Yanis Varoufakis on capitalism's incompatibility with democracy

Originally published at: https://boingboing.net/2018/11/13/thiel-vs-varoufakis.html


People who claim to owe society nothing sure take a lot of “free” stuff from it. Human language, for example.


I’ll listen to this later, but I disagree with both Libertarians like Thiel and left-wingers like Varoufakis on the premise of fundamental incompatibility. What’s missing in both views is an appreciation of the societal value of a strong middle class (including unionised blue-collar workers) to create a stable and beneficial equilibrium between liberal democracy and capitalism – one we enjoyed in the U.S. for three generations.

Late-stage capitalism does indeed co-opt the political sphere in the way Varoufakis describes, but to get there it first needs to decimate the middle class to the point where the remnant is too busy being set against each-other and against the proletariat to pay attention to the top 1% (or 10% or 20%, depending on how one reckons these thing) and corporate entities taking control of politics.

I will grant that the period from 1945 to roughly 2000 was an anomalous one in world history and that perhaps we’re returning to “normal.” However, anomalous != impossible and political economies are ultimately human constructs that can be preserved or destroyed according to human will.


Thomas Piketty has something to tell you about the historic anomaly that is the mid-20th century. (Specifically r > g, and the stability you ascribe to a unionized middle class was a consequence not a cause of the redistribution of wealth immediately following the second world war.)

Caveat: I am a union member, pro-union, etc.


I’m already aware of that, hence my use of the term “anomalous” in my last paragraph. Piketty points out that a wealth tax combined with progressive income taxes could preserve the middle class by reducing inequality but claims that is politically impossible. I would disagree with that last as a permanent condition – the question is whether the possibility comes about in a soft or hard way. The next decade, or perhaps the 2020 election, should decide that question in the U.S.

At the beginning it was indeed a consequence, because the powers-that-be had no choice and had learned from the errors made following the Great War. However, in the longer term it became an on-going cause of post-war prosperity. From 1945 to 1980, the consensus was to focus on “g” rather than “r”, but Reaganism/Thatcherism flipped that around under the erroneous trickle-down theory that g should track r.


That increased societal value and equilibrium were mostly an illusion, with the true costs exported to the lower class, non-whites, non-males, the third world and any country caught in the sights of our military-industrial complex. The people of Earth will spent several generations and trillions of dollars addressing the vast, lingering externalities generated by coddling (almost exclusively) white American males for a few decades. The costs far outweigh the benefits when you look at the big picture.


That’s absolutely true. It’s also where the real discussion about inequality should be, rather than some perceived fundamental incompatibility between democracy and capitalism in their broadest philosophical senses.


I agree with you - the existence of Social Democracy’s that are vibrant capitalist states like Sweden basically flys in the face of this assertion.

The example from Sweden is that the people - in the form of the State - highly regulates the capitalism. This is reinforced by a strong cultural belief that this is the way it should be, and hence even corporate CEOs and shareholders do not work to undermine it.

We on the other hand need to be vigilant and combative to prevent social support systems from being dismantled by the small percentage that benefit the most from not paying for them. We have to be far more assertive about these issues than your average Swede.


Having lived all my life in a northern European social democracy, albeit with a more capitalist bent than the scandinavians, I have to agree. It’s possible to combine the two but you have to regulate relentlessly. If you don’t free market believers will quickly tear down the wellfare state you’ve built. I don’t particularly agree that in the US you have to increase your effort, keeping up a system like this is just as taxing (heh) as creating it. You’re never finished, it needs constant maintenance.


Correct. The problem in the U.S. has been that conservatives and Libertarians have spent 35 years propagandising to the point where many people equate any regulation with the dreaded “soshalist” Ro-o-oad to Serfdom.

And since regulation in Western countries emerges in some sense from democratically elected policy makers, by extension democracy in the Libertarian fundie view is incompatible capitalism. Which is BS, of course.


I’d say it goes back a lot further, the cold war pretty much equalized socialism with communism, especially the hopeless soviet version. This is of course a particularly heinous exaggeration but you know, propaganda. The Reaganites just built on this.


So true. My brother told me that Sweden and Cuba were basically equivalent. -headslap-


Just keep in mind that Sweden abolished inheritance taxes and taxes on gifts in 2005 and in 2007 introduced a rather low maximum value on estate taxes that was a huge boon to those with expensive property. We’ve also had a wave of privatizations, with lots of private schools etc and test results falling through the floor. In some ways we are now a test bed for how to turn a social democratic state into a more unfettered capitalist state. (and of course many blame immigrants when public service is reduced with far right parties gaining ground).


I know - I am aware of the right wing push in Sweden’s politics. But your right wingers (aside from their attitudes towards immigrants) are left of our Centrist Democrats.

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Are you sure they are not just “getting started”?

What’s going on in Sweden does sound, in a few respects perhaps, rather similar to what it felt like when the UK started to dismantle market regulation and welfare, and privatize not only “arm’s length” agencies but core state functions. The 80’s and 90’s, very roughly.

Yeah, they’re just getting started in Sweden. Best to assume that. Assuming anything else is dangerous.


To a degree Sverigedemokraterna are the ones who most want to preserve the old social democratic state, which they think they can do if they just get rid of all foreigners, although their policies are a bit diffuse on all issues except immigration as is common in modern populist platforms. In reality they tend to prefer to cooperate with the traditional liberal (European definition, not the US one where ‘liberal’ tends to mean what we’d call a social democrat) and conservative parties.

Geert Wilders is the same, xenophobe but a big fan of the wellfare state. It’s a strange combination of left and right, but these are strange times.

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No, actually I think this is particular to the Swedish mindset, where social democracy is not in question as much as the threat to it by outsiders.

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the German finance minister Gerhard Schauble

That would be former German finance minister, Wolfgang Schäuble. FTFY.

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