You turn to us for voices you won't hear anywhere else.

Sign up for Democracy Now!'s Daily Digest to get our latest headlines and stories delivered to your inbox every day.

Yanis Varoufakis on Iran Nuclear Deal Demise, US Trade Negotiations, Europe’s Far Right & Capitalism

Web ExclusiveMay 14, 2018
Media Options

In Part 2 of our interview with economist Yanis Varoufakis, the former finance minister in Greece and co-founder of the Democracy in Europe Movement 2025 discusses fallout from the U.S. withdrawal from the Iran deal, U.S. trade negotiations, the rise of right-wing politicians in Europe, the Greek economy and political developments, and Bitcoin. He also discusses his new book, “Talking to My Daughter About the Economy: Or, How Capitalism Works—and How It Fails.”

Watch Part 1: Yanis Varoufakis on Lost U.S. Credibility in Middle East, from Iran Deal to Israel Embassy Move

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now!,, The War and Peace Report. I’m Amy Goodman, as we turn to Part 2 of our discussion with the former finance minister of Greece, Yanis Varoufakis. We turn to the latest economic fallout from President Trump’s announcement that he would pull the U.S. out of the landmark nuclear agreement with Iran, top White House officials making the rounds on Sunday morning news programs saying the Trump administration is not only prepared to impose sanctions on Iran, but on European companies that do business there. This is White House National Security Adviser John Bolton on CNN’s State of the Union.

JOHN BOLTON: I think the issue here is what the Europeans are going to do, if they’re going to see that it’s not in their interest to stay in the deal. We’re going to have to watch what the Iranians do. They’d love to stay in the deal. Why shouldn’t they? They got everything they wanted from the Obama administration. But I think the Europeans will see that it’s in their interest, ultimately, to come along with us.

AMY GOODMAN: So you have this extremely provocative act of the Trump administration pulling the United States out of the Iran nuclear deal, at the same time that the Trump administration has moved the U.S. Embassy from Tel Aviv to Jerusalem—I mean, actually not officially, because it’s not been fully built yet, but the ceremony is happening today in Jerusalem. And you have the Israeli military at the same time in Gaza once again opening fire in the deadliest day of attacks on Palestinians. It’s believed, at least at the count of this broadcast, something like 37 Palestinians have been killed just today, as they engage in nonviolent protest on the border with Israel, bringing the total to well over 80 since March 30th, as these systematic nonviolent protests have been ongoing, leading up to the 70th anniversary of the founding of Israel this week, which Palestinians call the Nakba because of the mass displacement of hundreds of thousands of Palestinians.

We’re joined by, yes, as I said, here in New York, the former Greek finance minister, Yanis Varoufakis, who was the chief negotiator of Greece’s bailout with the European Union and International Monetary Fund. He has a new book out. It’s titled Talking to My Daughter About the Economy: Or, How Capitalism Works—and How It Fails. Yanis Varoufakis served as finance minister in Greece in 2015, before resigning from the Syriza government. He’s also co-founder of DiEM25—that’s Democracy in Europe Movement 2025. It’s a grassroots movement to strengthen democracy throughout Europe.

Welcome back to Democracy Now! I’m glad you stayed with us for this Part 2. But I wanted to—before we talk about your book, in Part 1 of this conversation, you talked about President Trump really going after Angela Merkel, when it came to pulling out of the Iran nuclear deal. How do you see it in that way?

YANIS VAROUFAKIS: Well, Trump has never made any bones about it. He was always targeting the German trade surplus with—vis-à-vis the United States, and also the Chinese one. He has a mercantilist view. But so does the German government, in a sense. So there’s a clash there. And the combination of giving massive tax cuts to German companies and, at the same time—that’s a carrot. And then the stick is that if they continue to do business in Iran, effectively, they will be frozen out. This combination is effectively rubbing Angela Merkel’s nose in her own helplessness to impose the European Union’s policies on Iran, because, effectively, German business turns around to the German government and say, “You cannot protect us from Trump. We’re going to pull out of Iran, and we’re going to do more business in the United States.” So, that is a victory for Trump, but it’s a very short-term victory.

AMY GOODMAN: I wanted to go to German Chancellor Angela Merkel, who was awarded the Franciscan Lamp of Peace in Assisi, Italy, Saturday. In her acceptance speech, Merkel said Trump’s decision to pull the U.S. out of the nuclear deal made things more tense in the Middle East.

CHANCELLOR ANGELA MERKEL: [translated] Sometimes it’s not even about the people in Syria anymore. And that is why today’s award is aimed at bringing me and the other European leaders and countries closer to find a solution for this conflict. And with the U.S. pullout of the nuclear deal, the situation has become even more tense. We are following the events between Iran and Israel. And for the background of German history and the background that Israel’s security is a reason of state for Germany, we are urged to play a strong and committed role in resolving this conflict. But we are only going to be able to do that if we can develop the European Union. One country alone in Europe cannot act on it. And that is why we need to work together.

AMY GOODMAN: That’s German Chancellor Angela Merkel just on Saturday. Now, Yanis Varoufakis, you—there is no love lost between the two of you. You were the Greek finance minister, fighting the imposition of the IMF and Europe of austerity on your country, on Greece.

YANIS VAROUFAKIS: Fighting against the great depression in Greece and the conditions that reproduce it.

AMY GOODMAN: And so, how do you see Angela Merkel today?

YANIS VAROUFAKIS: As a tragic figure. I have no personal animosity towards her. I actually quite like her, personally. Remember, in 2015, in the summer, when the Syrian refugees started streaming into Greece and into Europe. She did something quite remarkable, especially for a right-wing leader. She threw the borders of Germany open and welcomed them. And that was a magnificent—I felt very proud to be European and very proud of her at that moment. Of course, three weeks later, she realized that she was going to be overthrown by her own party, and she turned around and flipped and did something quite nasty. She had got into—proverbially, into bed with the president of Turkey, effectively bribing the president of Turkey, Mr. Erdogan, to the tune of $6-$7 billion, so that Turkey would allow us Europeans to violate all principles of international law on refugees. So, she’s—you know, she can do the right thing, and then she can do the wrong thing.

But the reason why I’m saying that she’s a tragic figure—I mean, you heard her say that we have to be united in Europe in order to have an impact on Middle East peace, on world affairs, to put our house in order in Europe. That is correct. But every single time that she had an opportunity, since 2010, to get Europe to pull together, she’s always undermined it by imposing austerity, the worst austerity, on the most depressed economies around Europe, therefore destroying the bonds of solidarity and wrecking the European Union, effectively. So, today, she is the most weak chancellor Germany has ever had, even though she started off her career as being the most powerful one. And that’s—you know, that’s the stuff of tragedy, isn’t it?

AMY GOODMAN: And how does Greece fit into the story of the destabilization of the Middle East right now, from Iran to Israel and Gaza to the Occupied Territories?

YANIS VAROUFAKIS: The European Union, if it were united, if we had a foreign policy, which we don’t—you put the words “European,” “foreign” and “policy” together, and you end up with a joke. But if we were united and had that foreign policy, we could be a bulwark. We could be a counterbalancing force to Donald Trump. But we’re not. Already Trump has been very successful in the way that he’s divided Macron and Merkel, the French president and the German chancellor.

AMY GOODMAN: Who both came to—

YANIS VAROUFAKIS: Who both came to the United States.

AMY GOODMAN: —the United States the same week. Hardly anyone knew Merkel was there.

YANIS VAROUFAKIS: And, effectively, what Trump told Macron was, “I don’t have a problem with you, because you don’t have a trade surplus with the United States.” And Macron turned around and said, “Well, there’s not much he can do against us, because we don’t have a trade surplus with him.” So, the divide-and-rule policy has actually worked, and the European Union is completely and utterly powerless, and therefore it cannot be a good force, in the Middle East or anywhere else in the world.

Now, where does Greece come in? Greece, in 2010, was the first domino that fell in a vicious domino effect dynamic that led to the disintegration—to the economic disintegration and fragmentation of the European Union. The way in which flimsy, little Greece was treated, with the worst combination of austerity and loans for the banking system, poisoned the democratic and economic dynamics with the European Union. So, the fact that we are not united now is a result of the policies that were first tried out in this dystopian laboratory, which is Greece, before exported to Italy, to Spain, to Ireland, eventually to France, leading to the fragmentation of the European Union, which now has rendered the EU and Angela Merkel impotent.

AMY GOODMAN: Yanis Varoufakis, again, before we talk about you talking to your daughter about the economy, can you make sense of what is happening now in this week of trade talks between China and the United States, which actually is very significant for the U.S.-North Korea summit that’s going to take place in Singapore, people might not realize, but how this Chinese company, ZTE, fits into this, President Trump saying he’s working to prevent the collapse of the Chinese electronics company ZTE, which has admitted to violating U.S. sanctions against Iran? Now, fascinatingly, the U.S. is saying they’re going to impose sanctions on European companies who do business with Iran. But he’s saying he wants to drop sanctions again ZTE, allow it to thrive, to save Chinese jobs, he says. Explain how this all fits together.

YANIS VAROUFAKIS: Trump operates on the basis of an imminent threat. He wants to create an environment in which his interlocutors, whether they are German companies or German chancellor or the Chinese companies, Chinese government, or North Korea, for that matter, think that he may strike at any time, that there is an imminent threat, like, you know, the sword of Damocles hanging over their head, so that they are constantly on the defensive, and then he can choose when he makes the offer of a deal, you know, the art of his—you know, his famous art-of-the-deal offer.

But when it comes to China, I think that the real game that we should focus our attention upon is not steel imports or exports. It’s not aluminum. It’s not the things that he’s talking about. The main game in China, as far as Trump is concerned, is the massive profits of high-tech companies that China has developed in opposition or in competition with Google, with Facebook, with Amazon, because, as we all know, the Chinese have effectively not allowed these big tech American, Silicon Valley-based industries to move to China, and they’ve developed their own. So China is the only economy that has developed a competitor to Silicon Valley. And the potential profits of those are gigantic. Trump wants, effectively, to end the Chinese wall that prevents those companies being taken over by Silicon Valley companies. There’s going to be a war, hopefully not a real war, but an economic and diplomatic war, and the war of words, about the profits of these companies. At least that’s my estimation.

AMY GOODMAN: And then you have the foreign minister of Iran, Zarif, meeting with Lavrov in Moscow. The significance of that alliance, and what it says to the United States, this coming right after the U.S. pulls out of the nuclear deal?

YANIS VAROUFAKIS: I don’t think there’s an alliance between Iran and Russia. And there will never be one. The two countries are—and two regimes are very skeptical of one another. But faced with a common enemy, there is always a tendency to collaborate, or at least to discuss and to coordinate.

The problem that we should be looking at, from a Western progressive perspective, is that, if you think about it, the two forces in the Middle East that helped us defeat ISIS, the fundamentalist misanthropy of ISIS, on the one hand, was Iran—without Iran, we would not have defeated ISIS—and, on the other hand, were the Kurds of Syria and Iraq. And think of how we are rewarding them. The West, through Trump, is turning against Iran, and we are also allowing the Turkish Air Force and Army, effectively, to destroy those communities of the Kurds who helped us defeat ISIS. What signal are we sending the world from now on? How can good people, like the Kurd fighters, who effectively did our dirty job for us—defeating ISIS—how are they going to look at us in the future, in future conflicts? As credible allies and collaborators? I don’t think so.

AMY GOODMAN: What do you think has to happen in Syria? What do you think will end this horrific violence?

YANIS VAROUFAKIS: I think the West has to accept that the Assad regime cannot simply be discarded, because if it is—and I’m not a supporter of the Assad regime or a defender of the Assad regime for one-hundredth of a second, but remember what happened when Gaddafi was overthrown in Libya. Libya became a failed state, and it’s a cesspool of misanthropy. There has to be an accommodation between the Assad regime and the Kurds and the anti-Assad, more democratic, not so Islamic fundamentalist forces. Not everyone is going to be part of that deal, but it has to be at least a triangle between elements of the Assad regime—even Assad himself—the Kurds and the anti-Assad fighters. But the West has to bring them together. And the West must declare that it is not there for regime change purposes in the way that we were in Iraq and in Libya, creating and paving the ground for the worst kind of misanthropic outcome, as we said—as we’ve seen both in Iraq and in Libya.

AMY GOODMAN: And what about Saudi Arabia in this picture? I mean, you have one of the worst humanitarian catastrophes in the world unfolding in Yemen right now, with the U.S.-backed Saudi bombing of Yemen. You’ve got maybe a million people who have cholera. You’ve got thousands of Yemenis who have been killed. The U.S. in a very tight alliance with Saudi Arabia.

YANIS VAROUFAKIS: Well, we have to end that. It’s very simple. DiEM25, our movement, has been campaigning, for two years now, for slapping massive sanctions on the Saudi Arabian regime, treating it as a rogue state, rogue state both domestically—the oppression of minorities, the dictatorial behavior of this government, the state of play regarding women’s role in that society—and, of course, the way in which they are exporting war, famine and devastation in Yemen, but not just in Yemen, elsewhere. The Saudi Arabian regime has been behind almost every misanthropic fundamentalist movement in the region. We need to deal with Saudi Arabia as a threat to stability and a threat to humanity, instead of dealing with them as if they are our best allies.

AMY GOODMAN: And what’s happening with Syriza in Greece today?

YANIS VAROUFAKIS: It exists only in name, ever since, in July 2015, the prime minister, and my colleague, decided to overthrow the people. We had a very interesting reversal of fate. For the first time in history, a government overthrew its people, you know, rather than the other way around. The night of the referendum, when the magnificent Greeks gave a 62 percent of backing to oppose the continued madness of our bailouts, the prime minister flipped and turned that no into a yes. Since that day, there is no Syriza government. There is a troika government. There is a government of the creditors. It’s effectively, all decisions and laws are being written in Brussels. And it’s not just that we have this kind of neocolonialism. It’s also that the laws that they write are absolutely absurd, if you think—just to give you one small example, that you are forcing small companies, you know, tiny little companies that are struggling to survive in a state of great depression, to prepay next year’s taxation this year. You just need to state that to realize how mad it is. So—

AMY GOODMAN: I mean, Alexis Tsipras, the prime minister, of course, was your close ally in Syriza—


AMY GOODMAN: —until you left.

YANIS VAROUFAKIS: You know, it really hurts a lot more when it is your friends and comrades that are turning and start implementing the things you know they disagree with. When we of the left do this, we progressives do this, then we are giving TINA, the toxic dogma that “there is no alternative,” the greatest boost there is. And that makes me very sad.

AMY GOODMAN: Explain that again, TINA, “there is no alternative.”

YANIS VAROUFAKIS: There is no alternative. That has been the neoliberal mantra that Margaret Thatcher introduced. Now, when the left gains power, it secures the massive backing of the people and then turns against them and says, “Ah, sorry, you know, Thatcher was right: There is no alternative. We have to implement these austerity measures, because this is the responsible thing to do.” That is a massive blow on progressive movements. It really knocks the stuffing out of our collective passion for change.

AMY GOODMAN: When you were finance minister, of course, in the midst of these austerity negotiations and the massive result in Greece and the major protests—you don’t have anything like that today in Greece. Why? What are the circumstances that changed that led people to go back inside?

YANIS VAROUFAKIS: The fact—the overthrowing of the people, which is my metaphor for what happened that very night. We got them out. We energized them. Remember, in January 2015, we were elected with a majority, a relative majority, 40 percent of the vote. For five months, we were fighting tooth and nail against the creditors. And on the 5th of July, six months later, we, under—in a state of siege, the creditors had shut down our banks. Do you know how hard it is to shut down your banks? Imagine if a foreign power were to shut down every ATM in the United States of America. That’s economic warfare. It’s financial waterboarding, if you want. And yet, our very courageous, brave people voted 62—so, 40 percent had voted for us six months before, and then, when things came to a crunch, 62 percent, even the right-wingers, voted for us, as part of a patriotic move to say, “No, we’re not going to take this.” We brought them out on the streets, against the television channels, that were all controlled by the creditors and effectively warning the Greeks that if they go against the troika of lenders and creditors, there will be Armageddon. And yet they did. And the next day, the left-wing prime minister turns around and overthrows this whole movement. Of course people went back home. And now they are nursing their wounds inside their home, privatizing their fears and privatizing their pain. The anger is there. The pain is there. Nobody believes that Greece is on the mend, which is the official mantra. But, you know, a great depression takes two forms: an economic form and the psychological form. And when you’re very depressed, you don’t demonstrate.

AMY GOODMAN: We’re talking to Yanis Varoufakis, the former finance minister of Greece, who has just written a new book. It’s called Talking to My Daughter About the Economy: Or, How Capitalism Works—and How It Fails. So, you go from finance minister, explaining the economy to the world, to trying to explain it to your daughter. How old is she?


AMY GOODMAN: And what do you think is essential for a 14-year-old to understand?

YANIS VAROUFAKIS: Fourteen-year-olds and 40-year-olds and 90-year-olds must all—we must all understand that empowering citizens to speak authoritatively about the economy is a prerequisite for democracy and a precondition for the good society. There are no economic experts. There are experts when it comes to recording a program like this one or to building a bridge. If you want to build a bridge, you can’t do it democratically, because if you do, the bridge will collapse and will be, you know, like a major crime. But the economy is the way in which we organize social power, who does what to whom, who has the power over their lives and who doesn’t. And that is a question of how we run our society. This is a question about democracy. So, if we were to accept that there is—there’s a group of experts and we have to defer to them when it comes to economic matters, then, effectively, we accept oligarchy.

It’s a little bit—little bit like in the Middle Ages. The language of power in the Middle Ages was the Bible. It was religion. So, if you do not understand—you remember Voltaire. He always—as an atheist, he had the Bible in his desk, and he said that “I need to understand it better than the theists, because, otherwise, I cannot discuss politics.” Today, the equivalent of the Bible is economics. So, my act of writing this book is a political act for empowering democracy, to the extent that we need to effectively liberate each and every citizen from the fear of understanding the economy, because that fear keeps them away from the levers of power and destroys our democracy.

AMY GOODMAN: Do you believe that capitalism must be dismantled, capitalist systems must be dismantled, or can it be moderated capitalism, in some way?

YANIS VAROUFAKIS: The beauty of capitalism is that it is undermining itself. We of the left have not done a very good job undermining capitalism. We tried and failed. We created the gulag, and we imprisoned one another. You know, we’ve been quite horrific in what we’ve done. We have a major stigma on our record as the left wing. But capitalism is fantastic at overthrowing capitalism.

Think about all of the gadgets that it creates, the technologies. Just very briefly imagine for a moment that this technological innovation, artificial intelligence, robots, moves in a manner in which it is moving, but even faster. Very soon, you’re going to have robots producing everything. Now, the robots do not want to consume that which they produce. And the rest of humanity is not going to have the money to buy it. So, capitalism is going to have a massive crisis, simply because it will have a humongous capacity to produce stuff, and no capacity to consume it, which is already what we are observing.

The reason why Trump is the president of the United States is because of this great incongruity. In the United States today, we have a magnificent capacity to produce, but the majority of Americans—I was reading a fantastic statistic, which explains Trump a lot better than Facebook, Russia and so on. More than 50 percent of American families cannot afford to buy the cheapest car on the market, for the first time in the last 70 years. So we have the capacity to produce all sorts of things, but not enough of a capacity to consume them. That is what is undermining capitalism. And until we regain democratic control of the way in which we organize production and distribution, both of income and of goods, we are going constantly to be in a crisis that allows people like Trump, effectively, to usurp the democratic process and deepen the crisis both at home and abroad.

AMY GOODMAN: What’s your daughter’s name? How do you pronounce?

YANIS VAROUFAKIS: In Greek, it’s Xenia. In English, you would say Zania [phon.]. And it’s the goddess of—in Ancient Greek—of kindness to foreigners.

AMY GOODMAN: So, in speaking about kindness to foreigners, how do you explain capitalism to Xenia?

YANIS VAROUFAKIS: Oh, by not mentioning capitalism, because the moment you mention anything beginning in—ending in “ism,” to my daughter, she just shuts the shutters down and says, “Dad, you’re boring.” So, the—you know, we were brought to this world—weren’t we, Amy?—to embarrass our children and to make them really not want to listen to us. But so, yeah, I’m an economist, I’m a politician. My daughter doesn’t want to talk about any of these things with me. But the one thing, from a young age, age of 8, 9, that seemed to energize her was inequality. She would come to me and say, “Why? This is stupid, Dad. I mean, why do we have a society”—she wouldn’t even use the word “society.” But the question, “Why so much inequality?” it really doesn’t make sense to an 8-year-old. And that was my gateway, because to explain inequality, you have to explain history, you have to explain the way in which colonialism evolved, the way in which—why are the 0.1 percent of society owning all the robots.

AMY GOODMAN: How did it happen?

YANIS VAROUFAKIS: Well, gradually, through the process of commodification, through the process of marketization, the steady, triumphant march—war—of prices against values, which produced inexorable wealth and, at the same time, stupendous deprivation that we never had before. And so, these—through an explanation of this epic, if you want want, contradiction, you can inspire young people, if you explain it in a way that Sophocles would explain it or Shakespeare would explain, because great theater is, I think, the best guide that we have to how young people can understand, you know, the historical struggle and contradictions that are the stuff of our lives.

AMY GOODMAN: And you talk about the marriage of debt and of profit. Explain.

YANIS VAROUFAKIS: Well, debt is to capitalism that which hell is to Christianity. It’s unpleasant, but essential. It doesn’t work otherwise. So, would Edison or Henry Ford be able to create what they—you know, the networked companies of the second industrial revolution that they did, without huge quantities of debt? It would be impossible to finance this. So, debt is the fuel.

Look, Amy, in slaves-owning societies or in the Middle Ages, we had production. People worked, toiled the land. Then we had distribution. The lord would send his henchmen in, his sheriff, to take his cut. So you had distribution—production, distribution. The lord’s cut would then be sold in markets. He would get money out of it, and then you would have finance. So we had production, distribution, finance.

With capitalism, we had the reversal of that. First you’d get the debt, to set up the—you know, to employ people. So you have finance, then distribution, and the last thing that happens is production. So, debt is central to capitalism. Now, that means one thing: The banker, the financier, has an exorbitant privilege. He’s like the sorcerer who has the capacity to push his hand through the time line, snatch value from the future, that has not been produced yet, and bring it in to the present to help orchestrate the production that will create the value that will be repaid in the future. But, effectively, you’re creating a class of people, the financiers, who then have complete control over society. And they can keep doing this a lot more, until the present can no longer repay the future, and there is a huge crash. And then what happens? Because they have this privileged position, they can make you and me, President Obama, whoever, Larry Summers, bail them out. So, they win if their bets succeed, and they win if their bets lose. What kind of political economy is this, when you have one class of people who win, whatever they do, and everybody else loses, whatever they do?

AMY GOODMAN: Is this what you refer to the black magic of banking?

YANIS VAROUFAKIS: That’s exactly right.

AMY GOODMAN: And so, what’s the cure for this?

YANIS VAROUFAKIS: Well, the cure of this is, effectively, to do that which FDR did in the 1930s.

AMY GOODMAN: President Roosevelt.

YANIS VAROUFAKIS: President Roosevelt—to put the financial genie back in the bottle. Make banking boring again. Put huge constraints upon them. Nationalize the banks and turn them into institutions for public purpose. And if even—you don’t necessarily need to nationalize, as long as you really keep them under strict control. Remember Bretton Woods, which designed the golden era of capitalism. Bretton Woods was a conference in 1944, and there 120 different countries agreed on the system which saw, in the 1950s and 1960s, the longest period of steady growth, with shrinking inequality and low unemployment and low inflation. FDR had one condition slapped onto membership of that Bretton Woods Conference. Do you know what it was? No banker was allowed in the Washington—the Mount Washington Hotel. So you had a monetary and financial system that was designed in the absence of bankers. That’s what we should do again.

AMY GOODMAN: So, what are the two Oedipal markets? This is what you’re explaining to Xenia, 14 years old.

YANIS VAROUFAKIS: Well, the two Oedipal markets are the market for labor and the market for finance, for money. You see, markets work very well, when it comes to mugs. So, if you and I are manufacturers of this mug, and we have an excess supply of them—that is, you know, they are not selling fast enough—well, we can’t do anything about them, we can’t redesign them. I’m sure that the Democracy Now! mugs would sell magnificently, but you know what I mean. All you need to do is reduce the price, and at some point you clear your stock.

But that is not the case with labor, and it’s not the case with money. Labor markets and money markets do not work well like markets. Why is this? Imagine you are an employer, and you are tossing and turning in bed at night, and you’re thinking, “Shall I invest in a new product? Shall I employ workers? Shall I borrow money to do all this, in order to enhance my production?” Well, you will, if you think that at the end of the production line there will be enough demand for the things that your company is going to produce. But what will this depend upon? It will depend upon whether other people like you have made the investments, because if they have, if everybody has invested, then there will be enough money in the economy for your product to be sold. So, you’re trying to predict what others in your position will do, in the middle of the night, turning and tossing around.

Now, imagine that in the middle of the night you can’t sleep, you’re worried, you don’t know what to do, and you put the radio on, and you listen to the news that the Fed is going to reduce interest rates further, instead of increasing them. Now they’re supposed to be on the way up. Imagine that the price of money—that’s the interest rate—has been announced it will come down. Or even imagine at the same time that trades unions announce that because of the slackness of the labor market, they will accept a lower wage, because they’re desperate for more jobs. Now, what will you think as an employer? Will you think, “Oh, great! My labor costs are coming down. My money costs are coming down. I will invest more”? You may think that. But there is an alternative thought you may have, which is, “Oh, my god! For the Fed to be reducing interest rates, things are bad. For the trades unions to be prepared to work for less, my god, things are—I’m not investing.” So, you have a situation where wages are coming down during a crisis, interest rate is coming down, and instead of labor quantities increasing and more money being invested, you have the opposite.

So, I call them Oedipal markets, because remember the myth of Oedipus. Oedipus’s father heard from the oracle that his son, his baby son, who was just born, would grow up to kill him, to murder him. So he takes the child, the baby, snatches it from his wife’s arms and gives it to a shepherd, with instructions to take it to the woods and kill it. The shepherd can’t bring himself to do this, so he gives it to somebody else. This boy grows up in the end, not knowing that Laius is his father. So, at some point, he meets his father, and in the first incident of road rage in the history of humanity, he kills his father, as to who had the right of way. If he didn’t—if he knew that this guy was his father, he would not have killed him. So, this is where the prophecy is self-fulfilling.

And that is what I just described before with interest rates and wages. Those two markets don’t work like markets. The idea that you will cut wages, through austerity, and competitiveness and output is going to go up, is just complete nonsense. It just doesn’t happen, because of the Oedipal effect. And Greece is a fantastic example of that. We reduced wages by—where it used to be, through the great depression, by more than 40 percent. And guess what happened to employment. It crashed.

AMY GOODMAN: We’re talking to Yanis Varoufakis. He was the finance minister of Greece. He’s now a professor at University of Athens in Greece. He is also co-founder of DiEM25, which is a movement to revive democracy in Europe. And he’s author of a new book. He wrote this for his daughter, Talking to My Daughter About the Economy: Or, How Capitalism Works—and How It Fails. You also write about the dangerous fantasy of apolitical money.


AMY GOODMAN: What is apolitical money?

YANIS VAROUFAKIS: In this country, you have a lot of people, good people, who are fed up with politicians, who are fed up with the Fed, and who believe that—they believe in true money, in honest money, that money should be somehow independent of the political process. Remember the gold standard? They still hanker after the gold standard. They would like the quantity of dollars printed to be linked to the quantity of gold that the Fed owns, so that there would be no political influence of the quantity of money, because they fear that—they fear the government will print too much money, and there will be inflation, and the value of money will be effectively eaten away—the gold bugs, as you call them in this country. Bitcoin—Bitcoin is a digital form of the gold standard. And so, the backlash against political control—

AMY GOODMAN: The Bitcoin folks are moving into Puerto Rico right now, has been devastated by Maria.

YANIS VAROUFAKIS: Of course it’s been devastated. But the solution is not Bitcoin.

AMY GOODMAN: But they’re moving in fast.

YANIS VAROUFAKIS: Yes, but it’s—you know, it’s just a bubble. It will burst. And the reason is, however much we loathe the political process because it is controlled by oligarchs and by the same old financiers who are behind the politicians who are bailing them out whenever the finance is needed—however much we dislike that, there is no alternative to political money. Why? Because the quantity of money must be in sync with the quantity of output of goods and services. If those two go out of sync, you have deflationary bouts. You have to—that will lead to depression. So, to put it very bluntly and simply, the quantity of money must be decided democratically. At the moment, it’s not being decided democratically. It’s decided politically, but oligarchically. The solution is not to take it and tie it to some algorithm.

AMY GOODMAN: In the United States, you—in the United States, you only refer to oligarchy when you’re talking about Russia, the oligarchs. But billionaire businessmen in the United States, you do not refer to as oligarchs.

YANIS VAROUFAKIS: But the United States of America is the prime oligarchy. The difference between the United States of America and Russia is that the United States is a more successful oligarchy. But it is an oligarchy nevertheless.


YANIS VAROUFAKIS: Well, think of 2008. President Obama is sworn in on a wave of expectation by the victims of the financiers. And what does he do? First thing he does is he appoints Larry Summers and Tim Geithner, the very same people who had actually unshackled the financiers in the late 1990s, allowing them to do everything that brought so much discontent to the very same people who then entrusted President Obama. President Obama, very soon after that, lost his credibility with those people, and the result is Donald Trump. That’s an oligarchy.

AMY GOODMAN: And so, why is Donald Trump so fiercely opposed to President Obama—is it just racial?—given that he laid the groundwork for the oligarchs, for people like Donald Trump, if, in fact, he does have money?

YANIS VAROUFAKIS: Well, the ruling class has a fantastic capacity, like the working class, to be divided. Donald Trump was never in the pocket of Wall Street. He used Wall Street. He used Deutsche Bank. He used all the people he dislikes, in order to keep, effectively, bankrupting his companies and profiting from it. So he’s really very good at that. But he was never very successful as a businessman, certainly not as successful as Goldman Sachs or JPMorgan. And he was always on the margins of the capitalist order of things in the United States. He understood that in order for him to gain more power, more—both discursively and politically and economically, he had to ride the wave of discontent against Obama. And he did this magnificently. And the Democrats let him. The Democrats brought their own distress and failure upon themselves.

AMY GOODMAN: So I want to talk about the rise of the right, but go back to World War II—actually, between World War I and World War II in Germany. How do you see the growth of the support for Hitler and how he took power in Germany, going back to World War I and the devastation of Germany?

YANIS VAROUFAKIS: The combination—the combination of a humiliated populace. The humiliation is very important, Amy. When you humiliate a whole people in the middle of a great depression, great economic crisis, you have a political crisis. So the political center implodes, which is what happened with the Weimar Republic, and then all sorts of political monsters ride up—rise up from that. We saw this in the 1920s, the 1930s, in the midwar period in Germany. But we saw it in—we see it in Greece today, after—do you know we have a Nazi party in Greek Parliament—in the country that, along with Yugoslavia, fought tooth and nail against Nazism in the 1940s. We had a magnificent resistance movement against Nazism. In that country now, the third-largest party is a—not a neo-Nazi party, fully old-fashioned Nazi party.

AMY GOODMAN: And this came into the Parliament when?

YANIS VAROUFAKIS: They came into Parliament in 2012, at the time of a humiliated public in the clasp of a great depression, just like in Germany in the 1930s.

But allow me to make a point, because there is a great misunderstanding about Germany of the midwar period. Usually people say, “Oh, it was hyperinflation. It was the fact that prices were rising exponentially that brought Hitler to power.” Not true. It is true that hyperinflation depleted the middle class, effectively destroyed the middle class’s savings and shook the system and made the Weimar Republic extremely fragile and ready for the taking. But if you look at the electoral performance of the Nazi Party in Germany, there is a direct correlation, not with inflation, but with deflation. You had Chancellor Brüning, who in 1930 decided to slam the brakes on the economy and to use large doses of austerity in order to make inflation go away—a bit like Paul Volcker when he pushed interest rates up in the early '80s, remember, to 20-something percent—and a lot more fiscal austerity, not just monetary austerity. It was at that point when prices started falling in Germany. Prices started falling, and unemployment ballooned. And that is when you have a major jump in the support for Nazis. Deflation breeds fascism. And that is something that we've got to remember. And I’m making this point because, unfortunately, the European Union’s economic policies today are producing deflationary forces that are being exported to the United States and to China. And that does not augur well for progressive international politics.

AMY GOODMAN: So talk now about the far right in Europe and also in the United States. But in Europe, you’re talking about Poland, you’re talking about Hungary. You’ve got Golden Dawn, not to mention the Nazi party, in Greece.

YANIS VAROUFAKIS: Oh, that’s the Golden—the Golden Dawn is a Nazi party. That’s the Nazi party I was referring to.

AMY GOODMAN: So, you have Hungary, you have Poland. Talk about what’s happening in Austria.

YANIS VAROUFAKIS: Look, it’s the 1930s all over again. You know, Marx once said that history repeats itself, second time as farce. Unfortunately, it’s not a farce. It is a tragedy, even the second time around. In 2010, the European economy entered a massive recession, that also became a depression in certain parts, in the periphery. And we behaved in Europe in exactly the same way that President Hoover behaved in 1929: liquidate, liquidate, liquidate. Remember that. This is what we did in Europe. And we had the gold standard, effectively. We still have the gold standard in Europe, because we have a European Central Bank, which is not allowed to do that which the Fed did in 2008. So, what the Fed did in 1929, which is nothing, effectively—sit by, waiting for liquidation to make the problem go away—we did in Europe in 2010.

Is it any great wonder that we had the ultra-right xenophobes rising up from everywhere, the political center collapsing? Now you have an ultra-right-wing government in Austria, which was always a fiefdom of social democracy and a very progressive country. You have Germany. The two centrist parties, the center right and the center left, the Christian Democrats and the Social Democrats, together used to command 85 percent of the vote. Now they’re just is a smidgen above 50. And that’s why Merkel is so weakened today. And you have the Alternative for Deutschland, which is rising up. They went from zero to 13 percent, and now they’re going to go to—

AMY GOODMAN: That’s called the Alternative party.

YANIS VAROUFAKIS: Yeah, that’s—you know, that’s a very xenophobic, ultra-right—it’s the Donald Trumps of Germany, to put it bluntly.

In France, the two major political parties disappeared. They don’t exist. You have, of course, the rise of Macron, which was almost serendipitous. It was almost serendipitous in the sense that he only became president because his right-wing opponent self-destructed as a result of a scandal involving his wife. And I’m very glad that Macron was elected, but nevertheless it’s not a great source of joy that Macron won, because it—you know? And—

AMY GOODMAN: And Le Pen in the wings?

YANIS VAROUFAKIS: And Le Pen won 35 percent of the vote.

AMY GOODMAN: And explain who Marine Le Pen is.

YANIS VAROUFAKIS: Well, Marine Le Pen is the leader of the Front National, the National Front, which is a Holocaust-denying, ultra-right-wing, xenophobic, anti-Muslim, Islamophobic party. I have friends in France who were fearing for their existence, because in France, unlike in the United States, you don’t have the checks and balances of the Constitution. The French president can send the secret police into your home, and you disappear. Of course, thankfully, Macron is there now, but his hold over French politics is more tenuous than it looks.

Then you have—you have Holland. In Holland, you have a very civilized country. You have an increasing insular, Islamophobic, anti-Semitic, anti-Southern Europe narrative. I can tell you, from Greeks that I know in Holland, they feel increasingly alien within their own communities.

In Greece, you have racism rising up against almost everyone, because this is what happens when you have a social economy in free fall. This is why DiEM25 is important to us. And we’re not just a movement anymore. We’re doing something rather radical. We’re going to stand in the European Parliament elections May 2019 in at least 10 countries. We are creating a political version of our movement. We call it the European Spring. And now we have—in June, we’re going to present our pan-European manifesto, and it will be a transnational list for the first time in the history of Europe. And we are running in France, Italy, Portugal, Greece, throughout.

AMY GOODMAN: And explain what DiEM25 stands for, D-i-E-M.

YANIS VAROUFAKIS: It’s the Democracy in Europe Movement. We also play on the phrase carpe diem, which means “seize the day.” So, effectively, it means “day,” but in the sense of a democratic movement that is trying to do something that has never been done in Europe and which we consider absolutely essential. We have a systemic, continental crisis in Europe. Never has the question been asked: How do we deal with this systematically? If you look at every Eurogroup meeting, every European Union Council meeting, the European Commission, the European Parliament, they deal like firefighters who attack the flames but not the source of the fire. They look at the Irish banks or the Greek public debt or the Italian labor market. But they never sit down and think of this as a systemic problem, which has to do, to a very large extent—and since we are on Democracy Now!—with a failure of European democracy. Because what we’ve done in Europe is something quite absurd. We have democratic states, but we have shifted all the important decisions to a democracy-free zone in Brussels, where all the decisions have been made outside the checks and balances of a democratic process. And to put it bluntly, Europe is failing because of that, because democracy is not a luxury. It is an essential process for maintaining a sustainable social economy.

AMY GOODMAN: And what do you think of Britain and the whole Brexit move, pulling Britain out of the European Union?

YANIS VAROUFAKIS: Well, I personally campaigned in Britain against Brexit, which puzzled a lot of my friends in Britain, because they would say to me, “You were treated like scum by Brussels. You were crushed. Your government was overthrown by the European Union. And you’re coming here to Britain to ask us to stay in this European Union? We don’t want to do that. Why are you asking us to do that?”

And my argument was, my answer was, look, I spent all my life demonstrating against every Greek government there was, outside the Greek Parliament, because a patriot has to love his country and demonstrate against his government when his government is wrong. Similarly, I confronted the European Union establishment because it was wrong. But I don’t want to bring Europe down. Britain is at the mercy of a major social crisis. We have massive poverty rising in Britain. We have very low-quality jobs, Uberization of the labor market. You know, 50 percent of families in Britain, as we speak today—this is incredible—need to use credit cards to put food on the table. We have an environmental crisis, like everywhere else.

All these crises are like climate change. We cannot sort them out at the level of our nation-state, at least not in Europe, where we have fragmented nation-states. What we need to do is we need to pull together. We need a pan-European New Deal, to put it in American terms. And this is why DiEM25 is organizing in Britain and everywhere along the lines of our policy, which we call the European Green New Deal.

AMY GOODMAN: And although you’ve referred to him throughout the interview, explain your thoughts about President Trump right now, about what he represents here in the United States and also what he means for Europe and the rest of the world.

YANIS VAROUFAKIS: Trump is an abomination for every progressive person, the way that he thinks of women, the way he thinks of Mexicans, the way he thinks about, I don’t know, even his own self. I mean, he’s a misanthrope. I’m sure he hates himself, as well. There’s no other explanation. So, it is quite an abomination to have that man in the White House.

But at the same time, I believe that it is a cardinal sin to demonize those who voted for him. What the Democratic Party does in this country is a crime against logic, to call them deplorables, to say that they’re idiots who were duped by Facebook and Cambridge Analytica. The reason why most voters who made the difference, in marginal seats, voted for Trump was because they could not fathom yet another variation of the same establishment government in Washington, D.C., that constantly bails out the bankers at the expense of the majority of the people in this country. It’s a failure of President Obama. That’s what Trump represents to me in this—in this country.

Internationally, he’s a major threat to the chances of stability, of peace, and of finding a modus vivendi between the three main economic blocs, that need to collaborate to avert a new great depression from hitting us. And the three main economic blocs are China, the European Union and Trump. Look, there is no doubt that America should play a leading role, effectively, with the European Union, to force the Europeans to get their act together. The Europeans are not getting their act together. Trump’s criticism of German trade surpluses is correct. But what he’s doing, which is to—all these shenanigans, with the Iran deal, against Merkel, playing games with China—this is not creating a new Bretton Woods, a new International New Deal, which we need. It is simply to go it alone and to undermine any prospect of a global equilibrium.

AMY GOODMAN: Final words, to your 14-year-old daughter Xenia?

YANIS VAROUFAKIS: Don’t take anything for granted. And don’t forget that every system of oppression, every system of government, if you want, wants to envelop you in its superstitions and ideology, until you can’t see it anymore and you think that you live in the best of all possible worlds. You don’t.

AMY GOODMAN: Well, I want to thank you so much for being with us, Yanis Varoufakis, economist and author of the new book Talking to My Daughter About the Economy: Or, How Capitalism Works—and How It Fails. Yanis Varoufakis served as finance minister in Greece in 2015. He was chief negotiator of Greece’s bailout with the European Union and International Monetary Fund, before he quit, later launching Democracy in Europe Movement 2025, which is becoming a European party—


AMY GOODMAN: —in the European Union and Parliament next year.

This is Democracy Now! To see Part 1 of our discussion, go to I’m Amy Goodman. Thanks for joining us.

The original content of this program is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. Please attribute legal copies of this work to Some of the work(s) that this program incorporates, however, may be separately licensed. For further information or additional permissions, contact us.

Up Next

“Another Now”: Socialist Alternatives to Capitalism Explored in New Novel by Yanis Varoufakis

Non-commercial news needs your support

We rely on contributions from our viewers and listeners to do our work.
Please do your part today.
Make a donation