I have produced economic blogposts before - see this link here for an explanation of Modern Monetary Theory which everyone needs to understand to avoid having the wool pulled over their eyes by mendacious and patronizing politicians. This blogpost has some very useful insights too.
|Yanis Varoufakis - academic and politician|
Yanis Varoufakis is both an academic and a politician. Born in Athens in 1961, he spent twelve years teaching at the University of Sydney in Australia and has also taught at various British universities: Essex, East Anglia, Cambridge, and Glasgow. He served as the Greek minister of finance until quitting when the European Economic Community determined that Greece would follow an austerity programme. The Democracy in Europe Movement (DIEM25) was founded by him in 2016 as a political means of bringing about change in Europe through resistance to the neoliberal economic agenda that has become a dominant defining force throughout much of the world. Yanis Varoufakis describes the world that is now shaping us as post-capitalist.
This blogpost is based on his online streamed lecture on post-capitalism that was aired on 21 April 2021.
- In this post-capitalist world, the financial sphere has decoupled itself from the economic sphere. The old 20th century adage that what was good for General Motors was good for the USA held true for as long as General Motors was just a car manufacturing company. But by the time of the global economic crisis in 2008, General Motors may have still been making cars but most of its profits came from finance trading.
- The industrial revolution turned the world upside down in the 19th century. In the new world of capitalism, huge wealth was created by the mechanization of industry in a factory system that depended on the exploitation of working men, women and children. The factory bosses were initially from lowly backgrounds but their wealth meant that social and political adjustments had to be made to ensure these new players had an appropriate and recognized place in this new world.
- A new balance was created between the political and the economic sphere which held firm until the neoliberal age arrived with the coming to power of Reagan in the USA and Thatcher in the UK in the late 1970s and through into the 1980s. Deregulation of the market became the new watchword - the unions and socialist ideas became the enemy. It was then that the financial sphere began to take over. So in effect there were now three spheres: the political, the economic - and the financial. Under the weight of its own inconsistencies, this world collapsed in 2008. Capitalism had met its nemesis - and post-capitalism was ushered in.
- There were two main forces that saved capitalist economies in the post-2008 world: the Federal Reserve (FR) and China. The FR printed rivers of cash for the US and for Europe. The north Atlantic bloc was saved by dollar swop-lines - and China boosted internal investment by 52% of GDP with such economic dynamism sucking in foreign exports from the USA and Europe.
- But what survived was no longer capitalism. The printing presses of the FR and other banks kept going after 2008. By 2011, there was a realization that withdrawal (otherwise known as 'tapering') of the morphine (printing money) was not helping the patient (the sick economy). So the printing of money continued ('quantitative easing').
- This meant that for the first time in the very foundations of capitalism there is a decoupling of wealth creation from capital accumulation. Wealth had been separated from profits.
|Inequalities are becoming more and more evident.|
- Ordinary citizens did not get this newly printed money in its billions. The small companies are left struggling. In Europe, it is the big corporate firms - Apple, Google, Siemens, Volkswagen, and their like - who can pay back the interest-bearing loans from the national banks who have been lent the money by the European Central Bank. A similar pattern operates in the USA with the FR lending to American banks who in turn lend to a few big corporations.
- The problem with these big corporations is that they now have lots of cash which they should be using for investment but instead much is going into savings. Even with minus zero interest rates, companies such as Siemens were pushing up their own share prices by using this 'free' money to purchase their own stock.
- In effect, money printed by the state was and is creating a very decent share price (and bonuses) - and doing nothing for the public good. Companies were making very little profit but their value as expressed in their share price was going through the stratosphere. Even the profits made by Amazon in these pandemic times is small compared to the increase in Jeff Bezos' personal wealth as a shareholder in his company.
- This turn of events was - and is - creating greater inequality - and doing nothing to counter the threat of climate change.
|The choice is stark - but surely a no-brainer.|
- There is another wrinkle in this developing picture of post-capitalism: 90 per cent of the companies on the New York Stock Exchange are actually controlled by just three asset-owning companies - BlackRock, State Street and Vanguard. They own the airlines, J.P. Morgan, Goldman Sachs, and so on. Yanis Varoufakis insists that this is not capitalism - with three companies owning the commercial corporate world and kept afloat by state money. The world as envisaged by the original neoliberals such as Friedman and Hayek has vanished as new digital spaces have been created where money is made - and these spaces belong to fewer and fewer people.
- In effect, we are seeing a return to feudalism where fiefdoms have been created and where, for example, Jeff Bezos is the baron. This is high-tech feudalism where a version of the feudal village is emerging where we are effectively, although not necessarily legally, owned by the lord. But this development is not sustainable. Planet Earth can not sustain such a depletion of our eco-system's capacity to reproduce itself.
- 2008 was a tipping point and we are now approaching a fork in the road. We face a stark choice where the needs of both the planet and the majority of the people on this planet are set against the self-centred needs of a tiny minority.
- We need a Green Transition using 10 trillion dollars a year to stop this descent into our own extinction. Existing institutions are not the vehicles for such radicalism - they are complicit in our present mess, trapped into serving the techno-feudal structure. Too many salaries are dependent on resisting change.
- Two steps are vital: A green Keynesian New Deal and a reconsideration of who owns the companies.
- We need for the first step 10 trillion dollars a year invested in developing as well as developed countries to bring about this Green Transition as part of a 21st century New Deal. In Europe, we need a European Investment Bank offering bonds to raise the money to tackle the climate emergency and further the moves to going electric. Yes, we need to tax the likes of Jeff Bezos to begin addressing the mind-numbing levels of inequality but that will not be enough. We need the New-Deal-type apparatuses of the state to become fully effective.
- For the second step we need to reconsider who owns the corporations. It is in the boardrooms and general assemblies of the large corporations that most of the decisions are taken which will determine our planetary future.
|A vision that we all need to understand|
- Yanis Varoufakis has a vision, a blueprint, of another saner world where one employee has one share and one vote, non-transferable. Everything would then unravel - stock markets would disappear. We would have a market-based democratic society without capitalism. His recent novel: 'Another Now' is an exploration of the need to reconfigure the ownership of corporations.