Yves here. One issue with Varoufakis’ bold vision is the question of what “progressives” really stand for. I have often quoted reader Richard Kline’s 2012 essay, Progressively Losing:
In my considered view, ‘progressives’ lose because they do not have it as a goal to win. Their principal concern is to criticize the moral failings of others in society, particularly the moral failings of those in power.
At best, progressives seek to convert. In the main, they name and shame—ineffectively. American ‘progressives’ distrust political power, period, are queasy about anyone having it, and suspicious toward anyone who actively seeks it, including other putative progressives. The contest as progressives conceive it is fundamentally a moral one: they believe they are right, and want their opposition to see the light and reform/conform. Thus, they don’t frame what they engage in as a fight but rather as a debate.
There has been another and more radical trend on the left-liberal end of the spectrum previously. That trend derived from radicalized, Continental European, immigrants, it sourced much of labor activism, and is largely extinct in America as of this date. It is the atrophy of this latter muscle in particular which has rendered progressive finger-wagging impotent.
Kline argues that in the US, progressives have bee effective only when they have teamed up with what he calls “radicals,” which are groups with grievances, usually economic (although calling off the cops counts too).
In Europe, one can argue that radicalism is less radical than here. When I was in college, Greece had two communist parties. Political and labor activism, such as strikes, are seen as more legitimate strategies than in the US. The flabbiness of progressivism in the US (and arguably the Anglosphere) is a complicating factor for Varoufakis’ bracing call to action.
By Yanis Varoufakis. Originally published at The Correspondent; cross posted from his website
Our era will be remembered for the triumphant march of authoritarianism in whose wake the vast majority of humanity have experienced unnecessary hardship and the planet’s ecosystem has suffered avoidable climate destruction. For a brief period – a period the British historian Eric Hobsbawm described as “the short 20th century” – establishment forces were united in dealing with challenges to their authority. It was a rare period in which the establishment had to face a variety of progressives, all seeking to change the world: social democrats, communists, self-management experiments, national liberation movements in Africa and Asia, the early, radical, ecologists etc.
I grew up in mid-1960s Greece, governed by a right-wing dictatorship that was instigated by the United States under Lyndon Johnson (whose administration was one of the most progressive domestically, but which nonetheless did not hesitate to prop up fascists in Greece or carpet-bomb Vietnam). The fear and loathing of right-wing populism that can be found today plastered on every page of the New York Times was simply absent back then.
Francis Alÿs, When Faith Moves Mountains, 2002 [Still] ©
Francis Alÿs Courtesy the artist and David Zwirner
Things changed after 2008, the year the western financial system imploded. Following 25 years of financialisation, Read more in Ann Pettifor’s piece on the global financial systemunder the ideological cloak of neoliberalism, global capitalism had a 1929-like spasm that nearly brought it to its knees. The immediate reaction to this crisis, intended to prop up financial institutions and markets, was to turn on the central banks’ printing presses, and to transfer bank losses to the working and middle classes via so-called “bailouts”.
This combination of socialism for the few and stringent austerity for the masses did two things. First, it depressed real investment globally, as firms could see that the masses had little to spend on new goods and services, producing discontent among the many while the very few received huge doses of “liquidity”.
Secondly, it gave rise initially to progressive uprisings – from the Indignados in Spain and the Aganaktismeni in Greece to Occupy Wall Street and various left-wing forces in Latin America. These movements, however, were relatively short-lived, and they were efficiently dealt with either by the establishment directly ( the crushing of the Greek Spring in 2015, for example) or indirectly (leftist Latin American governments fading as Chinese demand for their exports collapsed).
As progressive causes were snuffed out one by one, the discontent of the masses had to find a political expression. Mimicking the rise of Mussolini in Italy, who promised to look after the weakest and to make them feel proud to be Italian again, we’ve witnessed the rise of, what we can call, the Nationalist International, most clearly expressed in the rightist arguments fuelling Great-Britain’s exit from the European Union and the election successes of right-wing nationalists: Donald Trump in the United States; Jair Bolsonaro in Brazil; Narendra Modi in India; Marine Le Pen in France; Matteo Salvini in Italy and Viktor Orban in Hungary.
And so for the first time since the second world war, the great political clash has shifted from between the establishment and assorted progressives, to one between different parts of the establishment: one part appearing as the stalwarts of liberal democracy, the other as the representatives of illiberal democracy.
Of course, this clash between the liberal establishment and the Nationalist International was utterly illusory. In France, the centrist Macron needed the threat of far-right nationalism under Le Pen, without whom he would never be president. And Le Pen needed Macron and the liberal establishment’s austerity policies that generated the discontent that fed her campaigns. Similarly in the United States, where the policies of the Clintons and the Obamas that bailed out Wall Street fuelled the discontent that gave rise to Donald Trump whose rise, in a never ending circle, shored up Clinton’s and Biden’s defences against someone like Bernie Sanders. It was a reinforcement mechanism between the establishment and the so-called populists that has been replicated across the world.
Nevertheless, the fact that the liberal establishment and Nationalist International are, in reality, codependent does not mean that the cultural and personal clash between them is not authentic. The authenticity of their clash, despite the lack of any real policy difference between them, made it next to impossible for progressives to be heard over the cacophony caused by the clashing variants of authoritarianism.
This is exactly why we need a Progressive International – an international movement of progressives to counter the fake opposition between two variations of globalised authoritarianism (the liberal establishment and the Nationalist International) which trap us in a business-as-usual agenda that destroys life prospects and wastes opportunities to end climate change.
The question then is: what would a Progressive International do? To what purpose? And by which means?
If our Progressive International simply creates space for open discussion in city squares (as Occupy Wall Street did a decade ago) or just seeks to emulate efforts such as the World Social Forum, it will again eventually fizzle out. To succeed we will need a common plan of action and an uncommon campaign strategy to energise progressives around the world to implement that plan. Last but not least, we’ll need the shared will to envision a postcapitalist reality.
Allow me to unpack these three prerequisites one at a time.
Francis Alÿs, When Faith Moves Mountains, 2002 [Still]
© Francis Alÿs Courtesy the artist and David Zwirner
Prerequisite 1: A Common Progressive Action Plan
The fascists and the bankers have a common programme. Whether you speak to a banker in Chile or to one in Switzerland, to a supporter of Trump in the US or a Le Pen voter in France, you will hear the same narrative. Bankers will say that regulation and capital controls are detrimental to progress; that financial engineering increases the efficiency with which capital flows to the economy; that the private sector is always better at delivering services than the public sector, that minimum wages and trades unions impede growth or that climate change can only be dealt with by the private sector.
For their part, the Nationalist International narrative is as follows: electrified border fences are essential for preserving national sovereignty, migrants threaten local jobs and social cohesion; Muslims in particular cannot be integrated and need to be kept out; foreigners conspire with local liberal elites to weaken the nation; women must be encouraged to raise their children at home; LGBTQ+ rights come at the expense of basic morality and, last but not least: “Give us the power to act in an authoritarian manner and we shall make our country great and you proud again”.
By rebalancing wages, trade and finance at a planetary scale, both involuntary migration and involuntary unemployment will recede
Progressives also need shared narratives. Thankfully, we know what must be done: power generation must shift massively from fossil fuels to renewables, wind and solar primarily; land transport must be electrified while air transport and shipping must turn to new zero-carbon fuels (such as hydrogen); meat production needs to diminish substantially, with greater emphasis on organic crops; and strict limits on physical growth (from toxins to cement) are of the essence.
We also know that all this will cost at least 10% of global income, or nearly $10 trillion, annually – a sum that can be easily mobilised as long as we are ready to create institutions that will coordinate the various works and redistribute the benefits from the global north and the global south. To accomplish this, we need to invoke the spirit of Franklin D Roosevelt’s original New Deal – a policy that succeeded because it inspired people who had given up hope that there are ways of pressing idle resources into public service.
Our International Green New Deal will have to utilise transnational bond instruments and revenue-neutral carbon taxes – so that the money raised from taxing diesel can be returned to the poorest of citizens relying on diesel cars, in order to strengthen them generally and also allow them to buy an electric car. To plough these resources into green investments, a new Organisation for Emergency Environmental Cooperation, is necessary to pool the brainpower of the international scientific community into something like a Green Manhattan Project – one that aims, instead of mass murder, at ending extinction.
Even more ambitiously, our common plan must include an International Monetary Clearing Union, of the type John Maynard Keynes suggested during the Bretton Woods conference in 1944, featuring well-designed restrictions on capital movements. By rebalancing wages, trade and finance at a planetary scale, both involuntary migration and involuntary unemployment will recede, thus ending the moral panic over the human right to move freely about the planet.
Prerequisite 2: An Uncommon Campaign
Without this, our common plan, the International Green New Deal, will stay on the drawing table, so here is a campaign idea: let’s identify multinational companies that abuse workers locally and target them globally, utilising the great disparity between the cost to participants of, for example, boycotting Amazon for a day and the costs of such boycotts to targeted firms. Global consumer boycotts are not new but now, using the power of platform megafirms, like Amazon, against them, they can be far more effective. Especially in a second phase, they are combined with local strike action involving the relevant trades unions. Such global action in support of local workers or communities has immense scope. With some clever communication and planning, they can become a popular way people around the world share a feeling that they are helping make the world a freer, fairer place.
Of course, to make this happen, our Progressive International requires a nimble international organisation. The problem with organisations that are capable of global coordination is that they, surreptitiously, reproduce within them bureaucracies, exclusion and power games. How can we prevent neoliberalism and authoritarian nationalism from wrecking the world without creating our very own variety of authoritarianism? Granted, it is harder to find the right answer to this question as progressives who reject hierarchies, bureaucracies and the encroachments of paternalism, but we have a duty to find it nevertheless.
Prerequisite 3: A Shared Vision of Postcapitalism
Consider what happened on 12 August 2020, the day the news broke that the British economy had suffered its greatest slump ever. The London Stock Exchange jumped by more than 2%! Nothing comparable had ever occurred. Similar developments unfolded on Wall Street in the United States.
In essence, when Covid-19 met the gargantuan bubble with which governments and central banks have been zombifying corporations and financial institutions since 2008, financial markets finally decoupled from the underlying capitalist economy.
The result of these remarkable developments is that capitalism has already begun to evolve into a type of technologically advanced feudalism. Neoliberalism is now what Marxism-Leninism used to be during the Soviet 1980s: an ideology utterly at odds even with the regime invoking it. Following the collapse of the Soviet bloc in 1991, and of financialised capitalism in 2008, we are well into a new phase in which capitalism is dying and socialism is refusing to be born.
If I am right in this, even progressives who still entertain hopes of reforming or civilising, capitalism, must consider the possibility that we must look beyond capitalism – indeed, that we must plan for a postcapitalist civilisation. The problem is that, as my great friend Slavoj Zizek has pointed out, most people find it easier to imagine the end of the world than the end of capitalism.
To counter this failure of our collective imagination, in a recent book entitled Another Now: Dispatches from an alternative present, Read about this in my recently published book, Another Now: Dispatches from an alternative presentI try to imagine that my generation had not missed every pivotal moment history presented us with. What if we had seized the 2008 moment to stage a peaceful high-tech revolution that led to a postcapitalist economic democracy? What would it be like?
To be desirable, it would feature markets for goods and services since the alternative – a Soviet-type rationing system that vests arbitrary power in the ugliest of bureaucrats – is too dreary for words. But to be crisis-proof, there is one market that we cannot afford to preserve: the labour market. Why? Because, once labour time has a rental price, the market mechanism inexorably pushes it down while commodifying every aspect of work (and, in the age of Facebook, of our leisure even). The greater the system’s success in doing this, the less the exchange value of each unit of output it generates, the lower the average profit rate and, ultimately, the nearer the next systemic crisis.
Can an advanced economy function without labour markets? Of course it can. Consider the principle of one-employee-one-share-one-vote. Amending corporate law so as to turn every employee into an equal (though not equally remunerated) partner, via granting them a non-tradeable one-person-one-share-one-vote, is as unimaginably radical today as universal suffrage used to be in the 19th century. If, in addition to this pivotal transformation of company ownership, Central Banks were to provide every adult with a free bank account, a postcapitalist market economy would be delivered.
With share markets gone, debt leverage linked to mergers and acquisitions would also become a thing of the past. Goldman Sachs and the financial markets oppressing humanity will suddenly become extinct – without even the need to ban them. Freed from corporate power, unshackled from the indignity imposed upon the needy by the welfare state, and liberated from the tyranny of the profits v wages tug-of-war, persons and communities can begin to imagine new ways of deploying their talents and creativity.
We are at a fork in the road. Postcapitalism is underway, albeit on a path to dystopia. Only a Progressive International can help humanity alter this path.
_______
About the images: On April 11, 2002, 500 participants were given shovels and asked to form a single line on the outskirts of Lima, Peru. Their task was to push a 1600ft long sand dune forward by about four inches from its original position; their efforts captured for a film entitled When Faith Moves Mountains by artist Francis Alÿs.
Although this collective action created a spectacular, almost biblical image, the visual documentation is not itself the intended work. In the film Alÿs documents the responses from his volunteers to the question he asks about what persuaded them to participate and what they experienced on the day. Each story woven together gives meaning to, and makes concrete, this language – also from the Bible – of one’s faith being able to mountains. (Yara van der Velden, image editor). See more work by Francis Alÿs.
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Whether you speak to a banker in Chile or to one in Switzerland, to a supporter of Trump in the US or a Le Pen voter in France, you will hear the same narrative. Bankers will say that regulation and capital controls are detrimental to progress; that financial engineering increases the efficiency with which capital flows to the economy; that the private sector is always better at delivering services than the public sector, that minimum wages and trades unions impede growth or that climate change can only be dealt with by the private sector. Yanis Varoufakis
Otoh, you’ll NEVER hear a Progressive say that privileges for the usury cartel, aka “the banks”, should be eliminated. Why is that? Even FDR admitted having reservations about government guarantees for private, including privately created (“Bank loans create bank deposits”), deposits/liabilites for fiat.
And how does run regulate what is, in essence, systematic theft from the poorer, less “credit-worthy”, without becoming complicit in that theft?
You might hear a progressive say that the post office should offer basic banking services. Taxes should be paid and refunds given through the post office. If there are special pandemic disbursements, or unemployment insurance, well, you can get it at the post office. Since everyone has a verified government account, it is rather trivial for the government to cut you a UBI check if it wants to. In addition, there are other synergies. Who needs the FDIC, when your account can be backed up by the Fed? Who needs paltry for-profit bank savings account interest rates, when perhaps there is some integration to be had with treasuries? Credit cards and debit cards? Check. Auto loans, perhaps. Mortgages? Well Freddie and Fannie end up buying most of them anyway. I suppose we could do that too. Why not just merge them with the post office. They might even bring with them some financial expertise that the post office will need. Maybe they can offer citizens email accounts while they are at it.
I sometimes wonder if for profit banks really want these roles anyway. They can all turn to hyper financialization of big business and hedge fund investing and leave the rest of us out out their mad schemes. I’d rather the Post Office be too big to fail than Lehman.
Most of the services you mention above are simply allowing all citizens to use fiat in account form and should be competitively non-controversial (e.g. fiat debit cards.)
But lending (e.g. credit cards) and positive interest/yields on inherently risk-free sovereign debt violate equal protection under law.
Otoh, an equal Citizen’s Dividend to replace all fiat creation for private interests is completely ethical and a huge deal sweetener besides.
If, in addition to this pivotal transformation of company ownership, Central Banks were to provide every adult with a free bank account … Yanis Varoufakis
Good to see progress with what is actually just equal protection under the law wrt fiat use.
As long as progressives agree and amplify the Liberal Globalist Establishment’s “Orange Man Bad!” / demonization of Marine Le Pen message then progressives will have no leverage at all. Don’t believe me? Just look have arrogantly Joe Biden is treating progressives. He claims he curb stomped a socialist, calls for increasing police funding, and scoffs at the Green New Deal. He seems to really enjoy hippy punching.
The only way progressives will gain any leverage is to join forces with the Nationalist International, or at least seriously threaten to.
Instead, Yanis says progressives have to keep a tight grip on the establishment belt buckle and assist globalist elites in their struggles against the Nationalist International. And while voting these globalists into power, also during their down time push these three points?
His three points are weak tea.
Point 1 is basically agreeing to open borders and hoping in two centuries salaries will balance and then only involuntary migration will stop. Since the First International and the Irish Question, the Left has fumbled on immigration. Given the reality of global warming it should be clear that the high consuming First World has to close it’s borders completely to 3rd world economic immigration. Instead it should encourage ecological migration, which is from the first world towards the 3rd world, where consumption is much less.
He disingenuously claims the Nationalist International loves the banksters. I have some news for you; the nationalist right would love nothing more than to launch a Day of the Rope against banksters. Sure their motives may include just a bit of ethnic animus, but it seems a no-brainer to me that a left / right alliance could be had based on immigration restriction and turning banks into utilities.
Point 2, the Green New Deal is a perfect issue for further left/right compromise. A program of green reindustrialization, feature Green Protectionism would be very popular on the right. One other area of agreement is anti-imperialism. The right see the Globalists are playing a game of Invade the World/Invite the World. In other words imperialism is a necessary part of provoking mass cheap labor migrations. Interesting that Yanis didn’t even mention imperialism, or invasions, perhaps he fears getting the Russian stooge label?
Point 3 needs more study but all corporations would have to do is offshore to avoid these requirements, or just stop hiring employees and go towards contractors. This doesn’t exactly seem to be an over throw of capitalism but I have not studied these ideas that much. What percentage of the population works for corporations anyway?
Amending corporate law so as to turn every employee into an equal (though not equally remunerated) partner, via granting them a non-tradeable one-person-one-share-one-vote, is as unimaginably radical today as universal suffrage used to be in the 19th century… this pivotal transformation of company ownership…
I’ve been a member of various producer and consumer coops my whole life but I don’t understand the logistics of getting from our current business world dominated by multi-national capital to a world dominated by coops. To be specific, this would require one of two things:
1. Some kind of global or at least multi-national business law that imposes/requires a global coop model; or
2. Individual nations trying to do this without all of their MNC’s fleeing to other locations.
Neither one of these seems remotely plausible to me. Maybe that puts me in the Zizek crowd – having an easier time seeing the end of the world than the end of capitalism. Though I don’t see the end of the world, only the end of our world.
Yes the issue of scale here, from huge multinationals to a local small business, is difficult to wrap one’s head around.
I think I’ve mentioned this anecdote here before, but the woman who started the business that I’m now one of the owners of, wanted to start getting out and offered the business to all of her longest tenured employees (and there were a number of us). Exactly two people accepted. And the monetary cost to do this was nothing. I asked why the others didn’t want to do this and it was mostly “i don’t want the responsibility, I don’t want to think about other things, I just want to do my work, get paid and go home etc.” Han zero interest in doing this. Anecdote to be sure but there are certainly a number of people who do not want to be partners/owners/whatever you want to call it.
But what about a scenario like this- A plumber, say, starts his own business and finds that he’s so busy, working nights, weekends, giving up jobs that he can’s take, decides he needs to hire two people. Are they suddenly, with their two equal partner shares, able to out-vote him? Fire him and take over the business?
And I can’t even imagine what he is recommending here as it pertains to the hugest of the huge companies.
I would hope that this ” one worker-one vote” democratic election control of co-ompany planning and actions would not lead to the emergence of political parties and political operators within the company to replicate what we have in society. Working in such politicised workplaces would be like swimming in boiling radioactive sewage.
I find it a deeply vile and ugly suggestion , myself.
So, there are middle grounds to strike. My workplace, while certainly hierarchical, does very clearly describe my role as a very senior engineer to inform management about what should be done, design next gen products, and keep the company from running off the technical rails. I enjoy quite a bit of autonomy. There is a history of a debate culture, and we generally try to hear everyone’s viewpoint. Most things are driven bottom up with a somewhat generous interpretation of bottom (seniority and experience count) and other stakeholders like marketing get to chip in their bit too. There have indeed been about a half dozen times over the last 20 years when I’ve been directly told to do something I didnt want to do or didn’t think was a good idea, but in most of them in retrospect, they were right and I just wasn’t aiming high enough. Perhaps the schedule was just unrealistic.
Management is mostly there in an assistant role to engineering, making sure we have what we need and a lot of stuff I frankly don’t want to deal with is taken care of. It isn’t democratic in the sense that we are all equal. We all play different roles and some are more central to products and decisions than others. But also quite clearly it is not a feudal organization ruled from the C suite with an iron fist. It is also certainly not an autonomous workers collective. There are many decisions, especially in the board room which would be very different if it was. I would also be exceptionally wealthy, alas, because there would be a lot more profit sharing. When the company finally admitted it was making more money than it knew what to do with, the money went exclusively to the investors, not the people who made the success happen.
Within a company there should be a general union of purpose. If you find yourself forming parties and starting a big fight, it may be time to find somewhere else to work. This is a difference between government and private industry. The government is a monopoly, so there is nowhere to go if you want to be part of the public sector. Divergent views persist and strange bedfellows ensue. In private industry, there are many choices of whom to work for. If you can’t abide Facebook’s ethics, or HP’s cubicles, then there is probably a good fit somewhere else.
I think there is plenty of room for one worker one vote without seeing the workplace tear itself apart. Some of us enjoy something a little like that now.
Going forward into a more liberal future, it is easy to imagine more companies incorporating more employees into decision making processes. I think we will all be better off for it.
Notably what is missing from my situation are any hard guarantees about whether or not I get a vote in what happens. My influence mostly depends on a reputation for good decisions, know how and clear view of the facts on the ground. If I don’t deliver these things, I will quickly find myself without much say at all.
It is an interesting question to me whether people deserve to be heard because they are people, or because they are often right. We can only assume that the members of the 1789 constitutional convention that had the most influence did so because they had a record of good judgement and wise words.
Of course, as I understand it, there were a few Boobs who didn’t even show up.
Yanis, an economist, realizes that within Capitalism the only way to improve the material condition of the working class is through policies that create a scarcity of labor. This is what labor unions attempt to achieve on a micro level. But it is far more crucial that labor scarcity be achieved on the macro level of the nation state. Labor abundance leads directly to the pauperization of the working class, as we are currently seeing. Trump ran on a program of implementing labor scarcity but just as a playboy seduces an aspiring starlet with matrimonial promises, as soon as Trump got the votes he wanted from the Deplorable working classes he dumped them and only meekly tried to achieve labor scarcity.
Yanis’ conundrum is that to be accepted on the margins of the halls of power, he must support the globalist oligarch’s desire for labor abundance — free trade and mass immigration — but at the same time he must be seen to be trying to improve the material conditions of the working class in order to perform his systemic role as a “progressive whisperer.” This role is defined as steering progressives away from policies that would lead to labor scarcity and to keep them safely attached to the globalist oligarchy’s collective belt loop. In other words he must simultaneously support the policies that lead to the pauperization of the working classes but at the same time be seen as fighting against this phenomenon.
And so given these circumstances; the only way to square this circle is to call for the abolishment of the labor market. This is a tacit admission that the current globalist oligarchy policies are indeed pauperizing the working classes through the labor supply and demand curves.. And yes, both Soviet socialism and national socialism managed to abolish the labor market but as Yanis states, the results were not exactly beneficial to their working classes. And so this idea of giving shares to every employee of a “corporation” is the magic bullet that will supposedly allow labor abundance while stopping working class pauperization.
At first glace this would not abolish the black market labor market of illegal immigration. And given Yanis’ commitment to free trade, what would stop corporations from off-shoring to nations that still allow a labor market? He says this only applies to corporations, so that form of business organization could simply be avoided? I have to read further into this idea.
The flaw in this presentation is that it seems to assume that labor markets can only be unregulated and subject to the worst excesses of supply and demand. However, we might decide that we cap pay scales at the bottom and top for example, the minimum wage can not exceed half the median wage and the maximum wage can not exceed double. (Pick your favorite limits.)
If the Jones’s are legally incapable of earning vastly more than you, then we may assume that you can expect to compete with some ability for goods and services and not find yourself dealt out of the proverbial national pie.
I think you, kasia and others in this thread make good points. The problem with the solution of Yanis is a lack of social experimentation of it. For surely what will turn out to be best will differ from his idea now. The inability to experiment, if only on a local scale, is partly due to the violent hostility of it from the established order, capitalist in this case. TINA is also about making sure that there is no alternative. In that sense nationalism maybe an ally of the progressive. I mean is it a coincidence that the largest coop in the world was founded in a region, the Basque Country, that is very nationalistic? Like Fred Hampton and his rainbow coalition, consider working with groups that deep down share the same goals as you. Consider not Mr./Ms. Right, but Mr./Ms. Right Now.
Yanis Varoufakis- Does anyone really take what he say’s to heart?
No.
But does that mean that he should stop saying it?
He is a long sighted visionary in a short sighted world. Sadly.
However, as an economist,not an ecologist, he is not fully understanding of the fundamental problem we face – too many people destroying the planet and causing the sixth great species extinction.
I generally enjoy his description of salient problems — I am less convinced by his proposed solutions.
This is ever the accurate description of socialists and marxists. They are very good at telling us what is wrong with capitalism. An evening with Richard Wolff will leave you clear eyed about exactly what is broken about this country. However, even he is much, much slower to speak about what to do about it.
I personally think that free market capitalism is only half an economy. It is very good at many things. The historical success of capitalism in generating wealth over command economies of the last century was pretty telling. However, what it does not do is the necessary but unprofitable stuff, like planning for pandemics, or taking care of the elderly. It will happily take care of the elderly’s money, but probably not in a way that the elderly would prefer if they understood what was going on.
With capitalists, anything that is unprofitable doesn’t get done, no matter how necessary. Capitalism also isn’t to be trusted with natural monopolies like roads and can be trusted to be responsible with common property. If it can offload costs to you, it will. Finally, it’s motivation isn’t to do what is needed, it is to do what is profitable. To the extent that people will pay for what is needed, these two things can come into alignment, but if some of the people don’t have enough money to be heard in this way, their needs go unmet. The usual problems ensue.
This is why there must be a public sector to take care of these problems, to make sure there are enough ventilators and rubber gloves. To make sure that if the private sector won’t provide someone with a living, that the public sector will. To spend a lot of time and money trying to shrink the size of government so it can be drowned in a bathtub is a perversion of the Social contract. It means that those who find themselves favored by capitalism will be rewarded and those who aren’t will have a tough time getting along. It is an attempt to leave half the population behind.
Going forward, there is opportunity in expanding the role of government again. This should be done without traditional Marxist heavy handedness. No Mao cultural revolutions or gulags for political dissenters. It should be done at a more local level, with smaller organizations, helped along with federal money.
It’s great to be able to come to NC and see bold, provocative thinking from people like Varoufakis. He’s right about a lot:
Note that the laundry list of fine objectives that follows this statement is not a “narrative.” Varoufakis’s Nationalist International has more than a narrative; it has a shared worldview that’s been around for centuries. At its core is a moral system that is regarded as having been handed down to us by some transcendent god(s). Their elite opponents, the meritocratic technos, have a somewhat less complete worldview in which there is no god and not much of a moral system unless we grant Woke-ism as one, but they do have a deep and abiding faith in their own ability to manipulate and control others. Their problem, as Yanis sees clearly, is that their finger-wagging nagging has failed to convince the Deplorables that they must drop their old-fashioned ideas and learn morality from “Hamilton.”
I do wish Yanis had recognized the possibility that there might be something other than the progressivism he describes, which is little more than a reaction against Nationalist International. If we are truly to think in post-capitalist terms, we’ll be required to shed layer upon layer of the culture we have been marinating in for most of our lives.
Varoufakis sees this issue and concludes with the problem it presents:
Thomas Berry, who is a source well worth consulting for narratives and a worldview not ultimately born in reaction to a dying system, suggested the following course for those who long for a new world:
How do you “live in paradise” in the midst of an increasingly hellish reality? Some may be able to work together building a new world on a small scale that can serve as test case, example, inspiration. Others may need to dream dreams, consult spirit guides, probe the Collective Unconscious and explore strawberry fields, to live in paradise in the imagination.
The break with the present that is required is so radical, so complete, that beginning with the question, “What would I change about this world?” can easily lead us astray.
It’s not hard to imagine an end to capitalism in a mechanical sense. For example, living and working in communes could become popular. The communes could cohere for purposes of mutual aid. They would gradually supplant capitalist and bureaucratic institutions and relations. For the communards, that might be ‘living in paradise today.’ The people who do it now seem to like it, or so they say. The fact that most people consider such a proposal to be a wild fantasy and are in any case unwilling to do anything about it is the problem, not that there is something inherently unworkable in the idea, or other non- or post-capitalist ideas.
Been there. Inherently unworkable without land trusts to allow ownership of improvements (depreciate) but not land, to prevent speculation and getting kicked off your land. There’s also the issue of intentional communities being very hard to come back from, because if you want the residents to be anything but backward destitute peasants, you have to be integrated into the surrounding economy. Now you compete with economies of scale unless you’re producing very niche product. Fetishizing rural poverty brought many a post-recession Dreamy to their knees.
The problems you mentioned don’t seem impossible to overcome, provided there were enough people — say, 1% of the population — willing and able to do it. It certainly seems easier than trying to reform capitalism through a representative government dominated by plutocrats, warmongers, and secret police. Actually, there seem to be many possible ways to emerge from capitalism.
But Varoufakis quotes Žižek: “Most people find it easier to imagine the end of the world than the end of capitalism.” That seems dubious to me, except when one insists on a top-down immediate changeover driven by power. We can’t force people to be free.
“We can’t force people to be free.” Can we ask nicely for people to stop being extractive inhumane billionaires, sooomeday? If we promise to stay in the mud and eat potatoes?
As local businesses fail and municipalities have more and more derelict commercial properties on their hands I see an opportunity to re-invigorate local economies and work towards some of the goals Yanis describes. In exchange for “free” infrastructure, entrepreneurs could start businesses with new ownership structures along the lines of a one-employee-one-vote model. Municipalities can also pick winners in who they partner with by granting free property to by selecting businesses that focus on sustainable or green tech and products, localizing small scale manufacturing in a bottom-up on-shoring and requiring the alternate corporate organizations previously mentioned. This isn’t a short or easy path but I can’t see globalization as a thing for much longer and we need to try something before it’s too late and climate and empire tip over the chessboard, take the ball and go home, or whatever your preferred metaphor is for the unstructured end to the game which is coming unless we get smart.
Additionally, as has been written and discussed in depth (Harari’s Sapiens, e.g.), in order to create a global response to anything we’re going to need a big myth that unites us, an other. The recent hubbub about Pentagon releasing details of otherworldly tech tickled me as a potential ploy in that direction, uniting humanity against alien invaders. Lol. Independence day. Life imitates art, or schlock anyway. For whatever reason, climate change is not suitable or concrete enough as “the other” and we’re reduced to squabbling for the last scraps as our ecology crashes around our ears.
I liked this one. YV is spot on when he proposes we eliminate the stock and labor markets. He is saying, diplomatically, that we must eliminate profits for a selective self-interested few. Indeed we must. And the beneficiaries must now include not just disenfranchised humans, but the entire planet and all the creatures on it. Oceans, land, forests… big constituents to say the least. To that end we must define what we mean by “Prosperity.” It cannot come at the expense of someone/thing else. If it’s not inclusive it is not prosperity, it is theft. So capitalism can still work – nothing says capitalism must impoverish and exploit in order to prosper. That’s just how it evolved. The word “capitalism” should be refined as capitalism for all. And money. Money is funny. All we have to do is agree to the task, distribute value digitally, and we are in business. It’s so cool. And until there is good coordination globally for this new paradigm, an enlightened nationalism will be progress. Nationalism will prove to be very beneficial, imo. To that end we can implement MMT. Now if not sooner.
“If, in addition to this pivotal transformation of company ownership, Central Banks were to provide every adult with a free bank account, a postcapitalist market economy would be delivered.”
What if the goal of our central bank is to drive out out or destroy local and community banks–with the desired goal to be the only bank around. We seem to be moving towards a more and more concentrated banking system, a postcapitalist market economy that results in the Sovietization of our banking system.
Could it be that the Federal Reserve is in the process of consolidating its powers by trying to get rid of competition in the form of paper money or bank credit by driving both cash and bank credit out of business through their move toward negative interest rates, which are not designed to stimulate the economy but to create deflation. Might they be moving toward a money system which will allow only digital currency that they issue and control and that they can monitor in terms of all transactions and that they can switch off, if. for instance, some pesky dissident criticizes them too much.
Or one could call it the Corporate Soviet Yeltsinization of our banking-finance-payments system.
I certainly expect the FIRE sectors’ symps and feltravs to try legislating the outlawment of coins and bills.
Coins and bills would retreat to the Free Patriot Markets ( the “underground currency black markets”).
Barter would grow vastly and hugely as people tried to craft a Free unmarket CounterEconomy against
the government certified Amazon Bank economy.
What if the goal of our central bank is to drive out out or destroy local and community banks–with the desired goal to be the only bank around Gulag
Government should not be in the lending business since that violates equal protection under the law in favor of the so-called “credit worthy.”
So private lending institutions (but with 100% voluntary depositors) should still exist.
But if you expect that their privileges should persist, then you’re on the wrong side of justice.
I love Yanis’ well spoken optimism, leadership and determination. We certainly are heading towards a post-capitalism-as-we-knew-it future. I believe that the future will be socialist only after a cataclysmic struggle. The people in my little sea-side community can easily envision high tides lapping over our main commercial streets and 300 year old neighborhoods submerged. If you asked them if they could envision any sort of non-capitalist future they would reply with an open mouth and a blank stare.
The difference posited between radicals and progressives seems real and is certainly very useful.
“Stop police brutality” is a grievance seeking redress.
” Repent, you White racist sinner! Confess your White Privilege!” is pure progressivism.
I suspect radicalism will be polluted and destroyed by progressivism every time radicals allow progressives anywhere near their radical movements. Progressives are merely liberals on meth.
I think the labels are the other way around: liberals, e.g., the Democrat establishment, are into Idpol and other types of worker class fragmentation. While progressives, e.g., Sanders, have concrete goals such as M4A. In that sense, the preface to Yanis’ article is a little off.
The American experiment in republican self government was sullied from the start by the compromise with slave holders to achieve union. Heather Cox Richardson is great on discussing this paradox of American history and politics, including tracing how the extractive economics of the slave holding south get transferred to the USA west after the US Civil War, leading to Barry Goldwater, Ronald Reagan, and the whole case of conservative / libertarian sociopaths. Look up Richardson on YouTube and watch a few minutes and tell me you don’t get hooked.
Overcoming this history appears to be an insurmountable obstacle for recovering the fundamental ideas of the American School, which I believe is the only way to properly formulate rules of political economy for a republic. First of all, it’s terrible history to write that Americans conceive of freedom as the freedom to get ahead economically, to acquire property, and become rich. Lost today is the idea of “competency” – that a citizen needed to make enough to be economically independent so as to have the disinterestedness to decide on public affairs.
In addition, for most of the 19th century (except in the South, then the West), there was great distrust and hostility to concentrations of economic wealth. Among the first substantive legislative acts after independence was the prohibition of primogeniture and entails.
But more fundamentally, USA republican (small “r”, not Republican Party) political economy is based entirely on Alexander Hamilton’s understanding that the ultimate foundation of a nation’s wealth is the productive power and thought of its people. So, it’s not that people are supposed to strive for riches and accumulations of property; the proper goal is increasing humanity’s ability to control and harness the forces and resources of nature. Matt Stolller and other such well-intentioned people simply don’t understand that what Hamilton does is shatter feudal economics, which is pretty much zero-sum: for a nation to increase its wealth, it must seize from another nation, or obtain an unfair advantage in trade. Under Hamilton’s system, a nation’s wealth increases as its people develop new and better ways of doing things. I.e., science and technology.
Republicanism values each human individual for their potential to contribute to the intellectual, material, cultural, and aesthetic conditions of life. Republicanism thus frees each person from the tyranny of the market. The market can only treat a human being as a consumer, or a commodity unit of labor.
We have now reached a point — with automation, robotics, and artificial intelligence — that the productive power of labor is so great that humanity becomes more and more able to supply its needs and wants without the need for full employment. [Which is why I was very sad to see the pictures accompanying this article was of massive manual labor.] We must embrace the reality that only around 15 percent of a workforce is actually required, and work to conceptualize and build an economy in which the vast majority of people simply are not required to work. Perhaps it looks like this: no one under the age of 21 is employed, and mandatory retirement is taken, with full pay, at 45 or 50. There is universal health care, and education is paid for however many years a person works toward a professional career. People over the age of mandatory retirement serve on local, state, regional, and national boards that award and administer stipends, grants, and honoraria to artists, musicians, authors, and entertainers.
This, I think, is how you inject a positive vision into progressive ideas and policies. This is an amazingly optimistic view of humanity and its role as co-creator of the Universe with the Great Architect of the Universe. This positive vision rings out in the speeches of people like John Quincy Adams, Noah Webster, and others. Just look for speeches given at opening ceremonies of things like the Erie Canal and the hundreds of local railroads built before the Civil War. You often also find it in speeches commemorating Independence Day.
The obvious problem, of course, is the pillaging of natural resources and despoliation of the environment. But if you realize that all environmental problems are actually, fundamentally, engineering problems, then you realize that once you destroy the dictatorship of banking and finance, you can fully — and safely — implement visions such as the Green New Deal.
Is your policy incremental? If so, can you suggest what could be done first? I ask because I’m wondering if a necessary feature of any better way to go is that it should at least have some tangible benefits along the way. No one is going to agree to slave for a utopia that is one thousand years away. In that way, some elements of Yanis’ proposed solution seem to rely on all the other elements working beforehand.
To Yves point about the left not wanting power, do you see any serious left-wing warriors out there?
The nationalist in Sweden are openly talking about jailing journalists and there is no public outcry.
This article from Ian Welsh is something that Varoufakis could and very much should learn from.
https://www.ianwelsh.net/7-rules-for-running-a-real-left-wing-government/comment-page-1/
It’s not “the left”. It’s “progressives” who tend to be educated and concerned about morality and fairness. But they tend to be well off or at least not downtrodden, and therefore don’t have strong reasons to put themselves at risk. In Kline’s paradigm, radicals, who are getting the short end of the stick, do have grievances and are therefore willing to fight.
Progressives are going to do a whole lot better when they have some good economics as a solid foundation.
Capitalism isn’t actually as bad as we think it is, we just don’t know how it really works.
The classical economists could observe the world of small state, unregulated capitalism in the world around them.
Today’s economists worked up from micro foundations and got very confused.
How different is classical economics?
Ricardo was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
“The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist
What does our man on free trade, Ricardo, mean?
Disposable income = wages – (taxes + the cost of living)
Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
Employees get less disposable income after the landlords rent has gone.
Employers have to cover the landlord’s rents in wages reducing profit.
Ricardo is just talking about housing costs, employees all rented in those days.
Low housing costs work best for employers and employees.
Adam Smith on Profit:
“But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.”
Exactly the opposite of today’s thinking, what does he mean?
When rates of profit are high, capitalism is cannibalising itself by:
1) Not engaging in long term investment for the future
2) Paying insufficient wages to maintain demand for its products and services
Today’s problems with growth and demand.
Amazon didn’t suck its profits out as dividends and look how big it’s grown (not so good on the wages).
Today’s idea – you pass the profits upwards in dividends.
Older idea – you pay more in wages and generate less profit. The gains flow down to the workers.
Jeff Bezos is going for growth – pay low wages and don’t pay dividends, plough everything back into the company for maximum growth.
Pray someone else is paying high enough wages to buy lots of stuff from Amazon.
William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics.
https://www.youtube.com/watch?v=g6iXBQ33pBo&t=2485s
He thinks we have been on the wrong path for one hundred years.
Small state, unregulated capitalism was where it all started and it’s rather different to today’s expectations.
Today’s economics is causing all sorts of confusion.
If only the Americans had understood free trade, they would have seen China’s rise and its own decline.
There was always going to be massive off-shoring due to the high cost of living in the US.
How did the UK prepare to compete in a free trade world in the 19th century?
They had an empire to get in cheap raw materials; there were no regulations and no taxes on employees.
It was all about the cost of living, and they needed to get that down so they could pay internationally competitive wages.
UK labour would cost the same as labour anywhere else in the world.
Disposable income = wages – (taxes + the cost of living)
Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
Ricardo supported the Repeal of the Corn Laws to get the price of bread down.
They housed workers in slums to get housing costs down.
Employers could then pay internationally competitive wages and were ready to compete in a free trade world.
Let’s look at the US cost of living.
The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living
No wonder US firms off-shore to maximise profit.
Those jobs ain’t coming back Mr. Trump.
What sort of employer would be mad enough to pay the US cost of living in wages?
There are loads of better alternatives.
US firms couldn’t wait to get out of the US to places where they could make more profit.
They then imported back into the US, to add to the trade deficit Trump keeps worrying about.
Let’s look at China.
Maximising profit is all about reducing costs.
China had coal fired power stations to provide cheap energy.
China had lax regulations reducing environmental and health and safety costs.
China had a low cost of living so employers could pay low wages.
China had low taxes and a minimal welfare state.
China had all the advantages in an open globalised world.
It did have, but now China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.
The West was never going to do well.
Everyone pays their own way.
Employees get their money from wages.
The employer pays the way for all their employees in wages.
Off-shore from the US, ASAP.
China became a superpower and US influence in the world declined.
The “cost of living” trips everyone up that uses neoclassical economics, even the Chinese.
The Chinese have been trying to increase consumption, but they were using neoclassical economics.
Davos 2019 – The Chinese have now realised high housing costs eat into consumer spending and they wanted to increase internal consumption.
https://www.youtube.com/watch?v=MNBcIFu-_V0
They let real estate rip and have now realised why that wasn’t a good idea.
They had to learn the hard way.
The equation makes it so easy.
Disposable income = wages – (taxes + the cost of living)
The cost of living term goes up.
The disposable income term goes down.
They didn’t have the equation, they used neoclassical economics.
The Chinese had to learn the hard way and it took years.
What are those yellow vests doing on the streets of France, Macron?
The “cost of living” trips everyone up that uses neoclassical economics.
I’ve always wondered what happened to Richard, I haven’t seen him in comments for a very long time.
I believe he was spot on, way before a lot of other people – to get power, you must want to wield power. Crobyn in the UK was IMO a prime example – he never came across as someone who wanted to wield it, more as an eternal protestor.
Sanders did want power, but well, I guess DNC had more levers. As an aside, I do wonder, if say Biden died before elections, would not Sanders have a way better claim on the running than Harris (who would be likely annointed by default), given that he was the runner up in the DNC primaries? That would be fun..
A successful economy is a lot better than we think.
People have to be paid the money to buy the goods and services the system produces.
Papering over the cracks with credit is not a long term solution.
The big problem in developing a successful economy.
We want economic success
Step one – Identify where wealth creation occurs in the economy.
Houston, we have a problem.
Economists do identify where real wealth creation in the economy occurs, but this is a most inconvenient truth as it reveals many at the top don’t actually create any wealth.
This is the problem.
Much of their money comes from wealth extraction rather than wealth creation, and they need to get everyone thoroughly confused so we don’t realise what they are really up to.
The Classical Economists had a quick look around and noticed the aristocracy were maintained in luxury and leisure by the hard work of everyone else.
They haven’t done anything economically productive for centuries, they couldn’t miss it.
The Classical economist, Adam Smith:
“The labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money.”
There was no benefits system in those days, and if those at the bottom didn’t work they died. They had to earn money to live.
Ricardo was an expert on the small state, unregulated capitalism he observed in the world around him. He was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
“The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist.
They soon identified the constructive “earned” income and the parasitic “unearned” income.
This disappeared in neoclassical economics.
GDP was invented after they used neoclassical economics last time.
In the 1920s, the economy roared, the stock market soared and nearly everyone had been making lots of money.
In the 1930s, they were wondering what the hell had just happened as everything had appeared to be going so well in the 1920s and then it all just fell apart.
They needed a better measure to see what was really going on in the economy and came up with GDP.
In the 1930s, they pondered over where all that wealth had gone to in 1929 and realised inflating asset prices doesn’t create real wealth, they came up with the GDP measure to track real wealth creation in the economy.
The transfer of existing assets, like stocks and real estate, doesn’t create real wealth and therefore does not add to GDP. The real wealth creation in the economy is measured by GDP.
So all that transferring existing financial assets around doesn’t create wealth?
No it doesn’t, and now you are ready to start thinking about what is really going on there.
“The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist
In Ricardo’s world there were three classes.
He was in the capitalist class.
The more he paid in labour costs (wages) the lower his profits would be.
He was paying the cost of living for his workers through wages, and the higher that was, the higher labour costs would be.
Disposable income = wages – (taxes + the cost of living)
The more he paid in rents to the old landowning class, the less there would be for him to keep for himself.
From Ricardo:
The labourers had before 25
The landlords 25
And the capitalists 50
……….. 100
He looked at how the pie got divided between the three groups.
The capitalist system actually contains a welfare state to maintain an old money, idle rich in luxury and leisure.
In the UK we still have an aristocracy, so it is hard to forget.
There were three groups in the capitalist system in Ricardo’s world (and there still are).
Workers / Employees
Capitalists / Employers
Rentiers / Landowners / Landlords / other skimmers, who are just skimming out of the system, not contributing to its success
The unproductive group exists at the top of society, not the bottom.
Later on we did bolt on a benefit system to help others that were struggling lower down the scale.
They were dependent on the old moneyed classes for capital.
They had a solution for that as well.
Banks create money from bank loans.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
They could get their funding from banks; they didn’t need the old moneyed classes for capital.
They could get their funding from banks; they didn’t need the old moneyed classes for capital. SoS
Yes but banks should be 100% private with 100% voluntary depositors. Otherwise, equal protection under the law is violated in favor of the so-called “credit worthy.”
Nor would interest rates be necessarily high with an honest banking model since equal fiat distributions to all citizens should lower them.
Varoufakis claims a “lack of any real policy difference” between the liberal establishment and right-wing populists. I think there is indeed at least one such difference, namely on immigration policy. Varoufakis seems to have a blind spot for this issue, which is central to much of European politics. Consequently any conclusions he might draw are suspect.
The term “progressive” has always been fuzzy, since it encompassed both democratic socialists and authoritarian Stalinists, but now “progressive” has developed an additional layer of ambivalence, since it now also seems to include communitarian currents that don’t even pay lip service to traditional Enlightenment ideals of individual self-determination and instead consider people merely as components of ethnic groups, and encourage racial segregation, no less. For instance Cornel West — who is conventionally considered a progressive — wrote the preface to the English-language edition of “Whites, Jews and Us” by Houria Bouteldja, [https://en.wikipedia.org/wiki/Whites,_Jews,_and_Us] the leader of a French group, PIR, that calls itself “decolonial” and whose party program does not contain the word “freedom” except when it refers to freedoms enjoyed by ethnically defined collectivities, and in which the annihilation of Israel plays a central, almost transcendental role.
Yanis appears to stress the GND. Here in the US, I think a first goal is just M4A. The good thing about it is that it implies that markets are not the solution to everything. That to me is a necessary beachhead in this struggle.