavioural pattern is inherently confusing, the actor can draw from her own past whatever is necessary to convey the intensity of such choices.

Does any of this matter beyond the world of theatre? I think it does, and that Shakespeare demonstrates this amply. He shows that to understand conflict in the social world around us it is obligatory to look into a conflicted heart overseen by a bright mind – whether that is Richard the 3rd, Macbeth, Brutus or Shylock. If we are to follow him without abandoning the realm of rational analysis, the only option is to enrich our perception of it. Rejecting the economists’ mindset in favour of Shakespeare’s is an excellent start. And not just for the benefit of humanist studies, good literature or excellent theatre. No, we need to abandon the economists’ mindset in the interests of good economics and of a better social order too. Let me speak to this very briefly. Remember the collapse of international finance in 2008, our generation’s 1929? Remember how for two decades prior to that bankers built up mountains of private money in the form of terribly complicated forms of debt – derivatives as they called them? Did they not get what small children on the beach learn through building sandcastles; that at some point if you keep piling sand on top of sand, paper assets on top of paper assets, your pile will tumble down? No, they did not. Why not? Because they were building their toxic derivatives on the basis of mathematical equations that predicted their value and reported to them every morning and every night how much money they stood to lose that day. Until the very last moment, when the bottom fell out of all financial markets at once, and we had to bailout them out at the expense of a lost generation, their mathematics were telling them that their potential losses were tiny. Why were their equations so badly wrong? For a simple reason: The financier’s models were built on the assumption that the probability of correlated losses was tiny. Insurance companies have every reason to think that when it comes to accident insurance. What is the probability that if Ann breaks a leg skiing in Switzerland will be causally related to you breaking a leg when walking home tonight? Zero. Taking their cue from this, they assumed that the probability of correlated bankruptcies was close to zero; that the chances that Jill would go bankrupt because Jack did were nil. What they forgot was that, in a crisis, almost everyone goes bankrupt at once. It was the equivalent of assuming that the probability of the crisis they were trying to predict is… zero. They resembled meteorologists who tried to predict the probability of a tornado once he has assumed that no tornado can ever happen – poor Michael Fish! The question of course is: Where did the financiers find the confidence to make such an absurd assumption? And the answer is… In the economists’ theoretical models which assume away praxis, reducing it to acts motivated purely by internal reasons, before also assuming that greed and conflicting interests will always and necessarily lead to an equilibrium that serves the public interest because everyone is as uninterested in the public interest, and as self-serving, as the financiers knew themselves to be. In short, while economists did not commit the crimes, they provided the theories, the latter-day sermons, that steadied the hands that pulled the trigger, that gave the financiers the confidence to jeopardise everyone’s well being. And the gist of those models was the axioms about human nature and rational choice that, if allowed to infect theatre, would produce terrible theatre – economic axioms that anyone who read a tattered copy of Shakespeare’s Collected Works as a younger woman or man would instantly dismiss.

Yes, ladies and gentlemen, just in case I have not made myself clear on this, I am indeed arguing that Shakespeare should be compulsory reading for economics students. Sophocles, Marlow, Shelley, and Aeschylus too. Perhaps the only thing that economics students should not be allowed to read is… economics textbooks: the type of book written as if to make it impossible for its readers to recognise, let alone analyse, really existing capitalism. This being a paradox that I could speak forever on, let me fast forward to the era after 2008, once the financiers had created a dystopian post-2008 world which is impossible to understand in pre-2008 terms and which is, increasingly, resembling a post-modern version of the 1930s.

As is, alas, well known, my country went bankrupt in 2010. And the oligarchies, Greek and European, in power decided to cover it up by means of largest loan in History to the most bankrupt European state – money that was, always, meant to flow on to France’s and Germany’s bankrupt bankers while the Greeks were thrown indefinitely into debtor’s prison and treated to the harshest austerity this planet has ever seen. Yes, there was method to the madness of the powers-that-be, just as in any Shakespearean play. Watching them stumble from one idiotic decision to the next, making things up as they were going along, and intensifying the crisis that they were trying to quell, was like watching a version of Othello, wondering how smart people could be so foolish, or of a Macbeth scheming in the land of Oedipus. Like King Laius of Thebes unwittingly brought about his own murder by his son Oedipus because he believed the prophecy that Oedipus would kill him once he grew up, so too did Europe’s Deep Establishment, in a bid to save their bankers while safeguarding their legitimacy, undermined their legitimacy by committing successive, Macbeth-like, crimes against logic – so much so that, today, the so-called political centre traditionally in the service of the Establishment lays in ruins everywhere in Europe: Think France, Austria, Germany, recently Italy, where political monsters are rising up across Europe bringing to mind Brutus’ line in Julius Caesar about the hatchling of the serpent’s egg that must be “killed in the shell” before it emerges. Except that, instead of crushing the shell before the new serpents hatched, the Establishment kept it warm, facilitated its hatching, and is now repeatedly bitten by them.

In my recent memoir, Adults in the Room, I recount how at the end of my first meeting with the Managing Director of the International Monetary Fund, at the meeting’s end, walking towards the door, we got a chance for a short, relaxed but telling tête-à-tête. Taking her cue from the points I had raised, Christine Lagarde surprised me by seconding my appeals for debt relief and lower tax rates as prerequisites for a Greek recovery. With calm and gentle honesty she said: “You are of course right, Yanis. These targets that we insist on can’t work. But, you must understand that we have put too much political capital into this program. We cannot go back on it. Your credibility depends on accepting and working within this program.” My jaw dropped before a smile emerged from within as I recalled a far better phrasing of her confession. Lagarde might as well have said: “What’s done cannot be undone.” Or, even more to the point,

…I am in blood/ Stepped in so far that, should I wade no more,/ Returning were as tedious as go o’er.

Turning to the challenge of writing up that memoir, it must be said that no account by any protagonist to a cutthroat drama can escape bias or the desire for vindication. To be as fair and impartial as possible, I tried to see their actions and my own through the lens of a Shakespearean play, like for example Julius Caesar, in which fallible characters, neither good nor bad, are overtaken by the unintended consequences of their conception of what they ought to do. Most of the persons I encountered and wrote about in Adults in the Roombelieved they were acting appropriately, but, taken together, their acts produced misfortune on a continental scale. Is this not the stuff of Sophocles and Shakespeare? Indeed, with every meeting, especially with the troika’s smarter and less insecure officials, the impression grew on me that this was not a simple tale of us against them, good versus bad. I witnessed how the moment the supremely powerful recognised their powerlessness, the hatches were battened down and official denial prevailed. Even when it was abundantly clear that they would get less money from Greece if they strangled us, than if they accepted my proposals, Shylock-like they demanded their pound of flesh from the Greek people. Yes, ladies and gentlemen, I had the unenviable job of negotiating – like Bassanio – with creditors who did not want their money back. And while sorrows came to my people, not as single spies, but in battalions, the consequences of the tragic impasse Europe’s Establishment created were left to unfold on autopilot, imprisoning them further in a situation they detested. This impression became ever so clear in my final meetings with the German finance minister, his shoulders drooping from the realisation that, despite his immense power, he was powerless to do what deep down he thought right.

As in all tragedies, the most thankless and painful of tasks is working out how one could have been fooled by one’s comrades. People ask me on the street: Why did you not see that your comrades were, Iago-like, plotting your defeat from Day 1? The simplest explanation is, of course, that I was another fool indulging a penchant for wishful thinking, projecting on comrades qualities they lacked. Be that as it may, a puzzle remains: Why was I not fooled by most of them – whom I recognised as plotters of our surrender from very early on – but I did not see my Prime Minister’s machinations coming? The answer I came to, in the end, is that he, Alexis, was the only character that was not banal in Hannah Arendt’s sense of the term. He had to talk himself into crossing his own red lines, which is the opposite of never having the intention of keeping to them. I can imagine Alexis saying to himself, Richard the 3rd-like:

And therefore, since I cannot prove a rebel,/ To entertain these fair well-spoken days,/ I am determined to prove a villain.

He struggled to reconcile himself to betraying our red lines, to find peace in crossing them. It was, I am convinced, his inner voice that was both his strength and his downfall, both the usurper of our common project and the reason why I believed him almost to the bitter end.

A few weeks ago a highly sympathetic review of Adults in the Room appeared in the New York Review of Books, authored by a good, solid Columbia University economist. In his concluding remark he writes: “Varoufakis adorns his narrative with references to… tragedy… As far as the eurozone is concerned these are largely beside the point. What he has actually given us is something more prosaic but no less important: a deeply reflective, first-person insight into the workings of modern power and politics.” This is proof that economists, even decent ones, simply do not get it. They do not get that a proper insight into the workings of modern power and politics is impossible without the perspective of a Shakespeare or a Sophocles. Economists must, I submit to you, be deprogrammed before they begin to see that justice is not a matter of how the superflux, the economic surplus, is redistributed away from those with the power to extract it. Shakespeare’s plays shine a brilliant light on the established powers’ desperate attempts to avoid ethical accountability. They insist that ethics is for wimps, that the strong do as they will, and the weak suffer what they must. But, in the end, unjust power gets its comeuppance in proportion to its magnitude. What Shakespeare has taught me, and I shall be forever grateful for this lesson, is that what passes for political realism has no capacity to hold our societies together because in the end it is… utopian to believe that the few can oppress and exploit the many sustainably without becoming enslaved by their own insecurity, paranoia and, in the end, induced incompetence. As my friend Slavoj Zizek said in a message of support of MeRA25, the new Greek political party that we are about to found in Athens next Monday: “We are not dreamers. While the true utopians sit in their comfortable fat chairs in Brussels, we are the agents of the European awakening.”

But, lest I turn this into a party political broadcast, let me go back to the superflux and what shaking it profitably for human society and human flourishing means. It cannot mean, despite rumours to the contrary, philanthropy or mere redistribution of the establishment’s loot. Philanthropy, and altruism, when extreme in magnitude, lead to bankruptcy and, ultimately to misanthropy – as Shakespeare demonstrates in Timon of Athens. And when milder, philanthropy or redistribution of the sort that King Lear thinks he should have practised when he had the chance, it becomes an engine that reproduces privilege and exploitation. Permit me to state this: Nothing is more dangerous to society than a ruling class on good terms with its conscience. No! In my estimation, shaking the superflux, “showing the heavens more just”, requires much, much more than sharing the surplus more ‘fairly’. It requires solidarity with the exploited which, in turn, requires that we work tirelessly to abolish the main cause of systemic misery: institutionalised exploitation – especially if this means the abolition of our privileges and power that, in the end, makes even the powerful feel empty vessels, powerless playthings of forces beyond their control.

From this perspective, to shake the superflux, and not just to stir it pitiably, the last thing we need are sermons on the injustice of it all, denunciations of rising inequality, or vigils for our vanishing democratic sovereignty. Nor should we stomach desperate acts of regressive escapism to some pre-modern, pre-technological, parochial nation-state where we can cling to the bosom of nationalism. (I promise that, tonight, this shall be my sole allusion to Brexit.) No, what we need is to grasp the tragic dynamic of capitalism. When journalists ask me how can a smart person still declare himself a Marxist, albeit an erratic one, I respond thus: If capitalism appears unjust, it is because it enslaves everyone, rich and poor, capitalist and worker, wasting human and natural resources. The problematic nexus of capital and waged labour stops us from enjoying our work and our artefacts, and turns employers and workers, rich and poor, into mindless, quivering pawns who are being quick-marched towards a pointless existence by forces beyond our control. The same ‘production line’ that pumps out untold wealth also produces deep unhappiness and discontent on an industrial scale. This perspective, that guides my thinking every day, I owe as much to Marx as I do to Shakespeare.

So, our first task must be to recognise the tendency of capital – this all-conquering economic ‘energy’ – to undermine itself. Can there be a more Shakespearean take on our society’s condition? Think back to the opening line of the Communist Manifesto: ‘A spectre is haunting Europe.’ Like Hamlet confronted by the spectre of his slain father, the reader is compelled to wonder: Should I conform to the prevailing order, suffering the slings and arrows of the outrageous fortune bestowed upon me by history’s technology-driven, irresistible forces? Or should I join these forces, taking up arms against the status quo and, by opposing it, usher in a brave new society? Should I adapt this idiotic world to my beliefs or my beliefs to this idiotic world? Depending on how we each answer Hamlet’s re-worked question, humanity may succeed in securing social arrangements which, with the help of our new robotic slaves, will allow for ‘the free development of each’ as the ‘condition for the free development of all’. But, then again, we may end up in the ‘common ruin’ of nuclear war, environmental disaster, or agonising discontent as the superflux, unshaken, is concentrated more and more in the hands of the powerless powerful.

There are no guarantees – just as in Shakespeare’s plays where indeterminacy rules supreme and catharsis is in the eye of the beholder. This is why democratic politics is indispensable. But isn’t politics stultifying, especially socialist politics, which Oscar Wilde once claimed ‘takes up too many evenings’? The answer is: Because we cannot end this idiocy individually! Because, no market-based mechanism can ever emerge that will produce an antidote to this stupidity and shake the superflux. Collective, democratic political action is our only chance for freedom and enjoyment. Maybe, as the establishment is turning Parliament into farce we must turn our theatres into Parliaments. And for this, the long nights seem a small price to pay.

The Nature of Money, Modern Money and Bitcoin

Yanis Varoufakis

Video 2 - Political Economy - The Red Pill in Social Sciences

The six Brexit traps that will defeat Theresa May

Yanis Varoufakis


“It’s yours against mine.” That’s how Wolfgang Schäuble, Germany’s finance minister, put it to me during our first encounter in early 2015 – referring to our respective democratic mandates.

A little more than two years later, Theresa May is trying to arm herself with a clear democratic mandate ostensibly to bolster her negotiating position with European powerbrokers – including Schäuble – and to deliver the optimal Brexit deal.

Already, the Brussels-based commentariat are drawing parallels: “Brits fallen for Greek fallacy that domestic vote gives you stronger position in Brussels. Other countries have voters too,” tweeted Duncan Robinson, Brussels correspondent of the Financial Times. “Yep,” tweeted back Miguel Roig, the Brussels correspondent of Spanish financial daily Expansión. “Varoufakis’ big miscalculation was to think that he was the only one in the Eurogroup with a democratic mandate.”

In truth, Brussels is a democracy-free zone. From the EU’s inception in 1950, Brussels became the seat of a bureaucracy administering a heavy industry cartel, vested with unprecedented law-making capacities. Even though the EU has evolved a great deal since, and acquired many of the trappings of a confederacy, it remains in the nature of the beast to treat the will of electorates as a nuisance that must be, somehow, negated. The whole point of the EU’s inter-governmental organisation was to ensure that only by a rare historical accident would democratic mandates converge and, when they did, never restrain the exercise of power in Brussels.
In June 2016, Britain voted, for better or for worse, for Brexit. May suddenly metamorphosed from a soft remainer to a hard Brexiteer. In so doing she is about to fall prey to an EU that will frustrate and defeat her, pushing her into either a humiliating climb-down or a universally disadvantageous outcome. When the Brussels-based group-thinking commentariat accuse Britain’s prime minister, without a shred of evidence, of overestimating the importance of a strong mandate, we need to take notice, for it reveals the determination of the EU establishment to get its way, as it did when I arrived on its doorstep, equipped with my mandate.

When I first went to Brussels and Berlin, as Greece’s freshly elected finance minister, I brought with me a deep appreciation of the clash of mandates. I said as much in a joint press conference with Schäuble in 2015, pledging that my proposals for an agreement between Greece and the EU would be “aimed not at the interest of the average Greek but at the interest of the average European”. A few days later, in my maiden speech at the Eurogroup of eurozone finance ministers, I argued: “We must respect established treaties and processes without crushing the fragile flower of democracy with the sledgehammer that takes the form of statements such as ‘Elections do not change anything’.” May will, I presume, go to Brussels with a similar appreciation.

When Schäuble welcomed me with his “it is my mandate against yours” doctrine, he was honouring a long EU tradition of neglecting democratic mandates in the name of respecting them. Like all dangerous hypotheses, it is founded on an obvious truth: the voters of one country cannot give their representative a mandate to impose upon other governments conditions that the latter have no mandate, from their own electorate, to accept. But, while this is a truism, its incessant repetition by Brussels functionaries and political powerbrokers, such as Angela Merkel and Schäuble himself, is intended to convert it surreptitiously into a very different notion: no voters in any country can empower their government to oppose Brussels.


There is a long EU tradition of neglecting democratic mandates in the name of respecting them

For all their concerns with rules, treaties, processes, competitiveness, freedom of movement, terrorism etc, only one prospect truly terrifies the EU’s deep establishment: democracy. They speak in its name to exorcise it, and suppress it by six innovative tactics, as May is about to discover.

Time to listen in, Theresa. Photograph: Russell Cheyne/Reuters

The EU runaround 

Henry Kissinger famously quipped that when he wanted to consult Europe, he did not know whom to call. In my case it was worse. Any attempt to enter into a meaningful discussion with Schäuble was blocked by his insistence that I “go to Brussels” instead. Once in Brussels, I soon discovered that the commission was so divided as to make discussions futile. In private talks, Commissioner Moscovici would agree readily and with considerable enthusiasm with my proposals. But then his deputy in the so-called Eurogroup Working Group, Declan Costello, would reject all these ideas out of hand.

The uninitiated may be excused for thinking that this EU runaround is the result of incompetence. While there is an element of truth in this, it would be the wrong diagnosis. The runaround is a systemic means of control over uppity governments. A prime minister, or a finance minister, who wants to table proposals that the deep establishment of the EU dislike is simply denied the name of the person to speak to or the definitive telephone number to call. As for its apparatchiks, the EU runaround is essential to their personal status and power.

Picking opponents

From my first Eurogroup, its president, Jeroen Dijsselbloem, the Dutch finance minister, began an intensive campaign to bypass me altogether. He would phone Alexis Tsipras, my prime minister, directly – even visiting him in his hotel room in Brussels. By hinting at a softer stance if Tsipras agreed to spare him from having to deal with me, Dijsselbloem succeeded in weakening my position in the Eurogroup – to the detriment, primarily, of Tsipras.

The Swedish national anthem routine

On the assumption that good ideas encourage fruitful dialogue and can be the solvents of impasse, my team and I worked hard to put forward proposals based on serious econometric work and sound economic analysis. Once these had been tested on some of the highest authorities in their fields, from Wall Street and the City to top-notch academics, I would take them to Greece’s creditors in Brussels, Berlin and Frankfurt. Then I would sit back and observe a symphony of blank stares. It was as if I had not spoken, as if there was no document in front of them. It would be evident from their body language that they denied the very existence of the pieces of paper I had placed before them. Their responses, when they came, would be perfectly independent of anything I had said. I might as well have been singing the Swedish national anthem. It would have made no difference.

The Penelope ruse

Delaying tactics are always used by the side that considers the ticking clock its ally. In Homer, Odysseus’ faithful wife, Penelope, fends off aggressive suitors in her husband’s absence by telling them that she will announce whom among them she will marry only after she has completed weaving a burial shroud for Laertes, Odysseus’ father. During the day she would weave incessantly but at night she would undo her work by pulling on a loose string.

In my negotiations in Brussels, the EU’s Penelope ruse consisted, primarily, of endless requests for data, for fact-finding missions to Athens, for information about every bank account held by every public organisation or company. And when they got the data, like the good Penelope, they would spend all night undoing the spreadsheets that they had put together during the day.

Truth reversal

While practising the Swedish national anthem and Penelope ruse tactics, the Brussels establishment utilised tweets, leaks and a campaign of disinformation involving key nodes in the Brussels media network to spread the word that I was the one wasting time, arriving at meetings empty-handed; either with no proposals at all or with proposals that lacked quantification, consisting only of empty ideological rhetoric.

Sequencing

The prerequisite for Greece’s recovery was, and remains, meaningful debt relief. No debt relief meant no future for us. My mandate was to negotiate, therefore, a sensible debt restructure. If the EU was prepared to do this, so as to get as much of their money back as possible, I was also prepared for major compromises. But this would require a comprehensive deal. But, no, Brussels and Berlin insisted that, first, I commit to the compromises they wanted and then, much later, we could begin negotiations on debt relief. The point-blank refusal to negotiate on both at once is, I am sure, a colossal frustration awaiting May when she seeks to compromise on the terms of the divorce in exchange for longer-term free trade arrangements.

So what can Theresa May do?

The only way May could secure a good deal for the UK would be by diffusing the EU’s spoiling tactics, while still respecting the Burkean Brexiteers’ strongest argument, the imperative of restoring sovereignty to the House of Commons. And the only way of doing this would be to avoid all negotiations by requesting from Brussels a Norway-style, off-the-shelf arrangement for a period of, say, seven years.

The benefits from such a request would be twofold: first, Eurocrats and Europhiles would have no basis for denying Britain such an arrangement. (Moreover, Schäuble, Merkel and sundry would be relieved that the ball is thrown into their successors’ court seven years down the track.) Second, it would make the House of Commons sovereign again by empowering it to debate and decide upon in the fullness of time, and without the stress of a ticking clock, Britain’s long-tem relationship with Europe.

The fact that May has opted for a Brexit negotiation that will immediately activate the EU’s worst instincts and tactics, for petty party-political reasons that ultimately have everything to do with her own power and nothing to do with Britain’s optimal agreement with the EU, means only one thing: she does not deserve the mandate that Brussels is keen to neutralise.