Talking to My Daughter About the Economy Review
Not many authors write a book in 9 days, and fewer still are likely to announce information technology in the prologue. Yanis Varoufakis has no qualms about doing then in this brief history of capitalism, structured around the device of talking to his girl, Xenia, not long a teenager. It was first published a few years ago, when she was even younger, and has been updated for British readers post-obit a farther week's writing. Past being open up about the writing process, the scholar and politician manages his readers' expectations; but he likewise builds them, by promising to explain economic science in a linguistic communication that everyone can understand, in identify of the jargon- infested pseudo-scientific language of mainstream economics.
But writing such a primer is no easy job, given that experts have oft establish information technology easier to hide backside opaque linguistic communication than to explain complex concepts in elementary terms. And then much gimmicky soapbox assumes that economic science functions outside of politics, and that it is best left to professional economists and mathematicians. Varoufakis wants to smash this barrier: he argues from the commencement that if nosotros defer to experts on the economy then nosotros hand over all our most important political decisions to them.
He has decided to use Karl Polanyi'due south term "the market lodge" throughout. So although he is describing the history of commercialism, he dispenses with the actual term, assertive it to be accompanied by likewise much ideological baggage. "Market social club" is preferred to the equally loaded "market economic system" – every bit in Margaret Thatcher'southward famous phrase that "there is no alternative" to a market economic system. Varoufakis is determined to show that politics tin can always produce an alternative economics.
He lays out where money comes from in the simple terms he has promised: it was invented to tape debts, which ways that money and debt accept marched together since artifact. The very first scripts are bookkeeping records to testify how much surplus produce, such equally grain, farm workers were owed. Merely it was the shift from a feudal society to a market social club that turned debt into the "primary factor" – there can be no profit without debt because businesses have to borrow to abound. The expansion of debt also created instability and fuelled crashes but it was debt, not coal, that "was the real fuel that powered the engine of the industrial revolution".
Varoufakis comes up with a vivid comparison between money supply and the marketplace in cigarettes in a German prisoner-of-war campsite to explain inflation, deflation and interest rates, in terms whatsoever teenager – or adult – will understand. In the army camp, prisoners received packages from the Red Cantankerous that included food, cigarettes, tea and coffee. Over fourth dimension, as in prisons the world over, cigarettes became the currency past which other goods were traded. At present and again, the Red Cross would put more cigarettes in the packages, which meant that with more circulating in the camp they were worth less, and so more would be needed to buy the same amount of goods – inflation in other words. Conversely, after a heavy bombing raid, prices went down – deflation – as so many cigarettes had been smoked they were in short supply and were worth more. As cigarettes are durable – like shells and precious metals, which take been used every bit currency – they can be saved, and in time "bankers" emerged in the army camp, who would loan cigarettes with interest, ensuring that borrowers would pay back more they had borrowed. In times of inflation, when the value of the currency was uncertain, interest rates went up, and vice versa.
A key part of the analogy is that when the Cerise Cross handed out the cigarettes – for which read the money supply – it was able to play the part of a genuinely independent central bank. Simply while the central banks of most of the world's advanced economies are formally independent, Varoufakis believes that it is not possible for such powerful institutions, in charge of debt and taxation, to act exterior politics. Rather than having a cardinal bank as neutral as the Crimson Cross, the consequence is that "we terminate upwards with a fundamental banking concern whose decisions remain as political as ever, except that they are no longer supervised by parliament".
His line of argument is at the contrary cease of the spectrum to Thatcher's comparison between a household budget and the economy – itself aligned with the assumption that economics is a neutral science, set apart from politics. For Varoufakis, economics is e'er politics, because whoever controls the money has the power: his views on debt inevitably reverberate his feel every bit Greek finance minister in 2015, desperately trying to renegotiate Greece's debt and curtail the savage thrift programme. Unsurprisingly, he reserves his greatest vitriol for the banks; it may have been essential to save them, only why advantage the very bankers who facilitated unsustainable amounts of debt? Why not "send them home penniless as a warning to any other banker who is tempted to do the aforementioned"? His answer, which relies heavily on the revolving door between senior bankers and governments, is handsomely supported by the number of Goldman Sachs alumni serving in successive Us governments.
The speed with which he wrote this volume shows, but Varoufakis does equip his readers with the ancestry of a new language, and punctures myth later on myth. If he can do that in nine days, imagine what he could write in 90. Perhaps that could really exist the economic science text a new generation is looking for.
• Anna Minton'southwardBig Upper-case letter: Who Is London For? is published past Penguin.A Brief History of Capitalism is published past Bodley Head. To order a re-create for £10.49 go to bookshop.theguardian.com or call 0330 333 6846. Costless UK p&p over £10, online orders just.
For the original posting on The Guardian site click here.
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Source: https://www.yanisvaroufakis.eu/2017/10/28/talking-to-my-daughter-about-the-economy-book-review-in-the-guardian-by-anna-minton/
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