Something remarkable happened this August: How the pandemic sped up the passage to postcapitalism

hello everyone and welcome and thanks everybody for joining us my name is daniel denver i'm the host of the dig a podcast from jacob magazine i'm also the author of all american nativism how the bipartisan war on immigrants explains politics as we know it which came out this year from verso and i'm really honored to be hosting this conversation today with janice verofakis giannis considers himself to be a politician by necessity rather than choice which i think is an important distinction he is an economist and academic by training and currently a member of the hellenic parliament secretary general of mara 25 co-founder of dm25 and of course as everyone listening watching i'm sure knows was the former finance minister of greece he's taught economics at the universities of east anglia cambridge and sydney as well as at the university of texas at austin he's the author of a bunch of books including adults in the room and the week suffer what they must and the global minotaur before we begin our program i want to thank the organizers of this virtual event landon foundation and haymarket books for the past 22 years landon foundation's readings and conversation series has featured inspired writers of fiction non-fiction and poetry as well as cultural freedom advocates with a social political and environmental justice focus and also i guess podcasters like myself lennon is excited to offer these programs online to a global audience and video and audio recordings of everything are available at their website which is lannon.org l-a-n-n-a-n.org market books is as you also probably know a radical independent nonprofit book publisher based in chicago haymarket's mission is to publish books that contribute to struggles for social and economic justice and now more than ever it is really critical that we support independent publishers like haymarket and independent bookstores and independent voices there are three ways you can do that first buy books from a haymarket second you 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00 pm est we have the struggle for abolition from the u.s to palestine then on wednesday august 26th econom economics for the 99 and you can register for these upcoming events on eventbrite and i believe the link for those eventbrites is being posted in the chat as we speak a few brief housekeeping items we well not we but someone from haymarket orlando is moderating the chat we cannot guarantee that everyone will observe our community guidelines though we hope you all do people who violate those guidelines which you should think of as something like the golden rule will have your comments deleted as quickly as we are able for those who want to follow the chat we suggest that you use the top chat function rather than live chat and with so many people joining the call we may need your patience if we have any technical issues there are hundreds hundreds of people watching i think maybe more if your stream gets choppy it might help to reduce your image quality and hey market will give instructions on how you do that in the chat if our youtube feed is interrupted for any reason you may need to navigate back to the youtube haymarket books page and then the feed should resume there if there's any interruption the event will have live closed captions instructions for accessing the captions are put being posted in the chat with that in mind all of us will also try to speak a little more slowly which for me is not a big problem i'm a pretty slow speaker be honest on the other hand thank you to nicole for live captioning this event we will have some time after the discussion toward the end of it for a q a including your questions so if you have a question as they occur to you post them in the youtube chat window and we'll get to those later in the program all right with no further ado i would like to introduce giannis verofakis thanks giannis well thank you so much um it's um it's an honor to be here i wish i was uh in santa fe as it was originally planned but then again make do with technology and maybe reach a wider audience let me begin with something that happened two days ago because i think history is going to mark this event as quite extraordinary two days ago folks something that has never happened before in the history of capitalism occurred it happened on both sides of the atlantic and i'm sure that it happened in many countries in asia as well but i haven't looked at the art of data yet let's begin in britain in london the news came out quite horrific news that the british economy had tanked it suffered according to official statistics the worst slump in its history more than 22 down compared to last year during the first seven months of 2020. remarkably on the same day and after this horrific announcement was made guess what happened at the london money markets the london stock exchange it rose magnificently by two percent the so-called ftse 100 index wind up on the same day while most of you are in the united states so you know what the climate the political climate the atmosphere in the states is these days you know better than i do but from what i hear you live in a country that is beginning to look like a failed state not just a struck economy and yet on that same day wall street the the s p 500 index to be precise hit an all-time historic record when i noticed these two remarkable events i just couldn't contain myself so i tweeted the following i said something like yeah financialized capitalism has decoupled from the from the capitalist economy financialized capitalism has decoupled from the capitalist economy skyrocketing skyrocketing out of earth's orbit and living behind it broken lives and dreams and then i added just for as an explanatory comment that as the united kingdom sinks into the worst recession ever and the united states edges towards failed state status the ftse 100 goes up by two percent and the s p 500 breaks an all-time record now this phenomenon has been culminating so to speak percolating since 2008 but never has been seen in such stark colors and shapes and shades you see think about it before 2008 and many markets also behaved in a manner that defied humanism do you remember those of you who are old enough to remember the pre-financial collapse of 2008 period when news of mass firings of workers by general motors by general electric and so on would routinely be followed by sharp prices in the share price of these companies of the companies that were so-called letting workers go as if they were concerned with their liberation from the shackles of employment but at least back then before 2008 there was a weird inhumane but nevertheless a logic a capitalist logic to the correlation between firings of workers increases unemployment in effect and rises in share prices the logic was this that once speculators predicted a reduction in the company's wage bill expenses on wages yeah they immediately assumed or they believed that it was a reasonable assumption that others would assume that this loss of personnel would lead to um you know arising profits fewer wage costs more left over for shareholders at least in the short run the mere belief that there were enough speculators out there thinking that there were enough speculators out there who would form the expectation that enough financial power would enter the stock exchange to buy shares of companies that fired workers that was enough to explain the phenomenon an awful phenomenon but one at least that did not defy logic even capitalist logic compare and contrast to what's happening today we're in the midst of this pandemic not one person in their right mind imagines that there are speculators out there who believe that there are enough speculators out there who believe that company profits in the united kingdom or in the united states will rise anytime soon that there will be enough left over for dividends for shareholders and yet even though there is no such delusion and no one believes that somebody else believes that yet they buy shares of companies in the doldrums of the pandemic you know as if they are hotcakes with enthusiasm let me make this absolutely clear it is spectacularly wrong to try to find any correlation any logic that connects what is going on in the real world of wages of profits of output of sales and in the world of the money markets so boys and girls friends members of the audience there's no point in trying to find a link between what's going on in the real world and what is going on in the money markets that is the dick coupling which is unique it has never happened before in the history of capitalism it is not that speculators here that the united kingdom economy or the united states economy have may have tanked but ah they think let's buy shares because we need to buy into the deep things are going to get better no the situation is far far worse they don't give a damn about the economy this is why i'm referring to the decoupling of money markets from real capitalism for the economy in which capitalism in terms of production and distribution of goods and services emerges these speculators like you and me can see that kovi 19 has put capitalism in suspended animation that it is destroying lives and livelihoods that it is damaging our economies in a way that may turn out to be almost permanent or at least medium to long term that it is causing a new tsunami of poverty that it demonstrates in every country and every town the pre-existing deep class and race divides some of us who were privileged enough to keep social distance rules during the lockdown know very well because we could see an army of people out there laboring for a pittance and at the risk of their lives to cater to our needs no what we are living through now is not your typical capitalist disregard for human needs the standard tendency of the capital system to be motivated only by the needs of profit maximization of as we left this used to say or still say of capital accumulation no capitalism is now in a new strange weird degenerate phase i call it socialism for the very very few courtesy of the central banks and governments catering to a tiny oligarchy and stringent on austerity stringent austerity coupled with cruel competition in an environment of industrial and perhaps technologically advanced feudalism for almost everyone else this week's events in wall street and the city of london mark the turning point the historical moment that i i'm convinced by that future historians will undoubtedly pick out to say it was in the summer of 2020 when financial capitalism finally broke with the world of real people including capitalists you know old-fashioned capitalists you know capitalists who are antiquated enough to continue to try to profit from producing things from producing goods and services but let me take you right to the beginning let's begin at the beginning how did it all begin let's go beyond capitalism actually before capitals you know during feudalism feudal times when the lord of the land owned the land and more or less the people working on them back then that debt owing owing money or lending money you know appeared at the very end of the economic cycle a mere reflection of the power to accumulate by the landed gentry who had the authority the power to just siphon off or gather the surpluses you see you remember under feudalism production came first so the peasants worked on the land they planted the harvested there was production this first thing that happened then you had distribution how did it happen how did distribution unhold the sheriff on behalf of the lord would come over you know and collect the share of the harvest that belonged to the lord and that depended on the relative power of the feudal gentry over the peasants the extent which they feared that the peasants are going to revolt or not join their armies when they want to conquer more land in the surrounding areas or all the way to palestine whatever it was so production was first distribution came second that came last third and it only emerged at the very last stage of the cycle when the lord who had accumulated all the surplus and would sell most of it in local markets would lend his money to debtors often to the king himself back in england now what is phenomenal about capitalism is that it reversed the order once land had been commodified after the enclosures when the peasants were thrown off the land in england and in wales and in scotland with the enclosures immediately land became commodified because suddenly every acre of land was associated in terms of price with the price of the wool that would grow on the back of sheep that replaced the peasants in on that acre of land and labor was commodified because all those um expelled peasants would knock on people's doors in the nearby towns and villages and say i will do anything for a loaf of bread that's the first labor market the first labor supply so once labor and land had been commodified that was necessary for the first time in human history before production began now think about landless capitalists landless peasants that were given an opportunity by the the lord to um lease a piece of land in order to manage the sheep on it and act as a tiny little dirt poor entrepreneur these slanderous capitalists have to borrow in order to lease workers land and later machinery or tools who they borrow from the lord but that came first before they could hire workers and get equipment in order to work the land that they leased from the landlord after the enclosures before that they had to borrow money so that comes first then production begins and distribution so that effectively was the fuel that gave capitalism its incredible over from the 18th century onwards now that's the very beginning we're talking about 18th century what made capitalism genuinely successful and what allowed it effectively to take over the four corners of the planet and to make it possible for karl marx to write the epic celebration critical celebration but celebration nevertheless of uh globalized globalizing capital accumulation was the second industrial not the second industrial revolution which was based on electromagnetism and robert maxwell's wonderful equations that unified electricity and magnetism and allowed for things like the telegraph the telephone electricity power generation the light bulb and so on to create the megaphone because when edison created his conglomerate that was the first time we had a networked firm a firm that produced everything from the power plant generating the electricity all the way to the light bulb that's a network these mega firms to be financed required mega banks that would provide them with the money the little banks the small fragmented banking systems of the 19th century early 19th century middle 19th century were simply not enough so the mega firm required a mega bank and this new agglomeration this new network of mega firms and mega banks is the capitalism the triumphed it is not the capitalism of adam smith who romantically refers to the baker the butcher and the brewer but it is the capitalism of mega firms and mega banks this kind of network that in the mid 1960s john kenneth galbraith described brilliantly in a book that everybody should read even today called the new industrial state uh he referred to galbraith referred to this combination of mega firms and mega banks as the techno strikes the techno structure the techno structure which is effectively a centrally planned gigantic system of power that limits competitions um feather beds political campaigns effectively buys politics out controls money creation and under the guys these guys of democracy on the one hand when there is no democracy there is just oligarchy with elections and other the guys of the free market there are no free markets they're all monopolized by the techno structure you have the magnificent success of capitalism in the 1920s now the problem with mega banks is that they have a remarkable capacity to conjure up money from thin air most of our audience today knows that when a bank gives out a loan it doesn't come out of the savings of anyone it comes out of thin air when the bank of america or citibank grants you a loan of 50 000 100 000 this money doesn't exist it's simply numbers that appear on a ledger an electronic ledger on your atm screen or your web banking application once you start spending that this money these numbers go from your row on that um what is a database to the role of somebody else as long as this money generation generates new profits then the system is not a pyramid scheme but the more successful it is at generating new value the banking system the commercial banking system finds it even more profitable to generate even more paper money to conjure up even more greater larger taller mountain ranges of privately minted money at some point this just collapses this is 1929. after 1929 did what did we have the new deal in the united states from 1933 which then morphed in 1944 with the bretton woods conference into a global new deal with political force used in order to keep bankers effectively neutered a system of a global plan with the dollar at its center run from washington dc internationally which collapsed in 1971 why because the united states lost its surpluses trade surpluses and by that time it was impossible to maintain the hegemony of effectively a single currency international capital system and then we go from the global plan era of the 1950s and 60s into what i call the global minitor era you need to have read my book in order to see why i'm calling that so just forget it for a moment what we have is a remarkable period between the 1970s and 2008 when the united states from being a surplus country becomes a deficit country steps on the accelerator boosts its taxes magnificently and you have the united states economy operating like a huge vacuum cleaner that sucks into the territory of the united states both the net exports of china and of course that before that of germany of japan and so on and 70 of the profits of these foreign capitalists on top of that tsunami of money coming to wall street you had financialization you gave a few billion dollars to a banker to play with every day for five minutes to find ways of making this grow for themselves it's those paper you know paper tigers or houses of cards that collapsed in our generations 1929 which take place took place in 2008. after 2008 capitalism changed drastically in their attempt to reflow the crashed financial system central banks channeled rivers of cheap debt money to the financial sector while fiscal austerity limited the public's demand for goods and services unable to profit from austerity hit consumers in the states in greece and germany corporations and finances were hooked up to the central banks to that constant drip feed of debt that central banks were producing on behalf of corporations that were becoming zombified and then in 2020 covet 19 came along profit 19 found capitalism in this zombified state with consumption and production hit at once governments must now replace all incomes to a gargantuan extent the way things are going the zombification of banks and corporations that we've been experiencing since 2008 will engulf the rest of the capitalist economy the necessary condition for avoiding this is a massive restructuring of public and private debts which of course our oligarchy regimes are going to fight to nail against so the point i want to leave you with and with which maybe you can start a conversation is that post capitalism is already happening my difference with fellow leftists is that i do not believe that there is any guarantee that what comes after capitalism is necessarily going to be a good thing it could prove very dystopic can you imagine conditions that may prove sufficient for post capitalism to be good allow me to finish with a speculative and controversial statement that will only happen markets can only begin to function in the public interest if on the one hand we terminate share markets terminate them not regulate them terminate share markets and terminate not regulate terminate labor markets while at the same time we terminate commercial banking and having the fed or the ecb or the bank of england central banks granting everyone a digital account with a central bank wow uh thank you for that incredibly rapid fire trip from feudalism to our present dystopic moment and i want to start with the present dystopic moment because and the current degenerate state of capitalism which is somehow just far more degenerate than the last time we spoke a few years ago in new york because in fact we cannot even be together in person today in santa fe as planned because things have gotten so profoundly dystopic so to start and you reference this tweet and i have the text of it here you wrote uh financial capitalism is decoupled from the capitalist economy skyrocketing out of earth's orbit leaving behind it broken lives and dreams as the uk sinks into the worst recession ever and us edges towards failed state status edges the ftse 100 goes up two percent and the s p 500 breaks all time record how how does a materialist analysis account for this is this the inevitable trajectory of finance within capitalism or does it have to do with the function of finances finance and the role of finance within this very particular political economic conjunction oh my analysis is 100 materialist except that capitalism deals not in material goods anymore it deals always has dealt in fictitious capital that has been its power that's why you see i i made the point that when we shifted from fidelity capitalism that was no longer a repercussion of social relations of production and distribution but became a prerequisite what really unleashed huge productive powers you know from the steam engine driven textile factories to today's apple and google has been this reversal that that comes first in another book that i wrote addressing my daughter it's called talking to my daughter about the economy i try to explain it as as follows it is as if the banker operating on behalf of the capitalist pushes his hand i'm going to use his not his or hers his hand through the a membrane which divides the present from the future reaches his hand reaches into the future grabs value that has not been created yet brings it to the present and lends it to capitalists to invest into you know technologies machines robots and so on to produce this value and return into the future and this has been incredibly progressive and created remarkable new wealth as well as new forms of depravity uh this has been the triumph of capitalism over the last 200 years but the tragedy here is and this is a bit like a shakespearean tragedy or an ancient greek sophocles like tragedy that the more successful it is the greater the incentive of the banker to keep reaching into the future for more value to bring to the present when the present at some point runs out of a capacity to convert it into value and therefore to repay the future and that's when a crisis happens and when the crisis happens the state steps in and bails out the bankers if it doesn't bail out the bank as in 1929 at the present hoover the whole thing collapses uh until something is done in the only difference with 2008 between 1929 and 2008 is that in 2008 that didn't make the same mistake they bailed out the bankers which is not a good thing they should have bailed out the banks but not the bankers but that's politics the fact is that they bailed out the bankers and then what's the difference between what's the difference between 2020 then and 2008 and in 1929 if this is a more qualitatively unique decoupling why if this is an inherent contradiction in capitalism between between finance and the real uh economy what's what's happening now that that you think is different you see i'm one of the few people who think that 2020 is not that significant i think the significant dates uh for capitalism were 1929 and 2008. in 2008 we had the bailing out of the banks which effectively what it did was it zombified the banks they are neither they were neither dead nor alive they were drip fed by public money okay and what happened was that this zombification of the banks between 2008 and 2020 led to the simplification of the whole of corporate capitalism and let me give an example because i'd like to speak in practical terms right go back to 2009 april 2009 barack obama is in the white house the first g20 meeting happens when the central bankers of the world gather together and they decide to act to save bankers around the world and they did this magnificently you know the fed bank of england banks japan the swiss national bank the the central bank of sweden the european central bank they all pumped money and gave it to the bankers and they refloated them at the same time they practiced austerity on the many including barack obama because obama's so-called um stimulus program was not a stimulus program in the end they were you know hundreds of billions supposedly but if you add the austerity of the states the state budgets were shrinking if you look at both federal governments for the federal government's budget and the state's government you add up together in the united states you had a small amount of austerity in europe you had a huge amount of austerity so what does this mean i mean imagine you're you're you know a banker you've received all these billions uh or trillions for that matter from the central banks and you you know the west nightmare of a banker is to have money that you can't lend right not being able to lend the money that you have this is the nightmare of a banker so you look at it and you look you look at the little people you say i'm not giving them money because they are suffering austerity they won't be able to repay me the so i'll give it to the corporations to apple to google to volkswagen to general electric to aston and so on now the board of directors of these large corporations look at out there to the living people at the lead between and they think the same you know if we what's the point of investing in new jobs and new production lines and new products when the little people out there won't be able to buy the stuff so what do they do they say okay they when they get that telephone call from deutsche bank or from citibank or from jp morgan and the banker says i've got lots of money for you do you want to to borrow it you say yeah okay give it to me it's cheap money it's free money it was coming at zero interest rates so why say no to it and what do you do with it you do not invest in good quality jobs in green technologies in hiring people you take the money and you go to wall street and you buy back the shares of your own company because that way the share price goes up your bonus as a member of the board of director ceo whatever of the company is linked to the share price so you're doing really very well why invest okay now that's what has been happening since between 2008 and 2020. so by 2020 by the time that stupid piece of rna not even dna hit humanity this zombified banking system had zombified the whole of the corporate world in the united states in germany in france in britain all these large corporations survived and their share prices were really going up all this time because of this drip feed connecting central banks to private banks private banks to corporations while everybody else was suffering austerity so the bubble bursts with covered 19 right this huge bubble now because in 2008 the bubble was confined within the financial sector in 2020 the bubble had become gargantuan and had engulfed the whole of the corporate sector even the oil industry so kobe 19 comes like a pin that pricks this gigantic bubble and the fed the ecb you know they have one instrument the same that they started using since 2008 which is to print money and they float the you know the bubbles that burst only this time the bubbles are much greater than they were in 2008. so the difference between 2018 2020 it's not a qualitative one in my view it is one of scale of course you know quantity leads to quality as hegel has taught those of us who you know hark back to that dialectical tradition um and now we have a situation where the increase in the quantity of money that the fed the european central bank and so on have decided upon and have injected into corporates is just 10 times as large as in 2008 so this is why you have the s p 500 reaching its all-time records because the people who play in the stock exchange in washington they don't give a damn anymore about what happens to the companies they know that even if general motors yeah thanks and nobody buys a single car the general motors board of director will get a huge amount of money from jp morgan which will get a huge amount of money from the fed so they will go into the stock exchange and boost the share price of general motors up independently of profits independent of how many cars are sold so this is the decoupling that i'm talking about now for how long can this last this is a political question you see bubbles burst but how long does it take before the burst john marion keynes had a fantastic expression he once said that the market can stay rational longer than i can stay solvent so you know this bubble can continue for now five years 10 years 20 years who knows but it is the politics that matters because as this bubble is constantly being refloated and the decoupling of financial markets from the real world continues the inequality becomes just unbearable you have people now in the united states people in britain people in greece people in germany who simply you know they used to be two paychecks away from penury now they're well immersed in while the good people in wall street you know they are thinking of what they're going to do with their huge profits at some point the politics will break the prob something we need will give and it is in my estimation that it will be the politics now the politics can give in two ways one is a massive boost of what i call the nationalist international or the neo-fascist international led by donald trump uh but also with bolsonaro modi um the ultralight in in europe or it will have to lead to a progressive movement which does not exist yet some of us are trying to put it together with you may have heard of you may have heard of the progressive international that um some of us are trying to uh turn into a real worldwide movement either something like that is going to create a genuine green new deal for the world not simply in terms of financing the green transition and good quality jobs and a shift of wealth from the global north to the global south all these things are essential but i don't think they are any longer sufficient we need to you know to become even more ambitious and talk about post capitalism i i don't want to bury the the lead of something pretty remarkable you said a few minutes ago which is that you are one of the few people who doesn't believe 2020 matters is what you mean by that that it doesn't matter the way that people think it does that it matters more as an acute crisis that's greatest import is that it's exposed and manifest a more generalized crisis in waiting that pre-existed coven 19 is that is that what you're saying yes i think look it's i'm not saying that 2020 does not matter it might it matters hugely but it is not a cool let's call uh if you want a discontinuity in the history of capitalism the way 2008 was 2008 was a discontinuity in the history of capitalism the same way in the same way that 1929 was in 2008 that discontinuity caused central banks and governments to adopt the policy of socialism for the few the zombification of corporates and banks and australia for the money and that bloated capitalism with unsustainable debt zombified the corporates created huge inequalities and that's when 2020 came which was a much greater crisis than 2008 in terms of quantity because if you look at the you know the collapse in gdp for instance it's much greater in 2020 than it was in 2008. but it's a quantitative shock compared to 2008 which was a historic shift so 2008 was smaller in magnitude but more significant in terms of its historical transformation it led to a gigantic battle bubble which burst magnificently now with 2020 so the the the volume of the crisis now is much greater yeah but the reason why it is so great is because of what happened in 2008 so future historians i think are going to mark 2008 as the moment when capitalism begun to effectively transform itself in a totally unsustainable system and manner and 2020 was the the final straw that's really fascinating and what's terrifying about that analysis though is that these sort of post 2008-2020 moments might just keep coming and coming what what does the economic and political response that you've seen to to covid both as a public health and economic crisis so far around the world what does that tell you about how the global the various global elites might handle an era of more pandemics and mass disruption caused by climate change that were that we're already experiencing well but i find very interesting since you're asking me to comment on the way they're handling it but the politics yeah the economics is straightforward they are just using their rulebook of 2009 uh turbocharging it through quantitative easing they're not doing anything more beyond that of course they the furlough scheme and all those things are just proof that neoliberals never meant it when they were admonishing the state when ronald reagan was saying that you know the most terrifying words in the english language are you know i come from the state and i'm here to help you he didn't really mean it it was just an erratical flourish right um the newly burials always left the state more powerful than they found it uh except that the power of the state that they invested in was uh powered in favor of the oligarchy not of the the whole polloi right that's so neoliberal is a complete hypocrisy in the same way that marxists were hypocrites under the soviet union which had nothing to do with uh socialism um so um yeah i mean what i find fascinating about men and women in authority is the way in which they adapted so quickly to a new situation a situation where the government is very clearly capable powerful you remember up until kobe 19 came along uh there were the conventional wisdom was that you know governments are not that powerful uh i remember you remember bill clinton saying that he wants to come back as uh the bond market because apparently this big government is over yeah so the the the myth of the radical center which dominated both in europe and the united states until barack obama the myth that you know there's not so much the government can do you know now we live in a world which you know is globalized it's all under the spell of economic forces beyond our control what we need to do is you know cajole them and channel them and stroke them and be nice to them and you know be realistic and not try to to to behave as if the state can do stuff that went overnight suddenly you know the government steps in and says okay uh you can't go to a concert you can't get out of your house we're going to tell you how to breathe when to breathe where to breathe right i'm not criticizing the lockdown what i'm saying is that suddenly the government comes and tells you what to do at every level of life it says okay the same people who used to say that you know a tiny little increase in the budget for education or the health care would be catastrophic will end america as we know it yeah suddenly they say okay let's create 10 trillion and they argue whether it should be 10 or 15 you know and they take over the labor market and they they pay people's wages in britain between 80 and 100 of wages have been paid by the government the bank of england suddenly announces that you know what don't worry about that um we will buy the government debt primary market buying something that had never said you know they were um insisting was impossible if this ever happens then the banking system will collapse wait it happened it didn't collapse the bank system is doing really very well there's a distinction between the u.s and europe here right where like the fed uh is is acting in in the u.s but a lot of the other branches of government really believe their own propaganda and we are experiencing a total inability of of congress to pass to extend very basic um a very basic extension of unemployment benefits thanks to senate republicans you know my fellow americans my friends in america i mean right don't sound like an american president but my friends in america live under this touching illusion that europe is so much much better the united states folks have got bad news it isn't because yes i mean the difference between state governments in the united states and our national nation-state governments in the eurozone is that yes you have some real idiots running state governments in the united states believing their own rhetoric um in europe is worse because we have nation-states that have absolutely no power you know i live in um in a colony of the european central bank it doesn't matter who is the prime minister of greece they don't have access to monetary policy they don't have access to fiscal policy they don't even have access to health policy you know we have had over after 10 years of stringent austerity we've lost um 25 of doctors in the last 10 years through immigration in the last two years 50 percent of our medical school graduates are leaving the country now think about that for a country like greece that puts all this money into educating doctors but then immediately go to canada germany new zealand and they you know they they serve the public health service or the private health service there uh imagine the the waste of human capital by the greek state and there's nothing the greek state can do to hire a few more doctors here you know as a party leader i go from hospital to hospital and they are totally depleted they're you know the usual heroes and heroines doing remarkable work um some of them haven't been home for three or four days and nights because there is enough stuff and the greek government cannot hire anyone so it's the differences between the united states and europe are not as great as the liberal imagination in the united states would have it the escapist liberal imagination here is is vast the recurrent pledges amongst uh the affluent liberal elite to move to canada if x y or z happens um but let's talk about about europe um specifically the 750 billion euro post-pandemic eu recovery fund which you've been writing a lot about recently and northern european governments hate it which might lead one to conclude that it's a good thing this crossing of of what seemed to be such a a red line around the mutualization of of european debt seems significant and and hopeful to a lot of people um but but not to you uh even though as you write it is quote the first time eu leaders seem to have acknowledged the indispensability of a common debt as the glue of any monetary union but you're deeply skeptical why why don't you see this as a turning point towards a true fiscal union and instead you see it and instead see it as the next step towards the obliteration of the eu okay allow me to answer by recasting this agreement eu agreement in u.s terms imagine you lived in in the united states in which there was no federal government no federal treasury but there was a fed which was not allowed to bail out arizona or missouri right or the banks of arizona for that matter imagine further that you know in 2008 the great state of nevada which is more or less the same size as ireland in terms of population also a state based on low corporate taxation on a lot of you know construction right nevada and ireland similar not in weather not in culture but at least in these financial and economic terms right imagine if the great state of nevada when everything collapsed in 2008 when real estate went to the dogs when banks went to the dogs imagine if the the governor of nevada had to borrow in the international markets to bail out the banks of nevada and to pay for the unemployment benefits of the construction workers in las vegas and wherever it is that they are building stuff okay then immediately what will happen is of course the state of nevada would be bankrupt and if um the the then the governor of nevada had to go to the to the international monetary fund and get a loan from the imf on conditions of austerity that slash uh wages slash pensions in nevada then that would drive half of the nevadans out of nevada and you know the state would be even more bankrupt okay this is what happened between 2010 and 2020 in europe because you know what i described now is very much the way in which the eurozone the european union's monetary area common area where the euro is the currency uh functions imagine that 10 years afterwards or 12 years after us you know kobe 19 comes to this kind of the united states and the great and the good leaders of the states get together and agree that it's time that we had common debt and that we transfer some money between ourselves but imagine that instead of the seven eight nine percent of gdp which the federal government that you now have is uh using as a fiscal stimulus they agreed on a 0.7 percent now not 7 0.7 the first thing you'd say is guys too little too late first secondly even worse than that even worse imagine if the agreement was the following the governors of the states would sit around a very large oval table and they would come to an agreement on raising a common debt common debt they claimed it's 750 billion but when we looked at the numbers it was 310 which is again much smaller than advertised but besides that besides that and they agreed in advance how they would allocate this money how much arizona would get how much missouri would get how much oklahoma would get before you know what the impact of covet 19 is both on the health services and the economies of this country of country states and new york state and california which are donors because they are richer would have to agree on how much debt to take on on behalf of missouri right before having the data you know what if the governor of california or the of new york state said sorry mate i'm not agreeing with this i would not necessarily take shots of them you know similarly when the dutch prime minister who is not microsoft and he's not on the same side of the political spectrum as i am you can imagine that that's an understatement but developers have some sympathy for him when he says you know don't talk to me about solidarity you know because if if you if the italians and the greeks won't solidarity for me okay i will reach into my pocket to find what money i have and i'll give it to you that's what solidarity means from my savings i'll give you some money but solidarity does not impose upon me the moral duty to go into a bank together with you and get out a joint loan that's not what solidarity asks me to do so you know piss off excuse the french i don't know what it is in dutch right again i agree with him because the issue is not solidarity the issue is common sense you see the beauty of a federal system of a genuine fiscal union is that it is automated that the fiscal stimulus is automated at least its first stage so in 2008 going back to my nevada versus ireland example you know the governor of nevada didn't have to negotiate with anyone what happened is automatically the fdic the fed took over the failed banks of nevada sold some of them closed some of them you know merged others refloated or bailed out the remainder the state of nevada had nothing to do with that they didn't pay for it the nevadans didn't pay for it it was a fed that they will cut as for the employment benefits and you know medicare and social security those were paid automatically by californians or new yorkers but without any political huggling of who gets what and who borrows in order to lend to somebody else because if you had that process of political haggling in the united states i can tell you the united states would enter a new civil war that would have made the 1860s version look like you know a walk in the in the garden so you will excuse me i'm not going to celebrate these kinds of ridiculous agreements by the eu especially when they not don't discuss the elephant in the room which is what you know they okay they've agreed to share 310 misery billions 0.65 of gdp nothing yeah it's not even worth talking about it from a macroeconomic point of view but while we've been having these discussions about an insignificant amount that is going to be delivered by means of a formula that effectively divides the continent they're not talking about the real threat you know we have a tsunami coming our way and everybody's ignoring it that's the the tsunami in the room or the elephant even and that's austerity because you know next year the greek government italian government the spanish government will have to balance their budgets because like in the united states where the states must balance their budgets we have a similarly stupid rule here right what does this mean it means you know my our government here is going to end same in italy we're going to have a budget deficit of 15 of gdp to go from minus 15 to zero you need austerity of at least at least 10 percent cuts pension cuts wage cuts you know reductions in investment in the health service of 10 of gdp now that's going to be like you know the m the time when hopefully in 2021 the greeks the spaniards the italians the germans are going are going to be raising themselves from this mire of covet 19 induced recession and then what will happen a huge hammer sledgehammer is going to hit them of austerity coming from the silly fiscal rules so no this is another dereliction of duty by the european union my message to my friends in america is stop celebrating europe as the way forward it is not you have a huge mess in the united states but so do we i'm uh i'm being pushed to go to audience uh questions but i'm going rogue and asking you one one more of my own um on this on this subject uh you wrote recently quote it is against this backdrop of high and rising inequality that the mood of the german public must be understood in particular resistance in particular popular resistance to the idea of a eurozone fiscal union german workers who are increasingly struggling to make ends meet understandably refuse to endorse the idea of huge amounts of money being constantly channeled to citizens of other countries this reminds me of the situation in the u.s where where wage stagnations decades of wage stagnations for workers across the board have created this fertile environment for attacks on public sector unions and welfare recipients and anyone considered to be free riders or moochers so my question is before we move on to audience questions how can the left confront this by linking up international redistributionist politics in in the european context to to domestic internal redistributionist politics so that workers in one european country aren't pitted against workers in the other because that's currently quite the opposite of the way that things are functioning when neoliberalism runs into nationalism you mentioned kindly the party that i lead in the greek parliament meri25 now what is unique about merit25 is it belongs completely belongs not affiliated to it belongs to a pan-european movement which is called dm-25 diem and mera mean the same thing in latin and in greek and we made the point of this of starting that movement in berlin in february of 2016 to signify what this is not a clash between the north of the south between the germans and the greeks the italians of the dutch this is a clash between the oligarchy sons without frontiers and knowledge which are greek the germans they love each other they are very solidistic one towards one another as you know they are the enemy and they are the enemy of the greeks the germans the dutch workers you know the high poly of our different countries and the point i made in the article in the guardian that again you kindly read out is that this idea that germany is going to be pouring money to be giving to greece is abhorrent from a left-wing progressive position because i don't want the holy grail the greek oligarchy to get a single penny raised by german workers in the international money markets why should a greek oligarchy be given money by german workers and united german workers that are going to be uh taking on their shoulders this extra german debt it's not going to be the german oligarchy because they have cayman islands accounts that they don't pay anything and that is not a good foundation for solidarity we want solidarity yeah together with our german comrades that belong to the same pan-european transnational movement dm25 we we have a party in germany we have a party in greece we have a party in france and so on what we are trying to educate the german workers and the greek workers and the dutch workers and the italian workers is that what really matt what is of the essence today is to have a fiscal union such that the rich families of the greeks the germans the dutch and so on subsidize the poor families in every country not the rich countries the poor countries and i think once you start saying this to people even people in germany and that will hear you know greece no they are all lazy gits you know um playing the bouzouki under the sun suddenly they realize that you have a point and it is the only way of building international solidarity um i'm gonna move on to audience questions uh first there i have two related questions from stephen j cleese um and john wahaskee and i apologize if i'm butchering the pronunciation of anyone's name um what happens when we terminate labor markets like you called for earlier what's what's the alternative and secondly do you view your prescription of of the term for the termination of labor markets and markets as the second question is not idiomatic so i'm going to just uh what happens when we terminate labor markets okay well the only way to terminate labor markets is if you can imagine a world in which shares operate like library cards in universities in colleges so when you enter a college right you're given a library card at registration it gives you rights you can borrow books you can it acts as an id you don't buy it and you certainly can't sell it and you can't rent it to anyone so imagine that shares operated like library cards you get hired by a corporation and you get given one share that gives you one vote for every decision made by the firm it doesn't mean that everybody is equal in terms of pay because you can design wonderful bonus payment systems where the majority decides um an algorithm by which some people who whom the rest of the corporation believe are contributing more to the corporation get much more much better rewarded than everybody else there is a basic income for everyone and on top of that you can have very large bonuses and you know when you leave the company you take that share with you and you take the capital that has accrued to you and then you move to another company either you create one um on your own could be a single person company or you can come together with others create a new company everybody chips in their shares but then everybody has one vote in that new company um and um or you move to another corporation another corporation hires you that that is that's the way to end the share market the share market and the labor market at once because suddenly there's no share market like there's no library card market and there's no labor market because suddenly everybody's a partner in the corporation to which they contribute their labor um i i apologize for maligning the second question it was because i was uh just getting this on my phone and misread share as a as a verb when it was as a noun so if i will read that question now which is a good follow-up to that do you view your prescription for the termination of labor markets and share markets as specific to advanced capitalist economies such as japan or the us or broadly applicable across the world i think it's broadly applicable to the whole world but the way that it will be applied will have to cater for different social conventions by the way it's not in order to improve capitalism in order to support capital not transcend capitalists because capitalism is a is not defined by markets every society in the history of the world had markets what makes capitalism capitalism is the co-modification of labor the fact that there is a labor market and the fact that there is a capital market that is what differentiates capitalism from feudalism from slave ownership and so on and it is what is going to differentiate it from post capitalism the world in which i just very very briefly described um but i've been doing a lot of thinking about this over the last couple of years what i call post-capitalism the world that i'm describing doesn't have a labor market in it it has labor it has markets it doesn't have labor markets um from mark forlenza and this is a spicy one does modern monetary theory extend the size and life of the bubble or does it help control the damage caused by its bursting mmt is the theory it's not a policy which means that it it depends on how you use it it's like an instrument that how you use an instrument um is going to determine the result it is a very useful instrument for the united states effectively what it says is that um money is crea it acknowledges that money is created out of thin air which is fine don't panic about it you know overcome the delusion that money should be a commodity like gold or stones or salt or you know a piece of a string of zeros and ones as in bitcoin it's fine that we conjure up money the question is how do we use the money that we conjure up do we use it in order to give it to the bankers to give it to the corporates who already have a lot of money stashed away so that they can buy back their own shares and create a greater inequality and destroy the opportunity of humanity to combat uh social crisis as well as climate change do you want to use it this way this is because you know uh financialized capitalism is very respectful of mmd they they show they have no compunction in printing loads of money when it suits the oligarchy what m tears however say like people you know my friends stephanie kelton and others is that in a place like the united states where um you have a central bank controlling the production of public money the dollar and where debt is denominated in that currency not in a foreign currency uh then you can you know you can print as much money as you want in order to create jobs and you can provide a job guarantee for all americans and then there will be no inflation if the the jobs that you create this way push out goods and services so that the quantity of money goes up but so does the quantity of goods and services so the balance between money and goods is not disturbed but you have a lot more goods and a lot more services and a lot more welfare and well-being so it it's a theory it's a question of how we press it into practice a follow a brief follow-up on that to what extent is mmt's application peculiar to the united states given the unique global position of the dollar well it is pretty um peculiar to the united states the exorbitant power of the dollar helps mmd gives you a lot more room for maneuver as it does today but primarily what makes the difference is what currency is your debt denominated in so all american debt is denominated in dollars so there's no way americans can go bankrupt because you control the currency in which you owe money so you know there's no reason why you should ever go bankrupt unless you choose to right unless donald trump says i'm not paying off the bonds that the treasury bills that the chinese have purchased but that's a political decision it's not because you have to but if you're a turkey or greece for that matter coming to you know my neck of the woods here uh greece does not control its currency we have the euro the euro is not controlled by the great government or by a greek central bank it's like a foreign currency all our debt is in euros so we can't print it same with turkey turkey has its own currency but most of its debt is in euros and dollars so um it doesn't help to pump up the quantity of terrorist leader when you know your uh uh your lender has come asking for euros and dollars the same would apply to argentina's situation right now yeah exactly exactly the same thing um this is from uh music one two three okay music one two three if private property and commodification of land are the root of the debt problem which is important in the context of u.s colonialism by which i think they're referring to settler colonialism in the us how does our relationship to land have to change post-capitalism that's a very difficult and good question here is a very quick and you know dirty answer how about every county um splitting the land between two zones one is a commercial zone and another is a social zone you use on a democratic basis you make decisions about how you're going to utilize the commercial zone in order to create a rents which you then invest into the social zone the whole land remains public but the use of land tenure is granted in both the commercial zone uh to those who can afford it and for free within the social zone so this is an example of how you can democratize land because unless we do we are allowing the worst kind of monopoly monopoly that even liberals disdained over decades and centuries to maintain a grip over the distribution of wealth um here is the last the last question which comes from ian soroka and again apologies to everyone whose name i'm likely butchering without power we cannot institute economic policy that seems true to me can you speak to the immediate historical horizon where our political choices in the u.s do not reflect the developing struggles in the street and just to ad-lib to expand on on this question where we have are going to shortly ostensibly be seeing presidential debates between joe biden and donald trump during a period uh the same year where we've seen the largest mass protests in u.s history demanding a very different sort of direction for the country well in the same way that the financial sector is decoupled from capitalism democratic politics dominant establishment democratic politics have decoupled from social movements from the public's perception of what's going on the uh presidential debates that you're going to be facing soon are going to be soul destroying uh here you have joe biden who has never failed to be on the wrong side of important decisions over the last decades um financialization war [Music] rejection of medicare for all every single important debate where public opinion has shifted markedly in the united states joe biden has been on the wrong side of and he is the only hope and he is the only hope against the misanthrope residing in in the white house um one can only despair but look um allow me to to to look at the the hegemon from a tiny little colony of the west called greece we had a little revolution in 2015 when we won government against the oligarchy that was snuffed out within five months and those of us who were absolutely amazed to find on the 5th of july 2015 that the people of greece gave us a 62 percent support for the the radical alternative and which of course were overthrown overnight by the prime minister then forcing me to resign in others you know suddenly we found ourselves from the top of the mountain again into the troughs of hell but you know we didn't um despair we despaired for a few minutes a few days and then we started a new party and started from zero again because every generation is condemned to fight the same struggle again and again and again and in the end we have to take courage from the fact that it is the struggle that gives us strength and it's actually fun not the capitulation well thank you so much for for all that janice um this has been a really great conversation and thank you for for making time to share your perspective on everything and thanks so much to everyone who's been watching uh or who's listening later on on my podcast uh before we close i want to do a few reminders um first if you're in a position to make a donation no matter how small to haymarket it would be very appreciated so uh look in the chat for that info please visit lennon.org l-a-n-n-a-n dot org to watch and listen to other talks that are you know maybe not as great as this one but pretty pretty excellent um and please register for the following events which i'm sure will be excellent uh thursday august 20th 5 pm est the struggle for abolition from the u.s to palestine wednesday august 26th economics for the 99 percent thank you again to nicole for live captioning this event thank you to the landon foundation and hey market books for putting together this live stream and the whole discussion and thank you to everyone who tuned in and again giannis thank you very much thank you it was i mean the last time we met i was in in person was uh yeah they resulted in a great discussion this one too i hope the next time we are again in person with a proper audience not that our audience now is not proper but i can't see them i can't see you folks you know i wish i could without this kind of socialization especially those of us on the left are left bereft thank you more socializing for socialists we need you

Channel: Yanis Varoufakis

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Length: 77min 39sec (4659 seconds)

Published: Fri Aug 21 2020