PREAMBLE
Editor’s Note:
We’ve asked Professor Yanis Varoufakis, former Finance Minister of Greece, political activist, and advocate for the death of capitalism, to comment on the year that has just passed. What do we draw from his words? The more things changed, the more they stayed the same.
Below is the transcript of Part I of Yanis Varoufakis commentary - a reposting from:
GENOCIDE
Let’s begin with one word that encapsulates 2024. I’m afraid it’s not a pleasant one. The word I’m choosing for 2024 is the word “genocide,” as for the event that connects with it. It is, of course, the genocide of the Palestinians in Gaza. A people that have been placed on death row by the Israeli army, the IDF. A people that are being ethnically cleansed by the same state and the settlers in the West Bank and in East Jerusalem. A people that have been constantly, constantly denied the right to exist since 1948. That’s the one event which is essentially a culmination of what has been happening now for decades upon decades.
TRUMP
As for the person that will be remembered by the historians of the future as the most influential, unfortunately, his name is Donald Trump.
I’m going to concentrate on what I consider to be the great conundrum that he’s facing. Allow me to put it briefly, if he succeeds in using his gigantic tariffs to redress and eliminate the trade deficit of the United States, which is his stated objective. Then he will have failed his own tribe. Which tribe? What is the tribe of Donald Trump? The people that he feels closest to——real estate agents and financiers in Wall Street.
And why will he have (to) betray them if his tariffs succeed in eliminating the US trade deficit? Because it’s the US trade deficit, which is driving the factories of Japan, of Germany, indeed, of China, producing profits for these companies outside the United States, which to a very large extent, to return to the United States, because they are in dollars. They go to Wall Street where they finance what real estate and the stock exchange as well as the American government.
So if Trump succeeds to eliminate the US trade deficit, he will have eliminated the tsunami of dollars that goes into Wall Street, effectively lifting all the boats of his own tribe, the financiers, and the realtors.
So either he is going to betray his own tribe by fulfilling his promise to the majority of the Americans, especially the American working class, or he’s going to betray the American working class in favor of his own tribe. Guess which choice I think he’s going to make.
GERMANY
Let us now focus on Germany.
The reason why Germany was such a great success story after the Second World War is three words–U.S.A.. Because it was the United States of America that did a number of things that made the German industrial military possible.
Firstly, they eliminated their debt. Effectively, they forgave them their debt to the Americans and to the rest of Europe as well. That was in a conference in London in the early 1950s.
Secondly, they fixed exchange rates such that the German currency would be undervalued, therefore, assisting German net exports to the rest of the European periphery initially into the rest of the world, including the United States and China later.
Thirdly, it’s the United States made sure that the macro-economy of the capitalist world, indeed, the whole world was amenable to whatever it is that the German factories were producing in large quantities and in high quality, especially mechanical and electrical engineering, as well as the chemical industry.
In other words, the government of the Federal Republic of Germany never had to worry about managing the macro-economy, because the Americans were doing it for them until they stopped doing it in 1971.
But then after that, the European Union created its own fixed exchange rate regime. And later, the euro, which was always much lower in value than the Deutsche mark would have been, therefore assisting German exports.
So effectively, the American and European world was providing a cocoon for German industry, the traditional heavy goods industry to grow and become a great success story. And of course, it is important to note that very cheap energy that Germany was getting from Russia.
Then after the 2008, near collapse of world capitalism, at least North Atlantic capitalism, we had the bankruptcy of the European periphery, but China rose up and picked up the slack. So the net experts of Germany that were going to Italy, to Greece, to Portugal, to Ireland, and so on, went to China. Until more recently, something tragic happened for Germany. Because after the 2008 crisis, the German government insisted in namely, allow me to say idiotically, on massive austerity, across Europe, not just in Greece and in Ireland and in Italy, but also in Germany itself. But it’s a class war against the working class of Europe.
While at the same time, the European Central Bank was printing rivers of cash for the financiers. What happened was when you have big business, receiving a lot of money, a lot of cash that the state produces, but they look out of the window and they see the masses in peculiars, too poor to buy expensive goods. They don’t invest in these big businesses. They take the money that the state produces for them, the central bank produces. And they buy back their own shares, but that’s not the investment.
So for 15 years now, at least 15 years, the German industry has not invested in its own technologies. So they missed out on an important technological revolution, unlike the Chinese and unlike the Americans. That is why now the German industrial model is kaput. It’s finished.
And along with it, you have the political system, which you can see what’s happening in Germany. There’s no government. And even when they do have a government–Friedrich Merz will probably be elected in January with the new year.
But again, the whole of the political class is utterly bereft of ideas of how to manage a macro-economy, which since the Second World War, was managed by other forces, by the Americans and the European Union.
Now the Americans don’t care, especially with Donald Trump, and the European Union is too fragmented to provide that amazing service for Germany.