It is shortly after 19.00 when the crowd gathered at the Emmanuel Center in Westminster bursts into a thunderous applause. Former Greek finance minister Yanis Varoufakis walks on stage with unassuming composure. The event, organized last night by the anti-austerity movement The People’s Assembly, sold out in a matter of hours and dozens of people are standing at the back of the room, patiently waiting to hear the polarizing and often controversial Greek politician’s address.

Camping above the speakers’ table is a quotation from John 10:10, whose towering presence is made rather apposite by the vibrant left-leaning atmosphere: “The thief cometh not, but for to steal, and to kill, and to destroy: I am come that they might have life, and that they might have it more abundantly”. Beneath it, the panel is rich: former trade union leader Paul Mackney, the chair of the People’s Assembly Romayne Phoenix, New Economics Foundation chief economist James Meadway,  General Secretary of Public Services International Rosa Pavanelli, Diane Abbott MP and, obviously, Yanis Varoufakis. Rumor has it that the newly elected Labour leader Jeremy Corbyn may eventually arrive to join the other speakers, but he is at the House of Commons, voting against trade union reforms.

The title of the evening is ‘Fighting for our Future: a Public Meeting with Yanis Varoufakis’ and its theme undoubtedly ambitious, consisting of the delineation of a blueprint for an ‘alternative to austerity, humanitarian disaster and market meltdown’. The first addresses are primarily concerned with the illustration of the most immediate symptoms of the said disaster: Meadway offers a passionate account of the alleged absurdity of the adoption of austerity measures in order to tackle any form of financial crisis, while Pavanelli details the mechanism by which austerity policies weaken trade unions, suggesting that this process might ultimately erode the notion of democracy central to European politics at large.

The lion’s share of the talk, though, lies entirely in Varoufakis’ hands. “I call myself a liberal Marxist. I like contradictions”, he eventually states, but the most striking contradiction of his address is not a paradox at all: Europe ought to look at Greece as an example of how (not) to implement austerity measures. This is because the draconian magnitude of the spending cuts taking place in Greece from 2008 onwards is simply unprecedented, to such an extent that the country is aptly labeled “a laboratory of austerity”. Within one and half years, spending was reduced by 14%, pensions cut by 45% and public sector wages by 38%. Yet, unemployment soared from 8% to 28%. According to the Greek economist, this is sufficient to conclude that austerity simply does not work. This is because, to use his own words, “cutting down spending and supply happens when you are shifting tomatoes and potatoes. If you have too many potatoes, you cut the price down to shift them. It works like that, but it does not work with labour”.

'The Global Minotaur', 2011

‘The Global Minotaur’, 2011

Varoufakis, then, moves on to reflect on a concept elaborated in his famous 2011 book The Global Minotaur: “bankruptocracy”, namely the rule by bankrupted banks, arguing that this was crucially buttressed by the European Central Banks and member states of the EU, deemed to be guilty of socializing banks’ losses and turning them into public debt. As a result, while the loss of asset values was somewhat contained – or, as some would say, simply ignored –, the banks’ dramatic insolvency remained yet to be tackled. As Euro membership prevented countries in debt (mainly Greece, Ireland, Spain and Portugal) from devaluing their currency, not only did banks opt to start betting, using the money forked by Central Banks, that weaker economies would eventually default, but they also began borrowing money from each other to increase the number of these bets. Consequently, a domino effect ensued and banks, while remaining insolvent and on the verge of bankruptcy, could still carry on playing their betting games, ultimately transforming Greece, Portugal, Spain and Ireland’s debt into Central Banks bets and, at the same time, into more debt owed by one bank to another.

Yanis Varoufakis in Berlin, feb. 2015

Yanis Varoufakis in Berlin, feb. 2015

This, in a nutshell, is why austerity is simply nonsensical: the predatory conditions under which loans were proposed to economies in recession are symptomatic of the institutional connivance with the bankers’ logic. And the Greek financial disaster is a prime example of this tragedy: “The ruling class”, Varoufakis continues, “knows that austerity does not work and that by shrinking the state is a massive transfer of wealth and it makes sure that the costs of the financial crisis are transferred onto the shoulders of those who did not cause it”. Creditors have always been perfectly aware that Greece would never be able to repay its debt, and their GDP-crippling propositions have never been motivated by a charitable spirit of altruism. Rather, they purposefully aimed at bringing the Greek economy further down in order to keep it into debt and carry on creating money out of a non-existing capital.

Varoufakis has plenty of advice for Jeremy Corbyn, too: “Your opponents are going to use fear as their main instrument. They will say to you that a Corbyn government will push up the pound. This is what the systemic media will tell people in their living room”, he passionately roars. “Don’t fear them. People are perfectly capable of sifting through this. The people can overcome fear if the leadership overcomes fear”. The British left ought to advance a fearless struggle against the imposition of austerity measures. History offers an interesting argument against the effectiveness of these policies in the United Kingdom, too: during the Thatcher years, austerity entailed the decrease of public spending by 1%. Yet, this was enough to determine economic stagnation and increase the number of the unemployed from 700’000 to 4.5 million.

Jeremy Corbyn’s victory is an extension of a European phenomenon articulated via Syriza, Podemos and the Left Bloc, proving that the Left is still an extremely relevant historical force. Practically speaking, this intuition ought to be turned into a meaningful indication directing the work of the Labour party between 2015 and 2020. As Nobel-laureate economist Paul Krugman aptly put it, “if the political opposition won’t challenge the coalition’s bad economics, who will?”. Given that a left-wing culture inevitably entails an ethics of opposition, the struggle against austerity must accept no compromises and, in this sense, Corbyn ought to look at Greece as an example. Syriza undoubtedly fostered a remarkable sensitivity, among Greek citizens, for the inner predatory mechanisms of the fiscal policies they were being subject to, as the July, 5th referendum indisputably proved. Yet, the country’s economy was too weak not to ultimately give in to the creditors’ demands. Britain, instead, is sensibly different, considering the much greater capacity for its economy to sustain public spending, as Krugman argued in a much debated article appeared in The Guardian in April 2015: austerity “is not necessary, and does major damage when it is imposed. That was true of Britain five years ago – and it is still true today”. This, in ultimate analysis, is why the Labour leadership should overcome any fear and, instead, concentrate its efforts toward the creation of an opposition aiming at eroding the fiscal decision-making mechanisms which created the European crisis of debt in the first place and at challenging the institutions preventing its resolution.

© Alessandro De Arcangelis, 2015

A full video of the event is available:

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