submerged truths

Sculpture José Resende /SESC Jundiaí, São Paulo/


National governments have chosen not to exercise their enormous powers in favor of economic agents enriched by globalization.

A house of cards. A set of lies that we subconsciously accept. This is what our certainties look like during deep crises. These episodes shock us into recognizing how unreliable our assumptions are. That's why this year has felt like an accelerated ebb tide, forcing us to face submerged truths.

We used to think, with good reason, that globalization had dented national governments. Presidents cowered in the face of bond markets. Prime ministers ignored their country's poor, but never Standard & Poor's. Finance ministers behaved like Goldman Sachs scoundrels and International Monetary Fund satraps. Media tycoons, oilmen and financiers, no less than left-wing critics of globalized capitalism, agreed that governments were no longer in control.

Then came the pandemic. Overnight, governments grew claws and bared sharp teeth. They closed borders and grounded planes, imposed draconian curfews on our cities, closed our theaters and museums, and forbade us to comfort our dying parents. They even did what no one thought possible before the Apocalypse: they canceled sporting events.

The first secret was thus exposed: governments retain inexorable power. What we find in 2020 is that governments have chosen not to exercise their enormous powers so that those whom globalization has enriched can exercise theirs.

The second truth is one that many people suspected but were too shy to announce: the money tree is real. Governments that proclaimed their impeccability whenever called upon to pay for a hospital here or a school there suddenly found an abundance of money to pay furloughs, nationalize railroads, take over airlines, support car companies, and even support fitness academies. gymnastics and hairdressers.

Those who normally protest that money doesn't grow on trees, that governments should let things go without intervening, have bitten their tongues. Financial markets cheered rather than launch an attack on the state spending spree.

Greece is a perfect case study in the third truth revealed this year: solvency is a political decision, at least in the rich West. In 2015, Greece's public debt of €320 billion ($392 billion) exceeded a national income of just €176 billion. The country's troubles were front-page news around the world, and European leaders lamented our insolvency.

Today, in the midst of a pandemic that has worsened a bad economy, Greece is not a problem, although our public debt is €33 billion higher and our income €13 billion lower than in 2015. a decade of dealing with Greece's bankruptcy was enough, so they decided to declare Greece solvent. As long as Greeks elect governments that consistently transfer whatever wealth (public or private) is left to the borderless oligarchy, 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 trouble. spotlight.

The fourth secret that 2020 revealed was that the mountains of concentrated private wealth that 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 the markets. But only a small percentage of your accumulated wealth is the result of value creation.

Consider the stupendous increase since mid-March in the wealth of America's 614 billionaires. The additional $931 billion they accumulated was not the result of 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, which sent asset prices, and therefore the wealth of billionaires, skyrocketing.

With the rapid development, testing, approval and rollout of Covid-19 vaccines, a fifth secret has been revealed: the science relies on state aid and its effectiveness ignores the public good position. Many commentators have become lyrical about markets' ability to respond quickly to humanity's needs. But the irony shouldn't be lost on anyone: the administration of the most unscientific US president ever – a president who ignored, bullied 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 bigger secret: while 2020 was a landmark year for capitalists, capitalism no longer exists. How is this possible? How can capitalists flourish as capitalism evolves into something else?

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

It's not hard to see that capitalists can do much better with less competition. This is the sixth secret that 2020 has exposed. Freed from competition, colossal platform companies like Amazon have done surprisingly well with the end of capitalism and its replacement by something resembling techno-feudalism.

But the seventh secret revealed this year represents a silver lining. While bringing about radical change is never easy, it is now perfectly clear that things could be different. There is no longer any reason to 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 stay the way they are."

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

*Yanis Varoufakis is a former finance minister of Greece. Author, among other books, of the global minotaur (Literary Autonomy).

Translation: Tales Mançano protocols for ObservaBR.


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