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The Economy Is Too Important to Leave to the Economists

Farrar, Straus and Giroux

“Talking to My Daughter About the Economy: or, How Capitalism Works-and How It Fails”
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“Talking to My Daughter About the Economy, Or, How Capitalism Works—And How It Fails”

A book by Yanis Varoufakis. Translated from the Greek by Jacob Moe and Yanis Varoufakis

Over the course of several books, Yanis Varoufakis has attempted to explain his progression from a “self-described erratic Marxist” to someone who now places his faith in some form of radicalized democracy as our best hope for the future. He is wary that Europe will slide back into variations of the excessive nationalism and fascism that dominated the 1930s, and believes that “unstable debt-ridden countries are breeding grounds for fascism.” The growth of the neo-Nazi Golden Dawn party that has been gaining ground in his beloved Greece is understandably disturbing to him. The 56-year-old Varoufakis, an expert in game theory, mathematics and economics, caused quite a stir as Greece’s finance minister in 2015, with his take-no-prisoners approach to negotiation with the big banks of Germany and France that were insisting Greece accept their harsh measures toward solvency or risk excommunication. Greek Prime Minister Alexis Tsipras was initially infatuated with Varoufakis, but eventually realized he put Greece in more jeopardy than it was already in, and Tsipras signed a deal with the Eurozone without informing Varoufakis. Their relationship soured shortly afterward, and Varoufakis abruptly resigned from the government. He returned to teaching and writing, and started DiEM 25, an international grass-roots democratic humanist movement that he hopes will transform Europe and the rest of the world into a fairer and more just place. How this transformation will take place remains unclear.     

His new book, “Talking to My Daughter About the Economy,” is a phenomenal read. He is a natural born storyteller and teacher and has the ability to explain economic concepts and relationships. For example, he explains what a radical shift it was when the Protestants broke away from the Catholic Church and embraced interest-bearing loans and profiteering as part of God’s plan. He is brutally honest about the inadequacies inherent to banking: “The black magic of banking destabilizes market societies. It amplifies wealth creation during good times and wealth destruction during the bad times, constantly skewing the distribution of power of money.” He is passionate about his belief that current market economies are inadequate to the pressing task of addressing the needs of our rapidly declining planet. And he speaks poetically about the need for people to reconnect with activities of “experiential value” that the market cannot control. He believes the current overwhelming need to commodify all human activity is destroying humanity’s best impulses. 

Click here to read long excerpts from “Talking to My Daughter About the Economy” at Google Books.

He outlines for us the main reasons certain economies failed while others prospered, explaining that some nation states developed faster due to climate, geography and agricultural readiness. The geographical conditions in Eurasia allowed surplus to take hold with greater force than in other regions, leading to the emergence of rulers of state in command of large armies and arsenal. He contrasts these regions with Australia, explaining how the native Aborigines were always blessed with a bountiful food supply and tended to live in greater harmony with nature. This allowed them to develop poetry and music, but not the armies and weapons they would need to fight off future invaders. He wants his daughter, and his reading audience, to understand that history’s victims were victimized by circumstances largely out of their control. 

He is able to make the driest of subjects compelling. He spends many chapters dissecting basic economic concepts such as debt, surplus, interest rates, capital, profit, production, distribution, credit and technology, and how all these things connect to human labor. He is insistent that there is no such thing as apolitical money. Money is always tied to politics. 

He tells his daughter why he became an economist while slaying several sacred cows:

“Have I ever told you why I became an economist? Because I refused to leave it to the experts. The more I understood about economics’ theory and mathematics the more I realized that the so-called experts in our great universities, on our TV screens, in the banks and finance industries did not have a clue. The smartest among them created brilliant models that could only be solved mathematically if the reality of labor, money, and debt described in this book were first removed from those models, rendering them irrelevant to market societies. The rest, the second-raters among economic commentators, not only did not understand the models of great economics, whom they worshipped, but remarkably did not seem to care that they did not understand them.”

He also warns her about the sand traps inherent in her own sense of entitlement:

“If you think about it, nothing is reproduced with greater ease than the faith of the haves that they deserve what they get. Since childhood you have been caught up in a vicious logical contradiction that you barely noticed. On the one hand, you were appalled by the idea that some kids cry themselves to sleep because they are hungry. On the other you were thoroughly convinced (like all children) that your toys, your clothes, and your house were all rightfully yours.”

But he stops himself frequently from his imaginings of a better world to remind readers to remain wary of society’s darkest impulses and their power to surface amid turmoil.  He explains his fear of reactionary fervor in all of its vicious forms:

“Why so much emphasis on democracy? Because to quote Winston Churchill’s tongue-in-cheek remark, democracy may be a terrible, terrible, form of government—as flawed, fallible, inefficient and corrupt as the people of which is it comprised—but it’s better than any of the alternatives.”   

He adds:

“A Greek or a Portuguese or an Italian exit from the Eurozone would soon lead to a fragmentation of European capitalism, yielding a seriously recessionary surplus region east of the Rhine and north of the Alps, while the rest of Europe would be in the grip of economic stagflation. Who do you think would benefit from this development? A progressive left, that will rise Phoenix-like from the ashes of Europe’s public institutions? Or the Golden Dawn Nazis, the assorted neo-fascists, the xenophobia…? I have absolutely no doubt as to which of the two will do best from the disintegration of the Eurozone.” 

He concludes:

“I, for one, am not prepared to blow fresh wind into the sails of this postmodern version of the 1930s. If this means that it is we, the suitably erratic Marxists, who must try to save European capitalism from itself, so be it. Not out of love for European capitalism, for the Eurozone, for Brussels, or for the European Central Bank, but just because we want to minimize the unnecessary toll from the crisis.”

Varoufakis wants to work within the democratic framework, but he also wants to alter it greatly. His goals include socializing debt, stabilizing debtor countries’ economic growth, and democratizing the EU bureaucracy. He believes harsh austerity measures are nothing more than a terrible economic policy that is guaranteed to fail. He writes:

“Austerity is a morality play pressed into the service of legitimizing cynical wealth transfers from the have-nots to the haves in times of crisis, in which debtors and sinners must be made to pay for their misdeeds.” 

But Varoufakis’ cogent arguments are hurt by his seeming inability to really address, describe or feel the human suffering that surrounds him. One senses he can see it only on an intellectual plane, divorced from the harsh realities of the street. Varoufakis lives with his second wife, wealthy installation artist Danae Stratou, in Athens. Stratou’s father is a millionaire Greek industrialist. The tabloid papers in Greece have had a field day photographing Varoufakis, with his chiseled good looks, rock star wardrobe, and his beautiful wife frolicking at their stunning vacation homes.

When asked by a reporter, during the crisis he was attempting to negotiate as Greece’s finance minister, if he ever noticed the long lines of pensioners at the ATM machines desperate to retrieve their savings, or the scarcity of goods on supermarket shelves, he replied defensively that he and his wife were living in an austere fashion as well. 

The pictures of him and Stratou at one of her family’s magnificent homes, with the sun shining on their sun-kissed faces, told a different story.

 

Elaine Margolin
Contributor
In addition to writing book reviews for Truthdig, Elaine is a book critic for The Washington Post, San Francisco Chronicle, Jerusalem Post, Denver Post, and several literary journals. She has been reviewing…
Elaine Margolin

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