Anti-austerity showman fails to measure up
As Greek finance minister, Yanis Varoufakis presided over a run on the banking system and intensified his country’s long economic crisis. His policies almost forced Greece out of the euro, an outcome for which there was little public support, and which would have caused an inflationary crisis and a collapse in market confidence. He managed this in little more than five months before resigning in July last year.
For good measure, he alienated every possible ally among EU governments and earned the abiding distrust of other EU finance ministers. For all this failure, he is lauded by Europe’s radical anti-austerity campaigners.
His new book is ostensibly an account of how the forces of capital have prevailed over the common good and of the rickety nature of Europe’s purported recovery from crisis. But most of all it is an account of himself and his own visionary status. I won’t mince words. It’s a tendentious and vainglorious book: a monument to the dreams of a man whose electorate was expendable in the furtherance of dogma. “The slide into totalitarianism is not to be prevented,” he tells us, “by technical means applied by faceless bureaucrats primarily concerned with their own banal careers. It can be prevented only by a functioning, healthy democracy.”
No prizes for guessing who is in the vanguard of this democratic uprising and who are the banal bureaucrats, in Greece and Brussels.
The book is also abysmally written. Varoufakis has a susceptibility to vapid metaphor. It’s not enough to say that economic policy has trade-offs. He has to talk — in relation to Britain’s membership of the EU — of a “tug of war between sovereignty on the one hand and the forces of financialised capital on the other, [which] has led to a precarious halfway house”.
The book’s essential thesis is that the present economic management of Europe by the European Commission and the European Central Bank is not some technocratic, apolitical exercise; rather it is driven by an ideological belief in a smaller state. The rules that govern Europe’s monetary integration are, he maintains, “political whims of the strong disguised as legal constraints upon the weak. The strong break their rules at will and concoct new rules whenever they think it suits them.”
Actually, there’s something in that. It’s true the bigger members of the eurozone have shown tolerance for themselves in setting aside fiscal targets. But Varoufakis overstates his case. He lauds the anti-austerity campaigns of Jeremy Corbyn and the Euroscepticism of Margaret Thatcher, in particular the latter’s objection to the notion of “apolitical money”. By this, he means the Thatcherite critique that a single European currency and single interest rate managed by an independent central bank, supposedly above politics, would undermine the accountability of economic policy to democratic government.
(Thatcher is a particular heroine of his account despite his own fashionable radicalism. “My appreciation of her prescient critique of the euro’s built-in democratic deficit is particularly delightful,” he gushes — apparently believing that his own political stance is what his readers are most interested in.)
Not every criticism in this book is in error. Europe’s policymakers took a long time to enact sensible policies to cope with the downturn and there are big questions about whether they can work. The belated adoption of quantitative easing was right but has practical obstacles. Europe’s bond markets are not large or liquid enough; the euro was indeed launched without the necessary institutions to pool fiscal as well as monetary sovereignty. It’s not hard to list the errors of policy and the way the eurozone falls short of the ideal. Nor is Varoufakis wrong to note the irrational “deficit phobia” of European policymakers. German hawkishness about budgets has been extremely damaging for Europe’s economy. But all of these points are secondary in Varoufakis’s telling to a grossly overwrought depiction of Europe’s rulers as an undemocratic cabal — hence his absurd references to “totalitarianism” and the “serpent”. In one florid passage he asks: “Does the fact that the Nazis were the first to plan a European economic and monetary union — one perhaps too close for comfort to today’s European Union — imply that the latter was founded on fascist principles?”
Talk about a leading question. Though Varoufakis gives the only sensible answer to that question (er, no), he has already insinuated this preposterous, calumnious notion.