A review of ‘Talking to My Daughter About the Economy: A Brief History of Capitalism’ by Yanis Varoufakis

Yanis Varoufakis is an economist and left-leaning politician from Greece. He pens down a monologue about the evolution of todays all-pervasive market economies whilst discussing the problems that plague these structures and possible panaceas.

The first chapter titled ‘Why So Much Inequality?’ acknowledges today’s fundamental reality. where we see unprecedented wealth and unimaginable poverty co-existing and catalysing each other. Although I agree with the general premise of his theory that geography is a major cause of inequality, I find that the example of Australia he picks is a little too convenient to suit his theory. The colonisation of the Indian sub-continent under the British Raj and the Americas by European powers presents a very different case. In fact, these countries were well-endowed with large tracts of lands fit for agriculture, perennial rivers, favourable weather, unimaginable mineral wealth and in the case of India political entities and technological prowess not far behind colonial-era Europe. Despite all this we see colonisers building large empires with the sole purpose of draining the resources of these lands to fuel the growth in Europe. I hence found the premise of this chapter flimsy and even sanctimonious at times.

What actually makes for a more interesting read is how he traces the evolution of speech and surplus. These set humans apart from other animals and further give birth to some of the pillars of human societies. Focusing then on inequalities that arise within the same geography/society, he talks about how ideologies allowed rulers of that time to control the general populace and set into stone some of the inherent different in professions we see today. Here are a few interesting quotes from this chapter:

…a capacity to produce food or instruments that would not have existed without human labour. Two Big Leaps: speech and surplus.

…the production of agricultural surplus gave birth to the following marvels that changed humanity for ever: writing, debt, money, states, bureaucracy, armies, clergy, technology …

So, how did these rulers manage to maintain their power, distributing surplus as they pleased, undisturbed by the majority? The answer is: by cultivating an ideology which caused the majority to believe deep in their hearts that only their rulers had the right to rule.

After establishing that human beings are able to produce surplus and invent debt, Yanis starts talking about value. He classifies value into two kinds, experiential and exchange. The former being the emotional output you can derive from an entity and the latter being how it fares in a barter. Back when tigers smoked, experiential value of entities was valued more than their exchange values and there was relative peace and harmony in the world. As times flew by, exchange value trumped experiential value. Thus, a spiral of activities was set into motion that transformed money from being a means into an end.

In chapters 3–5, Yanis finally begins talking about the evolution of capitalism as we see today.

Towards the end of the feudal era, the serf lords realised that it was a more profitable venture to raise sheep on their lands than leasing them out to farmers. This was a turn from a more subsistent form of agriculture to a more profit oriented and ‘for the market’, form of agriculture. Lords would often borrows massive sums of money to front their adventures and hence relied on speculative profits. With abundant cheap labour, who were driven out of the land they tilled for generations, copious amount of raw materials at their disposal and the technological advancements of their day, factories sprung up all across the cities of Britain. This marriage of debt and profit fuelled the industrial revolution all across Europe.

What Yanis misses out here is that all-along colonial undertakings also played a key role in this. Take the case of the British East India Company which forced Indians farmers to grow indigo and destroyed looms all across the country thereby “opening up” new markets.

Yanis also talks about the “necromancia” of banking and how all the money we own is virtual. This was the chapter I enjoyed the most because it had the least idealogical smells from his own opinions and spoke more or less about the banking systems we see today.

In fact, it is not just the state that provides the conditions for wealth creation. If you think about it, all wealth has always been produced collectively– through recycling and through a gradual accumulation of knowledge. Workers need entrepreneurs to hire them, who need workers to buy their goods. Entrepreneurs need bankers to lend to them, who need entrepreneurs to pay interest. Bankers need governments to protect them, who need bankers to fuel the economy. Inventors cannibalize the inventions of others and plagiarize the ideas of scientists. The economy relies on everyone.

As we progress to towards the second half of the book, we see that Yanis digresses. He talks more about the implications of economy on the planet and of technology on the economy.

Talking about the implications of technology on the economy in the chapter titled “Haunted Machines”, Yanis believes that a Matrix like takeover is not so unrealistic and may actually happen in the future.

Also, as mechanisation drives out large swathes of the workforce, Yanis argue that we should give back the benefits reaped from these advancements. I beg to differ here because in a lot of cases, entrepreneurs take huge risks to make sure their business stay ahead or afloat of others. How do we plan to reward this risk? Also who ensures that these benefits reaped are fairly redistributed? Although, I must agree that he makes a very solid case for this redistribution because he argues that the market is a cyclic exchange of goods and services and once we start reducing the purchasing power of people, we only disturb this precariously maintained cycle of production and consumption.

As he wraps up, Yanis talks about the commodification of the world’s natural reserves and how this could be the path to salvation. I like that he recognises that human nature is pivoted more on self interest than we’d like to admit.

Your era will be typified by the momentous clash between two opposing proposals: ‘Democratize everything!’ versus ‘Commodify everything!’

‘It is better to be a human being dissatisfied than a pig satisfied, better to be Socrates dissatisfied than a fool satisfied. And if the fool, or the pig, are of a different opinion, that is because they know only their side of the story.’



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