V for Varoufakis

I have a long review up at Boston Review of three books by Yanis Varoufakis: The Global Minotaur, And the Weak Suffer What They Must?, and Adults in the Room. Here’s the start:

In the spring of 2015, a series of debt negotiations briefly claimed a share of the world’s attention that normally goes only to events where celebrities give each other prizes. Syriza, a scrappy left-wing party, had stormed into office in Greece on a promise to challenge the consortium of international creditors that had effectively ruled the country since its debt crisis broke out in 2010. For years, austerity, deregulation, the rolling back of labor rights and public services, the rule of money over society, had been facts of life. Now suddenly they were live political questions. It was riveting.

Syriza was represented in these negotiations by its finance minister, Yanis Varoufakis. With his shaved head, leather jacket, and motorcycle, he was not just a visual contrast to the gray-suited Eurocrats across the table. His radical but rigorous proposals for a different kind of Europe—one based on meeting human needs rather than rigid financial criteria—offered a daily rebuke to the old refrain “there is no alternative.”

The drama was clear, but the stakes were a little obscure. Why did it matter if Greece stayed in the euro? Orthodox economic theory, after all, gives little role for money or finance. What matters are real wants and real resources, for which money is just a convenient yardstick. University of Chicago economist John Cochrane probably spoke for much of the profession when he asked why it made any more sense to talk about Greece leaving the euro than about Greece leaving the metric system.

But money does indeed matter—especially in economic relations between countries, as Varoufakis himself has convincingly shown. In his three books—The Global Minotaur (2011), And the Weak Suffer What They Must (2016), and Adults in the Room (2017)—Varoufakis offers a fascinating lens on the euro system and its masters. While the first two books chart the history of the international monetary system from World War II up to the debt crisis, his last and most recent book is a reflection on his five months as Greek finance minister. Taken together, they read as if Varoufakis is the protagonist in some postmodern fable, in which he is transformed from a critic of the play to one of the main characters in it. …

Read the rest there, and then comment here if you are so inclined.

2 thoughts on “V for Varoufakis”

  1. I have three different comments to make, the first about debt, the second about leftish politics in general, and the third about the EU.

    1) Of the three book that you reviewed, I only did read the Global minotaur. In this, Varoufakis bases his explanation on the idea of the “recycling” of surplus, an idea that I think is more or less postkeynesian. But, he never speaks of debt as such, and for this I think he gets it wrong:
    For example, suppose that Germany produces 70, and Greece 30, but for some reason the EU wants the Greeks to get more, so it taxes 10 from Germany and gives it to the Greek government; in this situation, 10 is “recycled” from German production into Greek consumption, but no debt is created.
    But in a different example, Germany produces 70, but only consumes 60, Greece produces 30 but consumes 40, borrowing 10 from Germany. In this second situation, 10 is again “recycled” from German production into Greek consumption, but contestually a capital asset of 10 (Greek bonds) was created, and this capital asset is a positive for “Germany” but a negative for “Greece”.
    So this “recycling” is not only a way to dispose of “surplus production”, it’s a way to turn surplus production of consumption goods into economic wealth, which is the whole point of the accumulation of debt, but somehow this disappears in Varoufakis’s view (and he is not the only one to ignore this point, MMT is problematic for this same reason IMHO).
    Of course this kind of “recycling” into financial wealth doesn’t happen only between nations, but mostly between privates and often through governments, the international flows being mostly a reflection of the internal financial flows IMHO.

    2) In your review you say: “But, from the outside, one might still wonder if his way is the only way. It is exhilarating to imagine a genuinely democratic Europe, one that reflects the collective choices of the continent’s people as a whole.”.
    But well, someone did vote Schauble into office, and there are plenty of people in Europe and elsewhere, who are quite right leaning.
    I remember an old clip of Roberto Benigni who sarcastically asked how it is that “we” (the italian communist party of the time) represent workers, who are the majority of the population, “them” represent the capitalists, who are a very small group of people, but “we” keep losing elections.
    The really simple answer to this question is that it turns out that most people are not communists, and many workers vote for the right.
    I think that it is dangerous to assume that a lack of social-democratic policies implies a lack of “democracy”, I think it mostly reflects the fact thet the “ideology of common sense” is mostly right leaning (which explains the many right leaning “populist” movements that are sprouting out in this period).

    3) Then you write: “But perhaps the best route to this model of integration would be, paradoxically, for some countries first to de-integrate—to reassert their sovereignty […]”.
    I can see why you say this, but what I see is that in most cases “euroskeptic” parties are hard right ones, who generally have policies that totally go in the opposite direction of the social-democratic ideal you would like: mostly they are anti-tax movements. In the recent case of Brexit, for example, it’s evident that the Brexiters were sold two set of claims: a sort of pseudo-social-democratic one (more money for the NHS, less immigrants so an higer wage share for the locals) and others were promised deregulation, low taxes, a boom in exports etc..
    Now that Brexit is happening for real, one of the two sets will be disattended and it appears that it will be the first, pseudo-social-democratic set.
    I don’t think this happens by chance either: if you think that workers produce income, and profits (and taxes on those profits) come from the income produced by the workers, the idea that immigrants are draining the NHS is stupid, because immigrants are the ones who are producing the income from which the NHS is paid for. The idea that keeping immigrants out is beneficial for workers only makes sense if you think that there is a certain number of “job creators”, and workers only get an income because of the benevolence of said job creators, but if immigrants come workers will have to share the generosity of their betters with the immigrants! In other words this mindset is implicitly very right leaning, it only looks vaguely social democratic because it is opposed to free (international) trade, but this isn’t enough to make it leftish.
    Also in the case of Greece, while many commenters tought that Greece had better to get out from the EU or at least from the Euro, it wasn’t the Greeks who actually wanted to leave, and in fact one has to wonder whether Schauble wouldn’t have liked a “Grexit”, after all.
    It should be noted, by the way, that as far as I know there is no legal way to “kick out” a country from the EU, which means that if Greece could, for example, just print a whole lot of euroes, other countries in the EU could do nothing to prevent this, hence they had to block the Greeks from the backdoor of the ECB.

    1. he never speaks of debt as such, and for this I think he gets it wrong

      I suppose this is true. But it’s important to emphasize that trade imbalances don’t have to correspond to debt accumulations. The surplus recycling can also take place through intergovernmental transfers as with Marhsall aid and, more importantly, US military aid, in the postwar period. Or they can be income flows in the case where the trade deficit country has a positive intentational investment position, like the UK in the late gold standard era.

      On the other hand, the classic example of “recycling” is petro dollars in the 1970s, and that certainly did involve debt So I agree, it’s a somewhat surprising lacuna.

      Someone did vote Schauble into office, and there are plenty of people in Europe and elsewhere, who are quite right leaning.

      Germans did. The rest of Europe didn’t. And the recent elections should even make us question how much of a say even German voters get, since it seems the CDU/SPD coalition is invulnerable to the ballot.

      The larger point I would make is that democracy is not jsut a matter of registering the “preferences” of voters, as if they are given by nature. It’s ana ctive process of collective deliberation and decision-making, where people discover which of their many possible political identities and interests are most salient for them. The fact that, in the current configuration of electoral politics, conservative parties are doing well, I would not at all take as a sign that Europeans are essentially conservative.

      That said I do defer a bit to you, since I am an American.

      in most cases “euroskeptic” parties are hard right ones

      This is a real problem. If I were British, I would certainly have voted Remain — not becuase I think being in the EU is especially desirable, but based simply on who else was lined up on each side.

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