Capitalism for the rest of us

Talking to My Daughter About the Economy: or, How Capitalism Works—and How It Fails by Yanis Varoufakis

The People’s Economist of Greece, Yanis Varoufakis, has a lot of explaining to do. To his daughter.

Yanis Varoufakis is a dark horse, the underdog's underdog, a man on a mission against Neo-liberal dogma and questionable economics. Most well-known as the Greek minister of finance in 2015 during contentious EU negotiations of the Greek debt situation, he describes himself on twitter,  as an "Economics professor, quietly writing obscure economic texts for years, until thrust onto the public scene by Europe's inane handling of an inevitable crisis." This tongue-in-cheek tone was also a hallmark of his time as Finance Minister – some saying his informality and professorial, casual approach gave "his tenure [as PM] the air of a five-month-long TED talk."

When called to serve as Prime Minister, he was teaching economics at University of Texas at Austin and writing online about the situation Greece found itself in during the economic crisis; namely that the government had borrowed too much, couldn't repay, and had structural problems preventing economic growth; and the European Union wanted to bail out Greece in exchange for very steep structural adjustments. Varoufakis thought the bail out was a terrible idea because the social price that would be paid through structural adjustments, convinced that austerity politics made for bad economics, and instead argued for the state to declare bankruptcy and not pay their creditors. As he wrote such missives from Texas, his ideas grew in popularity in Greece, with the press dubbing him the Cassandra of the crisis.

His ability to explain the complexities of economics in terms many could understand (such as discussing the euro by comparing it to Hotel California by the Eagles – a place where "you can check out any time you like but you can never leave") helped grow his infamy. When in 2015 the Prime Minister of Greece Alex Tsipras asked him to serve as the Minister of Finance of Greece, he reportedly felt a moral duty to his country to try to help it out of its mess, and raise important questions about national sovereignty, representative democracy and economics.

His run as PM was short but remarkable; it seemed so rare to have a Finance Minister fight for the public, and take to speaking and explaining economics to the public so directly.  His skill in explanation is seen in his book Talking to My Daughter About the Economy, the updated version of which was released last year.

Varoufakis believes that an understanding of economics by the populace is a requirement of a truly well-functioning democracy. The issue is that the jargon-filled field of economics can obscure ideas in unfamiliar language and inane examples that make it difficult for non-economists to understand; and in fact, this opacity makes it easier for the people who do understand to pull a fast one on the rest of us.

Like any good professor, Varoufakis uses storytelling devices and tidbits from recent and ancient times to illuminate economic concepts for a younger audience in this book. Structured as a missive to his teenage daughter is a nice way to organize and think about audience (much as the excellent Between the World and Me by Ta-nehesi Coates' did as a letter to his son).

The book focuses on explaining inequality, debt and profits, the "black magic" of current global banking practices, what AI and automation mean for the future, and the vagaries of the job market. Inequality is explained in terms of different continents having different natural endowments – riches they have or don't have, and the desire for more. He argues that the Australian aborigines didn't need to leave Australia (where his daughter lives) to conquer other continents because they had plentiful food, a landmass the size of Europe, and a small enough population that there was plenty for everyone; their environment met their needs. The UK was too small a landmass and had too much competition for resources; it was difficult for the country to produce a surplus of anything, the basis of trade. Thus, the need to conquer. The "geography as destiny" argument is historically an interesting one, though I'm not sure it sufficiently explains modern inequality; this section needs more.

What's interesting is the longer historical range or lens that Varoufakis uses to explain economic phenomenon, a benefit of the European / Greek perspective. He uses the story of Oedipus Rex to illuminate how the power of prophecy makes money and labor markets self-sabotage. He uses the story of Faustus selling his soul to Mephistopheles arose when people were worried about the transition of their feudal societies into fully market-led societies, and to illuminate the rise in contract-based debt. Rarely will you find a discussion of economic phenomenon using a blend of stories from feudal Europe and Greek mythology from an American scholar.

Economics in America rarely brushes on the historical basis of economics, except for the odd University that includes a course in political economy / economics classics as part of their curriculum (rather than strictly teaching mathematical models without explaining their underlying theory or where they came from). If you're looking for an accessible crash course in the history of economics from an American perspective, The Worldly Philosophers: The Lives, Times And Ideas Of The Great Economic Thinkers and/or Teachings from the Worldly Philosophy both by Robert Hielbroner are nice places to start.

Overall, Talking to My Daughter About the Economy is an engaging alternative examination of many of the current weaknesses and threats posed by the global system, and helps place that system in a longer global historical context. This book is interesting for those wanting to connect the evolution of market economies in Europe to our modern world.

I write a newsletter about the future and the economic decisions that impact it. I’d love it if you joined the conversation happening there. Get it

On Capitalism

The Future of Capitalism: Facing the New Anxieties by Paul Collier

A development economist moved by poverty at home revisits the ethical dimensions of capitalism.


Bullshit Jobs by David Graeber

Meaning and purpose. David Graeber’s book is about the growth of jobs with neither.

The Meritocracy

Success and Luck: Good Fortune and the Myth of Meritocracy by Robert Frank

Economist Robert Frank is concerned. Concerned that not enough people recognize the role that good fortune and luck plays in their success, and that too many people attribute their success entirely to their own hard work and virtue.