Yanis Varoufakis: Can a professed erratic Marxist, and newly minted Greek Finance Minister, talk Europe down from the ledge?
Bullion.Directory precious metals analysis 5 February, 2015
By Terry Kinder
Investor, Technical Analyst
Yanis Varoufakis, the man whose name, even as we speak, is causing English word processor spell checkers around the world to have a fit, is a self-described erratic Marxist. Considering my own libertarian / anarcho-capitalist leanings I would have thought Yanis Varoufakis and I would have nothing in common. It turns out that, despite our wildly divergent views of the world, we do have some common ground.
To get a feel for where Varoufakis is coming from take a look at the video below where he offers his modest proposal for a way forward for Europe out of its current crisis:
Another video worth watching in its entirety is Yanis Varoufakis: Confessions of an Erratic Marxist. If you would rather read the text of his speech you can do so here.
Now, while Mr. Varoufakis and I are worlds apart on capitalism versus Marxism, I find many of his observations very apt. These are my impressions, so hopefully I am not mis-characterizing what he has said.
1. Varoufakis points out that the euro was constructed incorrectly from the start. Martin Armstrong has made a similar observation. Essentially, the euro was doomed to failure because Europe did not consolidate its debts. This created an impossible situation for countries such as Greece, Portugal, Spain, etc. Without shared debt or common debt issuance, you essentially have a two-tiered Europe with wealthy nations from the north benefiting long-term while countries in southern Europe do not.
2. Tying in with the above is the fact that the faulty foundation of the euro made it extremely vulnerable to any significant financial crisis. He explains this in The Global Minotaur: The Crash of 2008 and the Euro-Zone Crisis in Historical Perspective.
In essence, the Global Financial Crisis (GFC) brought to an end the post-Bretton Woods system and mortally wounded the “Global Minotaur”, aka the United States. After World War II the United States had provided Europe, China, Japan and other nations, a place to sell their surplus production to and, also, a place to recycle their dollars. After the GFC the United States was significantly weakened and was no longer able to be depended on for this function. Unfortunately, the euro was created with the assumption that the U.S. would continue in its role of “Global Minotaur” indefinitely. Once the U.S. could no longer do so, the euro and, in turn, Europe began to crumble.
Can Yanis Varoufakis, a self-described erratic Marxist, talk Europe down from the ledge? Image: yanisvaroufakis
3. You can’t borrow your way out of a debt crisis. Varoufakis offered this bit of common sense not usually heard from finance ministers:
You know that I can’t really repay you the money I already borrowed and now you’re asking me to borrow more.
4. If the euro crisis is not resolved something worse is going to emerge. Whether it is fascism, war or something else, it won’t be good. Without some kind of debt restructuring it seems very unlikely the euro will hold together.
5. The old gold standard and relatively new euro were both doomed to failure. I don’t view that so much as a criticism of gold as simply pointing out what happens when you politicize gold or a currency. Politicians will always find a way to wriggle free from monetary and fiscal constraints. A reinstatement of some kind of gold standard would not be a panacea. Certainly, Varoufakis has a more negative view of gold than a good number of you reading this article. However, I am always amazed at the number of people who distrust government, point to the mess that governments have made of the economy, yet turn right around and suggest that somehow government managing gold and setting the price will bring about different results.
The above are just a few of the interesting points that Yanis Varoufakis has made. Personally, I can’t find much to disagree with. Essentially Varoufakis wants to “save” capitalism because he believes the alternative would be much worse.
Down the road, I imagine, once the economic situation has improved, he would like to see more policies amenable to Marxism enacted. That would certainly not be something I could ever see myself agreeing with. After all, I prefer microscopic rather than leviathan government.
Despite Yanis Varoufakis’ Marxism, I find myself agreeing with much of what he says. It certainly would be a bit of an irony if, in the end, a Marxist succeeds in allowing capitalism to live to fight another day and, in turn, talks Europe down from the ledge.
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