Yanis Varoufakis's Blog, page 71

Labour’s 2019 Manifesto: My assessment on BBC Radio 5, 21 NOV 2019

As an economist, Labour’s 2019 Manifesto strikes me as a sensible, moderate and well-targeted program in view of Britain’s needs and capacities.
Independently of what one thinks of Corbyn and McDonnell (Nb. my friendship and comradeship with both is well known), most people agree that:


Exceptional investment in the green transition and technologies, possibly of a level not seen since the post-war reconstruction, is our generation’s duty to the next. A large carbon tax on those who profit from heating up the planet is both fair and logical.


Unbearable levels of inequality, and homelessness need to be reversed.


The botched privatisations of rail, water, mail and energy call for re-nationalisation.


Labour’s 2019 Manifesto addresses all of these tasks by making the top 5% of the population, who have increased their share of national wealth scandalously during the last decade of deep stagnation, pay a fair amount.
Labour’s 2019 Manifesto is, thus, the most responsible policy agenda that has been offered to voters in a long, long time. A breath of fresh air… as I said earlier today on BBC Radio 5

Why is economics not a force for good and what must we do to make it so? Cambridge 8th NOV 2019

On 8th November, at the invitation of Professor Antara Haldar of Cambridge University, I presented this talk in the context of a fascinating group of academics who gathered in the Cambridge Union’s upstairs seminar room to revive Keynes’ original idea of the Cambridge Circus – a radical circle of economists seeking the kind of economics that can be a force for good. Warning: This is a wonkish (technical) presentation. However, to compensate, on the previous night, Professor Margaret Levi (Sanford and I) discussed the same question in front of the Cambridge Union in less technical terms of course. See below for the video:

The Cambridge Circus and the Reinvention of Economics , November 8-9, 2019, Centre for Research in the Arts, Social Sciences and Humanities (CRASSH), University of Cambridge

Convenor: Antara Haldar (Cambridge)

The Concept

Cambridge has been home to some of the most fundamental scientific breakthroughs in history—from gravity to evolution to the discovery of DNA. Yet no less significant is its role in shaping the discipline that, increasingly, forms the organising logic of every aspect of society: economics. Originally taught as a part of the “moral sciences”—alongside psychology and philosophy—it is the birthplace of modern economics; the site of invention of everything from the demand and supply curves to macroeconomics. Even while becoming increasingly algebraic, however, the Cambridge School, at the height of its glory, treated economists, in Keynes’ words, as “mathematician, historian, stateman and philosopher.” In the post-war world, led now by a different Cambridge—on the other side of the Atlantic—the rupture between economics and all else was more radical. But the epistemic elitism of the Boston Brahmins of economics, modelling the subject on physics or engineering, a priesthood closely guarding its secrets from the arts, humanities and even the rest of the social sciences, has had dire consequences for the world around it—resulting in untenable levels of inequality, the rise of populism, seismic shifts in the global economy and the biggest global financial crisis since the Great Depression. The “Common Currency” project at Cambridge’s Centre for Research in the Arts Social Sciences and Humanities, will confront the grave dangers of the current crisis in economics—and seek to shatter the existing epistemic silo. By bringing together, in an initial opening event fifteen to twenty of the most significant thinkers within the academy—and beyond—it will attempt to join the dots between advances at the frontiers of economics (in behavioural, institutional and information economics, for instance), but also link the discourse of economics with the broader conversation and strive to locate, once again, its emotional pulse. It will, thus, engage—in addition to economists—philosophers, sociologists, psychologists and historians, as well as artists, writers, activists and, crucially, the public. The dialogue will lead to the publication of a collection of essays, and, equally, art installations, theatre workshops, films and strategic media partnerships. The goal is to create the nucleus for a conversation around which an eventual epistemic revolution in the discipline can crystalise—one that is monumental enough to respond to the fierce urgency of the empirical challenges of today’s world posed by climate change and the rise of AI, rather than devoted to mere methodological tweaking. The event will lead to the adoption of the “Cambridge Declaration on Economics” outlining a bold new paradigm for a more “embedded” mode of value-based economic analysis—motivated by the idea that economics is far too important to be left to economists alone. In the golden age of Cambridge economics, the future of the discipline was regularly debated by a core group of scholars: Keynes called this the “Cambridge Circus”. Seeking to reclaim Cambridge’s place in shaping global economic history—let’s bring the circus back to town!

Sophisticated Heretic – Interview with the Cambridge Union magazine TCS

Yanis Varoufakis has been adamant that he is not a politician. He might be an economist, though his conversation with Margaret Levi – a Stanford political scientist – at the Cambridge Union last Thursday evening on 7th November 2019 smashed the academic boundary walls of economics in style. His critical principles come from his characteristic cool iconoclasm – he has ‘zero respect for economists’ – but this is a radical spirit that guides his beliefs to a mature and deeply felt complexity.
Varoufakis is impressively historically literate: he folds contemporary political and economic events into their bigger intellectual history. He puts it that the huge discursive power of the medieval clergy has, in a modern context, been seized by economists. The go-to revolving door theory – where industrialists are recycled as industrial-legislators – is reimagined by Varoufakis as the emperor at the confessional ear of the archbishop: their power is co-dependent.
He suggests that the ‘supreme power’ of established economic thought and policy over our collective imagination is analogous to the hold of sacred words on medieval minds. That the people, in their own language, might begin to understand scripture was an unhinging prospect that terrified the Tudor establishment. Varoufakis ascribes the quasi-religious authority of received economic thought to the mystery of its language. He drops into his medieval history, perhaps pointing to role models, the term ‘sophisticated heretics’.
Image Credit: Flickr
I asked him if the left today is open to intellectualism. He thinks the left has always been more welcoming than the right because, ‘all outsiders in human history have been more open to an intellectual reconfiguration and reconsideration of the status quo.’ But – never the politician – he pushes away an uncritical ideological spirit: ‘the left has also been responsible for immense acts of authoritarianism, and closing down debate, as it approached power. Power corrupts, and the left is not immune to that. So I am distinctly aware of the left’s proclivity towards modes of thinking that are just as oppressive as what we have today in the dominant paradigm.’
Toying with this urgent self-awareness, he turns on his new political party in Greece – MeRA, which is under the umbrella of his pan-European movement, DiEM or European Spring: ‘I watch how even small increases in our power, in our percentage in the polls, are always threatening us with a dissolution of friendship, of tolerance, of openness.’ Varoufakis holds up the flag of the Spanish anarcho-syndicalists as he likes its sophisticated symbolism: ‘[it] was black and red: they used to say red for the excitement, the hope, the revolutionary spirit in our heart, and black for the dark side that each one of us has.’
“I am an expert on economic theory,’ he says, ‘[but] that does not mean I am an expert on what needs to happen. That is very difficult.”
I find it difficult to see how these intellectually complex principles translate into his popular democratic movement, especially in the context of disinformation and a resistance to academically-informed discourse. ‘I am an expert on economic theory,’ he says, ‘[but] that does not mean I am an expert on what needs to happen. That is very difficult.’ He clarifies the difference I am trying to define between the academic and the political spheres: ‘In the academic sphere, the beauty of being in a place like Cambridge, is that at the level of research, you put forward your hypothesis, then you meet with your colleagues whose job it is to disprove it. It is only through this test, this trial, that good ideas survive and bad ideas die. This means that the greatest merit of being an academic must be an openness to criticism and a readiness to change your mind, which is exactly the opposite of being in politics. Imagine, instead of having a roundtable of academics where we are testing each other’s theories and trying to disprove them, that we have a roundtable with television cameras, with politicians. Just for a moment fantasise that you are in this conversation and your political opponent says something, and suddenly, you think: my God, that’s a good point! If you say so, you are gone. That really concerns me about politics.’
“Just for a moment fantasise that you are in this conversation and your political opponent says something, and suddenly, you think: my God, that’s a good point! If you say so, you are gone. That really concerns me about politics.”
He says that difference between the academic and the political is a very difficult difference to survive.
One feels that Varoufakis is up for the fight for that survival though. In the spirit of self-criticism, I wondered if he feared the risk as Finance Minister in communicating the complex idea of being at the same time a Europeanist whilst being a radically disruptive force in Europe, the risk of losing control of that narrative to the nationalists and the far right. ‘At every point: I still fear it’. Characteristic of his responses, he reserves political uniformity and gives a double critique of the Syriza project: ‘I think that on the one hand, when it came to the Greek people, we were very successful. Proof of that is that our narrative secured 36% of the vote in the January, and then a few months later, even though the banks were closed (and we were held responsible for that) and all of the media were lambasting us, we took that 36% to 62% of the vote. So, in our communication to the people of Greece, we were spectacularly successful.’ Of course, he checks his triumphalism though: ‘with many Europeans – not all, but many – the systemic media narrative prevailed. I still have to answer questions from journalists: ‘Mr Varoufakis, how dare you go against Europe?’ The answer is I did not.’
I put it to him that Jeremy Corbyn could have taken and led with that risk in the European debate in Britain, and Varoufakis is, for a moment, defensive. ‘He did.’ A quick clarification that he should have been more outright seems underplayed. ‘He showed a very sensible streak by saying: I am highly critical of this EU, but on balance, on the evidence, I think it would be hurtful for most of our people if we left.’ It is an unbrilliant logic that seems to lack Varoufakis’s usual brio, and I am unconvinced that Jeremy Corbyn posed the case for ‘radical Remain’ as well as Varoufakis has it that he did.
He talks me through what comes next for his European Spring movement, and he moves through its failures comfortably, admitting uncomplicatedly that the European Parliament elections this year were not a success for his movement. Varoufakis wants to keep the Green New Deal at the movement’s heart, and it makes sense to promote an issue, international by its very nature, in a political effort aimed at deleting political boundaries along conventional national borders.
This is a reconfiguration informed by his intellectual principles, which recognise the continuity between mathematics, metaphysics, politics, and the lists of other disciplines.
It appears from all of this that Varoufakis is training the modern left, building up its intellectual heft so that, so he says, it is ready for the next crisis. The left failed to enact a genuine paradigm shift after the 2008 financial crash, and Varoufakis seems furious at the wasted chance. He argues, in his conversation with Levi, for an ‘embrace of indeterminacy’. Varoufakis is calling for a sea change in our way of thinking, and it is a radically inspiring call. But, to the end, his principle checks even its own hope, and he questions his whole argument, that a radical departure can come from within the existing system: he is – charmingly – not so sure any more.

“But, to the end, his principle checks even its own hope, and he questions his whole argument, that a radical departure can come from within the existing system: he is – charmingly – not so sure any more.”
[For the TCS site please click here.]

My review of Banerjee & Duflo’s (this year’s Nobel winners in economics) latest book – The Observer

REVIEW: Good Economics for Hard Times: Better Answers to Our Biggest Problems, by Abhijit Banerjee and Esther Duflo

A recent YouGov survey confirmed that economists are the least trusted professionals in the UK today. Brexit is only the latest contributor to the public’s understandable rejection of a profession that has either failed spectacularly to raise the alarm over impending crises or have provided theoretical justifications for the inexcusable practices of bankers and the wild claims of politicians.

Who can forget the Queen’s devastating question, in the aftermath of the 2008 crash, to members of the Royal Economic Society: “Why did no one see it coming?” How can Nobel Prize winning economists be forgiven for providing the theoretical sermons that steadied the financier’s hand concocting the structured derivatives that Warren Buffet would later describe as “weapons of mass financial destruction”?

A new book, entitled Good Economics for Hard Times: Better Answers to Our Biggest Problems, is the latest attempt by professional economists to defend the profession. It is, happily, an excellent antidote to the most dangerous forms of economics-bashing: the attempts of opportunistic politicians to weaponise understandable discontent with mainstream economics and politics and to press it into the service of a xenophobic ideology that denies facts and serves the interests of a nativist, global oligarchy.

The book’s authors, MIT academic economists Abhijit Banerjee and Esther Duflo, write beautifully while in full command of their economics – a rare combination of skills. They look into the most crucial issues humanity faces (migration, trade wars, the scourge of inequality, climate catastrophe) with a combination of humility over what economics cannot tell us and pride over its contributions to our limited understanding. In every page they seek to shed much needed light upon the distortions that bad economics bring to the public debates, while methodically deconstructing their false assumptions. In their words, the book’s noble and urgent task is “…to emphasise that there are no iron laws of economics keeping us from building a more humane world”.

Serendipity would have it that, as this book was in the pipeline, Banerjee and Duflo, who are also partners in life, were awarded (jointly with Michael Kremer) this year’s Nobel Memorial Prize in Economic Sciences. Even if only for the good wind it will blow into this important book’s sails, the Prize Committee’s choice must be considered an inspired one.

Banerjee and Duflo are a new breed of economists. Unlike previous Nobel winners who were mostly older white males producing grand theories built upon mathematics of dizzying complexity, this year’s Nobelists are young and have made a name for themselves by studying poor brown people’s circumstances up close and personally. Most interestingly, they have specialised in borrowing the methods of randomised trials from medicine and deployed them in developing countries to ascertain what policies can alleviate suffering with given resources.

Their own conception of what economists should be doing is disarmingly down to earth. They see themselves as society’s “… plumbers: we solve problems with a combination of intuition grounded in science, some guesswork aided by experience and a bunch of pure trial and error.” A comparison with John Maynard Keynes’s conception of the study of economics is telling. Keynes thought that good economics required of us that we aim to be, at once, “mathematician, historian, statesman, philosopher”. That we must “…contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought.” That we must remain “…as aloof and incorruptible as an artist, yet some-times as near the earth as a politician.”

While such lofty ambition implanted a dangerous delusion of grandeur amongst many of the economists whose theories have caused many people great hardship (for example, grand theorisers of the financial market’s supposed self-correcting capacities), there are passages in this book when this reader would have liked a little more of Keynes’ ambition. For without it the plentiful useful facts do not go far enough to expose the deeper causes of our current predicament. Similarly, while it is refreshing to encounter a genuine admission of ignorance (e.g. when the authors admit that economists are damned if they know what causes economic growth spurts in some places while other places remain stagnant), the umpteenth time I encountered the usual transition from “on the one hand” to “on the other hand”, I found myself yearning, like President Truman once did, for the… one-handed economist.

The book’s greatest contribution is the methodical deconstruction of prominent fake facts on the day’s critical issues: Migration, the reader finds out, is not on the rise – indeed, at 3% of global population it is exactly at the level it was in 1960. Natural experiments (involving Finns expelled from the USSR in 1945, Cubans flocking to Miami in 1980, Jews settling in Israel in the 1990s) prove that migrants do not steal the natives’ jobs, but only help expose the holes in public services and social housing left by austerity. As for trade liberalisation that economists treat as super-important, Banerjee and Duflo dare suggest it brings relatively small benefits while doing a lot of damage to the poorer and the weaker in countries like the United States and India. The resulting discontent in developed countries turbocharges racism: The moment white blue-collar men lose hope and apply for disability welfare benefits it is no longer enough to denigrate blacks and Latinos as “welfare queens”. They must now be depicted as gang members or rapists.

In the chapters on growth, inequality and climate change the reader comes closer to encountering the authors’ politics. While firmly on the side of progressives, and fully sympathetic with figures like Bernie Sanders, Elizabeth Warren and Alexandria Ocasio-Cortez, their own policy stance is much more mainstream. They support schemes to help the victims of globalisation, e.g. by paying firms in declining areas to keep older workers employed. They want government in developing countries to help people move to areas with better jobs but also to help those who want to stay to look after their elderly or their village. In keeping with their academic work’s focus on things that work on the ground, they favour the smaller picture where they can be sure that public investment can make a difference. But what about the larger stage on which humanity’s drama unfolds?

Banerjee and Duflo consider Sanders’ Job Guarantee scheme but reject it because they do not believe worthy jobs can be produced by the state in such big numbers. Correctly, they point out that Warren’s wealth tax, while good and proper, cannot raise more than 1% of US national income, even less Ocasio-Cortez’s 70% marginal tax rate for the super-rich (which will simply motivate firms not to distribute profits but place them in trust funds). Alas, the fact remains that any serious tackling of climate change, or attempt to give social justice a chance, require spending in the vicinity of at least 5% of total income. So, where will the money needed for the International Green New Deal and the redistribution (both global and local) of wealth that humanity needs so desperately come from? Banerjee and Duflo do not say.

At some point they welcome a change of heart amongst IMF staffers: “The IMF now requires its country teams to include inequality in factors to take into consideration when providing policy guidance to countries and outlining conditions under which they can receive IMF assistance.” When I read this, I laughed thinking that someone must have forgotten to send this email to the IMF’s Greek mission! The reason I mention this titbit here is that it points to an explanation of their silence on how the Green New Deal will be paid for: A reluctance to break cleanly from the gravitational pull that the established institutions exert on successful academic economists, preventing them from countenancing public finance innovations that require an ambition closer to that of bigger picture thinkers (e.g. Franklin Roosevelt and John Maynard Keynes)

Every book as important as this one must include a theory of change: By what means shall we use the book’s insights to bring about a more humane world? The authors’ offering is enlightened selfishness by the rich (“The rich may eventually see that it is in their self-interest to argue for a radical shift toward the real sharing of prosperity”) and razor-sharp analysis that is disseminated to the public (“The only course we have against bad ideas is to be vigilant”).

This is unconvincing. But it could not be otherwise. To provide a persuasive internationalist progressive policy agenda at a time when the usual fixes (e.g. quantitative easing, taxation) no longer work, the deeper causes of capitalism’s economic stagnation and flirtation with climate catastrophe must come to the surface. To do this we have to reconsider that which polite society bans respectable economists from interrogating: property rights over the means of production, especially robots, AI etc.

It is a remarkable sign of the times that, as my friend Slavoj Zizek once said, even the brightest minds would rather fathom the end of the world than plan for the end of capitalism. Perhaps the greatest contribution of Banerjee and Duflo’s excellent new book is precisely this: It demonstrates both the brilliant insights that mainstream economics can make available to us and its limits – which a progressive internationalism has a duty to transcend.

https://www.theguardian.com/books/201...

“Η ολιγαρχική καταστολή είναι ο αρωγός της βίας και της ανομίας” – από τη σημερινή συζήτηση στη Βουλή

Αυτή η φωνή άξιζε να είναι στη Βουλή! Ο Κλέων για τους πρόσφυγες

“Should liberal capitalism be saved?”A debate between Martin Wolf & Yanis Varoufakis, Today, London, Wincott Foundation

On November 14, 2019, The Wincott Foundation will host an evening debate at the Financial Times to celebrate its 50th Anniversary. This special event takes the place of the usual annual Harold Wincott Memorial Lecture.
The Foundation was set up in honour of Harold Wincott, who was widely regarded as the finest economic journalist of his day. Writing first in the Investors Chronicle and then, between 1950 and his death in 1969, in the Financial Times, Wincott argued persuasively for the virtues of liberal capitalism at a time when many policy-makers and economists looked to government intervention as the principal means of solving Britain’s economic problems.
With the idea of liberal capitalism again under attack, The Wincott Foundation has invited Martin Wolf, chief economics commentator of the FT, and Yanis Varoufakis, former Greek finance minister, to debate the question ‘Should liberal capitalism be saved?’ It promises to be a fascinating and lively exchange, moderated by Merryn Somerset Webb, editor-in-chief of Moneyweek and FT columnist.
The event will be attended by leading financial journalists, economists, business people and regulators. An audio transcript of the debate will be published on this site.

Quantitative Easing: Its rationale, impact and the future of the world economy – Audio of speech delivered at ICA 2019

Hosted by Bahrain Financial Market Association, the two-day conference organized in cooperation with the Central Bank of Bahrain themed “Reshaping Finance in a Changing Economy”. The ICA hosted the Greek former Minister of Finance Professor Yanis Varoufakis at a panel discussion moderated by Dr. Jarmo T. Kotilaine the Chief Planning and Monitoring Officer of Tamkeen. Other prominent guests were former French President Nicolas Sarkozy and former British Prime Minister David Cameron.

 

https://www.icaconference.com/

“Brexit, for all its ills, has reinvigorated British democracy” – Cambridge Union address, 8 NOV 2019

Last Friday (8th November 2019), I delivered a Cambridge Union address on (what else?) Brexit. My opening message was: “Instead of moaning about the state of British institutions, rejoice! For all its many ills, Brexit has reinvigorated British democracy.” Unlike most continental European parliaments, the House of Commons remains at the heart of decision making and, to boot, the British public are heavily engaged in a much needed re-assessment of Britain’s constitution and socio-economic model. The downside, of course, is the toxicity of the debate and the chasm between Remainers and Leavers.
Beginning with an historical explanation of the deeper causes of British euroscepticism (focusing on the tension between British and Continental versions of capitalism), I concluded hopefully by pointing out that the 12th December forthcoming election offers voters an opportunity to choose between two clear options – which go well beyond Brexit as they involve different visions for the UK: One that is distinctly neoliberal and dedicated to extending the model of a low-wage, low-productivity, light regulation Singapore-like country. And another vision that will (A) keep the UK in or very close to the EU while (b) leading Europe down the much needed path toward a genuine, well-funded, progressive Green New Deal.
This pre-election clash of visions offers Britons an opportunity to heal divisions via a thoughtful debate. As for my preferred election outcome, it could not be clearer: A Corbyn-led, Green New Deal-pursuing, Labour government!

 

Capitalism, Democracy and Europe – Interviewed for the Great Transition Initiative

As harsh austerity and xenophobic nationalism fester in Europe, Yanis Varoufakis discusses his antidote with Tellus Senior Fellow Allen White.

What inspired your career trajectory from academic economist to prominent supranational activist?

I went into politics because of the financial crisis of 2008. Had financial capitalism not imploded, I would have happily continued my quite obscure academic work at some university. The chain reaction of economic crises, financial bailouts, and the rise of what I call the Nationalist International that almost broke financial capitalism, and brought Greece severe hardship, had a profound impact on me.

In the early to mid-2000s, I was beginning to feel that a crash was approaching. I could see that global financial imbalances were growing exponentially and that our generation or the next would be hampered by a systemic crisis.

I left my cocoon writing about mathematical economics and moved from Sydney to Athens at the time Greece was becoming insolvent. I began writing about the current situation and appearing on TV, warning against covering up insolvency with bailouts. Through these appearances as well as writing about government’s role in averting the impending crisis, I drifted into politics.

The second transition, from government to activism, was much simpler. Restructuring Greece’s debt was my top priority as Minister of Finance. The moment the Prime Minister surrendered to the austerity demands of the European Commission and accepted another loan without debt restructuring, resignation became the easiest decision of my life. Once I resigned, I was back in the streets, theaters, and town hall meetings setting up the Democracy in Europe Movement 2025 (DiEM25). I saw activism as the best way to confront the political and banking establishment. Four years later, in July 2019, our Greek branch, entitled MeRA25, entered Parliament with nine MPs. The fight continues.

You are one of the sharpest critics of neoliberalism today. How would you define “neoliberalism”?

To begin, let me challenge the term “neoliberal.” The use of the term in relation to West-Soviet relations was just a cloak under which to hide libertarian industrial feudalism, but neoliberalism has as much to do with financialized capital post-1970s as it does with Cold War geopolitical relations. Similarly—and I know this is a controversial statement—there’s nothing neoliberal about the world we live in today. It is neither new in the sense of “neo” nor liberal in the sense of fostering democratic values. Look at what has been happening in Europe over the last decade. Gigantic bank bailouts are funded through taxation. There is nothing really “neoliberal” about the use of such vast subsidies from the public to finance capitalists.

Even under the government of Margaret Thatcher in the UK from 1979 to 1990, the height of so-called neoliberalism in the UK, the British state grew rapidly, becoming bigger, more powerful, and more authoritarian than ever. We witnessed a state that was weaponized on behalf of the City of London to the benefit of a very small segment of the population. I don’t think we should concede the term “neoliberalism” to the brutish establishment using state power to redistribute wealth from the haves to the have-nots.

How has this “brutish establishment” become so dominant in shaping the global order?

The first two decades after World War II were the Golden Era of capitalism for a very simple reason: Franklin Roosevelt’s New Deal was projected onto the rest of the West under the Bretton Woods system. It was a remarkable, though imperfect, system, a kind of enlightenment without socialism. Structures to restrain financial capital were put into place. Banks could not do as they pleased; that’s why bankers hated the Bretton Woods system. Recall that Roosevelt banned bankers from attending the Bretton Woods conference and subjected them to reserve controls and rules against shifting money across international borders.

The result of the Bretton Woods system was a remarkable reduction in inequality concurrent with steady growth, low unemployment, and next to zero inflation. The system was predicated upon the US’s status as a surplus country, recycling wealth through Europe and Japan in a variety of ways. By the end of the 1960s, however, the Bretton Woods system proved unsustainable. The US began to incur trade deficits with Europe, Japan, and later China at the same time Wall Street, unrestrained by regulatory boundaries, attracted most of the profits from the rest of the world.

Unshackled financial institutions began creating what amounted to private money. Holding an inflow of $5 billion daily for a mere five minutes was enough to divvy it up into derivatives, opaque investment instruments that contributed to the 2008 financial crisis. This and other forms of financial engineering produced huge volumes of private money, the value of which, as in the 1929 crash, eventually collapsed in domino-like fashion. Authorities in Washington, Brussels, Paris, and Athens immediately transferred the resulting losses onto the shoulders of taxpayers, a form of socialism for bankers. I described this colossal mishandling of our financial system in my 2009 book The Global Minotaur, six years before I became the Greek Minister of Finance.

When I became Minister, I believed that a global crisis of capitalism was underway. Imagine, then, my walking into a meeting of the Eurogroup with all the European finance ministers in the room who knew I held this view. I was the red flag in the eyes of the establishment. In the same vein, the German ambassador to Greece and one of the most powerful (and most corrupt) Greek bankers had warned the future, democratically elected Prime Minster that my appointment as Finance Minister would cause them to close ATMs across the country and lead to collapse of the Greek banking system.

Given your experience inside and outside government, do you believe that there is a fundamental tension between capitalism and democracy?

Yes. Compare the character of a democratic election with a general meeting of shareholders of a private corporation. Both are elections, but in the democratic process, the one person-one vote rule applies, whereas in the corporate process, you have one share-one vote, essentially a wealth-based voting structure. My fellow economists, especially the true believers in free markets, love to portray the market as a voting mechanism. It is true that every time you buy a tub of yogurt, you are voting in favor of that brand. The same applies when you buy a Ford as opposed to a Volkswagen. The more money one has, the more votes one casts.

So, if you think of capitalism as a voting mechanism, it is anti-democratic in the sense that money determines power. The evolution of capitalism over the last few centuries is a history of the constant transfer of power to the wealthy, including the power to make decisions that affect the distribution of income.

Over time, power has been redistributed from the political sphere to the economic sphere. Until the early eighteenth century, there was no difference between these spheres. If you were the king or the baron, you also were rich. And if you were rich, you belonged to the nobility. With the rise of capitalism, a lowly merchant could become economically powerful. As the separation of the political and the economic evolved, power gradually transferred to the latter. What we now call democracy is not real democracy given the growing influence of economic power. To be sure, the voting franchise has been extended to all males (from only landowners), to women, and to blacks. A parallel democratization process has not occurred in the economic sphere, where power has become less inclusive and increasingly concentrated.

From the 1870s to the 1920s, democracy gradually became disempowered as the corporate world—a democracy-free zone—emerged. Since the end of the Bretton Woods system in the 1970s, power has migrated to finance. Goldman Sachs suddenly became more important than Ford, General Motors, or General Electric. Even corporations like Apple and Google are increasingly becoming financialized. Apple, for example, is sitting on hundreds of billions of dollars, and it is operating more like a financier than an iPhone producer.

This dynamic guarantees that when we vote, an act of celebrating democracy, we increasingly are participating in a sphere that has become totally disempowered. Capitalism is predicated on defeating democracy, even as the democratic cloak continues to legitimize the prevailing system.

Given this fundamental tension between capitalism and democracy, do you believe the European Union can be reformed? And if so, how?

We must aim for something much closer to a democratic federated Europe than what we have now. The tragedy is that the moment you start making such a case as the only antidote to disintegration, you serve the cause of nationalists, xenophobes, racists, and fascists. In ten years, either we’re going to have a democratic federated European Union, or the political monsters will be victorious.

How do we achieve a future democratic federation? The most urgent and difficult task is to go out into the streets of Athens, Rome, Berlin, Paris, and Lisbon and have a discussion with people about the crisis the EU faces. Many don’t want to hear about Europe’s future anymore. What used to be a very attractive vision of a unified Europe as a larger homeland for all its citizens has become toxic in the minds and the hearts of many Europeans. For them, the democratic European Union has become synonymous with an anti-humanist, even totalitarian, vision. We need to construct a new vision to counteract this kind of thinking.

You have been at the forefront of the recently formed Democracy in Europe Movement 2025 (DiEM25). Tell us about DiEM25’s pan-European mission and strategy.

DiEM25 seeks to put forward proposals that stimulate cooperation that is truly democratic. This will take time and will require recreating European institutions and a political economy that includes a massive Green New Deal or similar strategy. We must spend immediately at least 500 billion Euros annually on green energy, green transport, and a green transition in industry and agriculture. We can do this by creatively harnessing the power of existing institutions. The European Investment Bank, for example, could issue bonds worth half a trillion Euros every year, with that money going toward good-quality green jobs and technologies. The European Central Bank, sitting on the sidelines, could be ready to buy these bonds if needed to keep inflation in check. At the same time, we must engage with a broad spectrum of groups to stabilize Europe and so to bring back hope. With that movement underway, we can then have a discussion about democratic governance of the EU.

I’m an old-fashioned lefty. I don’t believe in destroying institutions. I believe in taking them over and transforming them into true public servants.

What does DiEM25 offer beyond the proposals of parties like Die Linke in Germany, Podemos in Spain, or other Green or Left parties throughout Europe?

Most members of these groups are our friends and comrades. We share a humanist attitude towards life and capitalism. The reason we created DiEM25 is that the major crises in Europe require local and national action as well as pan-European, if not global, action. It makes no sense to prioritize the local and national over the transnational, or vice versa. We must operate simultaneously at all levels.

For example, the design of urban transportation systems must consider the planetary, or systemic, impacts of alternative choices. The problem with national political parties is that they are not very good at such systemic thinking. What we need in Europe is a pan-European movement, which is more than a confederacy of autonomously operating states that make promises to local and national electorates independently of one another and then get together in Brussels to discuss the promises that each has committed to. This model is doomed to fail.

When DiEM25 was inaugurated in February of 2016, we sought to bring together Podemos, Die Linke, and allies from the UK to develop a Green New Deal for Europe. We hoped to unify such movements around a common pan-European program. It didn’t work out that way. Why? Die Linke comprises two distinct groups: one faction believes that the European Union is beyond redemption and should be dismantled; the other believes that the EU is salvageable through democratic activism and social transformation, a view shared by DiEM. This division between supporters of “exit” and “remain” stood in the way of an alliance.

Another impediment to unity was that Podemos and others opposed a European voice in national and local policies and decision-making. What is Podemos going to say, for example, about the level and allocation of investment funds among member states? If a Podemos candidate is elected to the European Parliament, what financial policies will she support? We need clarity and unity on such issues—to have a voice not of a Greek, a German, or a Spaniard, but of a European internationalist. We will continue to struggle to create a unified, coherent agenda for all of Europe. Unity without cohesion is the curse of the left.

Let’s not forget that the historical call was not for workers of each nation to organize within their borders. It was for workers of the world to unite.

Are there lessons to be learned from previous episodes of leftist internationalism, such as the Internationals, for our current time of global mobilization?

There are many lessons. Anybody who doesn’t learn from history is a dangerous fanatic. Lesson number one is that socialist nationalism is the worst antidote to national socialism. Remember what happened in World War I when the German Social Democrats were co-opted into a nationalist agenda and supported the war effort of Germany against the much of Europe. That kind of socialist nationalism will always be gobbled up by Nazism. Anyone who supports a left-wing agenda and at the same time supports a nationalist, populist workers agenda is going to be devoured by fascists. They will end up effectively blowing wind into the fascists’ sails, intentionally or not.

Lesson number two is that Internationals fail if they are just a confederacy of national parties. The moment agendas and organizations are nationally based, as was the case in postwar Communist parties, the international movement will inevitably fragment and collapse. This is why DiEM25 places all its energies into not becoming a confederacy of a Greek DiEM25, a German DiEM25, and an Italian DiEM25. This is not a theoretical matter, but a practical one: transnationality as opposed to confederacy is critical to building a new, progressive political enterprise. Studying the failures of earlier Internationals is fundamental in shaping this strategy.

To be clear, when we created DiEM25, we envisioned a movement, not a party. And it remains a movement, but we decided about a year ago to create our own “electoral wings” in each country. In Germany, DiEM25 created Democratie Europa (“Democracy in Europe”); in Denmark, Alternativet (“The Alternative”). In short, if you are a member of a DiEM25–created party, you also are a member of the larger movement. But you also can be a member of the larger movement without membership in a DiEM25-created party.

In a forthcoming book, you imagine “another world” in 2035 in which global financial capital is essentially demolished. What would this world look like? What would it take to get there?

I begin with the view that the present system is, simply stated, both awful and unsustainable. My story is told from the perspective of 2035, when my characters discover that, back in 2008, at the height of our crisis, the timeline split into two: one that you and I inhabit and another one that yielded a post-capitalist society. It is my narrative strategy for sketching out how post-capitalism could work and feel today had our response to the 2008 been different.

My forthcoming book, entitled Another Now: Dispatches from an Alternative Present, asks the following questions: Could the world be non-capitalist or post-capitalist? Could we see humanism in action? What would it look like? What would socialist corporations look like? How would they function? How would democracy function? What would happen to borders, migration, and defense? I try to create a vision of a liberal, socialist society that is not based on private property but does use money as a vehicle for exchange and markets as coordinating devices. I preserve money and markets because the alternative would be to fall to some fearsome hierarchical control, which, for me, is a nightmare scenario.

A deep transformation of values and institutions is essential to building a world of solidarity, well-being, and ecological resilience—what we call a Great Transition—is more urgent than ever. In a dark time, what basis for hope and advice can you offer fellow internationalists at this critical, historic moment?

We have the tools necessary in order to spend at least five percent of the global GDP on a Great Transition that saves the planet. Technically, we know how to create a new Bretton Woods, a progressive Green New Deal that diverts resources to saving the planet and creating quality green jobs across the globe.

To achieve such a future, we must offer a cautionary note regarding the role of borders. Some on the left are unfortunately moving toward the belief that migrants are a threat to domestic workers. That is a right-wing narrative that is factually untrue. We need to emancipate progressives from the notion that strong borders protect the working class. They do not. They are a scar on the face of the Earth, and they harm labor across the world.