Beyond the Crisis: Markets, planning and a utopian vision (inspired by the American National Football League)

The Crisis, especially in Europe (not to mention Greece), is all consuming. Every day our minds are highjacked by its latest twist. Today, here in Athens, a general strike has temporarily suspended the news’ cycle and given me a few moments to reflect. I thought that today’s post, reflecting this… reflective moment, should transcend that which is both depressing and newsworthy and reach for loftier thoughts: for a vision of what the Good Society may look like after the Crisis is over. The following lines (borrowing heavily from the last chapter of our new book) paint a picture of what a decent post-Crisis future may look like. Surprisingly, my utopian thoughts take their cue from the American NFL…

The Crash of 2008, and the economic crisis that it sparked off in the US, Europe and elsewhere, has exposed, among other things, the irrelevance of the economists’ mindset. My co-authors and I have tried to encapsulate this radical irrelevance in our recent book. The simple point is that, as economists (of almost all persuasions), we have been barking up the wrong tree. Suffice to remark on the pointlessness, in the post-2008 world, of our petty squabbles between ‘monetarists’ and the so-called ‘Keynesians’, between those favouring inflation targets and those against the fans of zero inflation; between advocates of microeconomic reform in the labour markets and others paying more attention to the credibility of central banks. All these debates, it turns out, were besides the point. The world was on a trajectory that moved from post-war centrally planned stability (the Bretton Woods era), to designed disintegration in the 1970s, to an intentional magnification of unsustainable imbalances in the 1980s and, finally, to the most spectacular privatisation of money in the 1990s and beyond.

Presently, the world is precariously balanced. The global economy is on the verge of a new recessionary spin, following the sovereign debt crisis that ensued in 2010, after the financial sector was propped up with public money. As it is now obvious, the late 2009 announcement that the global economy was on the mend, that ‘recovery’ was steaming along, was terribly premature. Lest we forget, even if only 25% of the income the world lost in 2008-9 proves permanent, the long term value of these losses for humanity will come to more than 70% (some say 90%) of annual world income.

Meanwhile, no one can seek solace in the thought that the Crash of 2008 had some redemptive effects on the world economy in terms of returning us to a more stable situation and a sounded mindset. It has not! Rather, it has simply transferred more of the burdens of systemic failure on the shoulders of public authorities; which are now tempted to follow Herbert Hoover in cutting deficits at a time of looming recession. [If Mr Schauble’s recent protestations that ‘private investors’ must chip in with the second Greek bailout signify anything, this is it.]

Whether our leaders (especially here in Europe) remain faithful to Hoover’s risible policies, the sands of time are counting down to the moment when the exorbitant privilege of the United States (i.e. the dollar’s unquestionable reserve currency status) will be challenged. Ironically, for now, the dollar’s status may be the only thing that stops us from sliding into a new 1930s style depression. However, the underlying imbalances are due to grow stronger and the only way that a new escalation of the crisis can be averted (one that may even acquire non-economic manifestations) is by means of a major re-jigging of world capitalism.

In this reading, the Crash of 2008 was not just an act of nemesis but a warning of what is to come. It gave us a glimpse of an underlying reality that could only laugh loudly when in proximity to the economists’ theories. Those who want to take advantage of this ‘glimpse’ will discern an international political economy alive with an ultimately geopolitical contest between surplus and deficit sovereign entities. Within those entities themselves, other, more traditional, distributional contests continue and a series of feedback effects are running backwards and forwards between the global and the local contests. The only certainty we have is that the manner in which the Crash of 2008 was dealt with, by infusions of trillions of dollars of public money, has arrested the collapse temporarily, has restored the power of the financial sector and has created the circumstances for greater instability.

In short, I have a hunch that the world is spinning out of control. The Fed is engaged in rear guard action to counter America’s contractionary fiscal policy, the ECB is lost in a parallel universe of its own, China is struggling to maintain growth in the context of anaemic consumer spending and against a real estate and banking bubble.  

In this climate, which is brewing heavy weather from West to East and North to South, the only remedy that can stem the forces of global recession is a generous transfer of power and surplus from rentiers (who have been abusing it for decades) to real producers (who can potentially harness it more effectively). In short, the only hope for a rational future is a massive transfer of social power away from the financial markets (i.e. the banks) to those who cannot be captured by them because they are too many to bribe, threaten and extort: Global Labour.

Labour must come to see that the post 1970s variant of global capitalism (what I call the Global Minotaur) has extinguished the postwar dream of a Good Society sustained by balanced growth and social justice. The crisis of social democracy is nothing but a side-effect. Old recipes for social justice and economic growth stand no chance in the post-2008 world. Neither the Nation-State nor the market can help labour claim the share of the global pie that will stabilise the world we live in. The narrative of empowerment through education is bogus; the older idea that trades unions are about wrestling a higher percentage of the surplus from specific bosses grossly inadequate; the hope that new legislation will avert environmental disaster quixotic; the promise of progress through free trade a pipedream.

The new task ahead is as simple as it is daunting: To create a New Global Plan. However, this time there are no New Dealers to design it on our behalf. Judging by what happened when they did, and despite its many successes, it is perhaps a good thing that we cannot bank on the New Dealers‘ successors today. The New Global Plan will have to be democratic, if only because nothing else seems to last. But what does democratic really mean?

It means that those who earn by actually working (and who do not rely on speculating with other people’s money or default probabilities), independently of whether they live in the United States, China, India, Africa or Europe, will have to have a say in the New Plan‘s constitution; that on that basis they must be allowed to tap into the almost infinite wealth doing the rounds in the international capital markets daily. In the long run, there may not be another way of defusing once and for all the current Crisis and of imposing the rule of Reason on our grossly irrational market societies.

And what would the New Global Plan look like? I am tempted to use one of my all-time favourite lines: We are damned if we know! However, the world needs more than splendid indeterminacy to reclaim hope of a future worth fighting for. But is there a future socio-economic arrangement worth fighting for? Can this question be answered in brief without instantly confining the answer to the too-hard, too-utopian basket?

In his little book, The Meaning of Life, Terry Eagleton (2007, pp. 171-174) faced a similarly daunting task: to capture, in brief, the… meaning of life. His answer was: A band like the Cuban Buena Vista Social Club; that’s the meaning of life! Eagleton’s point was that such a band illustrates the dialectic at its best. A ‘community’ with a clear, unifying tune toward which each ‘individual’ contributes by… improvising. Its members do not mechanically play from some given score, written by a despotic musical mind (however brilliant that mind might be), but, rather, integrate their own private freedom into a collective pursuit which enhances the experience of each of its members. Their improvisation confirms their private freedom not by having each note whimsically selected by autonomous players but, rather, when all the various pieces of improvisation fall into place, as if by the nod of some invisible conductor.

The parable that I shall now offer for what a decent future may look like, for a social economy that we think is worth fighting for, also comes from the Americas: The US National Football League! Think of it: The NFL is a paragon of aggressive competitiveness. On the pitch, extremely well prepared players give their all for victory, wealth and glory. Teams pull no punches to win. The road to the Grand Final is littered with injured bodies, broken egos but, in the process, a great deal of satisfaction and camaraderie is shared by everyone, winners and losers, both on and off the pitch.

Meanwhile, the League is based on a Central Plan. Teams cannot spend highly differential amounts on salaries and the best new players are forced to sign with the weakest teams. The market works but to do so it must be severely circumscribed by the Common Pursuit. The constraints liberate the true spirit of competition, preventing the successful from monopolising the best players and killing off the interest of most matches.

Thus, planning and competition are fused into a League that minimises predictability and maximises excitement. Socialist planning lives in sin with unbridled competition right under the spotlight of American show business!

All we need do is think of a way to organise the game of human life along the NFL’s lines, merely substituting the goal of maximising the audience’s excitement with that of minimising humanity’s chances of ending up like a dim, self-defeating virus.



  • Yanni

    Segueing off to the NFL is a bit of a cop out. Give us an example of country where power has, as you ask, been democratically assumed by labour, who exercised it democratically in a way you see fitting for the international model you propose. Certainly not the USSR not China, but Brazil? I hope not. Maybe the Nordic countries? But they have gone through their own banking crises, and while they certainly seem better managed than many others, capitalism and free enterprise are alive and well there. You can’t just throw the ball up in the air and walk away. They’re our balls.

    • Jerry,

      The fact that the democratic ideals of the French Revolution were drowned in the blood of the Terror does not mean that they were worthless. The fact that until slavery was abolished there had never been a society free of slavery did not mean that the notion of a slavery-free society was infeasible. Anyway, my little utopian interlude obviously failed to carry you along. The NFL parable was only meant as a metaphor by which to highlight the importance of designing markets; of combining their merits while giving democratic processes a role in constraining the excesses and failures. I think you should give it another thought…

  • I somehow compare your writings to alternative medicine…a much more wholistic perspective on human affairs..therefore better chances for a correct diagnosis.

  • Dear Mr. Varoufakis,
    I think you are very close to a solution to our predicament. While reading your post (shift from the rentiers to the working people) I was eagerly waiting on the moment when you might mention Silvio Gesell. I’m sure you must have heard of him!!!! What do you think of an economic system that has extinguished the Interest
    I am looking forward to a comment on this view!

    Dr. Eugen Renz

  • I can only agree with your concept. Particularly the idea of placing the best at the bottom and parallels my own suggestions for investment of equity capital, on free enterprise terms, into the grass roots of society. Thus permitting the creation of new employment, by the local community, managed by themselves, rather than managed by some larger organisation; out of touch with the local communities needs.

  • Well ,how can i comment on this?
    How can i not agree with this?

    It really is hard. How people will gain an understanding of their everyday power to use by offering and without diminishing eachother?

    We are in a vicious cycle.

    You stated certain solutions of the past that may not work in todays world ,but it is not a question of finding what works rather than when and how.

    1) Everything goes. Square inside a square. Frame inside a frame. Every frame with each properties. But in a dynamic constantly changing world ,properties change frames like jumping electrons ,thus one frame that was once the main and the all ,becomes the part.

    So ,every individual to himself ,not by destructive ego and greed ,but by respect to different properties and the interchangeability of situations. Or if one likes ,an understanding that to be and feel secure ,one must accept the dynamic varieties of beings and situations and find comfort by acknowledgement of unpredictability. Isn’t this the spice of life after all?

    2) Socio-economic flexibility. Trully there must be no such thing as politics that interfere like an ideology that superimposes on others. Creating a “system” that recognizes the adjustability of beings.

    From the moment we wake up to the moment we go to sleep ,we become part of so many variable events ,that without our being concious of own’s functions ,constantly changing ideologies is the norm.
    Thinging one’s daily endeavors with political terms. What parent in his right mind isn’t a communist with his feelings towards certain aspects of the child’s behaviour? What consumer isn’t a hardcore capitalist when in the grocery ,especially when in need to feed hungry siblings?

    Respect is all that’s needed.
    We broke everything in parts and convinced ourselves that one solution is better than the other ,when everything works together ,constantly changing properties.
    Time to see the oneness of all.
    Why have a fixed political ideology when everything goes? My “political ideology” is that i have none and everything.

    Life is a fractal.

    3) Accept the unexpected. Focusing on the task at hand. Not caring about what one does ,as long as one does not interfere destructively for destruction’s sake. His/her events are his/her own.

    If everything goes and you are free to act on your will ,without superimposing rules of others that even break your spirit and everyday life ,why you the citizen not want this for others? Do you want to be the sheikh in the place of the sheikh?

    Everything comes down to behaviour. Always.

    4) Need is the ultimate law. Everybody needs ,wants ,dreams. Respect and offer. In a small scale everyday. If you like. Just do not interfere and diminish the actions of others.

    5) Nature dictates the limits. There will always be limitations. Do you want others’ or nature’s? Everybody sees the most obvious and with experience everybody learns enough ,to live and prosper.

    Simple “systems” having as base words like courtesy.
    Improvising our lives.

    People do this:

    They are on a stairway ,and when someone else is beside them or a step lower ,they focus on lowering the other one ,instead of moving higher ,when their turn to move has come. Is it not preferable to pull someone higher and find someone to do the same for you? Some will ,some won’t. Their choice but your life.

    I choose to move higher and not let any “system” absorb me. I accept the way things are today ,because the majority does not give me a choice. Not the politicians or any powers that be. I accept but not being part of them.

    What is the nature and force of a protest ,that is a usual part of todays world and is being absorbed by the system ,as simply a negative fluctuation?

    If i the anonymous crowd do not change ,nothing does.

  • Hi Yanis,
    Congratulations on your new book and best wishes for an growing readership.
    However, this is not the best time for romantic musings of a game-theory-savvy NFL fan.
    I find Nouriel Roubini’s latest Twitter comment more appropriate as a test of your game-theory skills:
    “ECB works hard to ensure disorderly crisis in Greece: it vetoed debt restructuring, reprofiling & now even “voluntary” maturity extension”
    Are we being a bit too “modest” towards this hornet’s nest of eurozone hacks or is Roubini playing both sides of the CDS betting game?

  • Very interesting attempt of synthesis on liberal and socialist proposals and of course diagnosis on the global (capitalist) crisis.

    About the utopia of NFL: It is probably much easier to design a subsystem (NFL) compared to the system itself (society).
    When we project NFL to society/economy, if we assume that teams are private companies, we need to answer who will have the power to impose such rules. A democratic state comes to mind, but if the state depends on the companies (capital) more than the opposite, then it is not able to impose such rules (part of today’s situation). In my opinion this is one of the many flaws of the (neo)liberal plan. Opposite to the trend, we probably need a quite large number of companies, banks, etc, to be socialized.

    Of course it is far more complicated, but I just wanted to set off the issue of political and economical power.

  • “The best new players are forced to sign with the weakest teams”.This reminded me of a verse of a song called Keynes vs Hayek Second Round.There is a verse where Keynes preaches the necessity of state intervention and Hayek answers “people aren’t chess men you move on a board at your whim, their dreams and desires ignored”. If you are interested here’s the video:

    I don’t think ignoring people’s desires is an example we should aspire to.You mentioned in Syntagma Square that what we have right now is not capitalism and you were absolutely right.Here’s a thought,let’s establish capitalism.

    Let’s end all central banks(FED,ECB etc) and be done with the arrogant notion that a group of individuals can effectively determine interest rates and the scale of the monetary base.Let’s legalize competition and let people freely choose which currency to use.Let’s stop bailing out losers and let the markets punish the people that made bad choices.Let’s start treating banks like any other private company.I think that those should be fundamentals for any democratic society,then again I may be wrong.

    • Ignoring people’s capacities, desires and even idiosyncracies is the beginning of tyranny. Now, let me turn to your suggestion that, perhaps, we should try ‘true’ capitalism’. Well, I afraid we cannot. Pure capitalism is too unstable, It was tried before and showed an amazing instability (recall the US in the 19th century). The Fed, US Treasury Bills and the whole panoply that emerged after WW2 evolved in reaction to the gross incapacity of capitalism to produce enough demand for its magnificent products. This is why planning is of the essence. But planning is not necessarily a constraint on freedom, It can be liberating. Since you mentioned chess, think of us not as the pawns that are moved on the board but as the players who agree on the rules of the games; the very rules that constrain us (e.g. not letting us move the bishop up and down at will) so as to create the wonderful game of chess in which humans find such remarkable ways of exercising their Reason and creativity.

    • Must admit that I am not familiar with M.A. Armstrong. But now that you passed on the links, I shall take a look. Watch this space.

    • Nigel,
      I had a chance to watch the Aljazeera interview thanks to your comment. I must say, that was a total disgrace of a so called informative news program.
      How can you have a debate when the host is so uninformed or -even worse- slants the conversation based on false memes like ” nobody pays taxes in Greece”, “Greece doesn’t have a functioning economy” or the “inevitability of austerity”?
      If I was Yanis, I would never allow myself to be in the same room with people like that much less talk to them.

      1, If none of the Greeks pay taxes then, how can we at the same time believe that the majority of them are public servants, ergo they receive a paycheck every month where IRS deductions are automatically subtracted. Similarly, all private sector workers have their tax payments deducted before they actually lay their hands on any money at the end of every month.
      The % of non-declared income from the majority of the population is only a few points above the EU average and that is, IF the actual data reported by everybody else is accurate. (there is a lot of guess work involved)

      2. The annual GDP for Greece, for a country its size, does not reflect an economy not capable of producing enough for a fair standard of living. It’s laughable to make assertions like that and it gets even worse if we take into account the other slur often cited that apart from the real economy, there is another parallel one approaching 40% or more of the real one according to other neoliberal geniuses.
      What gives? What’s fact and what’s fiction?
      Like my father used to tell me, if you break something and putting it together you are left with parts left over, you ain’t fixed shit.

  • Yanni im from Melbourne, Australia and only recently through youtube and other internet media sources become aware of the situation in greece. the media in australia is quite hopeless and more focused on cats being rescued from trees than discussing the future of the EU and the financial crisis.
    I really enjoyed your NFL metaphor, it is unfortunately just an ideal that i feel a few people here are taking to literally. The NFL is similar in structure to Australias “AFL” (our unique football game) where there are salary and spending caps etc. This for me translates into, an economy no matter how big or small cannot be left unregulated, and that the dergulation that occured in the 90’s which i believe was set off by the Americans has caused catastrophic consequences for us today. Too much freedom has been given to the greedy bankers and they have, as human nature always does, abused their power. Am i on the right track here?

    Sorry to drag on but i was very proud of the way you conducted yourself in that interview on french tv when the german economist blatantly tried to “put words in your mouth” claiming that you were defending or advising the blackmailing of the EU by Greece! Well done!!!

  • I feel that there are a couple of fundamental factors that are missed here:

    1. We have been going through a technological revolution that has broken the borders and is increasingly changing who are the “haves” and the “have nots” .. the ones that “produce” and the ones that “consume”. It has made it easy for young people in India and China to compete in the global market place. It has moved production to different areas, and is actively transferring surplus. You can’t ignore the transfer of surplus from the US and Europe to India and China. If you see it actually as a difference of potential, the surplus is moving very fast from the highest to the lowest. I am not sure that you need some plan to accelerate that. It is happening today.

    2. The population of old Europe (and old America) is aging fast, and the entitlement programs of
    the past require a much smaller percentage of the population to “produce”, while others just consume. Although good and morally needed, it is reasonable to challenge the assumption that they can be maintained in an increasingly aging population. Cruel ? Absolutely. But, for those in India and China,, the number one requirement is to use the surplus moving there to improve their own quality of life and enjoy a portion of the entitlements that Europe is enjoying for years now. Their last worry is to maintain the European entitlements. So, like two communicating tubes of liquid, the level of liquid on both tubes will eventually equalize.

    3. The same technology has drastically increased the “rate of change”. The “stability” culture of Europe (and Greece in particular) has to adapt to this new rate of change. You don’t get the same job for life anymore, and you need constant adaptation and training to remain competitive and productive. Obviously, there is no surplus moving to Greece, where the dream of every mother is for their kids to go to a University and get a job in the public sector.

    Bottom line the transfer of surplus is happening. It might not be convenient for Greece, since it tends to move to the “lowest” possible place (and Greece is not there yet), but it doesn’t need any help.

    • Interesting points but genuinely irrelevant to the unfolding crisis. Technical change is continuous, even if lumpy. But financial bubbles burst discretely, or catastrophically, and call upon the political authorities for urgent rejigging of the remaining surpluses. The EU has no such mechanism.

  • In imagining the possible futures why not give a shot to the idea that capitalism is not defined by the ownership of the means of production but rather by the prevalence of the employer-employee relationship?

    Appropriating surplus does not depend on who owns the means of production. It depends on being the employer.

    Firms without employers and employees can become the mammals of organizational human evolution. High unemployment and idle resources create immediately an ecological niche for them to prosper. They present many interesting characteristics, e.g.:

    – Greater efficiency given lowered internal friction and improved decision.
    – Inherent discretion will afford near zero external friction.
    – Inter-firm networking will build support in a positive feedback fashion.
    – The (macro) economics of such firms interactions is leaner and cleaner.
    – Surplus as is appropriated today disappears precluding any minotaurs at any scale.

    If and when they will dislocate the prevailing dinosaurs is a matter to investigate by experiment. Otherwise, where will the fun be? 😉

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