Yanis Varoufakis's Blog, page 87
March 7, 2019
Two replies to Piketty’s critique of our New Deal for Europe
Our Green New Deal for Europe
(As proposed by DiEM25, the EUROPEAN SPRING and our earlier MODEST PROPOSAL)
The principle is simple: In the absence of reflation and reorientation towards sustainable growth by private enterprises that is due to self-fulfilling expectations of low aggregate demand, Europe needs a public investment-led drive toward ‘crowding-in’ idle savings and wealth. However, this must be done in a way that does not involve greater taxation of the exhausted working and middle classes or higher deficits of governments with little fiscal space. DiEM25 proposes, for this purpose, a investment-led recovery, or New Deal, program to the tune of 5% of European GDP annually to be financed via public bonds issued by Europe’s public investment banks (e.g. the new investment vehicle foreshadowed in countries like Britain, the European Investment Bank and the European Investment Fund in the European Union, etc.). To ensure that these bonds do not lose their value as their supply increases sharply, the central banks (in whose jurisdiction the investments will be made) announce their readiness to purchase them if their yields rise above a certain level. In summary, DiEM25 is proposing a re-calibrated real-green investment version of Quantitative Easing that utilises the central ban
Piketty’s critique: Democratising Europe by taxation or debt?
Thomas Piketty wrote in Social Europe on 11th February 2019: On December 10th 2018 we launched a Manifesto for the Democratisation of Europe, along with 120 European politicians and academics. Since it was launched, the manifesto has accrued over 110,000 signatures and it is still open for more. It includes a project for a treaty and a budget enabling the countries which so wish to set up a European Assembly and a genuine policy for fiscal, social and environmental justice in Europe—all available multilingually on the website.
In the Guardian, on December 13th, Yanis Varoufakis presented his ‘Green New Deal’ as an alternative to the manifesto, which he considers to be irrelevant. Concerned to ensure the quality of debate before the coming European elections, we set out some answers to his criticisms and clarify the differences between his plan and our proposals.
The Varoufakis plan builds on the European Investment Bank (EIB) which is responsible for issuing bonds to the value of €500 billion per annum, including these securities in the programme of purchase of securities by the European Central Bank (ECB). ‘They will sell like hot cakes,’ he says with the communicative enthusiasm which the former minister of finance in the Tsipras government in Greece is known to display for his own solutions.
What purpose would the funds thus raised serve—the ecological reconversion of the European economy, whence the slogan ‘New Green Deal? We have no intention to criticise this aim. The reconversion of our system of growth towards a sustainable economic regime is an absolute necessity today. It should be implemented at European level and indeed plays a central role in our own proposal.
What is the difference?
The main criticism by Varoufakis seems to be the following: why do you want to create yet more new taxes when one can create money? Our budget is indeed financed by taxation, whereas his plan is financed by public debt. In his proposals, private firms involved in the ecological transition borrow money from the ECB, after having been selected by the EIB. In fact, part of this arrangement already exists in the form of the Juncker plan. What Varoufakis adds is the purchase of securities by the ECB rather than by private investors.
In the first instance, our proposals are based on taxes because a major part of the expenditure which we propose is public expenditure: financing research in new technologies by universities and sharing the cost of migration among member countries are beyond the sphere of private firms. This is one of the fundamental differences between our proposals: we propose to give Europe the means to provide public goods to its citizens—including the campaign against global warming, but not uniquely.
Secondly, the new shared taxes we propose are aimed at reducing inequality within countries. There are rich Greeks who do not pay sufficient taxes and poor Germans who pay too much; our aim is to ensure greater participation by the richest, wherever they are, to the greater benefit of the poorer, whatever their country.
Varoufakis criticises us however for limiting transfers among countries associated with the new additional budget to 0.1 per cent of gross domestic product. We introduced this parameter to avoid the delusion of the ‘transfer union’ being once again aired as an excuse for doing nothing. If there is a consensus to increase the threshold to 0.5 per cent of GDP or more, and if Varoufakis knows a way of forcing the various countries to accept it, then we would be happy to support such a modification. But one can already achieve a lot by establishing more fiscal justice and reducing inequality within countries.
Technocracy to the aid of the climate?
Another major difference between our proposals is that we set ourselves the imperative of a legitimate, democratic framework. Not so with Varoufakis. By radically shifting the decision-making centre of European economic policy towards the central bankers of the ECB, Varoufakis does not seem to be as concerned as he previously was by the fact that high-ranking civil servants will take decisions behind closed doors which affect millions of European citizens. The Varoufakis plan hands the reins of European policy to an uncontrolled technocracy, as if he had not drawn all the consequences from the Greek crisis!
In contrast, our manifesto takes into consideration the lessons of the present day. It does not build on the hypothetical ecological awareness of central bankers. Our intention is to anchor the reorientation of European policies in a new, stable, institutional and democratic architecture; this will enable the intervention of actors who to date have been marginalised in arrangements not clearly defined, so as to change the balance of power at the centre of Europe.
The policies carried out at European level by ministers of finance lack legitimacy, among other things. To be legitimate, these European policies, which now intervene at the core of the social pacts of states, should be initiated and controlled by an assembly comprising European parliamentarians and, above all, nationally elected members, who, in the last resort, remain the guarantors of these pacts within our democracies.
To act as if everything could be settled by the issuance of a debt and to deem as negligible the question of fiscal justice and the democratic legitimacy of decisions concerning political economy, while restricting oneself to the eurozone, do not seem very convincing to us. That being said, we fully agree that our project would gain from being extended in many directions, in particular in matters of currency and debt.
The treaty we propose does indeed provide for the possibility of a sharing of debts above 60 per cent of GDP and would enable better democratic supervision of the ECB, thanks to the approval and examination of its senior staff by the European Assembly. But these parts of the treaty would gain from being aired and Varoufakis is right to stress the potential importance of the EIB and ECB in any credible strategy of ecological transition.
Financing the ecological transition
The Manifesto for the Democratisation of Europe enables states who so wish to sign a treaty creating a new European Assembly—20 per cent European elected members and 80 per cent nationally elected—which would raise new taxes such as on the profits of major firms or the wealth of the richest European citizens. This would ensure that those who have gained from the construction of Europe participate in the financing of European public goods, for example the ecological transition and the reception and integration of migrants. And provided that the states brought together represent at least 70 per cent of EU population, the European Assembly would take up the task to democratically control and direct the economic policies carried out by the ministers of finance of the states which made it up.
On these issues, it is very difficult to predict the transnational majorities which might emerge in the assembly. There is nothing for example to indicate whether the social fractions of the major European Christian-democrat parties would, or would not, side with left-wing parties to guarantee more social justice in our European societies—currently under threat everywhere from populist forces.
In conclusion, while they have the great merit of existing, the criticisms and proposals of Yanis Varoufakis do not seem to us to be in keeping with the issues at stake. Europe cannot ignore the questions of genuine democratic legitimacy and fiscal justice.
James Galbraith’s response: Financing the Green New Deal in Europe
James Galbraith replied to Piketty in Social Europe on 28th February 2019: Thomas Piketty and several colleagues have taken a shot at the European New Deal (END) of the Democracy in Europe Movement (DiEM25). Writing for DiEM25 last December, Yanis Varoufakis had noted how the taxes and spending Piketty advocates would now be implemented by each EU member individually with practically no Europe-wide component, a retreat from a previous agenda. So part of the difference between the two camps is over whether European green investment should be a continental project or merely each country doing what it chooses, more or less on its own.
But now Piketty calls attention to another big difference. The END of DiEM25 proposes to fund half a trillion euro of energy transformation and conservation with bonds—in other words, a policy of fiscal expansion backstopped by the European Central Bank. Piketty’s team proposes a series of tax measures, on corporate profits, a new progressive income-tax rate and an annual tax on wealth over one million euro—as well as a regressive carbon-emissions tax.
Overall, the Piketty proposal aims to redistribute 2 per cent of European gross domestic product (within countries, not between them) and to invest another 2 per cent in the Green New Deal, a number which comes to nearly €400 billion—close in principle to the DiEM25 proposal. In practice it would fall far short, since the taxes could not be imposed without national consent, and it would not only be tax havens such as Ireland and Luxembourg which would hold back. No conservative government in thrall to the wealthy would participate. Nor would any government that feared an insurrection such as that of the gilets jaunes.
The DiEM25 plan avoids this problem by promising to launch a green-investment programme without new taxes. But can one do this? Piketty and his colleagues say no. They want new taxes, ‘because a major part of the expenditure we propose is public expenditure’. They thus argue that one can’t have a Green New Deal without first putting up the taxes to ‘pay for it’.
Borrowing makes sense
But there is no requirement that any expenditure, whether public or private, be funded in advance by revenues. Expenditures in the nature of investments should, generally, not be funded in advance. If your house has a mortgage, you borrowed to pay for it. If you start a new business, you usually borrow the capital to get started. If a big corporation decides to build a new factory, it too borrows, from a bank or by issuing a bond. Borrowing makes sense when real resources are available and the benefits come over time. In making decisions to invest, governments have an extra advantage: they can write a cheque without having borrowed ‘in advance’. When the cheque is cashed, the recipient can (and often does) simply switch the proceeds for a bond; thus the ‘borrowing’ occurs after, not before, the project is launched.
Both sides agree that major investments are absolutely necessary to fight climate change and sustain high living standards. The question is: which approach would succeed? Piketty’s proposals would impose immediate hardship, through the carbon tax, in order to bring in funds in advance of the investments. By creating hardship, Piketty’s proposals would destroy the political basis for dealing with climate change at all—just as Emmanuel Macron’s diesel tax has already largely done in France. And, given non-compliance and tax evasion, it would probably fail to bring in the revenue anyway. To that extent, by placing taxes before spending, Piketty and his colleagues are promoting a fantasy.
For DiEM25, in contrast, progress would be evident at once and results would start coming in. The required resources would come by mobilising people who are currently unemployed (6.8 percent!) or underemployed (many more!) all across Europe. DiEM25’s proposal would reorganise existing economic activity, provide needed work and generate revenues over time to service the debts taken out at the beginning. Full employment, including a job guarantee, is integral to the European New Deal, both as economics and as the necessary politics of making it work.
A path charted
The DiEM25 proposal follows the path charted by the New Deal of Franklin Delano Roosevelt from 1933 to 1936. Using the technical expertise of the European Investment Bank, it would identify and plan out the large and small undertakings required to achieve the green-investment objectives. Using the credit of Europe, it would fund those projects for the long term at low interest rates. Using the power of the European Central Bank, it would ensure that the bonds were placed on favourable terms.
Stuart Holland’s response: Where the Piketty plan is mistaken
Stuart Holland replied to Piketty in Social Europe on 28th February 2019: In December Thomas Piketty and several others launched a Manifesto for the Democratisation of Europe, supported by 120 European politicians and academics, including proposals for a new European Union treaty, a new assembly and new European taxation. Since it was launched, the manifesto has gained over 110,000 signatures. In an article in the Guardian, Yanis Varoufakis countered this with the proposal from DiEM25, with which he is prominently associated, for a bond-funded Green New Deal. Piketty has responded in turn but both misunderstands and misrepresents the proposal.
A Green New Deal has been advanced not only by DiEM25 but also by the European Greens, which have made it the basis of their two last campaigns for the European Parliament. Its rationale is based on successive versions of A Modest Proposal for Resolving the Eurozone Crisis by Varoufakis and myself, in 2010, 2011 and 2012, and another with James Galbraith in 2013.
Piketty recognises that the Green New Deal proposition includes European Investment Bank (EIB) bonds, and that these could support ‘an ecological reconstruction of Europe’. But he claims that part of this is already in the Juncker plan for a European Fund for Strategic Investments, which is wrong.
The Juncker plan has entailed only €5 billion of EIB funds—rather than the €300 billion which Juncker made the first of ten commitments to the European Parliament, at the time of his adoption as commission president, or the €500 billion in the DiEM25 proposal, to which Varoufakis referred in the Guardian. It has also recently been strongly criticised by the EU Court of Auditors, for recycling existing funds rather than creating new resources.
While Piketty refers to EIB bonds in the DiEM25 New Deal proposal, he takes no account of the argument integral to it for bonds issued by the European Investment Fund (EIF). On my recommendation, the then commission president, Jacques Delors, embodied this in the commission White Paper on Growth, Competitiveness and Employment of December 1993 and persuaded the European Council to endorse it in 1994.
Eurobonds
The aim was to complement EIB micro-level project bonds with a macro-role for eurobonds to recycle surpluses in under-invested global pension and sovereign-wealth funds. Emmanuel Macron grasped this in 2014, as French economy minister, proposing to increase the subscribed capital of the EIF so that it could recycle a share of such surpluses to generate €200 billion or more of counterpart funds for EIB investments. At the time, he was opposed by the German finance minister, Wolfgang Schäuble, but Schäuble is no longer in office.
Piketty also neglects the fact that the Modest Proposal and its derivative case for a Green New Deal include more than funding environmental safeguards and green technology. Thanks to Antonio Guterres, when heading the government of Portugal, the Amsterdam Special Action Programme, endorsed by the European Council in 1997, persuaded the EIB to commit to this but also to fund investments in health, education, urban regeneration and venture capital for small and medium-sized firms to sustain innovative start-ups. These enabled it to quadruple its investment finance to more than double that of the World Bank in the following decade.
This fell to only some €60 billion after the 2008 financial crisis. Yet now, if quadrupled again—not least with EIF co-financing—it could reach some €240 billion, with investment multipliers of 2.5 to 3 double or more than fiscal multipliers, aided also by the EIF having become since 2000 part of the EIB Group.
Serviced by revenues
Unlike the Piketty proposals, none of this depends on a new treaty, a new assembly or new federal taxation—nor on national guarantees of eurobonds for a Green New Deal. For, although Piketty does not cite this, EIB bonds do not count on the national debt of EU member states any more than US Treasury bonds count on the debt of member states of the American union such as California or Delaware. Further, EIB Group bond finance does not depend on fiscal federalism, since it is serviced by revenues from the projects which it funds.
A real gain from EIB bond funding for public investment not counting on national debt is that this releases a major share of annual national taxation for current expenditures—such as raising minimum wages or increasing pensions, or both, without thereby increasing national debt or deficits. This has been integral to the successive versions of the Modest Proposal rationale for a European New Deal.
In claiming to highlight differences between his own proposals and those for a Green New Deal, Piketty claims that his are based on taxes because a major part of the public expenditure he proposes would finance research in new technologies by universities. This fails to appreciate that the key issue is not pure research but, as Mazzucato has evidenced, achieving synergies with entrepreneurship, which was already integral to the rationale for the EIF to issue venture capital.
Another difference claimed by Piketty between his proposals and those for a Green New Deal is ‘to provide public goods to citizens’. Yet, thanks to Guterres, since 1997 the EIB has been doing this in funding investment in health, education, urban regeneration and the environment, without this adding to national debt. Moreover, the Lisbon Agenda of 2000, also cited in the Modest Proposal, was concerned not only with public goods but also public rights, endorsing the principle of the right to a work-life balance which most EU member states thereafter adopted in national legislation—even if this would have been better as a European citizenship right, as originally proposed by Guterres to the European Council.
A further wrong claim by Piketty is that Varoufakis’aim is ‘radically shifting the decision-making centre of European economic policy towards the central bankers of the ECB’. This is a distortion of the point, referred to by Varoufakis in his Guardian article, and also in the Modest Proposal, that the European Central Bank could buy EIB bonds on the secondary market to support their credibility—but this is secondary to the main case we have made since 2010 for both EIB and EIF bonds (not the ECB) to fund a New Deal.
Real difference
While Piketty is concerned to highlight differences between his proposals and those for a Green New Deal, the real difference between them is that his—however well-intentioned—are a wish list for a new treaty, a new institution and taxation of wealth and income. A Green New Deal needs neither treaty revisions nor new institutions and would generate both income and direct and indirect taxation from a recovery of employment.
It is grounded in the precedent of the success of the bond-funded, Roosevelt New Deal which, from 1933 to 1941, reduced unemployment from over a fifth to less than a tenth, with an average annual fiscal deficit of only 3 per cent. Thereby, Americans recovered faith in their institutions, which—whether in the outcome of the ‘Brexit’ referendum in the UK or the gilets jaunes protests in France—is transparently not the case now in the EU.
Our Plan for a European Spring | DiEM25
Since then, anger has combined with hopelessness to create a vacuum, soon filled by the organised misanthropy of a Nationalist International triumphing across Europe, and making Donald Trump a very happy man. Against the background of an establishment that increasingly resembles the unhappy Weimar Republic, and of the recalcitrant racists produced by the crisis’s deflationary forces, the European Union is fragmenting. With Angela Merkel on the way out and Emmanuel Macron’s European agenda dead on arrival, the European election in May could prove the last chance progressives have to make a difference at a pan-European level.
Since it was created in 2016, DiEM25 (Democracy in Europe Movement 2025) has resolved to make the most of this opportunity. First we prepared our programme, the New Deal for Europe. Then we invited other movements and parties to help develop it and to create, together, our European Spring — the first transnational list pursuing a common policy agenda across Europe. Before discussing this project, the left must address two issues dividing and weakening progressives across Europe: borders and the EU.
Borders vs free movement
Something very odd has been happening in recent years: many on the left have come to view open borders as bad for the working class. Jean-Luc Mélenchon of La France Insoumise has said several times, ‘I’ve never been in favour of freedom of arrival.’ In a speech on posted workers at the European Parliament in July 2016, he said migrants were ‘taking the bread out of the mouths’ of French workers. He has since regretted this statement, though his views on the impact of migration on French wages have not changed.
This is not new. In 1907 Morris Hillquit, the founder of the Socialist Party of America, tabled a resolution to end ‘the wilful importation of cheap foreign labour’, arguing that migrants were a ‘pool of unconscious strike-breakers’. What is new is that much of the left seems to have forgotten Lenin’s fierce reaction in 1915 to Hillquit’s call for curbs on migration: ‘We think that one cannot be internationalist and be at the same time in favour of such restrictions … Such socialists are in reality jingoists.’
Lenin had provided the context in an article on 29 October 1913: ‘There can be no doubt that dire poverty alone compels people to abandon their native land, and that the capitalists exploit the immigrant workers in the most shameless manner. But only reactionaries can shut their eyes to the progressive significance of this modern migration of nations … capitalism is drawing the masses of the working people of the whole world … breaking down national barriers and prejudices, uniting workers from all countries.’
Only reactionaries can shut their eyes to the progressive significance of this modern migration of nationsLenin
DiEM25 adopts Lenin’s apt analysis: walls that curb the free movement of people and goods are a reactionary response to capitalism. The socialist response is to bring down the walls and allow capitalism to undermine itself, while we organise transnational resistance to capitalist exploitation everywhere. It is not migrants who steal the jobs of native workers but governmental austerity, which is part of the class war waged on behalf of the domestic bourgeoisie.
This is why we are adamant that xenophobia-lite must never be allowed to contaminate our agenda. As my friend Slavoj Žižek says, a leftist nationalism is a cruel and inane response to National Socialism. So DiEM25’s position on newcomers is that we refuse to differentiate between migrants and refugees. And we call upon Europe to #LetThemIn.
The left’s best strategy
Comrades from across Europe call us utopian and say the EU cannot be reformed. They may well be right. So for argument’s sake, let us agree that the EU is unreformable. Is progressives’ best response to adopt Lexit (the leftwing campaign for the controlled disintegration of the EU)? Some of my happiest memories are of addressing large audiences in Germany in 2015, soon after Syriza’s surrender to Angela Merkel and the troika (the International Monetary Fund, European Central Bank and European Commission). They were desperate to convey that what had been done to Greece had not been done in their name, the name of the German people. I remember how relieved they were on hearing the DiEM25 call to form one transnational movement, to unify, to fight together, to seize control of EU institutions — European Investment Bank (EIB), ECB etc — and re-deploy them in the interests of all Europeans.
I still feel the elation of our German comrades on hearing our idea to run Greek candidates in Germany and German candidates in Greece to signify that our movement is transnational, that it intends to take over the neoliberal order’s institutions everywhere and at once, not to wreck them but to make them work for the many, in Brussels, Berlin, Athens, Paris. Everywhere.
Compare this with how they would have felt had I told them that the EU was unreformable and must be disbanded; that Greeks must fall back to their nation state and try to build socialism there, while Germans did the same. Once we succeeded, our delegations could meet to discuss collaboration between our newly sovereign progressive states. Our German comrades would undoubtedly have felt deflated, and returned home depressed, thinking that they would have to face the German establishment as Germans, not as part of a transnational movement.
If I am right, it does not matter whether the EU is or isn’t reformable, but it does matter that we put forward concrete proposals on what we would do with EU institutions. Not utopian proposals but complete descriptions of what we would do this week, next month, in the next year, under the existing rules and with the existing instruments — how we would reassign the role of the awful European Stability Mechanism, reorient the ECB’s quantitative easing, and finance immediately, and without new taxes, a green transition and campaign against poverty.
Why such a detailed agenda? To show voters that there is an alternative, even within the rules designed by the establishment to further the interests of the top 1%. No one expects the EU institutions to adopt our proposals, least of all us. All we want is for voters to see what could be done, instead of what is being done, so that they can see through the establishment without turning to the xenophobic right. This is the only way the left can escape its confines and build abroad progressive coalition.
Towards a democratic constitution
DiEM25’s New Deal for Europe aims at this; it shows how the lives of the majority of people can be improved in the short run under existing rules and with the current institutions. And it maps out the transformation of these institutions while charting a constitutional assembly process that will, in the longer run, lead to a democratic European constitution to replace all existing treaties. And it demonstrates how the new mechanisms we will be introducing from Day 1 can help us pick up the pieces if, despite our best efforts, the EU disintegrates.
Everyone talks about the importance of the green transition. What they do not say is where the money will come from and who will plan it. Our answer is clear: Europe needs to invest €2 trillion between 2019 and 2023 in green technologies, energy etc. We propose that the EIB issues an additional volume of its bonds, €500bn annually for four years, and that the ECB announces that, if their value drops, it will purchase these on the secondary bond market. With that announcement, and the glut of savings around the world, the ECB will not have to spend a single euro, as the EIB bonds will sell out. A new European Green Transition Agency, modelled on the Marshall Plan’s Organisation for European Economic Cooperation (the OECD’s precursor), will channel those funds to green projects across the continent.
This proposal requires no new taxes, builds on an existing European bond and is fully legal under existing rules. The same applies to our other proposals, such as our Anti-Poverty Fund: we propose that the billions of profits of the European System of Central Banks (from assets purchased under the ECB’s quantitative easing or from the Target2 payment system) be used to provide every European under the poverty line with food, shelter and energy security.
Another example is our plan to restructure the eurozone’s public debt: the ECB mediates between states and money markets to reduce their total debt burden, but without printing money or making Germany pay for, or guarantee, the public debt of the more indebted countries.
As these demonstrate, our New Deal combines technically competent plans, implementable under the EU’s existing framework, with a radical departure from austerity and the troika’s bailout logic. And it goes further by tabling new institutions that prepare for a post-capitalist European future.
A plan for post-capitalism proposes to partly socialise capital and the returns from automation: big business corporations’ right to operate in the EU will be conditional on transferring a percentage of their shares to a new European Equity Fund. The dividends from these will then fund a Universal Basic Dividend (UBD) to be paid to each European citizen independently of other welfare payments or unemployment insurance.
Our proposals for reforming the euro are another radical change. Before getting bogged down in changing the charter of the ECB, we plan to create a public digital-payments platform in every eurozone country. Using their national tax office’s existing digital platform, taxpayers would have the opportunity to purchase digital tax credits, which they can use to pay one another or to pay future taxes at a substantial discount. These credits would be denominated in euros but transferable only between taxpayers within a single country, so would be impervious to sudden capital flight.
Governments would be able to create a limited number of these fiscal euros, to be given to citizens in need or used for the funding of public projects; fiscal euros would allow stressed governments to stimulate demand, lessen the tax burden, and ultimately reduce the crushing power of the ECB and costs of exiting the euro (or of the euro’s disintegration). In the long term, public digital-payment platforms would form a managed system of country-specific euros that work like an International Clearing Union, a modern version of John Maynard Keynes’s 1944 vision for the Bretton Woods system, which sadly failed to materialise.
Our New Deal for Europe is a comprehensive plan for smartly re-deploying existing institutions in the interests of the majority, planning for a radical, post-capitalist green future, and preparing to pick up the pieces if the EU collapses.
A European Spring is possible
The left’s great foes are disunity and incoherence. Unity is crucial, but it should not be pursued at the expense of coherence. Consider the state of the European Left party: how can it appeal to voters this May when it is represented in Greece by a party that, in government, implements the harshest austerity in the history of capitalism on behalf of the troika, while many of its leading lights in countries like France and Germany are eurosceptic?
Well-meaning leftwing friends ask, ‘Why doesn’t DiEM25 join up with Jean-Luc Mélenchon’s La France Insoumise or Sahra Wagenknecht and Oskar Lafontaine’s Aufstehen movement in Germany? How can the left make a difference if you fail to unite?’ The reason is simple: our duty is to create unity on a foundation of radical, rational and internationalist humanism. This means a common agenda for all Europeans and a radical policy of an Open Europe that recognises borders as scars on the planet and newcomers as welcome. Nothing less will do.
Our bid for unity was based on a simple idea: DiEM25 invited all progressives to participate in the joint authorship of our New Deal for Europe on the basis of radical, humanist Europeanism. Our call was answered. Génération-s (France), Razem (Poland), Alternativet (Denmark), DemA (Italy), MeRA25 (Greece), Demokratie in Europa (Germany), Der Wandel (Austria), Actua (Spain), Livre (Portugal) joined in. More movements are joining now. Together we have formed the European Spring coalition that will run in May in the European Parliament election to push for our project.
Our message to Europe’s authoritarian establishment: we will resist you through a radical programme that is technically more sophisticated than yours. Our message to the fascistic xenophobes: we will fight you everywhere. Our message to our comrades of the European left: you can expect unlimited solidarity from us, and one day our paths will converge in the service of a radical, transnational humanism.
Yanis Varoufakis
Yanis Varoufakis is an economist and former Greek finance minister (January-July 2015). He is the founder of the Democracy in Europe Movement 2025 (DiEM25).
Click here for the French version on the site of Le Monde Diplomatique. And here for their English site.
What’s wrong in Europe today and how to fix it tomorrow morning – Berlin speech
Demokratie in Europa is DiEM25’s new political party in Germany. Demokratie in Europa is running in the European Parliament election this coming May as part of our EUROPEAN SPRING that is campaigning across Europe on the basis of our transnational NEW DEAL FOR EUROPE. In this Berlin speech, and in my capacity as a candidate for MEP with Demokratie in Europa, I answer the question: “What is wrong with Europe today and what immediate steps we propose to fix it.”
March 4, 2019
German political economy’s two naughty sisters in action, once again – George Krimpas guest post
One naughty sister, the one named Cameralism, smiled. She knew all about surplus budgets. Her slogan is never to borrow except if you can control the value of repayment. This can be ensured if the other naughty sister, the one named Mercantilism, is ready to assist. Her slogan is to always have an external surplus. Thus the two naughty sisters are the ideal coalition, win-win against all comers, austerity at home assisted by exporting deflation abroad. Thus the timely intervention of Germany’s Economy Minister, a Christian Democrat: the external surplus, though enormous, shows signs of brittleness, what with T for Trump, C for China and B for Brexit, therefore sound policies must be preserved, competitiveness must once again be enhanced, supply side measures are appropriate, ergo austerity once again. Thus all the history of German political economy was rehearsed during the last two weeks. The naughty twins enjoyed their act.
It was only eight years ago that Yanis Varoufakis and I published our answer to the problem and would only once again wish that the science of economics could pierce through the opaque Germanic dogma of the naughty twin sisters. Here it is again as it appeared in the Monthly Review of May 4th, 2011.
March 3, 2019
Europe’s Leaders Are Aiding Italy’s Populists – Project Syndicate op-ed
ATHENS – Italy is now the frontline in the battle of the euro. Deputy Prime Minister Matteo Salvini is being propelled by a political tailwind that may, after the European Parliament elections in May, enhance his capacity to inflict serious damage on the European Union. What is both fascinating and disconcerting is that the xenophobia underpinning Salvini’s ever-increasing authority is being generated by the eurozone’s faulty architecture and the ensuing political blame game.
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February 28, 2019
Τα θεμέλια του μανιφέστου της Ευρωπαϊκής Ανοιξης-ΜέΡΑ25 – ΕφΣυν 23 ΦΕΒ 2019
Ξεκινάς θέτοντας βασικά ερωτήματα για το τι πρέπει να γίνει αύριο το πρωί (δηλαδή με τους υπάρχοντες θεσμούς), τι σε ένα-δυο χρόνια (αλλάζοντας παραμέτρους των θεσμών) και τι σε ορίζοντα δεκαετίας (αλλάζοντας τους θεσμούς).
Καλείς όσους ενδιαφέρονται να απαντήσουμε μαζί αυτά τα ερωτήματα, πειστικά, να προσέλθουν. Τέλος, μετά από κοπιώδη μελέτη των προβλημάτων και των προτεινόμενων λύσεων και εφόσον συμφωνήσουμε στο τι πρέπει να γίνει, αποφασίζουμε να κατέβουμε μαζί στις εκλογές στη βάση του κοινού μας προγράμματος. Πρόκειται για τον τρόπο με τον οποίο λειτουργούμε στο ΜέΡΑ25, τον τρόπο με τον οποίο χτίσαμε, μετά από τρία χρόνια σκληρής δουλειάς (στην οποία συμμετείχαν χιλιάδες Ευρωπαίοι), το εκλογικό μας μανιφέστο για τις ευρωεκλογές – το μανιφέστο που ονομάζουμε ΝΕΑ ΣΥΜΦΩΝΙΑ ΓΙΑ ΤΗΝ ΕΥΡΩΠΗ.
500 – 100 – 3
Τρεις αριθμοί εναντίον της ευρωπαϊκής αποδόμησης και του μισανθρωπισμού:
500 δισ.: Η Ευρώπη έχει άμεση ανάγκη για 500 δισ. ευρώ νέων, πράσινων επενδύσεων ετησίως (5% του ΑΕΠ της Ε.Ε.) τουλάχιστον για τα επόμενα χρόνια, συνολικά 2,5 τρισ. ευρώ για τη θητεία της επόμενης Ευρωβουλής. Είναι απαραίτητα για δύο βασικότατους λόγους.
Ο πρώτος λόγος είναι ότι η κρίση της προηγούμενης δεκαετίας έχει ρίξει το επίπεδο των επενδύσεων πολύ κάτω του επιπέδου αποταμιεύσεων. Ως αποτέλεσμα, (α) στην Ευρώπη ολοένα και σπανίζουν οι καλές θέσεις εργασίας, με αποτέλεσμα την ενδυνάμωση της κοινωνικής και ηθικής κρίσης, και (β) την αποτυχία της Ευρώπης να κάνει το καθήκον της απέναντι στο περιβάλλον και την κλιματική αλλαγή (κάτι που απαιτεί σημαντικές επενδύσεις).
Πού θα βρεθούν 500 δισ. ετησίως; Οχι από φόρους, απαντάμε. Θα βρεθούν μέσω έκδοσης ομολόγων αξίας 500 δισ. κάθε χρόνο από την Ευρωπαϊκή Τράπεζα Επενδύσεων, με την υποστήριξη της Ευρωπαϊκής Κεντρικής Τράπεζας, η οποία απλώς θα ανακοινώσει ότι, αν η αξία των ομολόγων αυτών αρχίσει να μειώνεται, η ΕΚΤ θα παρέμβει στη δευτερογενή αγορά ομολόγων αγοράζοντάς τα – μια ανακοίνωση που, από μόνη της, εγγυάται ότι δεν θα χρειαστεί η παρέμβαση της ΕΚΤ. Είναι σύννομη μια τέτοια πολιτική;
Και βέβαια. Για την ακρίβεια, από το 2015, ακριβώς αυτό γίνεται: Η Ευρωπαϊκή Κεντρική Τράπεζα αγοράζει ομόλογα της Ευρωπαϊκής Τράπεζας Επενδύσεων. Αυτό που προτείνει το ΜέΡΑ25 είναι η μεγέθυνση του υπάρχοντος αυτού προγράμματος ώστε να χρηματοδοτηθεί νέος κοινοτικός οργανισμός που εκπονεί και εφαρμόζει το απαραίτητο γιγαντιαίο πρόγραμμα Πράσινης Μετάβασης στους νευραλγικούς τομείς της ενέργειας, των μεταφορών, της βιομηχανίας και της γεωργίας. Με μια απλή τέτοια κίνηση η Ευρώπη μπορεί, από αύριο το πρωί, να δημιουργεί τις θέσεις εργασίας και το οπλοστάσιο εναντίον της κλιματικής αλλαγής που απαιτούν τόσο οι κοινωνίες μας όσο και ο πλανήτης.
100 δισ.: Η δεκαετής οικονομική κρίση έχει δημιουργήσει νέες τάξεις εργαζόμενων-λάστιχο οι οποίοι εργάζονται μέρα-νύχτα χωρίς να ξεπερνούν καν το επίσημο όριο της φτώχειας. Για την καταπολέμηση αυτών των νέων και παλαιών μορφών φτώχειας απαιτείται η δημιουργία ειδικού πανευρωπαϊκού ταμείου με προϋπολογισμό 100 δισ. ετησίως. Πού θα βρεθούν τόσα χρήματα;
Γνωρίζεις, αναγνώστη, ότι το 2018 η ΕΚΤ είχε κέρδη 91 δισ.; Γιατί να έχει κέρδη μια κεντρική τράπεζα; Δεν πρόκειται για επιχείρηση αλλά για δημόσιο, ευρωπαϊκό οργανισμό. Ακριβώς επειδή δεν δικαιούται να έχει κέρδη, το καταστατικό της ΕΚΤ επιβάλλει είτε τη διοχέτευση των κερδών της ΕΚΤ στα κράτη-μέλη (με τα ήδη πλουσιότερα κράτη να λαμβάνουν τη μερίδα του λέοντος) είτε τη χρήση των κερδών για την αγορά άλλων ομολόγων και τίτλων.
Το ΜέΡΑ25 προτείνει κάτι πολύ απλό, λογικό και καθ’ όλα νόμιμο: Το Ευρωπαϊκό Συμβούλιο να αποφασίσει ότι τα κέρδη της ΕΚΤ θα χρηματοδοτούν το ειδικό πανευρωπαϊκό ταμείο για την καταπολέμηση της φτώχειας. Φαντάζεστε την ενοποιητική δύναμη ενός τέτοιου ταμείου;
Φαντάζεστε πώς θα αλλάξει το κλίμα όταν φτωχές οικογένειες στην Ελλάδα, στη Γερμανία, στην Πορτογαλία κ.λπ. αρχίσουν να λαμβάνουν επιταγές υπογεγραμμένες από την ΕΚΤ για να αγοράσουν τρόφιμα και άλλα είδη ανάγκης – χωρίς μάλιστα να επιβαρύνονται οι φορολογούμενοι;
3 τρισ.: Το δημόσιο χρέος της ευρωζώνης ανέρχεται στα 9 τρισ. ευρώ. Από αυτά, τα 6,3 τρισ. είναι το χρέος που τα κράτη-μέλη «δικαιούνταν» να έχουν (σύμφωνα με τις Συνθήκες Μάαστριχτ-Αμστερνταμ). Ο μέσος όρος του επιτοκίου εξυπηρέτησης του «επιτρεπόμενου» μέρους του χρέους, δηλαδή των 6,3 τρισ., είναι 2,1%. Τα επόμενα 20 χρόνια, οι τόκοι μόνο ανέρχονται στα 3,2 τρισ.
Το ΜέΡΑ 25 προτείνει την εξής απλή παρέμβαση: Η ΕΚΤ εγγυάται το «επιτρεπόμενο» χρέος των 6,3 τρισ. (χωρίς να το αγοράζει ή να τυπώνει χρήμα) εξασφαλίζοντας επιτόκια αποπληρωμής λίγο πάνω από το μηδέν (σημ.: το επιτόκιο της ΕΚΤ σήμερα είναι… -0,4%). Ετσι, μειώνεται το κόστος αποπληρωμής του χρέους της ευρωζώνης κατά 3 τρισ. σε βάθος εικοσαετίας. Η κρίση δημόσιου χρέους εξανεμίζεται με μια μονοκονδυλιά, μαζί με την πίεση για λιτότητα (που αιτιολογείται λόγω του υψηλού δημόσιου χρέους).
Θεσμικές τομές για να μετατραπεί η Ε.Ε. από πηγή προβλημάτων σε πηγή λύσεων
Πλήρης αποσύνδεση τραπεζικών διασώσεων και ανακεφαλαιοποιήσεων από τις κυβερνήσεις των κρατών-μελών, έτσι ώστε να σπάσει η διαπλοκή πτωχευμένων τραπεζιτών και πολιτικών.
Φόρος κληρονομιάς και διοξειδίου του άνθρακα, για να χρηματοδοτηθούν εγγυημένες θέσεις εργασίας στους κατοίκους περιοχών που ερημώνουν.
Ευρωπαϊκό Ταμείο Πλούτου, στο οποίο θα περιέλθει το 10% μετοχών μεγάλων επιχειρήσεων, με διανομή των μερισμάτων σε όλους τους Ευρωπαίους πολίτες.
Εξωτραπεζικό Δημόσιο Σύστημα Πληρωμών σε κάθε χώρα της ευρωζώνης ώστε (α) να έχουν οι πολίτες πρόσβαση σε δωρεάν ηλεκτρονικές πληρωμές, και (β) το κράτος να δύναται να χρηματοδοτεί τους ασθενέστερους με ποσά που δεν μπορούν να βγουν από τη χώρα.
Ευρωπαϊκό Διαβατήριο Προσφύγων, το οποίο τους επιτρέπει την ελεύθερη διακίνηση εντός και εκτός της Ε.Ε.
Διαφάνεια στη λήψη αποφάσεων, με ζωντανή αναμετάδοση των συνόδων του Ευρωπαϊκού Συμβουλίου, των Eurogroup, EuroWorkingGroup κ.λπ.
Διαβουλευτικές Συντακτικές Συνελεύσεις με στόχο την (από κάτω προς τα πάνω) σύνταξη δημοκρατικού ευρωπαϊκού Συντάγματος, το οποίο θα αντικαταστήσει όλες τις Συνθήκες, με ορίζοντα το 2025.
Αυτό είναι, περιληπτικά, το μοναδικό πανευρωπαϊκό πρόγραμμα με το οποίο κατεβαίνει το ΜέΡΑ25 στις ευρωεκλογές, το ίδιο πρόγραμμα που η ΕΥΡΩΠΑΪΚΗ ΑΝΟΙΞΗ καταθέτει στην κρίση των ψηφοφόρων σε έντεκα, ταυτόχρονα, χώρες.
*Γραμματέας ΜέΡΑ 25
Britain needs to choose its dominant Brexit strategy – The Telegraph
A bad Brexit deal, and even more so a no-deal Brexit, will be detrimental to the UK and to the EU. Mrs Merkel, Mr Macron and Mr Juncker are just as aware of this as Mrs May. If Article 50 had not stipulated a fixed deadline, the EU’s leadership would have no option but to negotiate in good faith until they struck a mutually advantageous deal with the British government.
Nevertheless, the fixed deadline meant that, despite the large costs to continental manufacturers from a tumultuous Brexit, the EU lacked any strategic incentive to negotiate in good faith. Given that the negotiation’s last possible moment was common knowledge, and a no deal would impose higher costs on the UK than the EU, no authentic negotiations were ever on the cards – an obvious deduction which was the reason why, since the summer of 2016, I have been warning the UK against participating in Brussels’ phoney negotiation ritual.
When Brussels and London know that N days are left and that, on day N, London is facing a costlier default, Brussels has no incentive whatsoever to make meaningful concessions until day N. Whatever concessions Brussels makes before day N, London will expect more concessions on day N – which prohibits Brussels from making concessions before day N! Meanwhile, as day N approaches, the British side is beset by increasing divisions that give Brussels even greater cause to toughen its stance. Moreover, the above holds independently of whether N is 30 days, 300 days or 3,000 days.
Four conclusions follow from the above. First, the British Government erred in imagining that the EU’s considerable economic losses from a no deal translated into a strategic incentive to negotiate in good faith. Secondly, Mrs May committed an elementary mistake in accepting Mr Barnier’s two-phase negotiation process which committed Britain to giving the EU everything it demanded before discussing Britain’s demands.
Thirdly, an extension of Article 50 for the purposes of extracting a better deal from the EU is delusional – since a reset day N will not give Brussels reason to change its stance before the new day N arrives. Fourthly, Mrs May’s withdrawal deal deserves to be ditched courtesy of another fixed deadline that is embedded in it which, effectively, extends the current phoney negotiation, and standstill, until the final day of the fixed transition period.
What should the UK Government be doing instead? When faced with a fixed deadline and a disadvantageous default outcome, there is only one thing to do: select your dominant strategy; the strategy that you consider your best response to everything the other side may throw at you; a strategy whose appeal does not rely on the success of bluffs, threats or enticement.
Cajoling Mr Barnier, appealing to Mr Juncker’s sensibilities, or threatening Mrs Merkel with losses to the German car industry are not dominant strategies since their appeal depends on the kindness, ruthlessness or gullibility of strangers who lack an incentive to respond positively. Passing Mrs May’s Withdrawal Agreement is not a dominant strategy either because the result would be to enable Brussels to extend its recalcitrance until the last day of the transition period.
There are two dominant strategies a UK government must choose between: the no-deal strategy favoured by the European Research Group that leaves no room to Brussels to respond, except by making unilateral concessions; and an indefinite customs union deal favoured by Jeremy Corbyn’s Labour Party, which the EU negotiators cannot reject even if they wanted to.
That these two are both dominant strategies does not mean that they are equally attractive. But at the very least, focusing on them clears the fog caused by defections from the two main parties, and from Mrs May’s confused obstinacy, and concentrates the mind on the only two options that can annul the fixed deadline effect which has so unnecessarily toxified British, and European, politics.
Published on 25th February 2019. For the site of the Telegraph, click here.
February 19, 2019
Utopian science fictions legitimising our current dystopia – 2019 Taylor Lecture, Oxford University
For the audio of the lecture, click the photo above. For a video, click. The complete text of the talk follows.
12th February 2019, Taylor Lecture, Oxford University
Thank you profusely to all of you for being here tonight and, of course, to the Faculty of Medieval and Foreign Languages for your invitation to deliver the 2019 Taylor Lecture. It is a tremendous honour to be standing in front of your tonight.
To paraphrase Philip K. Dick, reality is that which, when you stop believing it, doesn’t go away. Just like Brexit. We wake up in the morning and, as our dreams or nightmares dissolve into thin air, we realise that, yes, we are indeed living in an unlikely world: Theresa May is still pushing her sad deal. My fellow Greeks continue to live in a decade-long Great Depression. Donald Trump is President of the United States of America!
Now, you may be tempted to think that, Utopia, the theme I chose for tonight, was meant as an escape hatch from from the tyranny of a post-2008 world that begets monsters we thought we had put to rest in 1945 – a life boat to survive our sea of troubles.
I only wish I could treat you to an hour-long flight from the disenchantment of the post-modern 1930s that 2008, our generation’s 1929, triggered off. Alas, utopian thinking, or thinking about utopia, never could offer respite from reality. Like science fiction, all it can do is open up a window from which to catch a glimpse of our reality and see it for the first time, perhaps less painfully, more hopefully.
Utopic thinking has its roots in that first instance when humans looked at each other, noticed the distribution of power in their tribe, and asked: Why this? Why so? It grew in complexity from the earliest of times, with Arcadian myths and parables juxtaposing ideal societies against existing social arrangements. It reached its apotheosis with Plato whose Republic was meant as a party-political manifesto – a piece of sophisticated propaganda by which to turn us into enemies of democracy and enthusiasts for enlightened oligarchy.
More interesting than Plato’s utopian thinking, at least to me, was the use of utopian thinking by playwrights like Aristophanes – thinkers more alert to the dangers implicit in utopian thinking, to the fact that one person’s utopia is another’s nightmare. In Ecclesiazuse, Aristophanes challenges the sanctity of debt and the power of creditors eloquently by making Praxagoras say:
…Tell me, my friend, how the creditor came by the money to lend?
All money, I thought, to the stores had been brought.
I’ve got a suspicion.
I say it with grief, your creditor’s surely a bit of a thief.
Soon after, he has Praxagoras issuing an egalitarian manifest, one that Shakespeare copied and made Gonzalo proclaim centuries later. He declares that behind unsustainable and immoral debt there always lurks illegitimate private ownership. And he dares us to imagine a society in which all good things are equally distributed:
The rule which I dare to enact and declare, is that all shall be equal, and equally share | all the wealth and enjoyments, nor longer endure that one should be rich, and another be poor…
Taking egalitarianism to its logical conclusion, Praxagoras challenges all property-based contracts, including what feminists like Carol Pateman refer to as the sexual contract which underpins all other contracts, private or social.
All women and men will be common and free no marriage or other restraint there will be
Aristophanes’ strategy is subtle but clear: He utilises utopian thinking first to excite, then to appal us. Effectively to warn us, to tell us: Beware what you wish for!
No girl will be permitted to mate except in accord with the rules of the state. By the side of her lover, so handsome and tall, will be stationed the squat, the ungainly, the small. And before she is entitled the beau to obtain, her love she must grant to the awkward and plain
His real message is that the most vengeful of gods is the one who might deliver the society we are foolish enough to think we can design, like megalomaniac architects, in our heads.
In this sense, Aristophanes is closer not just to Thomas More but also, remarkable as it may sound, to both Karl Marx and Karl Popper.
Starting with Thomas More, the slain statesman was indeed much closer to Aristophanes than to Plato. He sketched Utopia as an experiment with an alternative present but also as a cautionary tale of what we will get if we mess with the status quo. This is perhaps why More refused to have Utopia translated from Latin into English – to prevent it from influencing the English masses.
While More’s tale of an egalitarian Arcadia was not terribly original, we owe him a debt of gratitude for his onomatopoeic success, for concocting a terribly useful Greek word, one that means no where, no place – a word that has come to reflect our way of challenging, buttressing and understanding social reality. A word that has spawned three crucial genres:
Eutopias – non-existent but realistic societies described in considerable detail in order to show that a better world is possible – The Republic is an early example; the anti-globalisation movement’s Another World Is Possible a more recent one.
Anti-Utopias – Eutopias gone wrong as a result of the terrible unintended consequences of trying to build an imagined eutopia. The various communities modelled on the thought of Herbert Spencer or, indeed, the Soviet Union being good examples. And,
Dystopias that emerge spontaneously from our existing reality – Brave New World, 1984 and, more recently, Bladerunner, The Matrix, and the Terminator series.
This is perhaps the moment for a personal note. All my life I opposed utopianism as a political or intellectual project, despite having enjoyed hugely literature and movies turning on some utopian or dystopian axis. The reason was my affinity to Aristophanes and my antipathy to Plato.
When I first read Thomas More’s classic, I recoiled just as I had done when reading about the suppression of artists from Plato’s Republic. It was a time when I was learning how to be a socialist that I encountered Karl Marx’s warnings against utopian socialism. And when, a little later, I read Karl Popper’s Open Society and its Enemies, along with 1984, I became convinced of the imminent dangers baked into any blueprint of the good society. To put it bluntly, totalitarianism lurks in the shadows of any grand design that we seek to construct in our heads before implementing it in practice.
Some of you may be baffled by my lumping together of the two Karls, Marx and Popper. Don’t be. I think that, in this, they are on the same page. Popper feared utopian thinking. Marx disdained it. Popper believed that no society can be perfect. Leftwing anarchists, like William Godwin, thought that hell is any group of people. Jean Paul Sartre thought that hell is other people. Marx, in contrast, was more optimistic and allowed himself to think of a society in which he could
… do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, …, without ever becoming hunter, fisherman, herdsman or critic.
But Popper and Marx agreed that trying to imagine the perfect society in order to construct it was a bad idea. For Popper, any attempt to construct the perfect society can only go wrong in the sense of erecting some variety of totalitarianism. For Marx, utopian socialists trying to imagine the good society either wasted their time or were unwittingly functional to the reinforcement of the capitalist order. How?
Good, smart people living in slave societies (for example Aristotle) could never imagine a society without slaves – only a society in which, at best, the deserving remained free and the undeserving of freedom lost their freedom but were treated humanely. That’s what convinced Marx that we are unable to exit our current perspective and imagine the good society in a feasible future. If we force ourselves to imagine now how post-capitalism might work, we are bound to end up with a cuddlier version of capitalism, maybe a bucolic higher-tech version of feudalism, a superstitious class-ridden society in which the superflux is, at best, shaken a little more vigorously – to quote King Lear. A vision, in short, that reaffirms capitalism and ignores that only the dispossessed – not us intellectuals in universities like this one – can construct a radically different future.
This is why I never planned to write a book like the one I am currently struggling to write – one firmly lodged in the utopian genre. So, what changed? What made me sidestep a lifelong aversion to utopianism?
Last year I published a little book entitled TALKING TO MY DAUGHTER ABOUT THE ECONOMY, subtitled ‘A brief history of capitalism’. In it, I did what I had been doing for decades, only this time addressing teenagers: Explain to the young how our contemporary world, our political economy, works. The book was well received, even by my political opponents. However, one of them, after praising the book, issued a fair criticism: OK, let’s agree that capitalism sucks, he said (not in these precise words). So does democracy. But what if it is better than any alternative nevertheless?
I must admit that I saw the critic’s point. To answer it I would have to write a whole new book dedicated to answering the question: How could society be better, freer, fairer given our existing technologies and resources? As Popper and Marx understood only too well, this simple sounding question begets a long list of impossible questions: How would the price system work in a post-capitalist society worth fighting for, one that does not degenerate into a Soviet dystopia? Who would run the corporations? The cafeterias? Will there be a stock exchange and if so how would it work? How would we effect the decoupling of prosperity from physical growth to save the planet, while ending private property rights over productive means? What of democratic decision-making? Who would look after the kids and what would sexual politics be like?
As the list of questions grew endlessly in my head, panic began setting in. My natural tendency was to fall back behind Popper’s and Marx’s convenient line namely that: These questions cannot be answered by a mere mortal. And, more importantly, that it is dangerous even to try to answer them.
What stopped me from doing the sensible thing and quit while I was ahead? One thought: The realisation that others are already writing and weaponising utopian texts to underpin misanthropy at a planetary scale. Who are these people? They are the economists whose remarkable economic models have, long ago, become the language, the mathematised theology, in which all the important decisions affecting our lives are couched. They are the financiers who use these economic models to erect science fictions that permit them to create fictitious values that are functional to the most monstrous theft of the commons since the Enclosures. They are the politicians, the experts on your tv screen, the marketing gurus who, based on these utopian models, are shaping every aspect of the dystopic world we live in.
This is why I decided to throw caution to the wind and to write my own utopian text: Because progressives need a realistic utopian vision with which to fight dystopic realities based on unrealistic utopian models. We need working models of how work, production, distribution and exchange can provide shared prosperity without exploitation of either humans or Nature, and without authoritarianism.
To recap, there are unrealistic utopias that have been providing the legitimacy and authority of policies and practices which I would dare call dystopic. These unrealistic utopias will be my theme today. Then there is the need to put forward, as part of a progressive political platform, realistic utopias – sketches of a feasible alternative present that gives hope to the disempowered that TATIANA (the belief ‘That Astonishingly There Is AN Alternative’) can defeat TINA (the dogma that ‘There Is No Alternative’).
So, the book I am working on is divided in two parts. Part Two of the book begins in 2025 when a malfunctioning machine affords my three characters (Eva the neoliberal economist, Iris the radical anthropologist, and Costa the genius Silicon Valley engineer) glimpses of an alternative present – where the same technologies are supporting a society in which social relations are radically different from ours: companies, property rights, money, gender relations.
Part One of the book concentrates on the world that you and I inhabit and, in particular, the unrealistic utopic science-fictions propping up the status quo today. I mention Part One last because it is in on this first part that I shall be speaking about now. Why? First, because I do not want to give the plot of Part Two away. Secondly, because, unlike Part One, I have not written Part Two yet! And, thirdly, because it ought to be a priority is us all to distinguish between (i) reality and (ii) the momentous clash between reality and the utopic, science fiction-like, representations of reality that make it impossible for us to recognise our capitalist reality, let alone criticise or try to overcome it.
Unrealistic utopian foundations of our present dystopia
So, here I go. Let me begin with the best example of what I mean by the unrealistic utopian foundations of really existing capitalism.
Those of you who have suffered a course in standard microeconomics will be able to confirm that mainstream economists model people as fairly unsophisticated robots or fairly sophisticated thermostats. As algorithmic bargain hunters, constantly on the lookout for experiences that satisfy pre-determined desires. Eva, my proxy for the best amongst the mainstream economists, sees people as algorithms that buy stuff, work, laugh and cry as if to maximise the microwatts of private inner glow these activities leave them with. Unable to resist the tiniest net gain in these microwatts, they do what they like and like what they do, within constraints set by the universe – Nature, their budget, the state, other people and, of course, Goddess Luck.
Justice and equality appear as mirages, subjective ‘tastes’ that one may or may not have, similar to a taste for whiskey or Gothic novels. Like colours exist only as illusions in our minds, not in Nature, but red roses or a red flag can motivate us powerfully, so can the mere impression that someone has been ‘wronged’ lure us into drastic deeds. As for gender, Eva’s humans do what they like and like what they do. Every relationship they have is transactional, based on give-and-take. They are incapable of not asking: “What’s in it for me?” And yet, Eva cannot afford to see that her fictional Homo Economicus is an unreconstructed bloke.
She cannot see what a sad bastard her model man is because, if she does, she will forfeit the immense power her utopian fiction affords her. Students used to ask me, when I taught economic theory: Why do economists model humans like bliss-seeking globules oscillating relentlessly under the impulse of stimuli in search of the shortest path to the greatest amount of intertemporal net joy? Why is Eva devoting, in my book, so much energy to a sophisticated model of one-dimensional humans?” Because this particular science fiction allows her to kill two birds with one stone.
Bird No. 1: To identify herself with liberty while stopping anyone from feeling at liberty to tell her what to want
To unshackle freedom fully from paternalism – a worthy cause no doubt – Eva has to separate, to shield, liberty from the society it is practised in. Harriet’s pleasures must be her own and no Tom or Dick should be allowed to tell Harriet that hers are of a lower quality. Eva’s radical move to render sovereign every one of Harriet’s desires is to ban all inter-personal valuations of pleasure – to preserve pleasure as a strictly personal metric of subjective, internal satisfaction. No more prioritising a discontented Einstein over a happy moron, never again celebrating Sylvia Plath over Kim Kardashian.
The happy moron and Kim Kardashian can rejoice, freed from the condescension of our hypocritical society. By assuming that satisfaction comes in a single form, and that it is impossible to compare Jill’s and Jack’s satisfaction indices, Eva liberates humans from having to defend their desires. But, as freedom from other people’s prejudices makes its triumphant entrance, a new form of authoritarianism is breaking in via the back door: The radical ban on evaluating Jill’s joy relative to Jack’s also wrecks any capacity to differentiate between Jill’s experience of wasting away in a Croydon warehouse, working on a zero-hours contract, and Jack’s trading organic fruit in an idyllic Lake District marketplace.
To feel solidarity toward Jill, we would need to compare Jill’s experiences to Jack’s, or at least her satisfaction index to his. But that would open the floodgates of… paternalism. And here is the sheer brilliance of Eva’s model: the same move that stops anyone from censuring Harriet’s desires legitimises Jill’s zero-hour contracts, indeed hides exploitation in plain sight.
Bird No. 2: Her utopic model allows Eva to present herself as the scientist of society who can prove capitalism’s superiority as a mathematical theorem!
Imagine, ladies and gentlemen, that Mussolini, Hitler or the KGB had access to a mathematical proof that their regime was the best of all possible regimes. What an extraordinary propaganda tool it would have been! Eva senses the power that her little model places within her reach – and she goes to town with it.
Of course, no one, not even a Pythagoras on amphetamines, could prove that capitalism is good. Eva knows this. So, she tries out what we Greeks call a paralogy: When you cannot prove something, set out to prove something else that seems close enough. So, unable to prove that capitalism can be civilised, Eva aims to prove that market forces can potentially create circumstances that cannot be improved upon – not the same thing but close enough for her purpose.
Like all mathematical proofs, Eva proceeds one step at a time, like a chess master railroading a novice toward an inevitable check mate. First, she must gain control over the meaning of social improvement. Her suggestion is that social improvement occurs only when some change makes at least one person better off without hurting another. Once she has smuggled into the conversation this not-obviously-unreasonable definition of improvement, she proceeds to prove that it is possible to define immaculate prices for everything on earth– from smart phones and potatoes to theatre tickets, tuition fees and greenhouse gases.
“Immaculate prices?”, I hear you ask. Eva defines them as prices that, were they to prevail in the markets, would guarantee each person maximum satisfaction given the satisfaction of everyone else. Or, to put it differently, prices that could not, given her definition of social improvement, be improved upon!
To Eva, the very thought that such immaculate prices may be possible is all that matters. She overlooks the fact that, in our really-existing capitalism, the prevailing price of labour leaves millions unemployed, the destruction of the planet is ‘free’, and the price people pay for money is the loss of their soul. Eva knows that her immaculate prices will never prevail in any market near her, but this does not shake her faith. They are her holy grail, the divinity and the holy ghost wrapped up in one bundle of sanctity. Like the belief in the existence of god soothes the believer whose prayers go routinely unanswered, the mere possibility of these immaculate prices is enough for Eva to live hopefully in a capitalism that is far from immaculate.
Why? Because she can prove that her imaginary immaculate prices correspond to an imaginary immaculate distribution of wealth and income – one she has proved, with her impressive mathematics, can only be altered at the expense of at least one person. Like the Borg Queen in Star Trek, Eva seeks perfection in a utopia of her making. A model depicting a perfect capitalist universe inhabited by imagined drones whose liberty is as complete as it is pointless.
You may well ask: Who gives a damn? All of us ought to. Eva’s economic model is to the post-Thatcher world what the Bible was in the Middle Ages: the language of power, the syntax and the grammar in which madmen in authority couch matters of state and society, not to mention of finance and other forms of weaponised greed. That this language leaves almost everyone mystified, baffled, disenfranchised and powerless is perhaps its greatest merit.
Once Eva has her proof, her work is done. Not because she has proven capitalism to be good but because, by that point, anyone who has followed her reasoning falls into one of two groups. Those choked by the maths, feeling inadequate and ready to defer to her expert analysis. And the very, very few who, having invested massively in mastering the mathematics, would need a heroic disposition to turn down the power Eva’s model bestows upon them in the universities, government outfits, rating agencies, banks and corporations. In this, we have a propaganda coup superior even to Leni Riefenstahl’s Triumph of the Will:
The great propaganda value of Eva’s model lies also in the way it harnesses and misdirects the anger it occasions. We feel like shouting: “And what if these immaculate prices are theoretically possible? Who cares? Actual markets are incapable of properly pricing work, trees, even decent food.” Or to get even angrier at the thought that, even if Eva’s immaculate prices do prevail, society can still be pretty disgusting – for example, a world in which I own everything, including all of you, is one where everyone enjoys the greatest satisfaction consistent with not upsetting anyone – me, who owns everything.
At this juncture we must realise we have fallen headlong into Eva’s trap. The question “Can markets be helped to yield immaculate prices, and if so how?” inevitably inspires a technical, non-political discussion leading to an answer involving free-er markets, better markets, more markets, all-singing-all-dancing markets. Nothing is more political and toxic than the belief that highly political choices are apolitical, technical matters to be left to the experts.
Like moths by the fire, we become hypnotised by the mere possibility of un-improvable circumstances under conditions of complete liberty. No discussion of really-existing capitalism is possible once Eva has trapped us in this science fiction where everyone gets as much joy as it is possible without stepping on someone else’s toe. Lured into her labyrinth of deception, we lose sight of how those working for Walmart, Wall Street, Google, Deliveroo or in any Amazon warehouse do not work in any marketplace – that they spend their days and nights in hierarchical organisations more reminiscent of the Chinese People’s Army than a farmers’ market.
On really-existing capitalism
Let us now set aside Eva’s unrealistic utopia and look at the real dystopia that we inhabit and which Eva’s utopia reinforces by making it invisible to those living within.
As long ago as in the 1920s, the rise of networked mega-corporations, of the Edisons and of the Fords, created big business cartels investing heavily into how to usurp states and replace markets. In their wake, banks consolidated and filled the world with fictitious money resting upon mountain ranges of impossible debt. Together, captains of industry and masters of finance accumulated war chests of billions with which to pad campaigns, capture regulators, ration quantities and, in this manner, control prices.
Through interminable mergers and acquisitions, corporations replaced markets by a global Technostructure oozing with the power to shape the future for themselves. And, soon enough, that image was reflected into the soul of everyone. Richard Branson captured that moment with a statement which made William Morris spin in his grave: Who produces stuff and how does not matter one bit. Only brands matter now, opined Sir Richard. Before long, branding took a radical new turn, imparting personality to objects, boosting consumer loyalty and, of course, the Technostructure’s profits. Before they knew it, people felt compelled to re-imagine themselves as brands. The internet allowed colleagues, employers, clients, detractors, and ‘friends’ constantly to survey one’s life, putting pressure on each to evolve into a profile of activities, images, and dispositions that amount to an attractive, sellable brand.
Young women and men lacking a trust fund ended up in one of two dead-ends. Condemned to working under zero-hour contracts and for wages so low that they must work all hours to make ends meet, rendering ridiculous any talk of personal time, space, or freedom. Or forced to invest in their own brand every waking hour of every day, as if in a Panopticon where they cannot hide from the attention of those who might give them a break. Selfies have eroded any meaningful sense of self. Before posting a tweet, watching a movie, sharing a photograph or chat message, they must remain mindful of the networks they please or alienate.
In job interviews enlightened employers invoke utopian ideas of the self instructing them: “Be true to yourself, follow your passions.” Angst-ridden, they redouble their efforts to discover passions that future employers may appreciate, and to manufacture a true self that the job market will want to pay for. They struggle breathlessly to work out what average opinion among opinion-makers believes that average-opinion thinks is the most attractive of their potential true selves. Never slow to miss an opportunity, the Technostructure creates entire industries to guide them on their quest made up of counsellors, coaches and varied ecosystems of substances and self-help.
The larger the Technostructure grew the larger the financial sector necessary to conjure up fictitious capital to fund its largesse. Before we knew it, General Motors turned into a huge hedge fund that also produced some cars on the side. Across the West, the tug-of-war between profits and wages was replaced by the workers’ struggle for credit, for the right to go into debt.
To capture that moment in my book, I gave Eva a life before being an academic. As a theoretical physics graduate, her first job was as a Lehman Brothers’, obscenely-remunerated, graduate. While at Lehman’s she had a task to perform before going home every night to crash out: To leave on her boss’ desk a single-sheet of paper with a single number on it, an estimate of how much money Lehman’s stood to lose during that night while Wall Street was asleep and Asia was humming along. Where did that number come from? It came from the same model economists teach in the departments of our universities.
To compute her magic number, Lehman’s potential losses, Eva had to assume that the Jills and the Jacks of the world not only operated like complicated thermostats aiming at satisfying strictly private desires but that they, also, carried person-specific propensities to go broke. In the same way that the probability of Jill breaking her leg walking in a Glasgow street is independent of the probability that Jack will break his while watching TV in Kentucky, Eva’s model assumed that bankruptcies were independent ‘events’ whose separate probabilities she could compute just like she could calculate the immaculate prices in her little model
Of course, this is not how really-existing capitalism works. When a crisis hits, a chain reaction of bankruptcies feeds off itself. The sudden joblessness of the Jacks shrinks their expenditure and, before they know it, the Jills have lost their businesses. It is as if the legs of all the Jills and Jacks shatter sequentially on different continents, a global chain reaction that would wreck any insurance company in the same way that AIG, the American Insurance Group, was ruined the moment Lehman’s collapsed on the night of 14th September 2008. Naturally, the number that Eva had left on her boss’ desk that evening proved nowhere as astronomic as the actual losses that the first light of day revealed.
And yet, the same failed model was used in 2009, in 2010, today, to justify the bankers’ bailouts and the practices of the powerful today – its power still emanating from its utopian depiction of market capitalism. Under its ideological, theological I should say, cover, the Technostructure is developing new capabilities daily. It can now manufacture not just prices, money, consent but also desires and our self-image. Emasculated prices guarantee its profit. Hyper-complicated debt allows it fully to usurp the state’s monopoly over money. Turning over the private realm into a digital Panopticon destroys resistance to its authority and enables history’s greatest, and most cynical, transfer of banking losses from the books of the culprits to the shoulders of their innocent, struggling victims.
In my book, Costa, the brilliant engineer who can see through Eva’s models, experiences mental distress that only poetry, music and science fiction can ameliorate. A futurist since birth, he is weighed down by the increasing realisation that the future is no longer what it was cracked up to be – an insight that he first had in 1977, the year his beloved Sex Pistols released No Future as if to close the chapter on Marinetti’s Futurist Manifesto of 1909. To counter the sinking feeling he invents a machine whose malfunction allows my book’s characters to glean fragments from an alternative historical trajectory. What that alternative present looks like I am as eager to find out as you are – come next December when I am contracted to submit the manuscript to my publisher.
Conclusion: To show the heavens more just
At this point, it is incumbent upon me to address the unconverted. Those amongst you who have tolerated me so far even though myt take on capitalism leaves you bemused. There are plenty of good people, Steven Pinker for example, who would think of my musings as utterly whacky. They ask: How can you say that you care about the weak and the poor but not see that the proportion of people living in poverty collapsed from 94% in 1820 to around 10% in the 21st century precisely because of capitalism? Sure, inequality rose at the same time but it did so as a result of the same forces which crushed abject poverty. They concede that, yes, humanity can do much better in distributing wealth, but only by improving upon capitalism, not chucking it.
The problem with such statistics is that they are meaningless unless we are determined to look to the past and see a poorer version of the present. In the mind of mainstream thinkers, values that do not translate into prices are mirages, superstitions. To the extent that they have a few dollars in their pockets, Australia’s Aborigines today appear to them better off than before Captain Cook disembarked on their shores. What if they lived happy and fulfilled lives before money, guns, private property and killer germs arrived from England? In Eva’s viewfinder, where money is the sole metric of wealth, the destruction of Aboriginal communal living, their enslavement, appears as liberation from poverty.
What actually happened between 1820 and now was the transformation of communities in which most people lived reasonably well with hardly any need for money into capitalist societies where most people struggle to survive with some money, sometimes with loads-a-money. Poverty was invented, not ameliorated, by capitalism. Nonetheless, it would be an error to say that the past was better. As a feminist, freedom-junkie, a radical democrat, I cannot bring myself to praise a past that I would not want to inhabit.
I do, indeed, believe that people are now broadly healthier, better educated and in important ways freer than in 1820. Whether we are happier or richer than our ancestors, I cannot tell – except for the indigenous peoples decimated by Europeans who have every reason to look to their past as heavenly. What infuriates me about Eva and her ilk, more than their fixation with measurable wealth, is the stunning complacency. Everything good that has happened in history, happened because someone got pissed off and said: “This is hideous, I won’t stand for it.” The dominant economic paradigm, in contrast, adopts a utopic view of the present to back an inexcusable status quo.
If there is a Shakespeare character that I pity, it was King Lear, especially at the moment when, having lost power, home and shelter, he identifies with the poor – lamenting that he did not, while he still could, “shake the superflux to them” … “And show the heavens more just.”
Shaking the superflux, re-distributing wealth, would be a fine ambition if the problem was that it fell unequally upon us, like manna from a heaven unjust. But this is pie in the sky. Less than five percent of new global wealth ever reaches the poorest sixty percent of humanity. Why? Because, unlike the distribution of blue and brown eyes amongst new-borns, this is nothing like a natural phenomenon. Inequality prevails and grows because the people producing most of the food, clothes and gadgets on which modern society turns are forced by necessity to toil like their parents and grandparents had done in factories, farms and mines belonging to an oligarchy creaming the profits.
Enlightened Silicon Valley entrepreneurs, like Bill Gates, and financiers, like Warren Buffet, are Lear’s progenies, their concern for inequality’s triumph an endorsement of the fallen king’s call to shake the superflux. They disdain inequality but heavens forbid that we shall speak of capitalism whose side-effect inequality is. That’s why I dislike King Lear, the play. Coriolanus, on the other hand, epitomises the desolation of any individualism denying the person the benefits of catching a glimpse of one’s self in the eyes of others, of our community. In Coriolanus citizens demand a society without exploitation but also understand that forging consensus, let along collective action, is a difficult and dangerous endeavour.
No mechanism for re-distributing the lords’ loot could have put Lear’s world right any more than Hamlet could have civilised the Kingdom of Denmark. In Lear’s world, as in our financialised capitalism, the forces of evil band together effortlessly and coordinate spontaneously. When at their most dangerous, they even take aim at inequality. Was it not Mussolini who set up the first universal pension system in Europe? Where the Nazis not railing against the inequality caused by the bankers in the 1920s? Did Donald Trump not look into the eyes of forsaken blue-collar workers before promising to look after them, to make them proud again?
To conclude, making the heavens more just, rebelling against what lies behind the unshaken superflux, requires virtuous rebels who use their autonomy to link with others, to create something larger than themselves but without losing themselves in that ‘something’ and without helping the serpent’s egg hatch in the warm glow of an authoritarian egalitarianism.
This task seems at once essential and impossible. It is a feeling that paralyses and helps the status quo prevail. The question is: What social arrangements, what type of property rights, what collective action mechanisms can we envision so as both to overcome Popper’s and Marx’s objections to utopias AND allow us to escape the current dystopia?
I remember years ago I was addressing a political meeting at the time of Occupy Wall Street, in which I argued for the enlisting of financial engineering and of digital technologies in the struggle to prevent the re-establishment of what I called Bankruptocracy – of rule by the most bankrupt of banks. A member of the audience was deeply unimpressed and told me, in a hostile tone: “Science fiction fantasies are an indulgence when people are hurting, mate.”
For a moment I thought he was right. But I caught myself answering something like: Capitalism and science fiction share one thing: they trade in future assets using fictitious currency. Even if the tools I speak of are still in the realm of science fiction, we need to develop and to deploy them before they are used to reinforce a dystopia functional to the interest of the very few.”
I suppose that the little, unfinished book that you kindly allowed me to talk to you about tonight is evidence that I still believe we face a stark choice between (A) science fictions that are being deployed to maintain a clinically deceased dystopia and (B) science fictions that can help a realistic utopia be born.
Thank you!
Radio France – L’Interview éco, 18 FEV 2019
Depuis quelques mois, après des années de crise, l’économie grecque retrouve des couleurs. La croissance est de retour. Le chômage recule. Le pays peut à nouveau se financer sur les marchés. Pourtant, pour Yanis Varoufakis, cette reprise est un leurre. Il évoque même “un univers alternatif où chaque grand mensonge est construit sur de petites vérités. Pourquoi le chômage a-t-il baissé ? Parce que nous avons perdu 700 000 jeunes très qualifiés. Ils ont émigré. C’est pour ça que le chômage a baissé ! La Grèce est transformée en désert. Et ils appellent ça la paix ou la réussite !”
L’économiste juge l’Europe “déconstruite” et critique “l’establishment qui célèbre son triomphe”. “Lorsqu’il y a un tel clash entre la réalité et la propagande, c’est que le problème est grave”, conclut l’ancien ministre.
Il faut un parti modéré, mais significatif en France et en Europe (…) pour résoudre le problème avec les banques, fonder un programme anti-pauvreté.
Yanis Varoufakis
à franceinfo
Pourquoi se présenter aux élections européennes en Allemagne, pays dont il a pourfendu la politique économique ? “Si vous voulez transformer l’empire romain, il faut commencer par Rome. Quand vous voulez lutter contre l’austérité et le néofascisme – le parti Alternativ für Deutschland – il faut commencer au cœur de l’Allemagne. Il faut commencer par Berlin”.
En France, Benoît Hamon, fondateur du parti Generation.s veut faire de Yanis Varoufakis le leader de la gauche européenne. Le Grec le sera-t-il ? “J’espère, répond l’ancien ministre des finances. Les gens sont là, le mouvement est là. Quel que soit mon capital, je veux le mettre au service de ce mouvement”.
Yanis Varoufakis rêve d’un “parti modéré, mais significatif en France et en Europe”, pour préparer “ce qui doit se produire demain, fonder un new deal vert et résoudre le problème avec les banques, fonder un programme anti-pauvreté”.
Progressistes et écologistes ensembles pour un “new deal vert”
En France, les “gilets jaunes” rejettent les politiques de droite comme de gauche. La gauche ne peut pas incarner l’avenir dans ces conditions pour Yanis Varoufakis, car “la gauche a échoué”. Mais il ajoute : “Ensemble, les progressistes, les écologistes (…) si on est autour de la table et qu’on se met d’accord sur un programme commun, ça sera la solution. Les ‘gilets jaunes’ sont les enfants de l’austérité de ces dernières décennies. Ils se conduisent mal, ils peuvent être graves, mais nous cueillons ce qui a été semé pendant des dizaines d’années par les libéraux.”
Yanis Varoufakis : “‘Les gilets jaunes’ sont les enfants de l’austérité des dernières décennies”
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