An Interview with Yanis Varoufakis
An Interview with Yanis Varoufakis
“We have to talk to people in a way that combines addressing these [economic] anxieties with the issues of the environment. Unless we manage to do that, we will fail.”
The last few years have been a bit of a rollercoaster for the European left. Riding up front has been Yanis Varoufakis, the charismatic economist and former Greek finance minister who went to war with the troika—the European Commission, the European Central Bank, and the International Monetary Fund—in 2015 as it sought to inflict brutal austerity as a penalty for his country’s debts and its decision to elect an openly left-wing government headed by Syriza. They lost that fight, but Varoufakis escaped mostly unscathed. Amid Brexit and a wave of Euroskepticism, he went on to found the Democracy in Europe Movement 2025 (DiEM25), pushing for a more democratic and inclusive continent, free of austerity. The group mounted several candidates under the mantle of a European Spring this May, including Varoufakis himself. They failed to gain a single seat, though his vote total came in a hundredth of a percentage point below the 3 percent threshold needed to gain representation. While the center-right faltered in May, so, too, did the left.
Particularly among young voters, progressive and social democratic parties—including those in the DiEM25 orbit—seem to have lost many of their votes to the European Greens, which successfully tapped into the momentum of the youth-led Fridays for Future protests around Europe and Extinction Rebellion in the UK. Voters across the continent now rank the climate crisis among their top concerns. The great irony in left parties’ generally meager showing is that, from La France Insoumise to Labour in the UK, they are greener than they’ve ever been, in many places rejecting the old-school productivism that fueled them through the postwar era.
In Europe, all politics is now climate politics. The question is whether the left can ground the conversation about rising temperatures in a broader egalitarian vision that can counter tepid centrist technocracy and far-right xenophobia alike, and the response of each to the existential threat hurdling toward us. In its push for a Green New Deal, DiEM25 wagers that it can, but it has hit no shortage of road bumps along the way. Engaging in the largely symbolic European Parliament elections was one piece of an effort they’ll continue as the left attempts to craft the kind of systemic and internationalist climate response that science is demanding.
The interview below was recorded a few days before voting began.
Kate Aronoff: DiEM25 and many others are advocating a Green New Deal, something you’ve worked on for several years. What do you think it is about that framing that is grabbing people’s attention, despite it being seemingly so American?
Yanis Varoufakis: What is important about a Green New Deal is that it concentrates the mind on the main task, which is to swiftly and efficiently find massive funding for a cause that is in the public interest. The New Deal began with Roosevelt in the 1930s in the midst of a Great Depression. The innovation of this thinking by Roosevelt, who wasn’t exactly a radical, was to concentrate on the fact that even during the Great Depression—when everybody was short of money—there was a mountain of idle cash, which could be converted into investment. So instead of thinking of a different social system, like changing property rights, he used the toolkit of the federal government, and in particular U.S. Treasury bills, to put billions of dollars into the service of investments in jobs, in building roads and hospitals, even art projects and so on.
Our version of the Green New Deal [in Europe] combines the original aims and inspiration of Franklin Roosevelt. We want governments to use public financial instruments to massively increase investment in good quality jobs, and technologies and facilities that are necessary for green transition in the fields of energy, transport, manufacturing, and agriculture. That is absolutely essential, and this is what we’ve been working on for years now.
Aronoff: As part of that, you’ve also called for refashioning the Bretton Woods institutions and referenced the Marshall Plan, which, as you’ve written, was arrived at for a mixed bag of reasons, a big part of which was U.S. policymakers’ self-interest in having allies around the world in the context of the Cold War. What does refashioning the Bretton Woods institutions look like today? Is there a similar appeal to be made for the sort of self-interest that propelled the Marshall Plan?
Varoufakis: The Bretton Woods system was originally conceived by the New Dealers as the global framework within which Roosevelt’s New Deal in the United States could prevail.
Today, if we want a European Green New Deal, or an American Green New Deal, we will have to look beyond the confines of the borders of our countries to build the circumstances in which the New Deal can go global. It requires something like a new Bretton Woods. If you look at the old Bretton Woods institutions that are still with us, the International Monetary Fund and the World Bank, in the era of financialization, they have become toxic. They have become detrimental to the interests of the multitudes around the world. In DiEM25, but also as part of a progressive international that we are slowly building with our friends and colleagues in the United States, in Japan, in Iceland, in Africa, and so on, we are envisioning a new Bretton Woods that will have a very little to do with the old Bretton Woods, except in the original idea of creating the international framework and the international institutions that are absolutely necessary to maintain an international Green New Deal.
Aronoff: How does that get around some of the problems that have been faced by bodies like the United Nations Framework Conventions on Climate Change in trying to arrive at a global solution to this problem?
Varoufakis: The approaches that you mentioned have so far been approaches focusing on constraints. Now, this is very important, of course: physical limits to growth and setting ceilings for CO2 or methane gases is essential. But the problem with these international agreements is that while all countries around the world would benefit if everybody stood by those constraints, each one of them individually has an incentive to find some pretext, either covertly or directly, to break those commitments. However, if the international agreements on climate change move into creating public financial tools that allow banks to collaborate to issue bonds that soak up the excess liquidity, then suddenly the incentive would be there for countries to opt in. This would be a very large-scale international investment fund from which to create jobs and from which to do good things regarding technologies for renewables and so on. A large-scale, international green investment plan would offer not just sticks, but also carrots for countries to participate in these international agreements—something that has never been attempted before.
Aronoff: Adam Tooze responded to some of your writing on this point by arguing that power isn’t really held in nations as it was toward the end of the Second World War when those institutions were created, and is now concentrated among central bankers, lawyers, and financial economists. How do you respond to that critique in terms of where power is held today?
Varoufakis: I agree with that. We should never underestimate the importance of functionaries, both functionaries who work for the states and functionaries who work for large corporations. But to say that because they are vested with inordinate power, the rest of us should simply throw up our hands in the air and surrender to climate change or to underinvestment or to what Larry Summers refers to as secular stagnation, that is a non sequitur for me. My assessment of Bretton Woods in 1944 is that it was driven by a combination of a very powerful moral commitment by people in the New Dealers’ administration who felt in their bones the inequities and the wretchedness of the Great Depression, and they didn’t want to live to see it again. That moral political force, ideology if you want, was a necessary condition, even though it was not sufficient. As Adam Tooze points out, it took many lawyers and functionaries, who recognized the self-interest in participating in this majestic new internationalist project, to then bring it about. I don’t see why we should not aim to do the same thing at this juncture. The year 2008 was spectacularly similar to 1929.
Aronoff: There’s this tendency to treat climate as something that can be walled off from the financial sector or from issues of immigration. Could you say more specifically about why massive reforms to the financial system are so important to dealing with the climate problem?
Varoufakis: If you look at what’s going on in Wall Street today, it’s as if 2008 never happened. The financial sector is like a driver who was caught doing 130 miles an hour, gets a huge fine, and after half an hour forgets all about the fine and starts speeding again.
As for climate change, in my own country, we have a feast that is being prepared by the oligarchs of the eastern Mediterranean, including the Greek ones, and the American multinational companies that will soon be extracting oil and natural gas from deep sea wells. All that’s being financed by a financial sector that is going haywire yet again as if 2008 never happened.
Aronoff: In the 1930s and ’40s there was this real change in how people were thinking about the role of the state in the economy and what it is governments should be doing and providing. There was a similar paradigm shift in the 1970s that created an opening for neoliberals. Does the climate crisis offer that kind of opportunity today to folks looking to put a new paradigm into place that can actually deal with it?
Varoufakis: I think that this shift has already happened. A majority of people in every country realize that Alan Greenspan’s touching faith in the capacity of markets to self-regulate was nothing but a particularly toxic form of idiocy. The question now, however, is this: how do we go from the serious weakening of the libertarian paradigm to creating a political consensus toward a Green New Deal? This is the task ahead for all of us.
At the moment, instead of progressives getting together and planning a new Bretton Woods, what we have is a neo-fascist international led by people like Matteo Salvini in Italy, Marine Le Pen in France, the Alternative für Deutschland in Germany, Orban in Hungary, Steve Bannon—who is traversing the continent spreading his poison—Donald Trump in the White House, Bolsonaro in Brazil, Modi in India.
We are trying to create a progressive international but we are just at the very, very beginning. And the rallying call of the neo-fascist nationalist international is: Make America Great Again, Make Greece Great Again, Make Italy Great Again. On the one hand they’re saying they are nationalist, but on the other hand, they’re combining forces very efficiently across the world. What we need to do is effectively emulate their success but not by emulating their tactics. They are using xenophobia: they’re blaming Muslims, Jews, Greeks, and all sorts of categories and sets of people and nationalities and religions. They claim to be doing it on behalf of the people, but once in power they employ the worst offenders from Wall Street. Donald Trump took Goldman Sachs personnel and implanted them in the Fed and in the Treasury.
We need to use the Green New Deal as a rallying call across the world. The Green New Deal is a positive message of realism. We have excess liquidity. The world has never had savings as high as we have today. So all we need to do is find ways to turn those savings into good quality green jobs.
Aronoff: There’s this argument that welfare states were contingent on cheap oil. If we need to actually keep fossil fuels in the ground what does it look like to build a low-carbon welfare state?
Varoufakis: I’m not convinced at all that the welfare state was built on cheap energy. The welfare state was simply built as a result of the political pressures upon capital to yield some of its profits in order to stabilize its rule over labor. It was a result of class conflict. Already we see that renewable energy is cheaper than oil. So what seems to me a question that would have been very pertinent in the 1970s—because back then renewables were either not available or very, very expensive—is no longer pertinent. Today all we’re missing is a massive investment in turning existing renewable technologies and technologies that come into existence in the next five years into the mainstay of energy generation.
I reject the argument that we need to go back to a bucolic existence to save the planet. When we talk to people who are struggling to make it until the end of the month, telling them that over the next fifty years we’re going to lose species, they say “I don’t give a damn! I can’t make ends meet today.” We have to talk to people in a way that combines addressing these anxieties with the issues of the environment. Unless we manage to do that, we will fail. But I think we can.
Aronoff: For the last several decades, GDP growth, has been the main metric by which an economy’s health is judged. There is a stubborn relationship between GDP growth and emissions, but it’s also true that GDP growth is not necessarily a great indicator of human well-being, or of many other things we might think are important in an economy. Is growth a useful metric? Should there be others?
Varoufakis: GDP is an awful metric. There’s no doubt that GDP growth is meaningless in terms of human achievements and happiness and success. You burn down a forest, GDP goes up. But we don’t just need a new metric, we need a different system of organizing economic life. We need to transcend capitalism. But as long as we are with capitalism, what is the point? Let’s say I were to design a fantastic new metric that puts a great deal of value in trees and poetry and all the other things that should be valued. If we live in capitalism, it’s irrelevant.
Aronoff: Among economists, the go-to answer for how to deal with climate change for years has been to correct the market failure by making the price of carbon dioxide reflect it’s true value: the social cost of carbon. Do you see that consensus slipping at all?
Varoufakis: Economists are very funny creatures. When economists look at market value, the complete disaster in the environment, or for that matter in the financial markets, isn’t recognized as a market failure. So what are they proposing more of? More markets. They’re hoping that the market will perform its miracle and an emissions trading scheme will create a shadow price for carbon that will make it more likely that humanity will reduce its use of carbon. Now if you are interested in saving free-market ideology from failure and from becoming humiliated by the facts, then of course this is what you do. But if you’re interested in saving humanity, you just remind yourself that you started from the wrong axiom, and the wrong axiom is that the market knows best. The market doesn’t know best.
Aronoff: Now we’re talking a couple of days out from the European elections. However things turn out, what are the next steps?
Varoufakis: When we announced a year ago that we’re going to run in the European elections, we were really clear in saying we don’t consider the European Parliament to be that significant. What we always savored was the process of elections in the same week across Europe that allowed us to put the Green New Deal on the agenda in Poland, Denmark, Portugal, Greece, France, Germany, and Italy. This has been remarkable. So after the election we will take stock of what happened, how successful we were in putting it on the agenda and getting some people elected. We will see what new tools we have, whether we have some new resources as a result of the election or some of us in the European Parliament, how many of those resources there are. The next stage will be national elections in Germany, in Greece, maybe in Italy. This is not going to be an easy struggle, and it’s not going to end anytime soon, and it’s not a discrete event. It’s a continuous campaign.
Kate Aronoff is a fellow at the Type Media Center and a member of Dissent’s editorial board.
Yanis Varoufakis is the cofounder of DiEM25 and the former minister of finance of Greece. He is the author of Adults in the Room and The Global Minotaur, among other books.
