“There is a ray of hope”: economists on the coronavirus and capitalism | News from the world

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David McWilliams: I think it is fair to say that capitalism – during this unprecedented crisis – has been suspended. We are not going back to where we were, in business as usual. The state has returned and this episode will not be forgotten by the electorate. I don’t know where we’re going, but one thing seems clear: we’re not coming back.

Yanis Varoufakis: I like this sentence: capitalism has been suspended. The last time capitalism was suspended in the West, it was during the Second World War, with the advent of the war economy: a command economy that set prices. The war economy marked the transcendence of the standard capitalist model.

But what we are seeing now is not so much the suspension of capitalism. The rules of capitalism may have been suspended – all these sacrosanct policies have disappeared, the clear separation of fiscal and monetary policy has disappeared, the idea that public debt is a bad thing has disappeared.

But the institutions that are necessary to build the “war-free war economy” so to speak – to suspend and transcend capitalism – these have not been put in place. There is a profound difference between saying, “Everything is going to mess up, so we don’t expect you to follow the rules” and saying, “The rules themselves have changed, and we need to create new ones to avoid a economic collapse. . All this talk of quantitative easing from the European Central Bank suggests that we are very far from a war economy mentality.

DM: This is a familiar category error in Europe. If you base your economic policy on the willingness of overly traumatized and sick people to borrow – which is the basic logic of quantitative easing – then you have a very serious problem. A common picture of quantitative easing is the pipe: a huge money pipe, with water gushing to stop the heat of the crisis. But the monetary policy tip is limited by that little valve called the banks, a little valve called the credit committee, a little valve called “the willingness of companies to borrow money.” And ultimately, that silver pipe becomes a net – and even this net benefits the rich much more than the poor.

So I understand that, despite the suspension of the rules, the infrastructure remains in place. But people across Europe are now saying, “Hey, there is an alternative. This second phase will focus on how we are moving forward to rethink capitalism, rethink finance, rethink the functioning of economies and for whom – potentially towards a new Bretton Woods style regulation for the whole economy. world.

This is where we are: the first year of the third decade of the 21st century. Looking at the next decade, army of history and economy, what do you think the world and European economy will look like?




Yanis Varoufakis

Yanis Varoufakis. Photography: Daniel Leal-Olivas / AFP / Getty Images

YV: We are seated on a seatpost, ready to swing back and forth. It is entirely undetermined which of the two directions we are traveling.

Let’s start with the positive scenario. It builds on your perspective on the prospects for a new Bretton Woods – with its particular manifestation in the European Union.

If we are going to have continental consolidation, what should it look like? It would not be a federation, because – even if it is more necessary than ever – it is less likely than ever, because the centrifugal forces of the coronavirus crisis, the migration crisis and the euro crisis separate us . But the alternative is to deploy the existing [EU] institutions in a way that can simulate a federated Europe, and we can do it tomorrow, if we wish: to immediately provide money to all those struggling in poverty, to invest in the green transition.

There is a ray of hope here, because there is a profound difference between 2020 and 2010. At the time, when Ireland and Greece collapsed, there were remarkable differences between what our countries lived and what Germany was going through, what the Netherlands was going through. Today, the German industrial machine has broken down – and was broken long before the coronavirus struck. Two main industries – automobiles and machine tools – were already in serious trouble. So the fact that Germany is now in the same pile of shit as the rest of us gives us a glimmer of hope that they might say: what should we do? It is no longer: “Your problem: here is the Troika. “

DM: And we will also send you the invoice! So that’s the positive scenario. The end of the “status quo” paves the way for new policies and new possibilities for Europe and beyond. What is the other option?

YV: Well, we humans – and we Europeans in particular – like to miss fantastic opportunities and end up with dystopian results instead. It is very likely that we will encounter the same recalcitrants from the same series of European ordoliberals, who will continue to obstruct progress towards authentic democratic federalism.

DM: Obviously, such a roadblock will have a disproportionate impact on the southern EU Member States. What do you think will be the impact of this particular trauma on, say, Italy – a founding member of the European Union and a crucial part of Europe’s emotional hinterland?

YV: Whenever there is a crisis in Europe, Italian growth rates fall. Whenever there is a problem, Italy sinks further into stagnation – with Salvini waiting behind the scenes. If Frankfurt, Berlin and Brussels fail again to move towards the positive scenario, Italy – not only Italy, but all the most devastated regions of Europe – will once again move towards the neo-fascist right . In this case, all bets are deactivated.

This is the end of the negative scenario: a giant domino effect, leading to the disintegration of the European Union. Not that the EU will cease to exist. Only it will become irrelevant, like the Commonwealth of Independent States.

DM: Oh, I remember the Commonwealth of Independent States very well …

YV: It still exists! He still has an office in Moscow. The negative scenario is therefore that the European Union will become like the CIS. And it will be music to the ears of Trumps, Bolsonaros and Modis of this world. We would enter a global transactional Hobbesian economy: unpleasant, brutal and poor for the majority of people.

DM: When I was born in Ireland, the country was very poor. And then he got quite rich, on the back of the European project, on the back of Europe’s position in the global supply chain, and with a fiscal policy that attracted a lot, a lot of capital. I have the impression that this model may have disappeared, and this style of globalization with it. I’m afraid the time when you could travel, hire, travel – we may have reached the end of that open time. People will say, “This virus came from the cosmopolitan world, from the world of the international movement. Whether it is fair or not, we could start blaming people. We know that the Black Death has provoked fierce anti-Semitism in Europe. People asked, “Who can we blame for this?” And so they blamed the community that was already isolated in the ghetto.

This is what scares me the most, sitting here for the first year of the third decade of the 21st century. What we have seen before can come back, and we come back to Yeats: “Turning and turning in the widening whirlwind / The falcon cannot hear the falconer; / Things are falling apart; the center cannot hold; / Simple anarchy is untied on the world. I fear now, unless we move quickly and in a new direction, that the world my children will inherit will become very nasty. So this is a bugle call.

YV: The strongest call of a generation. I share all your concern for the future, although I must challenge the analysis on which it is based. The opening you describe has always gone hand in hand with severe restrictions: NAFTA and the US-Mexico border; free movement in Europe and Frontex along the Mediterranean. It’s not a contradiction; it’s the logic of a system that values ​​the movement of capital over the freedom of human beings.

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