Yanis Varoufakis's Blog, page 29

Σκληρό Μαρκάρισμα Νο.8. Με την Κάτια Μακρή

Χωρίς απαγορευμένες ή υπαγορευμένες ερωτήσεις. Χωρίς ταμπού θέματα ή προσυμφωνημένες ατζέντες. Χωρίς την παραμικρή προσυνεννόηση. Συνεντεύξεις όπως πρέπει να γίνονται. Στο όγδοο «Σκληρό Μαρκάρισμα» με ανακρίνει η Κάτια Μακρή. Μιλήσαμε χωρίς περιστροφές για την πανδημία, τους εμβολιασμούς και την υποχρεωτικότητά τους ή μη, τα πρόστιμα, το Εθνικό Σύστημα Υγείας και το Παίδων Πεντέλης. Και, βέβαια, αναφέρθηκα στην οικονομία, την μη μείωση του ΦΠΑ, τον κατώτατο μισθό και τη συρρίκνωση στο 25-30% της αγοραστικής αξίας του καλαθιού για το που πηγαίνουν τα χρήματα από ΕΣΠΑ και Ταμείο Ανάκαμψης, την πρώτη κατοικία αλλά και για τον EastMed, τις Ελληνοτουρκικές σχέσεις και τα Ραφάλ. Δεν έλειψαν αναφορές στη φιλολογία περί μετεκλογικών συνεργασιών, το ΠΑΣΟΚ κλπ.

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How the euro divided Europe, and why countries like Bulgaria should not join – Project Syndicate, Oxford Union video & Keynote audio

This January marked the 20th anniversary of euro notes and coins circulating. In an op-ed published by Project Syndicate I argue that the euro was an unmitigated failure even by the criteria of its architects. This is an updated analysis of a keynote I delivered a few years ago at the Oxford Union – see video below. Plus, a recording (click here) of my reply to a question by a Bulgarian banker on whether I believed Bulgaria should join the euro (yes, my reply was: Don’t do it!)When eurozone finance ministers recently issued a joint paean to the single currency on the occasion of the twentieth anniversary of the introduction of euro banknotes and coins, something remarkable happened: Nothing. No one joined in the celebrations, and no one cared enough to dissent.ATHENS – Twenty years ago this month, Europe’s common currency became a tangible reality with the introduction of euro banknotes and coins. To mark the occasion, eurozone finance ministers issued a joint statement that called the currency “one of the most tangible achievements of European integration.” In fact, the euro did nothing to promote European integration. Quite the contrary.The euro’s primary purpose was to facilitate integration by eliminating the cost of currency conversions and, more importantly, the risk of destabilizing devaluations. Europeans were promised that it would encourage cross-border trade. Living standards would converge. The business cycle would be dampened. It would bring greater price stability. And intra-eurozone investment would yield faster productivity growth overall and convergent growth between member countries. In short, the euro would underpin the benign Germanization of Europe.Twenty years later, none of these promises has been fulfilled. Since the eurozone’s formation, intra-eurozone trade grew by 10%, substantially lower than the 30% increase in global trade and, more significantly, the 63% increase in trade between Germany and a trio of European Union countries that did not adopt the euro: Poland, Hungary, and the Czech Republic.It’s the same story with productive investments. A huge wave of loans from Germany and France washed over eurozone countries like Greece, Ireland, Portugal, and Spain, resulting in the sequential bankruptcies that lay at the heart of the euro crisis a decade ago. But most foreign direct investment went from countries like Germany to the part of the EU that chose not to adopt the euro. Thus, while investment and productivity were diverging within the eurozone, convergence was being achieved with the countries that remained outside.As for incomes, back in 1995, for every €100 ($114) earned by the average German, the average Czech earned €17, the average Greek €42, and the average Portuguese €37. Of the three, only the Czech could not withdraw euros from a domestic ATM after 2001. And yet, her income in 2020 converged toward the average German’s €100 income by a whopping €24, compared to just €3 and €9 for her Greek and Portuguese counterparts, respectively.The key question is not why the euro failed to bring about convergence, but rather why anyone thought it would. A look at three pairs of well-integrated economies offers useful insights: Sweden and Norway, Australia and New Zealand, and the United States and Canada. Close integration of these countries grew – and was never jeopardized – because they avoided monetary union.To see the role of monetary independence in keeping their economies closely aligned, consider their inflation rates. Since 1979, the rate of inflation has been broadly similar in Sweden and Norway, in Australia and New Zealand, and in the US and Canada. And yet, during the same period, their currencies’ bilateral exchange rates fluctuated wildly, acting as shock absorbers during asymmetrical recessions and banking crises and helping to keep their integrated economies in alignment.Something similar happened in the EU between Germany, the leading eurozone economy, and euro-less Poland: When the euro was created, the Polish złoty depreciated by 27%. Then, after 2004, it appreciated by 50%, before falling again, by 30%, during the financial crisis of 2008. As a result, Poland avoided both the foreign-debt-fueled growth that characterized eurozone members like Greece, Spain, Ireland, and Cyprus, and the massive recession once the euro crisis was in full swing. Is it any wonder that no EU economy has converged more impressively with Germany’s than Poland’s?In retrospect, it was as if the architecture of the euro was designed to cause maximum divergence. In effect, Europeans created a common central bank that lacked a common state to have its back, while simultaneously allowing our states to carry on without a central bank to have their backs in times of financial crisis, when states must bail out the banks operating in their territory.During the good times, cross-border loans created unsustainable debts. And then, at the first sign of financial distress (either a public or a private debt crisis), the writing was on the wall: a eurozone-wide spasm whose inevitable outcome was sharp divergence and enormous new imbalances.In layperson’s terms, Europeans resembled a hapless car owner who, in an effort to eliminate body roll around corners, removed the shock absorbers and drove straight into a deep pothole. The reason countries like Poland, New Zealand, and Canada weathered global crises without falling behind (or, worse, surrendering sovereignty to) Germany, Australia, and the US is precisely that they resisted a monetary union with them. Had they succumbed to the lure of a common currency, the crises of 1991, 2001, 2008, or 2020 would have rendered them debt colonies.Some argue that Europe has now learned its lesson. After all, in response to the euro crisis and the pandemic, the eurozone has been reinforced with new institutions such as the European Stability Mechanism (a common bailout fund), a common supervisory system for European banks, and the Next Generation EU recovery fund.These are undoubtedly large changes. But they constitute the minimum that was needed to keep the euro afloat without changing its character. By implementing them, the EU confirmed its readiness to change everything in order to keep everything the same – or, more precisely, to avoid the one change that matters: the creation of a proper fiscal and political union, which is the prerequisite for managing macroeconomic shocks and eliminating regional imbalances.Twenty years after its creation, the euro remains a fair-weather construction, fueling divergence rather than driving convergence. Until recently, this outcome inspired heated debates – and thus hope that Europe was aware of the centrifugal forces threatening its foundations.This is no longer so. When the eurozone finance ministers issued their joint paean to the single currency, something remarkable happened: Nothing. No one joined in the celebrations. No one cared enough to dissent. Such apathy does not bode well for a union that is being torn apart by widening inequality and xenophobic populism.

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Why We Must Challenge Zuckerberg’s Ring of Power – Project Syndicate

Learning to appreciate that control is an illusion is hard, especially when we are prepared to sacrifice almost everything, to pay any price, to control others. But if we are to stop others—Mark Zuckerberg, for example—from controlling us, it is a lesson we must learn.Once upon a time, in the ancient kingdom of Lydia, a shepherd called Gyges found a magic ring, which, when rotated on his finger, made him invisible. So, Gyges walked unseen into the royal palace, seduced the queen, murdered the king, and installed himself as ruler. If you were to discover such a ring or another device that granted you exorbitant power, Socrates asked, would it be wise to use it to do or get whatever you want?Mark Zuckerberg’s recent announcement of some fabulous digital metaverse awaiting humanity gives new pertinence to Socrates’ answer: People should renounce excessive power and, in particular, any device capable of granting too many of our wishes.Was Socrates right? Would reasonable people renounce the ring? Should they?Socrates’ own disciples were not convinced. Plato reports that they expected almost everyone to succumb to the temptation, pretty much as Gyges had. But could this be because Gyges’ ring was not powerful, and thus not scary, enough? Might a device far more powerful than a ring that merely makes us invisible cause us to shudder at the thought of using it, as Socrates recommended? If so, what would such a device do?The ring allowed Gyges to overcome rivals physically, thus removing several constraints impeding his desires. But, while invisibility allowed Gyges to murder the King’s guards, it went nowhere near removing all of Gyges’ constraints. What if there were a gadget, let’s call it the Freedom Device, that removed every constraint stopping us from doing whatever we want? What would a constraint-free existence be like once this Freedom Device was activated?We would be able to fly like birds, travel to other galaxies in an instant, and perform feats experienced within the universes designed by talented video game developers. But that would not be enough. One of the harshest constraints is time: It forces us to forego reading a book while swimming in the sea or watching a play. So, to remove all constraints, our theoretical Freedom Device should also allow for infinite, concurrent experience. Still, one final constraint, perhaps the most perplexing, would remain: other people.When Jill wants to go mountaineering with Jack, but Jack craves a romantic stroll along the beach, Jack is Jill’s constraint and vice versa. To liberate them from constraints, the Freedom Device should allow Jill to go mountaineering with a willing Jack while he is strolling with a version of her contented self along the beach. It would let us all inhabit the same virtual world but experience our mutual interactions differently. It would fashion not merely a universe of bliss but, in fact, a multiverse of infinite, simultaneous, overlapping pleasures. It would grant us, in other words, freedom not only from scarcity but also from what other people do to us, expect of us, or want from us. With all constraints gone, all dilemmas dissolved, all trade-offs eradicated, boundless satisfaction would be at our fingertips.It is not hard to imagine Zuckerberg salivating at the thought of such a device. It would be the ultimate version of the “metaverse” into which he has said he wants to immerse Facebook’s two billion-plus users. I can imagine him letting us sample a cornucopia of pleasures for an instant, free of charge, just enough to crave more, at which point he would charge users accordingly. Every nanosecond of immersion in this multiverse would produce enormous multiple pleasures—for which he would charge us again and again. Before long, the capitalization of Meta, the company that now owns Facebook, would dwarf that of all other corporations put together.The fact that our technologists are far from inventing the Freedom Device is irrelevant, as was the fact that Gyges’ ring was mythical. Socrates’ question, resting on these two science-fiction devices, one ancient and one modern, remains central: Is it wise to deploy exorbitant power over others, and over nature, in pursuit of our desires?Big Tech and free marketeers think nothing of it: What’s wrong with joy? Why would anyone resist simultaneous experiences that satisfy one’s strongest desires? How is it wrong for Zuckerberg to make money from people who want to pay him for liberation from all constraints?Socrates’ answer remains as apt today as it was 2,500 years ago: The price you pay for deploying excessive power is a disordered soul—that is, radical unhappiness. Whether you are a client seeking absolute control of your senses within a multiverse created by some device, or Zuckerberg striving to own the digital realm into which billions will soon be immersed, your misery is guaranteed. A successful life requires the capacity to overcome our hunger for power. It presupposes an understanding that power, in the hands of contradictory beings like us, is a dangerous double-edged sword.Excessive power is counterproductive, even self-defeating, because we crave interaction with other minds that we cannot control, even while craving to control them. When others do what we do not want them to do, we feel disappointed, angry, or sad. But the moment we controlled them fully, their consent would give us no pleasure, and their approval would not boost our self-esteem.Learning to appreciate that control is an illusion is hard, especially when we are prepared to sacrifice almost everything, to pay any price, to control others. But if we are to stop others—Zuckerberg, for example—from controlling us, it is a lesson we must learn.Socrates was keen to warn us against yielding to the temptation of the magical ring, pointing to Gyges’ unhappiness. Today, with techno-feudalism and various immersive metaverses in the pipeline, his warning is more relevant than ever. As in ancient Athens, our tricky task is to empower the demos without succumbing to the lure of power.December 27, 2021 by Project Syndicate

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The causes of inflation and what to do about it – Keynote at Banking Conference, Sofia 2 DEC 2021

Invited by the Bulgarian Central Bank’s Deputy Governor, here is a keynote I delivered in Sofia, on 2nd December 2021, in which I offer a historical  explanation of the nature and causes of our current inflation – as well as a proposed policy response that would help (but which vested interests are impeding).

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The State of the Global Economy under the heavy burden of twelve lost years – Keynote (audio + text)

A keynote summing up my view that, since 2009, the world has wasted enormous resources in a bid to re-float finance and at the expense of our capacity to look after each other, and the planet, at a time humanity is facing existential threats – from climate catastrophe to war and toxic politics. My discussants included: Stephanie Flanders (Bloomberg), Sir Vince Cable (Former Business Minister, UK), Lord Karan Bilimoria (CBI), Mark Tucker (HSBC)After financialisation met its Waterloo in 2008, the G20 responded with an impressive coordinated monetary response that refloated finance. Its pinnacle, the April 2009 G20 London meeting convened by Gordon Brown.At the same time, the EU, the UK and, yes, the US practised substantial, coordinated, austerity (despite all the talk of an Obama stimulus that ended up austerian, if one takes into account the sharp austerity at state level). This is what became known as expansionary contraction, though I prefer to call it Socialism for Financiers Austerity for Everyone Else (i.e., the combination of massive expansionary monetary policy, including the money printing known as Quantitative Easing). This led to a unique phenomenon in the annals of capitalism: the non-existence of a general equilibrium rate of interest – i.e., a single rate of interest that can equilibrate, at the same time, (a) the real economy (i.e., bring investment in capital goods close to the level of available savings-liquidity) and (b) the financial sector.In other words, since 2009, the prevailing rate of interest would: Either be high enough to stabilise the banking system, but yield investment that fell woefully below savings-liquidity. Or be low enough to close the savings-investment gap but, at the same time, destroy finance. The reason why the period since 2009 has been unique in the history of capitalism is that, for the first time, it was not just hard for central banks to home in on a general equilibrium rate of interest but, rather, it was impossible – since a general equilibrium rate of interest no longer existed. [Nb. This is equations to a system of two equations in one unknown for which no real value of the unknown solves both equations]The result of the disappearance of the general equilibrium rate of interest, following the Crash of 2008 and the policy of expansionary contraction, were the LOST YEARS: 12 years of massive savings-investment imbalance and a historic failure to press money sloshing around the circuits of finance into the service of humanity’s real needs (from health and education to, crucially, the green transition)Global coordination of money printing (QE) that was not accompanied by a global investment drive caused this. By 2020 the global economy was limping along with this permanent investment-savings albatross hanging over its neck. Then the pandemic came to turbocharge the situation. Come to think of it, what exactly was the response of our states to the pandemic? Much more of the same (QE) along with a major replacement of lost incomes with public debt. Yes, that was a gigantic fiscal boost. Nonetheless, this fiscal splurge was not Keynesian at all as it did nothing to rebalance the pre-existing savings-investment imbalance.And then inflation arrived. For reasons that had precisely nothing to do with the abundance of liquidity in the circuits of finance – not even with the governments’ splurge. Inflation reared its ugly head because of the major disruption in global supply chains that, under post-1991 globalisation, relied in just-in-time deliveries of everything, from fruit and vegetables to microchips. However, the preceding 12 LOST YEARS (during which we lost the opportunity to invest in green energy) have now turned what should have been a transitory inflation into something far more permanent – as the world pays the price of struggling to move to green energy unprepared and hurriedly.While we are not facing a 1970s’ inflationary dynamic (something that the evisceration of the working class’ collective bargaining power guarantees), the major central banks are in a conundrum. After 12 years of financing the financiers, and extending-and-pretending unpayable debts of corporations and states, they are damned if they tighten monetary policy and they are damned if the don’t. In more abstract terms, the disappearing act of a general equilibrium interest rate central banks are unable to keep the show on the road in the way they have been since 2009. Toxic politics, racism, post-democracy and geopolitical tensions are the natural repercussion.Those who agree that climate change is a clear and present danger must, in view of the above, also agree that four things need to be done:Hard constraints on, say, coal mining that multinational corporations, along with governments they influence, resist tooth and nailMassive investment that the markets will not generate alone – due to a combination of a tragedy of the commons and standard coordination failureA global carbon tax that is re-distributed in its entirety to the victims of the mind-numbing inequality exacerbated by 12 LOST YEARSA total rethink of central banking, now that digital fiat money makes it possible to end the commercial banks’ exclusive right to have accounts with central banks – a common protocol of digital fiat money would be a good start.However, for these four things to stand a chance of being implemented, we need a Global Agreement, a New Global Plan, involving the US, the EU and China. That would be Progressive Internationalism establishment-type.But it is not happening. Some would say it is pie in the sky. Why? It is not just vested interests. It is also broken politics due to the ultra-long reign of vested interests. Put succinctly, the much needed Global Plan is not happening because:The United States is ungovernableThe European Union has no government and continues to play ostrich: ready to change everything in order to prevent making the one change that would make a difference (a proper fiscal union and a common investment policy)A New Cold War is being waged by the United States, and many of its European dependents, against China but on behalf of Big Tech, Wall Street and the military-industrial complex.That’s why the only chance for Progressive Internationalism comes not from the Establishment but from the radical, anti-Establishment Progressive International.You can also listen part of the discussion that ensued:How did Quantitative Easing boost inequality? Click hereWhat about the Eurozone? Click here

 

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Greek government’s market fundamentalism undermines Greece’s vaccination drive – BBC World Service

As of today, unvaccinated older Greeks (60+) will forfeit 100 euros each month. Market fundamentalism is pushing the Mitsotakis government to adopt a measure that undermines its own vaccination drive. Yet another example of how the neoliberal mindset fails to understand that the principles of demand and supply do not work when it comes to (uncommodifiable) matters of body and soul. As I explained this morning on the BBC World Service.

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On Brexit and the task of confronting technofeudalism – Interview in The Morning Star

ONE YEAR since the final deal for Brexit was announced, it remains one of the most divisive political subjects for a generation. Perhaps unknown to most, the incendiary B-word had its genesis in the term “Grexit” — coined during tumultuous years after the 2008 credit crunch when a Greek exit from the EU was speculated, as the nation’s people suffered punitive austerity measures imposed by the “troika” of EU Commission, central bank and IMF.After subsequent periods of mass civil unrest, rioting and national catastrophe, the democratic socialist party Syriza was elected in 2015, with Yanis Varoufakis serving as finance minister during crucial crisis talks with the deep establishment of the EU, as dramatised in the 2019 movie Adults in the Room.Varoufakis became a familiar face in British media during the Brexit period and expresses dismay concerning some of the dogma surrounding the debate.“Undoubtedly, the hard Remainers were as unsophisticated in their narrative as the hard Brexiteers. Mirroring the latter, for whom the EU was the source of all evil, the hard Remainers portrayed the EU as a splendid utopia — and in so doing they did enormous damage to the cause of Remain.“The case of Greece is, as you imply, a useful case in point: we ended up with the absurd situation where Tory grandees were lambasting the EU for imposing on our people overly harsh austerity and for snuffing out our radical left government, while hard Remainer Labour functionaries were keeping silent.“Personally speaking, it was utterly confounding to be shunned by social democrats and be embraced by Tories even though I was campaigning against Brexit and in favour, alongside Jeremy Corbyn and John McDonnell, of a radical Remain.”Many Remain voters perceived EU freedom of movement solely as a beneficial piece of legislature with attractive rights offering work or study abroad, yet this pillar of the single market also enabled unscrupulous British employers to undercut domestic workforces by hiring from poorer EU nations at the lowest possible rates exploitatively, causing social friction and driving wages down.The “Posted Workers Directive” included one such loophole, belatedly closed in 2018 — two years after the referendum — but Varoufakis agrees that similar mechanisms facilitating wage competition still exist within the EU labour market.“Under capitalism, of any variety, the legal framework meant to protect waged labour is full of holes that employers use at will. But I must insist that freedom of movement was and remains, on the balance of arguments, a progressive feature of the EU.“Yes, labour mobility in the short run allows capital to undermine the local trade unions. But, the solution is not electrified fences and impenetrable borders. The solution is the unionisation of immigrant workers.”A fine solution that would be, hypothetically — but after decades of legislation designed to weaken trade unions in Britain, growth of support to leave the EU was inevitable; and the trade bloc is not unfamiliar with the use of harsh border controls, since waves of migrants attempting to enter it have been tear-gassed and brutalised on the south and eastern flanks of the European continent.But despite the punishing financial impositions placed upon the people of Greece by the EU, Varoufakis campaigned for Remain in Britain.“The reason I opposed Brexit was both strategic and ideological — the ideological part [being] a commitment to bringing borders down so as to accelerate capitalism and give workers from different countries the opportunity and the challenge, to forge transnational organisations.“As for the strategic part: I could see that Brexit’s referendum success would lead to a Johnson-led Tory government. Back in March 2015, in a Guardian Live event at Emmanuel Centre, Tariq Ali and I debated the issue.“Tariq argued that Brexit would cause a rift in the Tory Party that would, essentially, lead to its final breakup. I counter-argued that the Tories are the epitome of class solidarity and, whatever differences they may have, they know how to bury them in the pursuit of the interests of capital.“In sharp contrast, I continued, it is the Labour side of politics that will be mortally divided by Brexit. I think that life has delivered its verdict. Personally, I have little doubt that Corbyn might have ended up in 10 Downing Street if Brexit had failed at the referendum.”However, in an interview last May with UnHerd, Varoufakis reconsidered that Brexit was “probably the right way for Britain” and reiterated his annoyance with hard Remainers who persisted in their attempts to overturn the referendum result.Meanwhile, left-leaning Leave voters hoped Britain would now be free from EU law that stipulates compulsory privatisation of industries such as transport and energy utilities, preventing full nationalisation to exclude profiteering by private investors at the expense of workers and services provided to the public.But details of Johnson’s final Brexit deal include a clause, Article 2.1: “The parties acknowledge that anti-competitive business practices may distort the proper functioning of markets and undermine the benefits of trade liberalisation.” Varoufakis is cynical about this.“These agreements are not worth the paper they are written on. There is nothing binding here since it is up to the British government to interpret as it sees fit the meaning of ‘anti-competitive business practices.’“In any case, I also believe that a government of the left had considerable degrees of freedom de facto to nationalise key industries even within the EU. Look at what happened, for example, during the pandemic: almost the whole of Germany’s economy was effectively nationalised!“Moreover, France and Germany took advantage of the pandemic to end, to all intents and purposes, the level-playing field rules, eg by pushing through mergers against the edicts of the European Commission.”Yet it should be considered that France and Germany are de facto EU leaders — and are thus more able to bend rules (such as the law that eurozone nations must keep deficits within 3 per cent of GDP, for breaking which Greece and Italy were punished.)Furthermore, they were able to implement nationalisation during the pandemic because EU law permits it in cases of emergency — so it was a temporary measure only, since extending this to a permanent situation would be contrary to other EU laws that mandate privatisation, which the European Court of Justice (ECJ) tends to rule in favour of lest the rights of private investors be curbed. A reminder that freedom of movement does not concern persons only, but goods, services and, crucially, capital.A distinguished professor and prolific author, Varoufakis theorises that traditional capitalism has been superseded by an economic system he terms “techno-feudalism.”“Central to the thesis that techno-feudalism is distinct from capitalism is the observation that, following 2008, the rise of digital platforms and more recently the pandemic, the two main drivers of capitalism are no longer central to the economic system: profits and markets.“Profit-seeking, of course, continues to drive most people. And markets are everywhere. However, the broad system we live in is no longer driven by private profits. Nor is, these days, the market the main mechanism for wealth extraction or creation.“What has replaced profits and markets? The short answer is: central bank money has replaced capitalist profits as the system’s fuel and big tech’s digital platforms have replaced markets as the mechanism for value extraction.“Central bank money replaced profits as the system’s driver: profitability no longer drives the system, even though it remains the be-all-and-end-all for individual entrepreneurs. Indisputable evidence that central bank money, not profits, power the economic system is everywhere.“A great example is what happened in London on August 12, 2020. It was the day markets learned that the British economy shrank disastrously — and by far more than analysts had expected (more than 20 per cent of national income had been lost in the first seven months of 2020). Upon hearing the grim news, financiers thought: ‘Great! The Bank of England, panicking, will print even more pounds and channel them to us to buy shares. Time to buy shares!’“This is just one of countless manifestations of a new global reality: in the US and all over the West, central banks print money that financiers lend to corporations, which then use it to buy back their shares — whose prices are thus decoupled from profits. The new barons, as a result, expand their fiefs, courtesy of state money, even if they never earn a dime of profit!“Moreover, they dictate terms to the supposed sovereign — the central banks that keep them ‘liquid.’ While the Fed, for example, prides itself over its power and independence, it is today utterly powerless to stop that which it started in 2008: printing money on behalf of bankers and corporations. Even if the Fed suspects that, in keeping the corporate barons liquid, it is precipitating inflation, it knows that ending the money printing will bring the house down.“The terror of causing a bad debt and bankruptcy avalanche makes the Fed a hostage of its own decision to print and ensures that it will continue printing to keep the barons liquid.“This has never happened before. Powerful central banks, that today keep the system going single-handedly, have never wielded so little power. Only under feudalism did the sovereign feel similarly subservient to its barons, while remaining responsible for keeping the whole edifice together.“Digital platforms are replacing markets: during the 20th century and to this day, workers in large capitalist oligopolistic firms (like General Electric, Exxon-Mobil or General Motors) received approximately 80 per cent of the company’s income. Big tech’s workers do not even collect 1 per cent of their employer’s revenues. This is because paid labour performs only a fraction of the work that big tech benefits from. Who performs the bulk of the work? Most of the rest of us!“For the first time in history, almost everyone produces for free (often enthusiastically) big tech’s capital stock (that is what it means to upload stuff on Facebook or move around while linked to Google Maps). That has never happened under capitalism.“Key to understanding our new system is the realisation that digital platforms are not a new form of market. That when one enters Facebook as a user or Google as an employee, one exits the market and enters a new-fangled tech-fief.”Intriguingly, Varoufakis has recently proposed a universal basic income (UBI) funded via input generated by users of search engines and social media. As with any suggestion of UBI, two key questions that arise are whether this would cause inflation and whether providing every individual with an income regardless of their economic circumstances can be genuinely fairer than one devised on a means-tested basis.“Whether it is inflationary and fair will depend on how it is financed. Unlike other proponents of UBI, I oppose the idea of paying for it using taxation. If you tell hard-working blue-collar workers, or Deliveroo drivers, that you will take a chunk of their puny income to pay layabouts and rich people, they will laugh in your face — understandably.Similarly, such a UBI may indeed prove inflationary. However, if it is funded, as I propose, through a combination of redistributing shares (ie returns to capital) and central bank money, UBI will be neither divisive nor inflationary.“Let me explain. First, redistributing shares.Capital was always produced socially and its returns privatised by the capitalist class. Today, this is much, much more so — as the whole of society is producing big tech’s capital (with every post on Facebook, every Google search etc), while the returns of all that capital are monopolised by capitalists.“It is high time that we demand that a share, say 10 per cent to begin with, of the corporations’ shares be transferred to a social equity fund. Then the accruing dividends can be one of the two income streams that fund a basic income.“Secondly, central bank funding. Since 2008, central banks have been printing mountain ranges of cash on behalf of financiers. The money tree is being plucked, in other words, daily — but the money it produces is utterly wasted (as it turns into share price and house price inflation). Here is an idea: instead of financing financiers to do untold harm, use the money tree to fund part of everyone’s basic income.“To see why this type of UBI, which I prefer to call ‘basic dividend,’ is neither inflationary nor unjust, consider this: yes, everyone collects it without the ignominy of means testing. But, nothing stops us from taxing at the end of the year the basic income of those above a certain income at a very high rate.“Moreover, the fact that the basic income will not push prices up in response to increasing VAT or personal taxation in order to fund it, means that it will not be inflationary per se. If, however, we do need to keep inflation under control, the central bank can reduce its use of the money tree (ie print less cash) while increasing the percentage of shares corporations must contribute to the social equity fund (ie socialise a larger share of capital).”On the subject of positive and practical advice for activists, campaigners and supporters of the wider left and labour movement going forwards, Varoufakis mused:“I have no words of great wisdom to offer those ‘unreasonable’ enough to want to change the world.“Speaking for myself, life is simply not fun without trying constantly to civilise a hugely irrational world and to boot, without constantly urging our comrades to beware concentrated power (even within our own movements and organisations).”

Click here for the Morning Star’s site

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A prediction for 2022, plus two book recommendations – Happy New Year everyone!

No impending New Year deserves to be unaccompanied with predictions that it, the New Year, will then proceed to ridicule. So, to tempt fate, here is my prediction for the 2022. Plus, two eye-opening books I recommend to people kept up at night by concerns similar to mine. Happy New Year to all, friends and foes.My predictionThe coming year will prove that all the talk of renewed 1970s-style stagflation was wildly exaggerated. The Chinese central bank’s experimentation with a digital renminbi will continue to send shivers down spines at the Federal Reserve and the European Central Bank, but their leadership will prove too timid to issue their own crypto dollar or euro. Why? Because Wall Street and the Frankfurt banks would scream bloody murder, fearing (correctly) the loss of their monopoly over payments once the central banks grant every citizen a digital wallet.Meanwhile, political paralysis will continue to deepen on both sides of the Atlantic in 2022, with US President Joe Biden’s administration stymied by the prospect of losing Congress in November’s midterm elections, and the EU facing greater fragmentation once the new German government begins to demand new austerity in the countries that can afford it the least.TOP BOOK OF 2021 – David Graeber and David Wengrow (2021). The Dawn of Everything: A new history of humanity, Allen LaneTo reveal one monstrous misconception about a central aspect of humanity’s development is the mark of a genius. But to reveal two is mindboggling. Having first debunked the conventional story of how money emerged to replace barter (in his Debt: The first 500 years), the late David Graeber, ably assisted by co-author David Wengrow, is determined to liberate us from our misconception regarding the social organisation of prehistoric societies. With this book, pre-History suddenly became fascinating, not to mention a source of insights about our era.ANOTHER TOP BOOK (published in 2019) – McKenzie Wark (2019). Capital is Dead: Is this something worse?, VersoInformation has been a favourite subject of free marketeer social theorists, like Fredrich von Hayek, who have argued that only markets – and thus capitalism – have the capacity to process information effectively. This is the first book I know written by a left-wing theorist who takes information as seriously, who thinks of its management and ownership as crucial in determining the distribution of surplus value, and who dares convincingly to claim that information technology is becoming for capitalism that which the steam engine was to feudalism: a death knell.

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MERA25: DiEM25’s new German (!) Party is now a reality

You may have heard of MeRA25, the first political party that DiEM25 created in Greece – and which entered Greek Parliament in July 2019. Well, true to our ambitious transnational agenda, DiEM25 took matters further: We recently established MERA25 as a… German political party that is now legally and organisationally ready and willing to contest elections across Germany. Watch our Berlin launch on the November day when the swallows of the Greek MeRA25 flew to Germany to spread the word and the hope of a genuine, rebellious, radical, realistic European Spring.Nb. All presentations are in German except my speech beginning on 51’30”

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Rosemary Bechler (1951-2021) – A wonderful life, a tower of intellect, a beautiful heart and the ideal comrade for all of us at DiEM25 and beyond

“Such a relief to be working on this with you guys … all the best and sleep much better for all this classy political activity! As I will now!”That was the last email I received from her. The campaign that she referred to was DiEM25’s recent, and very successful, crusade to save the NHS from further privatisation. It was typical of Rosemary to express gratitude to comrades who owed her so much. And to hint at her own impending long sleep, courtesy of the ‘inconvenient’, as she liked to describe it, disease that would ultimately take her away from us.I met Rosemary in February 2016 during DiEM25’s inaugural Berlin event, after weeks of frantic emailing that made clear her determination to be part of our pan-European movement from day one to her very last breath. Since then she has graced us all with intense support, criticism, ideas, papers, proposals, campaigns – a one-woman movement that chose our movement to motivate.A true internationalist, combining the virtues of the Suffragettes, the Spanish International Brigades, the Civil Rights movement, every fair and necessary industrial strike there was, Rosemary found the time and the reason to support me personally during my darkest hours. Never stepping back from being critical, she also never failed to shore up my psyche, to strengthen my resolve, indeed to offer material help well beyond what was either expected or even fair.Rosemary passed too recently for us, for me, for her comrades, to work out a fitting tribute. For now, it will suffice to emphasise her dedication to preventing our movement from becoming top-heavy, to keeping alive its commitment to its grassroots, to enlisting the Dunkirk spirit in our collective struggle.Sleep well dear Rosemary. We shall not rest until your spirit reaches everyone that can be reached, across Europe and beyond.

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