Europe's Dereliction of Duty: Unmasking Capitalism's Failures and the Power of Art in Crisis

This podcast episode features Yanis Varoufakis and Danae Stratou discussing how the COVID-19 pandemic has unmasked fundamental failings in society and the global economic structure. Varoufakis argues that the pandemic revealed the immense, often forgotten, power of politics, shifting it from a mere 'game' to a stark demonstration of 'who does what to whom.' Simultaneously, it exposed the inherent fragility of financial capitalism, which, since 2008, has created 'socialist conditions for the very few and harsh stringent austerity for the many,' and is now 'not fit for purpose' but continues to entrench the power of the rich. Stratou adds that the crisis forced a pause from 'crazy rhythms,' allowing a return to basic values, but also starkly highlighted global inequalities, particularly for frontline workers and artists who lack official support.

The discussion delves into the precarious architecture of the European Union, which Varoufakis contends is 'buckling under the hubris of its establishment' and moving in the 'wrong direction.' He uses Italy as a prime example, explaining how its massive public debt and reliance on small businesses and tourism make it vulnerable to a 'gigantic austerity wallop' once Germany balances its books. Europe's 'dereliction of duty' stems from a 'category error,' confusing bankruptcies with illiquidity and applying loans to the bankrupt, mirroring the mistakes of 2010. This flawed approach is fostering widespread discontent, leading to a dangerous rise of the 'xenophobic right' and 'recalcitrant nativism' across the continent.

Varoufakis revisits his 'Global Minotaur' metaphor, describing the US economy's role in devouring global net exports and profits, inflating financialization, and creating bubbles. He asserts that the beast is wounded but not dead, and the post-2008 period, characterized by central banks pumping liquidity into the financial sector without converting it into real investment, has bred the discontent fueling figures like Trump and Bolsonaro. He then plugs his upcoming science fiction book, 'Another Now,' which imagines an alternative trajectory from 2008, featuring a socio-economic system without share markets or private banks, reflecting a yearning for a different economic paradigm.

Stratou emphasizes the critical role of art, not as a luxury, but as an essential reflection of the human condition and societal history. She advocates for art's organic integration into social science curricula, highlighting its capacity to shed light on issues like inequality and climate change in ways that political or journalistic language cannot. Both speakers critique mainstream economics for its 'scientism,' its 'physics and mathematics envy,' and its reliance on models that lack fundamental elements like labor, money, and debt, serving as an 'indoctrination' that reinforces oligarchic power rather than genuinely explaining or improving the economy. The conversation concludes with a strong emphasis on climate change as the ultimate, overarching crisis that art, working with technology, must help address.

"politics in the end is about who does what to whom"

"the already fragile financial capitalism that we lived in... is now simply not fit for purpose but it's not going away"

"inequality was exposed because of course we have the possibility to be in our home and be safe and in this environment but other people do not"

"europe is sort of halfway there it's not an integrated nation with fiscal policy transfers and so forth on the other hand it has monetary integration"

"the architecture of the european union is simply buckling under the hubris of its establishment"

"they are confusing a sequence of bankruptcies for a sequence of illiquidity problems so they are throwing loans at the bankrupt and loans have never helped the bankrupt escape bankruptcy"

"the global minotaur... was devouring both the nets of the net exports of countries like germany japan and later china and the profits that capitalists in germany japan and china were making that were heading for wall street inflating financialization and then giving rise to the bubbles at burst in 2008."

"every single textbook has a model of the economy of any economy which lacks labor there's no actual labor happening in there everything is portrayed as a sort of exchange"

"the physics and mathematics envy of economy... it takes ideology even religious beliefs about how markets work and gives them a mathematical structure"

"the big problem that we have is not the the virus that we're now currently going through... it's climate change"