The Crisis, especially in Europe, is all-consuming. Every day our minds are hijacked by its latest twist. Here in Athens, a general strike almost brought the government to its knees and has kick-started a process that will, inevitably, lead to what can only be described as regime change.
While history is preparing the next regime in its mysterious laboratories, it is perhaps a good moment to take pause, enter a more utopian mood, and reflect on what the Good Society may look like after the Crisis is over. Surprising as it may seem, my utopian thought takes its cue from . . . the American National Football League.
The Crash of 2008, and the economic crisis that it sparked off in the US, Europe, and elsewhere, has exposed, among other things, the irrelevance of the economists’ mindset. The simple point here is that, as economists (of almost all persuasions), we have been barking up the wrong tree. Suffice to remark on the pointlessness, in the post-2008 world, of our petty squabbles between “monetarists” and “Keynesians”; between fans of zero inflation and those against them; between advocates of microeconomic reform in the labor markets and others paying more attention to the credibility of central banks. All these debates, it turns out, were beside the point. The world was on a trajectory that moved from post-war centrally planned stability (the Bretton Woods era), to designed disintegration in the 1970s, to an intentional magnification of unsustainable imbalances in the 1980s, and, finally, to the most spectacular privatization of money in the 1990s and beyond.
Presently, the world is precariously balanced. The global economy is on the verge of a new recession, following the sovereign debt crisis that ensued in 2010, after the financial sector was propped up with public money. As it is now obvious, the late 2009 announcement that the global economy was on the mend was terribly premature. Lest we forget, even if only 25% of the income the world lost in 2008-9 proves permanent, the long-term value of that loss for humanity will come to more than 70% (some say 90%) of annual world income.
Meanwhile, no one can seek solace in the thought that the Crash of 2008 had some redemptive effects on the world economy in terms of returning us to a sounder mindset and a more stable situation. It has not! Rather, it has simply transferred more of the burdens of systemic failure on the shoulders of public authorities, which are now tempted to follow Herbert Hoover in cutting deficits at a time of looming recession. (If Mr. Schauble’s recent protestations that “private investors” must chip in for the second Greek bailout signify anything, this is it.)
Whether our leaders (especially here in Europe) remain faithful to Hoover’s risible policies, the sands of time are slipping away, bringing closer the moment when the exorbitant privilege of the United States (i.e. the dollar’s unquestionable reserve currency status) will be challenged. Ironically, for now, the dollar’s status may be the only thing that is stopping us from sliding into a new 1930s-style depression. However, the underlying imbalances are due to grow stronger, and the only way to avert a new escalation of the crisis (one that may even acquire non-economic manifestations) is a major re-jigging of world capitalism.
The Crash of 2008 was a warning of what is to come. It gave us a glimpse of the underlying reality: an international political economy torn by an ultimately geopolitical contest between surplus and deficit sovereign entities. Within those entities themselves, other, more traditional, distributional contests also remain at work, and a series of feedback effects are running backwards and forwards between the global and the local contests. The only certainty we have is that the manner in which the Crash of 2008 was dealt with, by infusions of trillions of dollars of public money, has arrested the collapse temporarily, restored the power of the financial sector, and thereby created the conditions for greater instability.
In short, the world is spinning out of control. The Fed is engaged in rearguard action to counter America’s contractionary fiscal policy, the ECB is lost in a parallel universe of its own, China is struggling to maintain growth in the context of anemic consumer spending and a real estate and banking bubble. In this climate, which is blowing heavy weather from West to East and North to South, the only remedy that can stem the forces of global recession is a generous transfer of surplus from rentiers (who have been abusing it for decades) to real producers (who can potentially harness it more effectively). In short, the only hope for a rational future is a massive transfer of social power away from the financial markets (i.e. the banks) to those who cannot be captured by them because they are too many to bribe, threaten, and extort: Global Labor.
Labor must come to see that the post-1970s variant of global capitalism (what I call the Global Minotaur) has extinguished the post-war dream of a Good Society sustained by balanced growth and social justice. The crisis of social democracy is nothing but a side effect. Neither the nation-state nor the market can help labor claim the share of the global pie that will stabilize the world we live in. The old idea that trades unions are about wrestling a higher percentage of the surplus from individual bosses is grossly inadequate. The new narrative of empowerment through education is bogus; the hope that new legislation will avert environmental disaster quixotic; the promise of progress through free trade a pipedream.
The new task ahead is as simple as it is daunting: to create a New Global Plan that shields us all from the vagaries of financialized capitalism, also known as bankruptocracy. We need to produce for the post-2008 world a new New Deal. However, this time there are no New Dealers to design it on our behalf. (Judging by what happened when there were, it is perhaps a good thing that we cannot bank on the New Dealers’ successors today.) The New Global Plan will have to be democratic, if only because nothing else seems to last. But what does democracy really mean?
It means that those who earn by actually working (and who do not rely on speculating with other people’s money or default probabilities), whether they live in the United States, China, or India, Europe or Africa, will have to have a say in the New Plan’s constitution; that on that basis they must be allowed to tap into the almost infinite wealth doing the rounds in the international capital markets daily. In the long run, there may not be another way of defusing once and for all the current Crisis and of imposing the rule of Reason on our grossly irrational market societies.
And what would the New Global Plan look like? I am tempted to use one of my all-time favorite lines: We are damned if we know! However, the world needs more than splendid indeterminacy to reclaim hope of a future worth fighting for. But is there a future socioeconomic arrangement worth fighting for? Can this question be answered in brief without instantly having the answer cast into the too-hard, too-utopian basket?
In his little book, The Meaning of Life, Terry Eagleton faced a similarly daunting task: to capture, in brief, . . . the meaning of life. His answer was: A band like the Cuban Buena Vista Social Club — that’s the meaning of life! Eagleton’s point was that such a band illustrates the dialectic at its best. A “community” with a clear, unifying tune toward which each “individual” contributes by . . . improvising. Its members do not mechanically play from some given score, written by a despotic musical mind (however brilliant that mind might be), but, rather, integrate their own private freedom into a collective pursuit which enhances the experience of each of its members. Their improvisation confirms their private freedom not by having each note whimsically selected by autonomous players but, rather, when all the various pieces of improvisation fall into place, as if by the nod of some invisible conductor.
The parable that I shall now offer for what a decent future may look like, for a social economy that is worth fighting for, also comes from the Americas: the US NFL! Think of it: The NFL is a paragon of aggressive competitiveness. On the pitch, extremely well-prepared players give their all for victory, glory, and wealth. Teams pull no punches to win. The road to the Grand Final is littered with injured bodies and broken egos, but, in the process, a great deal of satisfaction and camaraderie is shared by everyone, winners and losers, both on and off the pitch. Meanwhile, the League is based on a Central Plan. Teams cannot spend highly differential amounts on salaries and the best new players are forced to sign with the weakest teams. For the market to work, it must be severely circumscribed by the Common Pursuit. The constraints liberate the true spirit of competition, preventing the successful from monopolizing the best players and killing off the interest of most matches.
Thus, planning and competition are fused into a League that minimizes predictability and maximizes excitement. Socialist planning lives in sin with unbridled competition right under the spotlight of American show business! All we need do is think of a way to organize the game of human life along the NFL’s lines, merely substituting the goal of maximizing the audience’s excitement with that of minimizing humanity’s chances of ending up like a dim, self-defeating virus.
Yanis Varoufakis is Professor of Economic Theory and Director of the Department of Political Economy in the Faculty of Economic Sciences of the University of Athens. Varoufakis’ books include: The Global Minotaur: The True Origins of the Financial Crisis and the Future of the World Economy (Zed Books, 2011); (with S. Hargreaves-Heap) Game Theory: A Critical Text (Routledge, 2004); Foundations of Economics: A Beginner’s Companion (Routledge, 1998); and Rational Conflict (Blackwell Publishers, 1991).
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