Social Europe

politics, economy and employment & labour

  • Themes
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

The seven secrets of 2020

Yanis Varoufakis 4th January 2021

National governments had been choosing not to exercise enormous powers so those globalisation had enriched could exercise their own.

national governments,globalisation
Yanis Varoufakis

A house of cards. A set of lies we have unconsciously accepted. That’s what our certainties seem like during profound crises. Such episodes shock us into recognising how unsafe our assumptions are. That is why this year has resembled a rapidly receding tide, forcing us to confront submerged truths.

We used to think, with good reason, that globalisation had defanged national governments. Presidents cowered before the bond markets. Prime ministers ignored their country’s poor but never Standard & Poor’s. Finance ministers behaved like Goldman Sachs’ knaves and the International Monetary Fund’s satraps. Media moguls, oil men and financiers, no less than left-wing critics of globalised capitalism, agreed that governments were no longer in control.

Bared teeth

Then the pandemic struck. Overnight, governments grew claws and bared sharpened teeth. They closed borders and grounded planes, imposed draconian curfews on our cities, shut down our theatres and museums and forbade us from comforting our dying parents. They even did what no one thought possible before the apocalypse: they cancelled sporting events.

The first secret was thus exposed: governments retain inexorable power. What we discovered in 2020 is that governments had been choosing not to exercise their enormous powers so that those whom globalisation had enriched could exercise their own.

Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content.


We will never send you spam and you can unsubscribe anytime.

Thank you!

Please check your inbox and click on the link in the confirmation email to complete your newsletter subscription.

.

The second truth is one that many people suspected but were too timid to call out: the money-tree is real. Governments that proclaimed their impecunity whenever called upon to pay for a hospital here or a school there suddenly discovered oodles of cash to pay for furlough wages, nationalise railways, take over airlines, support carmakers and even prop up gyms and hairdressers.

Those who normally protest that money does not grow on trees, that governments must let the chips fall where they may, held their tongue. Financial markets celebrated, instead of throwing a fit at the state’s spending spree.

Case study

Greece is a perfect case study of the third truth revealed this year: solvency is a political decision, at least in the rich west. Back in 2015, Greece’s public debt of €320 billion towered over a national income of only €176 billion. The country’s troubles were front-page news around the world and Europe’s leaders lamented our insolvency.

Today, in the midst of a pandemic that has made a bad economy worse, Greece is not an issue, even though our public debt is €33 billion higher, and our income €13 billion lower, than in 2015. Europe’s powers that be decided that a decade of dealing with Greece’s bankruptcy was enough, so they chose to declare Greece solvent. As long as Greeks elect governments that consistently transfer to the borderless oligarchy whatever (public or private) wealth is left, the European Central Bank will do whatever it takes—buy as many Greek government bonds as necessary—to keep the country’s insolvency out of the spotlight.

The fourth secret that 2020 brought into the open was that the mountains of concentrated private wealth we observe have very little to do with entrepreneurship. I have no doubt that Jeff Bezos, Elon Musk or Warren Buffett have a knack for making money and cornering markets. But only a tiny percentage of their accumulated loot is the result of the creation of value.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

Consider the stupendous increase since mid-March in the wealth of America’s 614 billionaires. The additional $931 billion they amassed did not result from any innovation or ingenuity that generated additional profits. They got richer in their sleep, so to speak, as central banks flooded the financial system with manufactured money that caused asset prices, and thus billionaires’ wealth, to skyrocket.

State aid

With the record-fast development, testing, approval and rollout of Covid-19 vaccines, a fifth secret was revealed: science depends on state aid and its effectiveness is oblivious to its public standing. Many commentators have waxed lyrical about markets’ capacity to respond quickly to humanity’s needs. But the irony should be lost on no one: the administration of the most anti-science US president ever—a president who ignored, intimidated, and mocked experts even during the worst pandemic in a century—allocated $10 billion to ensure that scientists had the resources they needed.

But there is a broader secret: while 2020 was a banner year for capitalists, capitalism is no more. How is that possible? How can capitalists flourish as capitalism evolves into something else?

Easily. Capitalism’s greatest apostles, such as Adam Smith, emphasised its unintended consequences: precisely because profit-seeking individuals have no regard for anyone else, they end up serving society. The key to converting private vice into public virtue is competition, which impels capitalists to pursue activities that maximise their profits. In a competitive market, that serves the common good by boosting the range and quality of available goods and services while constantly lowering prices.

It is not hard to see that capitalists can do much better with less competition. This is the sixth secret that 2020 exposed. Liberated from competition, colossal platform companies such as Amazon did astonishingly well from capitalism’s demise and its replacement by something resembling techno-feudalism.

Silver lining

But the seventh secret that this year revealed represents a silver lining. While bringing about radical change is never easy, it is now abundantly clear that everything could be different. There is no longer any reason why we should accept things as they are. On the contrary, the most important truth of 2020 is captured in Bertolt Brecht’s apt and elegant aphorism, ‘Because things are the way they are, things will not remain the way they are.’

I can think of no greater source of hope than this revelation, delivered in a year most would prefer to forget.

Republication forbidden: copyright Project Syndicate 2020—‘The seven secrets of 2020’

Yanis Varoufakis

Yanis Varoufakis, a former finance minister of Greece, is leader of the MeRA25 party and professor of economics at the University of Athens.

Home ・ Economy ・ The seven secrets of 2020

Most Popular Posts

Ukraine,workers' rights,laws,labour,protection,liberalisation,zero hours Ukraine to pass laws wrecking workers’ rightsThomas Rowley and Serhiy Guz
airport chaos,chaos at airports,queues, security, key workers,essential workers Airport chaos: security guards and cleaners still keyMark Bergfeld
China,Ukraine China to the rescue?Branko Milanovic
Boris Johnson, Brexit, Conservative,conservatism Boris Johnson: blustering onPaul Mason
deglobalisation,deglobalization,Davos Getting deglobalisation rightJoseph Stiglitz

Most Recent Posts

labour law,ukraine,trade unions,social dialogue,ILO,International Labour Organization Ukraine could abandon key labour principleThomas Rowley and Serhiy Guz
cars,vehicles,transport,industry,jobs,skills,Europe,retraining Vehicles and just transition—turning the wheelSarah Mewes and Gloria Koepke
hybrid working,working from home,new normal Blurring of boundaries in work’s ‘new normal’Rolf Schmucker
ECB,European Central Bank,Draghi,whatever it takes,euro ‘Whatever it takes’, ten years onLászló Andor and David Rinaldi
pandemic preparedness,pandemic response,financial intermediary fund,FIF,Covid-19 Effective pandemic response must be truly globalMariana Mazzucato and Jayati Ghosh

Other Social Europe Publications

National recovery and resilience plans
The transatlantic relationship
Women and the coronavirus crisis
RE No. 12: Why No Economic Democracy in Sweden?
US election 2020

Eurofound advertisement

Fifth round of the Living, working and Covid-19 e-survey: Living in a new era of uncertainty

The fifth round of Eurofound's e-survey, sampled between March 25th and May 2nd 2022, sheds light on the social and economic situation of people across Europe two years after Covid-19 was first detected on the European continent. It also explores the reality of living in a new era of uncertainty caused by the war in Ukraine, inflation and rising energy prices. The e-survey reveals the heavy toll of the pandemic, with respondents reporting lower trust in institutions than at the onset, poorer mental wellbeing, a rise in unmet healthcare need and an increase in households experiencing energy poverty.


AVAILABLE HERE

Foundation for European Progressive Studies Advertisement

Discover the summer issue of the Progressive Post!

The summer issue of the Progressive Post magazine from FEPS is out! It offers compelling analysis on: the energy-crisis challenge, Ukraine war, western Balkans, enlargement, housing crisis, rural areas, minimum wage and much more!

Almost five months into the war, and against the backdrop of soaring energy prices, rising inflation, a changing international order, rampant disinformation, the Ukrainian refugee emergency and all the other consequences triggered by the Russian war against Ukraine, the EU finds itself at a historic turning point. It must choose between sticking together, taking bold decisions, and acting accordingly—or, on the other side, allowing indecisiveness and divisions to gain the upper hand.


DOWNLOAD HERE

Hans Böckler Stiftung Advertisement

Towards a new Minimum Wage Policy in Germany and Europe: WSI minimum wage report 2022

The past year has seen a much higher political profile for the issue of minimum wages, not only in Germany, which has seen fresh initiatives to tackle low pay, but also in those many other countries in Europe that have embarked on substantial and sustained increases in statutory minimum wages. One key benchmark in determining what should count as an adequate minimum wage is the threshold of 60 per cent of the median wage, a ratio that has also played a role in the European Commission's proposals for an EU-level policy on minimum wages. This year's WSI Minimum Wage Report highlights the feasibility of achieving minimum wages that meet this criterion, given the political will. And with an increase to 12 euro per hour planned for autumn 2022, Germany might now find itself promoted from laggard to minimum-wage trailblazer.


FREE DOWNLOAD

ETUI advertisement

Workers on the route

Discover the new issue of HesaMag, the health and safety magazine with a European view (aussi disponible en français), published twice a year by the ETUI, and take your seat for an exclusive journey through the day-to-day reality of transport workers across Europe, from Romanian drivers to Dutch dockers and French female flight attendants, just to name a few.


MORE INFORMATION HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us on social media

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube