He's been called a Marxist, but Mr. V is not calling for revolution; he's not advocating, as Marx did, that the workers of the world expropriate the "means of production", meaning the industrial infrastructure that makes the economic world go around.
He's not looking to the European Union for truly effective financial leadership. He's not even looking to China (the most likely candidate) to grab the baton of world demand-driven economic vitality and run with it.
He says, at the end of his book, The Global Minotaur, that it has to be the USA to repair the international financial disaster.
The United States was, after all, largely responsible for the post-WWII arrangement (which he calls the Global Minotaur) that propelled, then ultimately toppled in 2008, the economic stability of the world.
The US had accepted the reins of power for internationally reconstructive wealth-generation in the aftermath of World War II. At the 1944 financial summit in Bretton Woods, New Hampshire, the seeds were sown, through a meeting of Allied minds, for worldwide reconstruction and recovery from the devastation of war. This actually worked out quite well for about thirty years for most countries who were involved, until about 1971.
In that year, President Nixon, in an effort to arrest the US's unraveling surplus, announced that our Treasury would no longer sell gold for dollars. Thus did the USA, the principle player and beneficiary of post-WWII world reconstructive prosperity, set in motion the demise of its own international hegemony.
The worldwide financial tailspin that resulted from America's abandoning the gold standard set in motion a debilitating chain of destructive financial consequences, beginning in the 1970s.
The wizardry of world-conscious financial minds, however, had constructed a financial framework for "recycling" capital around the world. When those minds had conferred in 1944, much was agreed upon. But there was, at the Bretton Woods conference, a divergence of strategic proposals for effectively restructuring the world's capitalism. The famous (or infamous, depending on your economic worldview) John Maynard Keynes proposed an international policy that would include automatic mechanisms for recycling surpluses between rich nations and poor nations.
Mr. Keynes, genius that he was, was not able to convince the assembled heads of State and their finance people to accept his plan. Instead, the Bretton Woods conferees devised their dollar-pegged arrangement according to a proposal from an American, Harry Dexter White. This settlement positioned the United States pretty much in charge of things.
The demand-generating, growth-driven Bretton Woods agreement was humming right along until 1971 when Nixon's announcement about the gold window amounted to throwing a monkey wrench in the works of world currency valuations.
As burgeoning trade deficit and fiscal deficit began to debilitate American purchasing power, our financial and political heavyweights were nevertheless still adept at reconfiguring the Global Plan for economic development in a way that sustained our yankee advantage. Some exploitive characteristics of the new deficit-driven (instead of surplus-driven) financial machination rendered the whole Bretton Woods arrangement as a beastly, power-obsessed system rigged for devouring foreign assets to enrich US corporations and "Wall Street."
Hence, the analogy of the Minotaur, a mythical flesh-eating creature of ancient Greek mythology, was chosen by Mr. Varoufakis as the central force of his narrative.
The imagery works adequately for the purposes of Mr. Varoufakis treatise, because there are some parallels between the mythical, terrible man-bull beast that feasted on young virgins, compared to the US-driven Global Plan for sucking up 60-80% of the world's capital for a very long time. With Mr. Harry Dexter White's plan, tweaked and fortified along the rocky paths of the 1970's, '80's and '90's by Mr. Volcker, Mr. Greenspan, and President Reagan, the recycling plan for surpluses morphed into a reversal of the Bretton Woods Agreement. So it still favored American interests with exorbitant privilege that arose from managing the world's reserve currency. Thus was the good ole USA sitting' on top of the world, even though our trade and fiscal deficits were expanding in leaps and bounds; the Minotaur was gorging on debt, and so were most Americans.
So after the stagflationary 1970's, we were able to rig the game of international capital flows so that the lion's share (the minotaur's share) of world capital just kept coming back in yankee directions.
Which worked well until about, you know, 2008.
With all the world-friggin' capital recycling that had been humming along through the '80s, '90s, 2000's, the wizards of wall street managed to concoct up a handful of magical innovative financial instruments to keep themselves gainfully occupied and the stock markets thoroughly inebriated. Dubbed MBSs, CDOs, derivatives, and credit default swaps, these wonder working financial "innovations" kept the profits rolling along to the tune of billions. Until 2008.
By that time, the real industrial-based, home-building, retail-flourishing music of sound economy was screeching to a grinding halt; suddenly myriads of those fancy high-steppin' financial dancers found themselves with no musical chair to sit in, and no way to repay all those millions of $$$ they had borrowed to purchase all those perpetual motion money-machine MortgageBackedSecurities, CollateralizedDebtObligations, CreditDefaultSwap-protected HFT electronic and/or sometimes paper fragile financial instruments.
So the Wall Street guys came out of the 2008 financial meltdown with a tarnished reputation because what had been a fairly constant flow of world capital came to, like, a standstill.
At which time, according to Mr. V's book, Mr. Summers, Mr. Geithner and a few of their cronies cooked up a plan to keep the whole perpetual motion money-making machine cranking along like nothing had really happened, which is what, in some ways, we're still operating under, a little like smoke and mirrors as they used to say back in the day (the '80's-90s.)
Now looking back on it all, the international financial infrastructure for continuous capital and liquidity around the world actually worked reasonably well for one hell of a long time--even when, in the 1970's the big sugar daddy US of A started to slide into major deficit territory (on both fronts: trade and fiscal).
It was only (in my opinion) at the end of the big Capital flow run, in the dozen years 1998-2008, that the US-led machine became what might be called predatory. 'Twas then I saw a long-bearded guy on the street in Seattle with a sign that said Send Banksters to Jail.
Which is why--the predatory attribute-- I suppose, Mr. Varoufakis, used the flesh-feasting Minotaur analogy for his treatise.
But the US-driven plan for world hegemony was no cannabilistic beast. That's a little bit like overkill, Mr. V, isn't it?
More like a couch potato with a credit card.
A very good read, though, Yanis--your treatise, The Global Minotaur.
Here's the book excerpt that I found most interesting. (This pertains to President Reagan's policies in the 1980's)
From chapter 7:
"As for the actual ideals underpinning free market fundamentalism, their fate was identical to that of Marxism in Moscow:
they (the ideals of free market fundamentalism, -ed.) became the first victims of its political champions' rise to power. Indeed, when, in 1981, Ronald Reagan entered the White House, he spoke the language of supply-side economics, balanced budgets, the withering of big government (ironically, an expression first coined by Marx), etc. However, after a few months of toying with such policies, and once unemployment skyrocketed in 1981, Reagan performed an abrupt U-turn (just as Lenin had done by adopting his New Economic Policy the moment he discovered that socializing the factories did not work as well as planned). Instead of shrinking government and balancing the budget, the president put his foot on the accelerator. The twin deficits (trade and fiscal, -ed.) ballooned and, as a result of his unbridled Keynesian practices, unemployment shrank and the Global Minotaur was on its merry way."
So, considering Mr. Varoufakis' book conclusion that the US should lead the way out of our worldwide money Crisis, I'm wondering if he, (ironically) like so many libertarians on the internet, is looking for another "Reagan"? to take the ball and run with it toward our new goalposts for some kind of demand-generating, surplus-recycling 21st-century game plan for the nations of the world.