Dr. Yanis Varoufakis: This Pandemic Will Leave Behind Permanent Winners and Losers
Date: January 25th 2021
Author: Alenka Lena Klopčič
“I would like to imagine a world in which democracy is not something that we just like to talk about but also something that we practice within our economic sphere,” said Dr. Yanis Varoufakis, a world-renowned economist and bestselling author, who in 2015 also spent a few (economically and politically very hot) months as Greece's Minister of Finance, in his second video interview for Energetika.NET. This time we also touched upon his latest book on a possible alternative reality titled Another Now.
Changes begin… with banks!
The ‘miracle’ of market societies depends on the magic of the banking system, which tends towards black magic, just as flies are attracted to light. As a result, a crash and economic crisis are always looming on the horizon, threatening to require major state interventions, wrote Varoufakis in his book titled ‘Talking to My Daughter About the Economy’. In addition, in his first interview for Energetika.NET, recorded in October 2020, this world-known economist said that “the world of money is doing pretty well, while profits, wages, and investments are nowhere near the green transition. In short, things are not good,” he said, adding that, therefore, the solution must be political (MORE).
In light of this, where could we start solving the current economic situation? In response to this question, Varoufakis said that the crisis is already at least twelve years old and now, with COVID-19, it is getting deeper and deeper. However, he believes that we should immediately take the banking system out of the process of investing into the future of humanity.
According to Varoufakis, we – as a species under capitalism – are facing a big problem accumulated by the huge amount of liquidity money on the one hand, while on the other, the lowest level of investments in jobs and the green transition, which is crucial for making our society viable and the planet reproducible. ‘Banking’ is the problem, he is convinced, arguing this point by giving a concrete example in which only big corporations win, leaving behind small businesses and little people, along with the whole idea of the green transition. So, the banks should be cut out, whereas the central banks should provide money directly to governments in order to create good quality green jobs, stressed Varoufakis, adding that the solution must be political, but it must no longer only work for the few.
Varoufakis offers a glimpse of this alternative reality in his latest book ‘Another Now’, where he shows how, basically, everything can be ‘democratised’ and how economies could work, starting with ‘corpo-syndicalism’, or, as previously mentioned, the end of banking as we know it today. As regards the technostructure, he writes: “Bloated and inflamed, the technostructure was unable to convert the new liquidity into real productive capacity, into good-quality jobs, into a carbon-neutral economy drawing on planet-saving new forms of energy. It took an actual virus in 2020 / … / for most of us to realise the terrifying precariousness of our situation.”
If, by assumption, governments should not pump the so-called recovery packages back into the technostructure, what should they do instead and how can they be ‘convinced’ to do so? Varoufakis answered this question by saying that the problem is that the so-called technostructure is currently not even investing in itself. “But imagine that we did things the way that Europe gets out of a complete catastrophe, such as at the end of the World War II, when the United States invested in Europe in order to rebuild it. That money was distributed through an organisation that later became the OECD, and this money was allocated to governments for particular projects, such as electrification. Today, projects are underway to build renewable energy networks across Europe. So, imagine if this money was allocated through a central body to particular projects rather than to stock exchanges. That is not a radical thing to do, and it would create jobs and lift us from the depression. The second step would be to dissolve the technostructure,” illustrated Varoufakis, adding that he would like to imagine a world in which democracy is not something that we just like to talk about but that we also practice within our economic sphere.
In his final answer, the author of ‘Another Now’ touched upon the future that awaits us. He agrees with Raoul Pal, a macro investor, the CEO of Real Vision and a former investment banker for Goldman Sachs, that we are moving into a deflationary era and that the current system is not sustainable. However, he does not fully agree with Pal, who said for another Slovenian business newspaper that not only might central banks start giving money to individuals directly as Varoufakis is hinting, but also that “the drama of the first five post-COVID-19 years will be penned by the longest recession to date, a wave of insolvency, swelling debt, plunging consumer spending, the collapse and centralisation of the banking system, the inevitable devaluation of the dollar and a new global monetary order, the rise of new markets, gold, and particularly bitcoin as a value keeper”.
“Far more importantly, this pandemic is going to leave behind permanent winners and losers and this permanency is going to lead us to face up to the urgent need for a transformation of the socio-economic system that we have,” concluded Varoufakis.
This article is available also in Slovene.