Yanis Varoufakis, previous finance minister for Greece, offers insights as an economic insider about the current workings of global finance. He suggests the key challenge of our time is a lack of democracy to balance today’s unchecked capitalism. Capitalism without democratic oversight can become a very uncivilized system—brutish and destructive. This current imbalance threatens the global economy, our environment, and the future of civil society.
Capitalism is based on profit controlled by private owners instead of common need. And unfettered capitalism tends to create the extreme rich and the working poor—with a mountain of debt for the poor and a mountain of idle profit for the wealthy. If this idle (excess) profit is not returned to/invested in society then disparity and poverty grow and deepen. With this growing disparity and related instability the wealthy fear reinvesting their idle profit. And this lack of investment creates stagnant wages, lack of jobs, and further concerns about the future.
The result is low wages and unemployment with more than a quarter of 25 to 54 year-olds in America, Japan and Europe out of work. The result is low aggregate demand, which in a never-ending cycle reinforces the pessimism of the investors.
Alternatively, this idle cash, could be invested to improve lives, develop human talents, and finance green technologies, which are absolutely essential for saving planet Earth.
The separation of the economic and political spheres made democratic government possible, yet it also gave rise to an epic struggle between the two. Over time the economic sphere has eaten into the power of democratic government. We have shifted to an oligarchy of major banks and corporations—where representatives who serve big money make important decisions in backrooms. And hundreds of billions of dollars flow out of countries and end up in sheltered investments and off-shore banks—all unaccountable to the common good. We must find a way to reclaim democracy, morality and transparency, and reunite the political and economic spheres—before we end up with a nasty, brutish world.
Yanis Varoufakis, “The Sick Patient: EU between Authoritarianism and Incompetence,” Global Research, February 17, 2016, http://www.globalresearch.ca/the-sick-patient-eu-between-authoritarianism-and-incompetence-yanis-varoufakis/5508309
Yanis Varoufakis, “Capitalism Will Eat Democracy Unless We Speak Up,” TEDGlobal-Geneva, December 2015, http://www.ted.com/talks/yanis_varoufakis_capitalism_will_eat_democracy_unless_we_speak_up?language=en
“Panama Papers: Debate with Yanis Varoufakis (and Others),” The Global Herald, April 4, 2016. http://theglobalherald.com/panama-papers-debate-with-yanis-varoufakis/65260
Student Researcher: Jillian Solomon (San Francisco State University)
Faculty Evaluator: Kenn Burrows (San Francisco State University)