Talking to My Daughter About The Economy

A Brief History of Capitalism  by Yanis Varoufakis

Bodley Head £14.99

Reviewed by Jonathan Stones

The author of ‘Talking to My Daughter About The Economy’ was for many years a Professor of Economics in Britain, Australia and the USA before becoming for a few months in 2015, Finance Minister of Greece during that country’s battle with the European Central Bank (as well as the European Community’s more powerful members) to rescue its debt-ridden economy. He is currently Professor of Economics at the University of Athens and speaks to audiences worldwide as co-founder of the Democracy In Europe Movement.

 In this short book, Varoufakis sets out to answer his then ten year-old daughter Xenia’s deceptively simple question: ‘Why is there so much inequality’? In doing so, he launches the reader on a vertiginous sweep through the history of mankind’s journey towards what he describes as today’s ‘market society’. In a nutshell, Varoufakis’ history goes like this: in origin mankind enjoyed the sort of pre-colonial bliss which he ascribes to aboriginal Australian culture before the arrival of the British. But elsewhere, fear of starvation enforced the invention, through necessity, of agriculture, which in turn gave rise to what we now call ‘the economy’. We developed better tools and accumulated more grain than we could eat; in other words, a surplus. Hence the need for writing, to record who owned what and who owed what to whom. Varoufakis lays out the origins of money in the simple terms he has promised: it was invented he says to record debts, which means that money and debt have marched together since antiquity.

But in Varoufakis’ view, the invention of these marvels has led to the present economic dystopia. They caused the change in concept from experiential value to market value: and everywhere this conflation was accompanied by the need for more and greater debt. This in turn created such ills as the enclosures, mass slavery, and industrialised war.

What went wrong? Varoufakis is clear that when societies with markets became market societies, mankind lost its way. Money was transformed from being a means to an end, to an end in itself. The central part of the problem he says (perhaps inevitably) is the Banks. A world full of debt is the perfect environment for unlimited speculation. The banker creates money out of thin air and borrows from the future. Unchecked, the inevitable spiral of bubbles and crashes which this creates will eventually be followed by the ruination of the planet.

The solution which he proposes to his daughter at the end of the book, and the only way the ruthless short-termism of the rich minority can be circumvented, is through state intervention. The degree of conviction with which this will be received is likely to depend most on the reader’s personal position along the political spectrum.

Varoufakis tells all this with great verve, using stories such as the Faust and Frankenstein myths as well as more contemporary parables such as ’Bladerunner’ and  ‘The Matrix’ to augment his argument. Its exhilarating to read, if at times a questionably bumpy ride.

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