Placeholder Image

Subtitles section Play video

  • Democracy.

  • In the West,

  • we make a colossal mistake taking it for granted.

  • We see democracy

  • not as the most fragile of flowers that it really is,

  • but we see it as part of our society's furniture.

  • We tend to think of it as an intransigent given.

  • We mistakenly believe that capitalism begets inevitably democracy.

  • It doesn't.

  • Singapore's Lee Kuan Yew and his great imitators in Beijing

  • have demonstrated beyond reasonable doubt

  • that it is perfectly possible to have a flourishing capitalism,

  • spectacular growth,

  • while politics remains democracy-free.

  • Indeed, democracy is receding in our neck of the woods,

  • here in Europe.

  • Earlier this year, while I was representing Greece --

  • the newly elected Greek government --

  • in the Eurogroup as its Finance Minister,

  • I was told in no uncertain terms that our nation's democratic process --

  • our elections --

  • could not be allowed to interfere

  • with economic policies that were being implemented in Greece.

  • At that moment,

  • I felt that there could be no greater vindication of Lee Kuan Yew,

  • or the Chinese Communist Party,

  • indeed of some recalcitrant friends of mine who kept telling me

  • that democracy would be banned if it ever threatened to change anything.

  • Tonight, here, I want to present to you

  • an economic case for an authentic democracy.

  • I want to ask you to join me in believing again

  • that Lee Kuan Yew,

  • the Chinese Communist Party

  • and indeed the Eurogroup

  • are wrong in believing that we can dispense with democracy --

  • that we need an authentic, boisterous democracy.

  • And without democracy,

  • our societies will be nastier,

  • our future bleak

  • and our great, new technologies wasted.

  • Speaking of waste,

  • allow me to point out an interesting paradox

  • that is threatening our economies as we speak.

  • I call it the twin peaks paradox.

  • One peak you understand --

  • you know it, you recognize it --

  • is the mountain of debts that has been casting a long shadow

  • over the United States, Europe, the whole world.

  • We all recognize the mountain of debts.

  • But few people discern its twin.

  • A mountain of idle cash

  • belonging to rich savers and to corporations,

  • too terrified to invest it

  • into the productive activities that can generate the incomes

  • from which you can extinguish the mountain of debts

  • and which can produce all those things that humanity desperately needs,

  • like green energy.

  • Now let me give you two numbers.

  • Over the last three months,

  • in the United States, in Britain and in the Eurozone,

  • we have invested, collectively, 3.4 trillion dollars

  • on all the wealth-producing goods --

  • things like industrial plants, machinery,

  • office blocks, schools,

  • roads, railways, machinery, and so on and so forth.

  • $3.4 trillion sounds like a lot of money

  • until you compare it to the $5.1 trillion

  • that has been slushing around in the same countries,

  • in our financial institutions,

  • doing absolutely nothing during the same period

  • except inflating stock exchanges and bidding up house prices.

  • So a mountain of debt and a mountain of idle cash

  • form twin peaks, failing to cancel each other out

  • through the normal operation of the markets.

  • The result is stagnant wages,

  • more than a quarter of 25- to 54-year-olds in America, in Japan and in Europe

  • out of work.

  • And consequently, low aggregate demand,

  • which in a never-ending cycle,

  • reinforces the pessimism of the investors,

  • who, fearing low demand, reproduce it by not investing --

  • exactly like Oedipus' father,

  • who, terrified by the prophecy of the oracle

  • that his son would grow up to kill him,

  • unwittingly engineered the conditions

  • that ensured that Oedipus, his son, would kill him.

  • This is my quarrel with capitalism.

  • Its gross wastefulness,

  • all this idle cash,

  • should be energized to improve lives,

  • to develop human talents,

  • and indeed to finance all these technologies,

  • green technologies,

  • which are absolutely essential for saving planet Earth.

  • Am I right in believing that democracy might be the answer?

  • I believe so,

  • but before we move on,

  • what do we mean by democracy?

  • Aristotle defined democracy

  • as the constitution in which the free and the poor,

  • being in the majority, control government.

  • Now, of course Athenian democracy excluded too many.

  • Women, migrants and, of course, the slaves.

  • But it would be a mistake

  • to dismiss the significance of ancient Athenian democracy

  • on the basis of whom it excluded.

  • What was more pertinent,

  • and continues to be so about ancient Athenian democracy,

  • was the inclusion of the working poor,

  • who not only acquired the right to free speech,

  • but more importantly, crucially,

  • they acquired the rights to political judgments

  • that were afforded equal weight

  • in the decision-making concerning matters of state.

  • Now, of course, Athenian democracy didn't last long.

  • Like a candle that burns brightly, it burned out quickly.

  • And indeed,

  • our liberal democracies today do not have their roots in ancient Athens.

  • They have their roots in the Magna Carta,

  • in the 1688 Glorious Revolution,

  • indeed in the American constitution.

  • Whereas Athenian democracy was focusing on the masterless citizen

  • and empowering the working poor,

  • our liberal democracies are founded on the Magna Carta tradition,

  • which was, after all, a charter for masters.

  • And indeed, liberal democracy only surfaced when it was possible

  • to separate fully the political sphere from the economic sphere,

  • so as to confine the democratic process fully in the political sphere,

  • leaving the economic sphere --

  • the corporate world, if you want --

  • as a democracy-free zone.

  • Now, in our democracies today,

  • this separation of the economic from the political sphere,

  • the moment it started happening,

  • it gave rise to an inexorable, epic struggle between the two,

  • with the economic sphere colonizing the political sphere,

  • eating into its power.

  • Have you wondered why politicians are not what they used to be?

  • It's not because their DNA has degenerated.

  • (Laughter)

  • It is rather because one can be in government today and not in power,

  • because power has migrated from the political to the economic sphere,

  • which is separate.

  • Indeed,

  • I spoke about my quarrel with capitalism.

  • If you think about it,

  • it is a little bit like a population of predators,

  • that are so successful in decimating the prey that they must feed on,

  • that in the end they starve.

  • Similarly,

  • the economic sphere has been colonizing and cannibalizing the political sphere

  • to such an extent that it is undermining itself,

  • causing economic crisis.

  • Corporate power is increasing,

  • political goods are devaluing,

  • inequality is rising,

  • aggregate demand is falling

  • and CEOs of corporations are too scared to invest the cash of their corporations.

  • So the more capitalism succeeds in taking the demos out of democracy,

  • the taller the twin peaks

  • and the greater the waste of human resources

  • and humanity's wealth.

  • Clearly, if this is right,

  • we must reunite the political and economic spheres

  • and better do it with a demos being in control,

  • like in ancient Athens except without the slaves

  • or the exclusion of women and migrants.

  • Now, this is not an original idea.

  • The Marxist left had that idea 100 years ago

  • and it didn't go very well, did it?

  • The lesson that we learned from the Soviet debacle

  • is that only by a miracle will the working poor be reempowered,

  • as they were in ancient Athens,

  • without creating new forms of brutality and waste.

  • But there is a solution:

  • eliminate the working poor.

  • Capitalism's doing it

  • by replacing low-wage workers with automata, androids, robots.

  • The problem is

  • that as long as the economic and the political spheres are separate,

  • automation makes the twin peaks taller,

  • the waste loftier

  • and the social conflicts deeper,

  • including --

  • soon, I believe --

  • in places like China.

  • So we need to reconfigure,

  • we need to reunite the economic and the political spheres,

  • but we'd better do it by democratizing the reunified sphere,

  • lest we end up with a surveillance-mad hyperautocracy

  • that makes The Matrix, the movie, look like a documentary.

  • (Laughter)

  • So the question is not whether capitalism will survive

  • the technological innovations it is spawning.

  • The more interesting question

  • is whether capitalism will be succeeded by something resembling a Matrix dystopia

  • or something much closer to a Star Trek-like society,

  • where machines serve the humans

  • and the humans expend their energies exploring the universe

  • and indulging in long debates about the meaning of life

  • in some ancient, Athenian-like, high tech agora.

  • I think we can afford to be optimistic.

  • But what would it take,

  • what would it look like

  • to have this Star Trek-like utopia, instead of the Matrix-like dystopia?

  • In practical terms,

  • allow me to share just briefly,

  • a couple of examples.

  • At the level of the enterprise,

  • imagine a capital market,

  • where you earn capital as you work,

  • and where your capital follows you from one job to another,

  • from one company to another,

  • and the company --

  • whichever one you happen to work at at that time --

  • is solely owned by those who happen to work in it at that moment.

  • Then all income stems from capital, from profits,

  • and the very concept of wage labor becomes obsolete.

  • No more separation between those who own but do not work in the company

  • and those who work but do not own the company;

  • no more tug-of-war between capital and labor;

  • no great gap between investment and saving;

  • indeed, no towering twin peaks.

  • At the level of the global political economy,

  • imagine for a moment

  • that our national currencies have a free-floating exchange rate,

  • with a universal, global, digital currency,

  • one that is issued by the International Monetary Fund,

  • the G-20,

  • on behalf of all humanity.

  • And imagine further

  • that all international trade is denominated in this currency --

  • let's call it "the cosmos,"

  • in units of cosmos --

  • with every government agreeing to be paying into a common fund

  • a sum of cosmos units proportional to the country's trade deficit,

  • or indeed to a country's trade surplus.

  • And imagine that that fund is utilized to invest in green technologies,

  • especially in parts of the world where investment funding is scarce.

  • This is not a new idea.

  • It's what, effectively, John Maynard Keynes proposed

  • in 1944 at the Bretton Woods Conference.

  • The problem is

  • that back then, they didn't have the technology to implement it.

  • Now we do,

  • especially in the context of a reunified political-economic sphere.

  • The world that I am describing to you

  • is simultaneously libertarian,

  • in that it prioritizes empowered individuals,

  • Marxist,

  • since it will have confined to the dustbin of history

  • the division between capital and labor,

  • and Keynesian,

  • global Keynesian.

  • But above all else,

  • it is a world in which we will be able to imagine an authentic democracy.