Capitalism past, present, and future: in conversation with Yanis Varoufakis

This interview was conducted at the Cambridge Union, where Yanis Varoufakis spoke to the Chamber on the 7th of February. Thanks to Speakers Officer Sal Widdecombe for facilitating.

Varoufakis in the Union Library. By Reva Croft.

Yanis Varoufakis is a Greek economist and politician. In 2015, Varoufakis was made Greek Minister of Finance in the midst of a sovereign debt crisis, where he was openly critical of EU austerity politics.

When Varoufakis looks back on his move from the quiet life of academia to politics, he describes it as a “historical accident; it was neither desirable nor planned”. It is not a surprise that Varoufakis is happy to be back in Cambridge, where he had previously lectured in economics. To him, the city represents “an oasis in the desert” that remains “very close to my heart”. Unlike his work now, academia is an environment where “the whole point is to let the ideas clash with one another and learn from one another”.

Re-elected in 2019 for his party MeRA25, he tells me that Parliament is “soul-destroying” in comparison, a place where job security relies on rejecting opposing arguments regardless of their merit. Why, then, did he return? In one sense, MeRA25 aims to productively channel the same frustration with politics as usual. At its launch, Varoufakis described MeRA25 as the party of “European awakening, against the European establishment and the nationalists”. As our conversation continues, his broad concerns with the status quo are clear.

For one, he worries about the study of economics. When I ask Varoufakis whether meeting young economists makes him optimistic, he sighs. “I’ll give you the bitter truth…I do meet a lot, but my heart bleeds. It is not a comment on the calibre of the persons [but on] the calibre of the education they receive”. The field has changed since he was himself learning and teaching; a contemplation of an indeterminate “beauty of macroeconomics” has, over the last four decades, given way to “the mathematicisation of economics, the eradication of nuanced ideas”. Above all, graduates are taught a “structural, institutionalised inability to have anything to say of use regarding capitalism”.

He warns that departments “have completely lost touch with really existing capitalism…if you are trying to find the truth about capitalism in a system of equations, where everything can be quantified, then you will never find it, ever.” It is a damning view of the current state of affairs, and one which Varoufakis says is risky for economists to share: “if you have doubts about the economics profession, you end up a failure. You don’t get to have a position in a great university like this, or any university for that matter”. The failures of economics are not limited to academia, however.

Considering the prospect of another recession in Britain, Varoufakis delivers a mini-lecture on the history of the British economy. The core of his diagnosis is that “investment (…) is the one pillar of any genuine growth strategy which has been missing in the United Kingdom for decades”. He claims to hold “a very unpopular view in the City of London” – that it is a “drag on the British economy”. In explanation, Varoufakis points to privatisation and financialisation during Margaret Thatcher’s premiership, which “created a remarkable sense of exuberance”. However, of the money that poured into the financial sector from council house sales and sales of shares, “none of this ended up in productive investment. It went into asset price inflation”.

In Britain today, he says, Sunak and Hunt are desperately “trying to stabilise prices through austerity” to avoid raising interest rates. Yet Varoufakis reminds us that “the tragedy of austerity…is that it doesn’t work”. Varoufakis’ political career has been one of fighting the post-crash austerity politics of the European Union and attempting to undo their disastrous effects on the Greek economy. 

Varoufakis is similarly acerbic about former Prime Minister Liz Truss. In his words, she was “verging on a sad variety of madness” when she described the “Treasury as the ‘left-wing establishment’, and in the same breath, blamed the markets for imposing a left-wing agenda”. He appears incredulous: “what is she talking about?”. 

Labour does not escape criticism either. The Conservatives and Labour “may have different values, and different anthropological and aesthetical characteristics, but when it comes to policies it is Pepsi-Cola Coca-Cola”. When I ask him whether there might be an appetite for an alternative party like MeRA25 in the UK, he tells me that it is near impossible to know because “first-past-the-post is a mechanism by which to construct a cartel”. Cartel politics like Britain’s then leads to the “corrosion of the democratic spirit, and of belief in democracy…which is the best friend of populists, racists, enemies of democracy”.

Varoufakis in the Chamber. By Reva Croft.

Attempting to lighten the tone of our conversation, I ask Varoufakis what he thinks about digital technology and video games. In the early 2010s, he had a stint at Valve, one of the world's largest game developers and distributors. Varoufakis is clear: “I have to tell you that I knew very little about video games, and I still know very little about video games. I didn’t care about video games, I cared about the digital economies that were created [and] the lessons that I could draw from studying them”. He smiles, and his eyes light up as he describes the goldmine he uncovered, “imagine a biologist who has the great fortune of encountering a Darwinian process that has been sped up by a factor of a thousand, and you actually watch it happening in front of you…this is how it felt for me”.

This was a transformative experience. “It alerted me to the fact that we are moving from capitalism”, he confides. Steam, Valve’s digital shopfront, “looks like a capitalist market, but it isn’t. There is capital…but there is no capital-ism”. He likens it to the Apple store: “you have an army of producers who are self-employed…who pay a rent to a feudal lord called Apple. Thirty percent of everything they earn, forever”. 

This is the subject of his upcoming book, Technofeudalism. It focuses on ‘cloud capitalists’, the data-hungry corporations that know so much about our lives. In doing so, the book promises to force us to do what he had to do when he worked at Valve: “rethink what capitalism is becoming”. He is deeply critical of the status quo and emerging economic structures. Little wonder, then, that he felt unable to leave politics behind.