Thu May 6th, 2021 at 04:29:04 PM EST
Yanis Varoufakis has an interesting take on the current situation in Europe and the USA. He was the virtual keynote speaker at a conference in Israel apparently sponsored by the Israeli Labor Party. He asserts that, since 2008, we have been in a Post Capitalist environment.
Our situation is Post Capitalist as capitalism has been disconnected from the ability of corporations to make profits by making things or by providing non-financial services. Much of this has to do with financialization. In the USA and UK manufacturing ceased to be profitable and was largely 'offshored' under the guise of 'neoliberalism' which was neither liberal nor new. Since the '80s in the USA and UK profit sources came to be financial firms.
General Motors, by 2008, was a financial services firm that made cars on the side, while the profits came from General Motors Acceptance Corporation. I would add General Electric to that category, as by the '90s its profits came from the Japan Carry Trade - borrowing Yen for free in Japan, converting them to US$ and 'investing' those dollars for profit at a positive interest rate in the USA.
But in 2008 this all collapsed and the banks, along with other financial firms, were bankrupt and totally dependent on free money from the Federal Reserve or the Bank of England, which came to the rescue of the financial sectors, with the Federal Reserve also supplying generous swaps of US$ to foreign Central Banks. But what to do with this free money? Central Banks could only supply that money to credit worthy borrowers, of which there were few, as citizens did not have accounts at the Central Banks.
The answer was to give the money to large corporations. They could be counted on to pay the money back and many of them had huge cash reserves anyway. But the corporations did not see profitable investments available in the economy. In Europe the ECB went to negative interest rates, effectively paying the corporations to take the money. The not so ingenious solution of the corporations was to use the money to buy and retire shares of their own corporations, thus driving the stock bubble we now have.
To Varoufakis this was no longer capitalism, which is why he calls the situation Post Capitalist. Then he points to the massive market failure constituted by the inability of Capitalism to make the investments necessary to save the climate. So he argues for a Green New Deal financed by Green Keynesianism.
But Varoufakis also notes that such Keynesian efforts always meet with push back from the business sector. So he proposes a new version of Capitalism, where each worker has one non-transferable voting share in the corporation for which he works and the direction of the corporations are set by votes of the workers. This reminds one of Lenin's 'All Power To The Soviets' - at least so long as they followed the direction of the 'vanguard'.
Well, something clearly needs to change in the organization of our political economy. And that something needs to address the massive wealth inequality and the inability/unwillingness of our current Capitalist system to invest in saving the climate and providing future generations with a livable world.