The seven
secrets of 2020
by Yanis Varoufakis on 4th
January 2021 @yanisvaroufakis
National
governments had been choosing not to exercise enormous powers so those
globalisation had enriched could exercise their own.
A house of
cards. A set of lies we have unconsciously accepted. That’s what our
certainties seem like during profound crises. Such episodes shock us into recognising
how unsafe our assumptions are. That is why this year has resembled a rapidly
receding tide, forcing us to confront submerged truths.
We used to
think, with good reason, that globalisation had defanged national governments.
Presidents cowered before the bond markets. Prime ministers ignored their
country’s poor but never Standard & Poor’s. Finance ministers behaved like
Goldman Sachs’ knaves and the International Monetary Fund’s satraps. Media
moguls, oil men and financiers, no less than left-wing critics of globalised
capitalism, agreed that governments were no longer in control.
Bared teeth
Then the
pandemic struck. Overnight, governments grew claws and bared sharpened teeth.
They closed borders and grounded planes,
imposed draconian curfews on our cities, shut down our theatres and museums and
forbade us from comforting our dying parents. They even did what no one thought
possible before the apocalypse: they cancelled sporting events.
The first
secret was thus exposed: governments retain inexorable power. What we
discovered in 2020 is that governments had been choosing not to exercise their
enormous powers so that those whom globalisation had enriched could exercise
their own.
The second
truth is one that many people suspected but were too timid to call out: the
money-tree is real. Governments that proclaimed their impecunity whenever
called upon to pay for a hospital here or a school there suddenly discovered
oodles of cash to pay for furlough wages, nationalise railways, take over
airlines, support carmakers and even prop up gyms and hairdressers.
Those who
normally protest that money does not grow on trees, that governments must let
the chips fall where they may, held their tongue. Financial markets celebrated,
instead of throwing a fit at the state’s spending spree.
Case study
Greece is a
perfect case study of the third truth revealed this year: solvency is a
political decision, at least in the rich west. Back in 2015, Greece’s public debt
of €320 billion towered over a national income of only €176 billion. The
country’s troubles were front-page news around the world and Europe’s leaders
lamented our insolvency.
Today, in the
midst of a pandemic that has made a bad economy worse, Greece is not an issue,
even though our public debt is €33 billion higher, and our income €13 billion
lower, than in 2015. Europe’s powers that be decided that a decade of dealing
with Greece’s bankruptcy was enough, so they chose to declare Greece solvent.
As long as Greeks elect governments that consistently transfer to the
borderless oligarchy whatever (public or private) wealth is left, the European
Central Bank will do whatever it takes—buy as many Greek government bonds as
necessary—to keep the country’s insolvency out of the spotlight.
The fourth
secret that 2020 brought into the open was that the mountains of concentrated
private wealth we observe have very little to do with entrepreneurship. I have
no doubt that Jeff Bezos, Elon Musk or Warren Buffett have a knack for making
money and cornering markets. But only a tiny percentage of their accumulated
loot is the result of the creation of value.
Consider the
stupendous increase since mid-March in the wealth of America’s 614
billionaires. The additional $931 billion they amassed did not result from any
innovation or ingenuity that generated additional profits. They got richer in
their sleep, so to speak, as central banks flooded the financial system with
manufactured money that caused asset prices, and thus billionaires’ wealth, to
skyrocket.
State aid
With the
record-fast development, testing, approval and rollout of Covid-19 vaccines, a
fifth secret was revealed: science depends on state aid and its
effectiveness is oblivious to its public standing. Many commentators have waxed
lyrical about markets’ capacity to respond quickly to humanity’s needs. But the
irony should be lost on no one: the administration of the most anti-science US
president ever—a president who ignored, intimidated, and mocked experts even
during the worst pandemic in a century—allocated $10 billion to ensure that
scientists had the resources they needed.
But there is a
broader secret: while 2020 was a banner year for capitalists, capitalism is no
more. How is that possible? How can capitalists flourish as capitalism evolves into something else?
Easily.
Capitalism’s greatest apostles, such as Adam Smith, emphasised its unintended
consequences: precisely because profit-seeking individuals have no regard for
anyone else, they end up serving society. The key to converting private vice
into public virtue is competition, which impels capitalists to pursue
activities that maximise their profits. In a competitive market, that serves
the common good by boosting the range and quality of available goods and
services while constantly lowering prices.
It is not hard
to see that capitalists can do much better with less competition. This is the
sixth secret that 2020 exposed. Liberated from competition, colossal platform
companies such as Amazon did astonishingly well from capitalism’s demise and
its replacement by something resembling techno-feudalism.
Silver lining
But the seventh
secret that this year revealed represents a silver lining. While bringing about
radical change is never easy, it is now abundantly clear that everything could
be different. There is no longer any reason why we should accept things as they
are. On the contrary, the most important truth of 2020 is captured in Bertolt
Brecht’s apt and elegant aphorism, ‘Because things are the way they are, things
will not remain the way they are.’
I can think of
no greater source of hope than this revelation, delivered in a year most would
prefer to forget.
Republication
forbidden: copyright Project Syndicate 2020—‘The seven secrets of 2020’
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About Yanis Varoufakis
Yanis Varoufakis, a former finance minister of Greece, is leader of the
MeRA25 party and professor of economics at the University of Athens.
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