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Democracy.
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In the West,
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we make a colossal mistake taking it for granted.
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We see democracy
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not as the most fragile of flowers that it really is,
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but we see it as part of our society's furniture.
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We tend to think of it as an intransigent given.
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We mistakenly believe that capitalism begets inevitably democracy.
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It doesn't.
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Singapore's Lee Kuan Yew and his great imitators in Beijing
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have demonstrated beyond reasonable doubt
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that it is perfectly possible to have a flourishing capitalism,
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spectacular growth,
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while politics remains democracy-free.
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Indeed, democracy is receding in our neck of the woods,
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here in Europe.
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Earlier this year, while I was representing Greece --
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the newly elected Greek government --
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in the Eurogroup as its Finance Minister,
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I was told in no uncertain terms that our nation's democratic process --
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our elections --
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could not be allowed to interfere
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with economic policies that were being implemented in Greece.
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At that moment,
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I felt that there could be no greater vindication of Lee Kuan Yew,
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or the Chinese Communist Party,
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indeed of some recalcitrant friends of mine who kept telling me
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that democracy would be banned if it ever threatened to change anything.
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Tonight, here, I want to present to you
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an economic case for an authentic democracy.
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I want to ask you to join me in believing again
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that Lee Kuan Yew,
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the Chinese Communist Party
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and indeed the Eurogroup
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are wrong in believing that we can dispense with democracy --
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that we need an authentic, boisterous democracy.
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And without democracy,
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our societies will be nastier,
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our future bleak
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and our great, new technologies wasted.
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Speaking of waste,
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allow me to point out an interesting paradox
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that is threatening our economies as we speak.
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I call it the twin peaks paradox.
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One peak you understand --
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you know it, you recognize it --
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is the mountain of debts that has been casting a long shadow
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over the United States, Europe, the whole world.
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We all recognize the mountain of debts.
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But few people discern its twin.
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A mountain of idle cash
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belonging to rich savers and to corporations,
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too terrified to invest it
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into the productive activities that can generate the incomes
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from which you can extinguish the mountain of debts
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and which can produce all those things that humanity desperately needs,
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like green energy.
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Now let me give you two numbers.
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Over the last three months,
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in the United States, in Britain and in the Eurozone,
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we have invested, collectively, 3.4 trillion dollars
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on all the wealth-producing goods --
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things like industrial plants, machinery,
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office blocks, schools,
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roads, railways, machinery, and so on and so forth.
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$3.4 trillion sounds like a lot of money
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until you compare it to the $5.1 trillion
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that has been slushing around in the same countries,
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in our financial institutions,
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doing absolutely nothing during the same period
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except inflating stock exchanges and bidding up house prices.
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So a mountain of debt and a mountain of idle cash
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form twin peaks, failing to cancel each other out
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through the normal operation of the markets.
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The result is stagnant wages,
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more than a quarter of 25- to 54-year-olds in America, in Japan and in Europe
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out of work.
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And consequently, low aggregate demand,
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which in a never-ending cycle,
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reinforces the pessimism of the investors,
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who, fearing low demand, reproduce it by not investing --
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exactly like Oedipus' father,
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who, terrified by the prophecy of the oracle
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that his son would grow up to kill him,
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unwittingly engineered the conditions
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that ensured that Oedipus, his son, would kill him.
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This is my quarrel with capitalism.
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Its gross wastefulness,
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all this idle cash,
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should be energized to improve lives,
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to develop human talents,
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and indeed to finance all these technologies,
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green technologies,
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which are absolutely essential for saving planet Earth.
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Am I right in believing that democracy might be the answer?
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I believe so,
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but before we move on,
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what do we mean by democracy?
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Aristotle defined democracy
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as the constitution in which the free and the poor,
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being in the majority, control government.
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Now, of course Athenian democracy excluded too many.
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Women, migrants and, of course, the slaves.
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But it would be a mistake
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to dismiss the significance of ancient Athenian democracy
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on the basis of whom it excluded.
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What was more pertinent,
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and continues to be so about ancient Athenian democracy,
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was the inclusion of the working poor,
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who not only acquired the right to free speech,
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but more importantly, crucially,
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they acquired the rights to political judgments
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that were afforded equal weight
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in the decision-making concerning matters of state.
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Now, of course, Athenian democracy didn't last long.
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Like a candle that burns brightly, it burned out quickly.
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And indeed,
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our liberal democracies today do not have their roots in ancient Athens.
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They have their roots in the Magna Carta,
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in the 1688 Glorious Revolution,
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indeed in the American constitution.
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Whereas Athenian democracy was focusing on the masterless citizen
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and empowering the working poor,
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our liberal democracies are founded on the Magna Carta tradition,
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which was, after all, a charter for masters.
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And indeed, liberal democracy only surfaced when it was possible
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to separate fully the political sphere from the economic sphere,
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so as to confine the democratic process fully in the political sphere,
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leaving the economic sphere --
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the corporate world, if you want --
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as a democracy-free zone.
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Now, in our democracies today,
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this separation of the economic from the political sphere,
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the moment it started happening,
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it gave rise to an inexorable, epic struggle between the two,
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with the economic sphere colonizing the political sphere,
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eating into its power.
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Have you wondered why politicians are not what they used to be?
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It's not because their DNA has degenerated.
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(Laughter)
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It is rather because one can be in government today and not in power,
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because power has migrated from the political to the economic sphere,
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which is separate.
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Indeed,
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I spoke about my quarrel with capitalism.
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If you think about it,
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it is a little bit like a population of predators,
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that are so successful in decimating the prey that they must feed on,
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that in the end they starve.
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Similarly,
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the economic sphere has been colonizing and cannibalizing the political sphere
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to such an extent that it is undermining itself,
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causing economic crisis.
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Corporate power is increasing,
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political goods are devaluing,
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inequality is rising,
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aggregate demand is falling
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and CEOs of corporations are too scared to invest the cash of their corporations.
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So the more capitalism succeeds in taking the demos out of democracy,
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the taller the twin peaks
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and the greater the waste of human resources
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and humanity's wealth.
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Clearly, if this is right,
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we must reunite the political and economic spheres
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and better do it with a demos being in control,
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like in ancient Athens except without the slaves
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or the exclusion of women and migrants.
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Now, this is not an original idea.
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The Marxist left had that idea 100 years ago
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and it didn't go very well, did it?
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The lesson that we learned from the Soviet debacle
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is that only by a miracle will the working poor be reempowered,
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as they were in ancient Athens,
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without creating new forms of brutality and waste.
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But there is a solution:
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eliminate the working poor.
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Capitalism's doing it
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by replacing low-wage workers with automata, androids, robots.
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The problem is
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that as long as the economic and the political spheres are separate,
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automation makes the twin peaks taller,
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the waste loftier
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and the social conflicts deeper,
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including --
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soon, I believe --
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in places like China.
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So we need to reconfigure,
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we need to reunite the economic and the political spheres,
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but we'd better do it by democratizing the reunified sphere,
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lest we end up with a surveillance-mad hyperautocracy
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that makes The Matrix, the movie, look like a documentary.
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(Laughter)
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So the question is not whether capitalism will survive
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the technological innovations it is spawning.
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The more interesting question
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is whether capitalism will be succeeded by something resembling a Matrix dystopia
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or something much closer to a Star Trek-like society,
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where machines serve the humans
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and the humans expend their energies exploring the universe
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and indulging in long debates about the meaning of life
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in some ancient, Athenian-like, high tech agora.
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I think we can afford to be optimistic.
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But what would it take,
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what would it look like
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to have this Star Trek-like utopia, instead of the Matrix-like dystopia?
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In practical terms,
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allow me to share just briefly,
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a couple of examples.
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At the level of the enterprise,
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imagine a capital market,
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where you earn capital as you work,
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and where your capital follows you from one job to another,
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from one company to another,
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and the company --
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whichever one you happen to work at at that time --
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is solely owned by those who happen to work in it at that moment.
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Then all income stems from capital, from profits,
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and the very concept of wage labor becomes obsolete.
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No more separation between those who own but do not work in the company
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and those who work but do not own the company;
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no more tug-of-war between capital and labor;
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no great gap between investment and saving;
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indeed, no towering twin peaks.
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At the level of the global political economy,
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imagine for a moment
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that our national currencies have a free-floating exchange rate,
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with a universal, global, digital currency,
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one that is issued by the International Monetary Fund,
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the G-20,
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on behalf of all humanity.
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And imagine further
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that all international trade is denominated in this currency --
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let's call it "the cosmos,"
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in units of cosmos --
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with every government agreeing to be paying into a common fund
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a sum of cosmos units proportional to the country's trade deficit,
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or indeed to a country's trade surplus.
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And imagine that that fund is utilized to invest in green technologies,
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especially in parts of the world where investment funding is scarce.
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This is not a new idea.
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It's what, effectively, John Maynard Keynes proposed
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in 1944 at the Bretton Woods Conference.
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The problem is
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that back then, they didn't have the technology to implement it.
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Now we do,
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especially in the context of a reunified political-economic sphere.
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The world that I am describing to you
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is simultaneously libertarian,
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in that it prioritizes empowered individuals,
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Marxist,
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since it will have confined to the dustbin of history
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the division between capital and labor,
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and Keynesian,
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global Keynesian.
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But above all else,
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it is a world in which we will be able to imagine an authentic democracy.