Varoufakis v. the Consensus

Imagine: someone has a Big Idea that Explains Everything. But which poses a Big Problem. So he passes the Big Idea around, and other people come up with Big Solutions to the Big Problem. So soon you have experts who are expert in finding Solutions to the Big Problem, politicians who are itching to put those Solutions into effect, and journalists eager to explain what a Big Problem it is to the masses and bask in the glory of their own borrowed expertise.

Then one day it all goes horribly wrong.

I’m not talking about climate change and renewable energy here, but about European Union and the Euro. The problem was rebuilding a wartorn continent without reigniting old rivalries, and the solution was the European Economic Community and eventually the European Union, to be cemented by a common currency. And it went horribly wrong in the 2008 crash, first for Cyprus, then for Greece. The European Union was saved, at the price of a level of youth unemployment in some of the world’s once great powers (Greece, Portugal, Spain, Italy) normally associated with impoverished African dictatorships.

[If there’s one thing which keeps me resolutely on the left and stops me from becoming a Spectator-reading Delingpole fan it’s youth unemployment. It means mass migration to London of the most adventurous to serve sandwiches in Subway, while millions of other twenty somethings live at home with their parents. It means I can pop across the border to Catalonia and have a superb cheap meal served by a charming young person who speaks three languages. It means a soaring rate of suicides, murders and alcoholism among middle aged males in around 2030. Unless someone gives them hope by waving a flag. Which brings us back to Catalonia.]

There are a lot of similarities between the dream of a conflict-free Europe and a carbon-free economy, between an unworkable currency and an unworkable energy policy. Except that – so far – it hasn’t gone horribly wrong for energy policy. Gas prices are due to rise 6% or more per year for ever in France, and diesel even more, thanks to our ecology minister, the most popular politician in France. How long can that last? How long can Merkel square the circle between the pro-business FDP and the Greens and the SDP? When will the Poles’ carbonophilia cause the patience of the Commission to crack? In which country will the lights go out when a malfunctioning nuclear plant or a crack in a gas pipeline causes a rupture in supplies that renewable energy can’t cope with? We don’t know.

But we do know what happened when Greece nearly brought the Euro to the point of explosion. And we know thanks to a book by the Greek Economy Minister, Yannis Varoufakis.

I can’t recommend Adults in the Room enough. It’s funny because it’s so serious, like a Stoppard play. It’s riveting like a John le Carré novel, combining the structure of a chess game with the psychology of common mortals, who just happen to be the most powerful people in the richest continent on the planet. And it’s true, because he recorded everything on his phone, which neither Thucydides nor Alan Clark thought to do.

Varoufakis is known as one of those lefty role models who are regularly paraded in our media as a kind of sop to the idea of breadth of opinion, like Nelson Mandela, Che Guevara, or our own dear Ken Livingstone. We all love his leather jacket and his motorbike. Shame about the politics.

He was never a member of Syriza, but agreed to join the government out of personal sympathy for the courage of Alexis Tsipras. He describes himself as a Marxist, and counts Bernie Sanders among his fans, but he is also close to George Soros, the left liberal economist James Galbraith, and our own dear Norman Lamont. He prefers the company of intelligent rightwing economists to leftwing idiots. Like Trotsky, he doesn’t suffer fools gladly. (And look where that got him.) Varoufakis has got off lightly, so far.

Near the beginning of the book he recounts a conversation with former Treasury Secretary Larry Summers in a Washington bar, in which Summers says:

There are two kinds of politicians, the insiders and the outsiders. The second kind value their freedom to expose their version of the truth. The price of their freedom is to be ignored by the insiders, who make all the important decisions. The insiders have one Golden Rule: never to criticise their colleagues, and never to repeat what they say or do to others. What’s their advantage? Their access to confidential information, and the possibility, not guaranteed, of having an influence on important people and events. So, Yannis, what kind are you?

[I’ve translated back from the rather poor French translation I’m reading. Not a bad policy, actually, since most of the conversations Varouvakis recounts are in English, but between actors for whom English is not their first language. So my painful retranslation replicates the painful experience of the actors. Varouvakis’s knowledge of English is excellent, by the way, and he peppers his account with quotations from Shakespeare, T.S. Eliot and Dylan Thomas]

Summers’ insight, which he’s repeated elsewhere, applies perfectly to the climate scientists, the scientific functionaries,and the rare scientifically literate politicians who are no doubt faced daily with the same dilemma. Imagine for a moment if you will a young, leather jacketed Peter Lilley promoted to Environment Minister in a Conservative government, having made a pact with a young inexperienced Conservative PM to never cede to absurd international demands to ban the petrol engine and cover the country with windfarms. How long would he have lasted? Varoufakis lasted five months, not because he was weak, but because he refused to give in.

There are other interesting parallels, like the section on the war of the economic models. The models provided by the troika of the IMF, the EU and European Central Bank were economically absurd, which the modelers admitted. But what did that matter, as long as they produced the required results?

But the really interesting parallel is the account of what happens when the entire system is shown to be based on false premisses, when the European economy is faced with possible collapse due to its inherent absurdity. Does reason prevail? Do politicians and experts admit past errors? Of course not.

They double down. They lie, to themselves, to each other, and to us. And they exercise power – illegitimate power. In the case of the Euro crisis, it’s the Eurogroup, the council of ministers of the economy of the Eurozone, a body with no official existence, which effectively governs the economy of the richest continent on the planet. (Chinese Communist Party anybody?) And they crush anyone, like Varoufakis, who proves to be their intellectual equal and sufficiently courageous to remain an outsider to the end. And they exercise their power by lying about him, by lying to him, by tapping his phone, and by not bothering to hide the fact that they’re tapping his phone. Tapping his phone was the one thing they didn’t need to lie about. They had the power.

Varoufakis has reacted to his spectacular defeat by forming a party, resolutely leftwing, resolutely pro-European (to resist the rise of a neo-fascist nationalism, much more probable in Europe than we Brits can imagine) and resolutely Green.

Which is why I’ll continue to read dear old Delingpole, and why I can’t be bothered to open the mails from Varoufakis’s party, which I’ve supposedly joined.

Still, read his book. It’s about power, and power is what it’s all about.


  1. Yanis Varoufakis has been much on my mind of late, because of my interest in uncertainty, otherwise known as the ignorance of experts. I’ve been thinking about my three favourite Remainers – or, perhaps more accurately, advocates of voting Remain prior to 23rd June 2016. These are Varoufakis, Jenkins and Jill. Jill is my mother’s best friend and voted to stay in the EU, then chastised her children for going on marches to protest the result. It didn’t fit with her very English sense of fair play. Top marks. Simon Jenkins’ reaction in The Guardian was likewise ebulliently cheerful, as his expertise was binned by the masses. I’ll dig that out another time. But it was Varoufakis, speaking as an economist, who most clearly stated, before the vote – I heard him on the BBC’s Andrew Marr show – that no economist could know the consequences of such an unprecedented event. Many of his peers were at that time claiming they knew. They were proved wrong in the immediate aftermath, meaning of course they are even more certain now. Compared to them Yanis Varoufakis is a shining light.

    So I endorse this message. Whatever’s in the book or that Green manifesto. This is an honest man.

    Liked by 1 person

  2. I don’t like Varofakir because he’s a chavista, and I’ve seen first hand what the hard left does to countries which allows them to gain power.

    Unemployment in Cataluña is going to drop less than the rest of Spain, in part because over 3000 companies have moved their head offices elsewhere, and investment has dropped. Some felt the electoral victory by Ciudadanos, the unionist party headed by Ines Arrimadas, would defuse the economic malaise, but the current gerrymandering left the unionist block short of the majority in parliament (they won the popular vote, but came up short in the deputy count). The current mess will probably go on for a while. Interestingly, the economic engine, the province of Barcelona, is not separatist. This means there’s an interesting way out: the constitution allows a province to become an autonomous community. I suspect that, if separatism continues its campaign of hate and xenophobia, and the economy in Barcelona starts to suffer, they will indeed carve themselves out of Cataluña. And the remaining pieces will have a per capita GDP similar to the poorer areas in Spain. Interesting, isn’t it?


    Varoufakis is far from being a Chavista. His friendship with fellow economists of all political colours, like Norman Lamont, Mrs Thatcher’s ex-Chancellor, won him the suspicion of the left of the Syriza party. Most Anglo-Saxon economists view the economic policies of the EU as irrational. At one time I believe at leat three Greek cabinet ministers had studied economics at British universities. It’s an odd thing about the British that they have little interest or knowledge of the kinds of influence their country has abroad. I agree with you about the Catalan mess.

    The interest of his book to me is its depiction of what happens when an irrational policy breaks down. The Greek austerity programme was devised initially to save the German and French banks. Once that had been achieved, the aim was to save the euro, either by ejecting Greece (Shaüble’s preferred option) or by getting the Greeks to accept eternal austerity (the Merkel plan). The IMF and the European central bank were more or less reluctant players in this giant poker game. Time and again Varoufakis recounts how key players admit that the European position is irrational, but no-one canl admit it publicly or change it. Christine Lagarde’s famous remark about “adults in the room” was taken to mean that Varoufakis was being childish, but it seems to have been a more general observation that no one was in charge.

    Apply this lesson to a possible breakdown of current European energy policy (due to a revolt by consumers or whatever) and the outlook seems extremely pessimistic. A complicating factor sems to be that, in France Germany and possibly the UK, the only parties which accept climate scepticism are on the far right.


  4. Geoff
    Thanks for an interesting and intriguing review of the Varoufakis book. He does, as you point out, seem to show what will happen when the current EU energy policy falls apart.

    One thing I didn’t understand, and that was your saying that you were still “…resolutely on the left” because of the crippling and cruel levels of youth unemployment in Greece etc. Surely these are the product of the EU’s/Germany’s imposed economic policies? Just wondering.


  5. “If there’s one thing which keeps me resolutely on the left and stops me from becoming a Spectator-reading Delingpole fan it’s youth unemployment”

    I realize it is probably WAY off topic but what exactly binds these two concepts together? It seems to me that the left’s insistence on large minimum wage creates an economic wedge that inhibits employing anyone whose labor happens to be less valued than the current minimum wage. A more libertarian outlook allows employers and employees to negotiate wages; thus eliminating that “wedge” and increasing employment — recognizing that for some or many, their employment will likely be below current minimum wage (see the “Iron Law of Wages”). Governments can mandate wages but they cannot mandate worth or value. It is this disparity, in my opinion, that creates unemployment (or is the leading factor). The extreme example would be to set a spectacularly high minimum wage such that very few people’s talent brings in more revenue than their labor costs the employer. You end up with a huge army of unemployed and such as are employed must be taxed nearly 100 percent for the social services for all those unemployed.

    So what about the hypothetical alternative (as if there’s only two)? Completely libertarian economics? Well, it produced huge growth in the United States but also created a few dynasties of wealthy families who then created the tax system and, being as they had created it, also benefited from it and continue. It certainly isn’t libertarian today.


    My apologies for my aside which I admit was a bit obscure to anyone who doesn’t follow obsessively the debate about climate politics. My political views really have nothing to do with the argument I was trying to make, which was about how Varoufakis, an avowed Marxist, proposing sane economic policies supported by vast range of economists, from millionaire investor George Soros through conservative Norman Lamont to liberal James Galbraith, found himself blocked by the establishment, not because he was wrong, but precisely because he was right and the establishment couln’t admit that they were wrong.

    Christine Lagarde of the IMF privately agreed that he was right. Even Schaüble said that, in his shoes, he would have taken the same decisions. This seems to me to be an awful warning of what may happen when the climate /renewable energy debate reaches a crisis point, either through some spectacular energy failure, or a consumer revolt against high energy prices, or almost any unpredictable geopolitical crisis. Opposition will be crushed.

    Suppose the West actually stumped up the $100 billion p.a. promised to the “non-annex one” countries in the Paris Agreement, and taxpayers discovered that part of it was going to Saudi Arabia and South Korea? Or that another gas pipeline developed a crack and there was no backup for windless days, and people got stuck in lifts in their thousands? This is when the political sceptics step up, and as far as I know, they’re mostly in UKIP, the Front National and Alternativ für Deutschland.
    See for a programme I think most of us sceptics would support. The proposed reading list for Front National activists is at
    and it’s pretty hot stuff.

    Michael2 makes a good libertarian case for the classic economic model of free capitalists facing off against workers freely organised in trade unions. Nearly a century ago, Gramsci, Keynes and Hitler, in their different ways, showed that things are not so simple. My off-topic point about unemployment was aimed at the frequently expressed rightwing opinion that “there’s no such thing as society.” The left is as guilty as the right here in washing their hands of the problem with a reaction: ”Isn’t it a shame, so many idle hands. Let’s give them something to do – green jobs repairing river banks, or another fast food outlet with workers on a minimum wage zero hours contract.” Neither understands the profound meaning of an underemployed generation – a third of the population which can never hope to marry and buy a house, while the other two thirds work their arses off to hold on to their precarious place in this absurd setup.

    If you’re American or British, you live in a society where full employment is written into the constitution of the Fed, or at least unwritten in the DNA of politicians. Not so in Europe. A balanced budget and the impossibility of rescuing failed states is in the German constitution, and therefore in the DNA of the European Union.

    I’d wish you a Happy New Year, but we’re not quite there yet here in France. Because, though we’re on the Greenwich Meridian, since 1940 we’ve been observing Eastern European (Berlin) time. I wonder why.

    Happy New Year anyway.

    [Correction. Thanks to the foresight of the Vichy government in 1940 we’re entering the New Year earlier than the silly Brits, and so are the Spanish, thanks to Franco. Hooray for European unity]


  7. Even the celestial timekeeper bows before the almighty power of Brussels/Strasbourg bureaucrats. Only Portugal and Eire retain their true time allegiance, but will they crumble with the onset of Brexit?


  8. Not just the Eurozone.

    Back on Christmas Eve 1991 there were two superpowers in the World.

    On Christmas Day 1991, there was one superpower – the United States of America plus a rag-tag collection of failed states and Upper Volta with nuclear missiles.

    The intriguing thing about this was, not a single one of the innumerable Western intelligence services – 17 in the USA alone AFAIK – nor any of the plethora of political pundits had predicted this sudden catastrophic implosion.

    When the EUSSR goes pop, it will do so just as suddenly and spectacularly, just like that, overnight.

    Then the fun will really start.

    Thank Heaven for the English Channel!

    Liked by 1 person

  9. You guys need to listen to Sunday’s BH
    When J Vine admitted to epiphany “Experience trumps Experts”

    Note how libmob’s Samira Ahmed tackled the argument by strawmanning it
    as “Feelings vs expertise”
    See discussion on

    I’d already given my own comments and direct links to audio segs in B-BBC

    Liked by 1 person

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