Talking to my daughter: A brief history of capitalism – Yanis Varoufakis

15-8-19

Dear Partners in thought,

Before I start on this new Book Note, I wanted to let you know that my Book Notes may be shorter in the future, not because I suddenly became lazy but as I found out that you did not have all the time in the world to spend on my musings and I also did not want to tell you too much – which I admittedly did – in discussing those books so you would want to read them. I already feel a wave of warm support and appreciation reaching me in Prague from so many parts of the world… 

I wanted to tell you today about a book that is aimed at explaining the economy to the young (and in his mind, of course, not so young), written by Yanis Varoufakis (I feel eyes rolling), the  colourful (not to say firebrand) former economics minister in the early Tsipras government in Greece when the country was making the headlines as to whether it would repay its public international debt and would not eventually leave the EU. While things are much calmer in the cradle of Western civilisation with Tsipras now seen as a reformer and even defender of the EU (see the FT Special in May 2019), this feeling being strengthened by a former McKinseyite as new PM, YV having left the government some time ago, has been much on the circuit for speeches and conferences while sharing his experience in print. While many see him as an opportunist who may sail closely if unwittingly to the bad populist winds, there is no denying his brio, intellect and attractive persona. He also knows how to sell his message and himself, marketing the V brand very well as he goes on the speaking yours or even talk about Greece on various TV channels. Amusingly his book was shown to me by a very serious private equity veteran who seemed to like YV’s mix of iconoclastic flavour and Bernie Sanders approach, showing that a differentiated style matters as much as the rest for getting one’s messages across.     

His book is short and simple but very smart and entertaining. It is indeed a conversation (or a one sided, multiple address via letters) with Xenia, his daughter where he tries to explain to her the major tenets of economics in ways that would “resonate” with her. YV first wrote it in Greek with the English translation coming up later. His daughter, representing the young target audience (and let’s be clear all of us) lives in Australia so he could have gone “English” as he started the first time around, also as he masters the language like few of us foreigners can. Admirably he wrote it in eight days on the island of Aegina between meals and a bit of sailing – what is it not to like? Especially in these summery times…Clearly it is a funny and radical way to explain the economy to one’s daughter (the word “capitalism” in the sub-heading makes you wonder about another bearded thinker who would probably agree with YV today but also missed the point in his days about where the revolution would start). However taken as a piece of clever entertainment, it is really a good read while it makes you think about a few facts we always have taken for granted.    

YV addresses the main issue of “Why so much inequality?” that seems to have bothered him for ages. We learn why Europeans and their geography and agricultural surpluses (cultivating land being the key genesis fact for later success) conquered the rest of the world that was often more rich and full of “plentiful” cultures that did not need to bother about conquests or defending themselves. On the way, we learn the origin of writing (I say “we” though I should say “am” as many of you doubtless know already the need to check those amounts of grain in the Mesopotamian granaries). We learn why the British conquered Australian aborigines and not the other way around, which if an odd example to discuss inequality, is nonetheless a great dinner table topic. His main message is that Europeans did not prevail as they were smarter but as they had been given less natural assets and had to work harder that in turn started a cycle that led to the cycle of conquests that we know. Bureaucracy, armies and clergies, all established for the preservation of a certain order of things were by-products of agricultural surpluses that created Western kingdoms and nations. We then go on to understanding better the difference between goods and commodities and why debt and profits are the key elements that makes our world go around. The nemesis banking sector and its bankers are of course well covered while “haunted machines” are addressed in what is becoming a rising robotisation trend. He discusses economic instability as a chronic risk and why our economic system benefits some while impoverishing others, be they individuals or nations. All in all, these chapters or indeed letters to his daughter, cover the key pieces of the economic puzzle and address what are for YV the major issues linked to inequality in today’s world and why market-driven policies are not solving the more pressing issues facing our world. His main objective is to ensure that Xenia (and us) think about those points, be equipped better about what he sees as the failures and obfuscations of the current system and thrive for a more democratic alternative and outcome in the way the economy and indeed capitalism work.    

 I would probably not want YV to run my national economy while I would be happy to go on holiday with him – as he is very entertaining and has a knack for explaining economics in a fun manner even if his overall focus is of course highly radical. Conversely I would not like to go on holiday with many people I would trust blindly for running my national economy but whom by definition would be boring to spend time with. He is definitely more radical than progressive economists who nonetheless are playing the “game”, like Nobel laureates Joseph Stiglitz or Paul Krugman, but probably more fun to read in this very “Talking to my Daughter” instance. This is why I recommend that you read YV’s book (maybe for some if not many not to say all as a great piece of fiction) while enjoying some relaxing time somewhere not too hot…(now if you wanted to have a slightly more classical though also entertaining way to think about economics, I also recommend you to take Paul Krugman’s Master Class on the subject http://www.masterclass.com . So you know, I myself took wonderful Aaron Sorkin’s on screenwriting and the art of the dialogue. A gift of one of my daughters “talking to me” to tie this back to YV). 

Warmest regards,

Serge