First published in Il Manifesto the Italian communist daily newspaper, 24 February 2015
Translation by Arianna Bove“Nothing humanizes us like aporia: that state of intense puzzlement in which we find ourselves when our certainties fall to pieces”. Such is the opening of Yanis Varoufakis’s book, The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy (Zed Books, 2011). The Chancellor of the Exchequer of Greece refers to September 2008, when the crisis of the Lehman Brothers and of a whole era, that of financial capitalism, began. But the state of aporia has certainly not dissolved; we are experiencing it in the current negotiations between Greece and the European Union, moments of ‘semantic guerrilla’, if it wasn't for what is at stake: the seizure of the time necessary to begin the process of internal reconstruction that the Greek people dramatically need. Something we all need, in fact, if it is true that the Syriza experiment, being ‘within and against’ the European monetary and financial system, represents the first attempt of verticalization of the movements, to allow for the needs, demands and aspirations to transit from the concrete and painstaking locations where they are expressed to the only adequate institutional level, the European one, where the decisive game is played. An old tactic for a new strategy, and the beginning, however extenuating, is convincing.
Beyond the crackThe Global Minotaur is a work of Marxist macroeconomics, written for an audience beyond the academia, and the result of a long project that can be traced back to the 2003 article published with the economist Joseph Halevi in Monthly Review in 2003, then turned into an academic book, in collaboration with Nicholas Theocarakis, entitled Modern Political Economics. Varoufakis's attempt to answer the question of ‘what really happened’ centres on his analysis of the fundamental disequilibrium that has historically determined different forms of geopolitico-financial governamentality. “My figurative answer is: the Crash of 2008 was what happened when a beast I call theGlobal Minotaur was wounded critically. While it ruled the planet, its iron fist was pitiless, its reign callous’ (read more here).
The Minotaur of our era begins to take shape in 1971 and can be named with certainty: it is the US twin deficits, the budget deficit of the US government and the trade deficit of the US economy. These deficits had been building up towards the end of the 1960s when American trade surplus (exports) diminished and the German and Japanese economies grew. Instead of reducing the twin deficits, in the 1970s the United States decided to turn them into a giant vacuum cleaner, to absorb capital coming from the rest of the world.
Through this prism, the author writes, ‘everything seems to make more sense: the rise of financialisation, the triumph of greed, the retreat of regulators, the domination of the Anglo-Celtic growth model; all these phenomena that typified the era suddenly appear as mere by-products of the massive capital flows necessary to feed the twin deficits of the United States’, to feed the Minotaur.
Varoufakis develops this thesis with great intelligence and elegance throughout the book, starting in the 1950s and the Plan up to the era of globalisation, from Fordism to Post-Fordism; he eviscerates all the ‘technical’ arcane of the 2008 crisis and its devastating effects on Europe. It is relevant to note that in the midst of the crisis, already from 2009, we could already find similar analyses on the pages of the Financial Times or even in The Economist. Martin Wolf, for instance, is certainly not a Marxist, but also amongst the greatest supporters of the theory of fundamental disequilibrium. In a final note, Varoufakis writes: ‘Since the defeat of the Minotaur in the crisis of 2008, everyone has recognized that global imbalances are a problem, both at the international level (China’s surplus in relation to the US and Europe), and within Europe (Germany's surplus in relation to the rest of the Euro zone)’. But a historic crisis was necessary to bring some light to the night. And yet, it does not seem sufficient.
The real puzzleNow, what happens when the ‘oppressive despot falls ill and its maids take over command?’ This is currently Europe’s problem, and in Asia, it is China’s problem. The crisis persists and is destined to last because there is no mechanism to recycle the surplus at the heart of Euroland. In the absence of such a mechanism, the imbalance between economies in surplus and countries in deficit is managed by means of the European Central Bank’s injections of liquidity that, however, do not trickle down to the real economies of deficit, and feed, instead, the financial circuit of speculation. Moreover, austerity measures augment the imbalance instead of reducing it, stalling growth and worsening poverty. Around this real puzzle revolve both Greece’s struggle to undermine this imbalance and the absence of a monetary policy with a ECB that functions like a proper central bank. And this is the epilogue of Varoufakis’s book.
At the international level, this fundamental disequilibrium does not seem to have fatally wounded the Minotaur so far. Europe currently has a trade surplus driven by exports, especially German exports (to the US, but also China and Russia). Though losing speed, China continues to export more than it imports. But, above all, these countries, instead of investing domestically, keep opting for speculative investments of their savings abroad, and the US seem to have rediscovered the game of the vacuum cleaner.
Fictitious recoveriesIn the medium term, at least, the disequilibrium is bound to get worse, because monetary policies diverge from one side of the Atlantic to the other. The United States are projected towards increasing interest rates (and thus strengthening the dollar), whilst Europe is moving towards policies of liquidity expansion (and the weakening of the Euro). According to The Economist, this time two dangers are ahead of us. In the short term: the danger consists in a fall in US export due to both the revaluation of the dollar and the low demand of importing countries such as China and Europe, and to the reduction of domestic investment, especially in the energy sector (due to low oil prices). The US recovery risks being short-lived.
In the medium term the danger is that of a return to the indebtedness of US domestic economies, which was reduced during the crisis but is increasing again, especially in the housing sector.
This eternal return of disequilibrium makes Greece’s struggle ever more important, with the reading of Varoufakis’s book.