‘The Global Minotaur. America, Europe and the Future of the Global Economy’, by Yanis Varoufakis. Zed Books. 2015.
It will only be because the author later become Greek Finance Minister for a while that this book, that originally came out in 2011, has been republished (with a new introduction and an added chapter, plus a preface by Paul Mason). It’s an account and attempted explanation for the course of the world economy since the end of WW2 and up to the crash of 2008.
Varoufakis agrees with Marx’s basic analysis of how the capitalist economy works: that it is driven by capitalist corporations in pursuit of profit and that consumer demand and the demand for bank loans are dependent on this. Even though he places ‘financialization’ at the heart of modern capitalism, he doesn’t fall for the illusion that banks get their profits by creating money out of nothing but knows they do it by borrowing at one rate of interest and lending it at a higher rate, even the notorious CDOs and CDSs (don’t ask) that flourished in the run-up to the crash.
He also accepts Marx’s view that capitalist crises are cyclical and self-correcting in that slump conditions eventually create those for a recovery (e.g. by purging unprofitable firms) but, he adds, from time to time a big one with a capital C comes along from which, despite what Marx held, capitalism won’t spontaneously recover. 1929 was one. So, he says, was 2008.
His explanation for the crash of 2008 was the fatal wounding of what he calls ‘the Global Minotaur.’ The Minotaur was a monstrous half-man, half bull in Greek mythology which demanded that young men and women from the areas subject to Crete be sent to fight and be killed by it, reflecting as Yaroufakis points out the domination of the Greek-speaking world by Crete at one time.
The US – of course – is the new Crete and the Minotaur its financial system, based on the dollar being the currency in which other states and multinationals hold their reserves. This allows the US to run both a trade and a budget deficit. According to Varoufakis, this way of balancing world capital and trade flows broke down in 2008 and the world economy won’t recover until another one to replace it emerges. He favours what Keynes had proposed at the conference at Bretton Woods in 1945 to work out a new international payments system: ‘to create an International Currency Union (ICU), a single currency (which he even named the bancor) for the whole capitalist world.’
So, although he is a critic of some aspects of capitalism, he still thinks that it is in principle capable of reform to work in a different way from how it currently does. Since Keynes’s type of reform was not on the agenda, he must have felt in his discussions (when Greek Finance Minister) with his counterparts in the EU and Eurozone, that all they were discussing was tinkering with a broken system. It will be interesting to see what he writes about these in his memoirs which, judging by this book, should be readable and even amusing.
Adam Buick
No comments:
Post a Comment