to daughter about econ

daughter about econ.png

by Yanis Varoufakis



1 – why so much inequality


the production of agricultural surplus gave birth to the following marvels that changed humanity forever: writing, debt, money, states, bureaucracy, armies, clergy, technology and even the first form of biochemical war..t

writing, debt, money, bureaucracy, war

agri surplus



we know from archaeologists that the first forms of writing emerge in mesopotamia (where iraq and syria are now).. but what did they record? the quantity of grain each farmer had deposited in a shared granary.. such a system required some sort of receipt.. so that each individual could prove what quantity they had stored


ever since econ was invented, following the agri revolution 12 000 years ago, and the creation of the first surplus.. it was about credit.. virtual payments..


had to believe.. the willingness and capacity of controller of the granary.. and other must believe in accepting mr nabuk’s shell iou.. this is the origin of the word ‘credit’ : it comes from the latin credere, which means ‘to believe’


debt, money, faith, and state all go hand in hand. w/o debt there is no easy way to *manage agri surplus.. as debt appeared, money flourished. but for money to have value, an institution, the state, had to make it **trustworthy. when we talk about the economy, this is what we are talking about: the complex relations that emerge in a society w a ***surplus..t

so.. no *manage ness.. no debt..?

so.. no debt/money/measuring.. no need to make things **trustworthy.. rather..we trust us

so.. no ***surplus.. no energy loss..?

as we examine these relations, what also becomes clear is that a state could never have been born w/o surplus, since a state requires bureaucrats to manage public affairs, police to safeguard property rights, and rulers who.. for better or for worse.. demand a high standard fo living..  none of the above would be conceivable w/o a hefty surplus to sustain all these people w/o them having to work in the fields…. t..

nor could an organized army exist w/o a surplus.. and w/o an organized army the power of the ruler, and by extension the state, could not be imposed, and the society’s surplus would be more vulnerable to external threats..

bureaucracies and armies were made possible by agri surpluses..t.. which in turn created the need for bureaucracies and armies..  the same was true of the clergy…. surplus begat org’d religions…


farmers could have overthrown rulers.. so.. cultivated ideology that cause majority to believe .. in rulers.. w/o this legitimizing ideology, the ower of ht estate dint’ stand a chance..  the people who performed and instituted the ceremonies that served this purpose were the clergy..

w/o large surplus there would be no capacity to create religious institutions w complicated hierarchies of clergy.. since the ‘holy’ men and women did not produce anything.. this is why for thousands of years the state and the clergy were one and the same..


there was tech before agri (fire, et al).. but agri surplus gave tech a gigantic boost by giving rise to new tech needs..  and by concentrating resources in hands of powerful few.. t

surplus also creates deadly bacteria/viruses (ie: tons of wheat piled in granaries surrounded by people and animals.. waste)… bodies had not evolved to cope with resulting diseases.. at first many died.. slowly.. people managed to adjust..became more resistant.. but not tribes/communities not yet develop agri.. so.. handshake was enough to wipe most of the tribespeople out..  .. in both australia nd america many more of the native populations dies from contact w bacteria/viruses carried by invading europeans than from cannonballs, bullets, and knives..  .. i some cases european raiders even engaged knowingly in biochem war.. ie: giving blankets knowingly seeded w smallpox virus..


(so why didn’t australia invade british instead..?)

in countries like australia.. food was never in short supply since 3-4 mn people living in relative harmony w nature had exclusive access to the flora and fauna of a continent the size of europe.. as a result.. no reason to invent the agri tech that flows from the accumulation of surplus ..

the aborigines had poetry, music, and myths of tremendous cultural value, but they didn’t have the means to attack other people or to defend themselves from the armies/weapons/germs..   in contrast, the british.. had been forced by climate and need to generate large surpluses and all that came w them.. .. so when arrived in australian coast.. aborigines didnt’ stand a chance


(and what about africa.. why was slave trade such a one way street)

africa elongates n and s so climate differences.. so crops didn’t travel well..


geographical condition predetermined that africa, australia, and the americas would be colonized by europeans.. it had nothing to do w dna, character or intelligence..  it was all due to the shape and location of the different continents..

but another ineq geography can’t explain: ineq w/in same community/country.. to understand this need to talk about econ


maintain your outrage but sensibly, tactically, so that when the time comes you can invest it in what needs to be done to make our world truly logical, natural, and just

2 – the birth of the market society


the shift from contribution to transaction ruins the pleasure..


how did exchange value manage this triumph over experiential value..

marsh exchange law


the very fact that most work/production.. took place w/in the confines of the extended household gave rise to the word oikonomia: oikos (household) and nomoi (laws, rules, constraints).. this is the etymology of ‘economy’ which literally means something like the ‘laws of running or managing a household’



for much of human history, a household economy mainly produced goods, but only occasionally produced commodities

over past 2-300 yrs.. societies have transitioned to a diff phase of human history .. toward mostly commodity


in this process the word ‘economy’ has become a misnomer..  most of what we produce/consume is created outside the oikos.. household..  thus the laws of the household, the original econ.. are now irrelevant and incapable of shedding useful light on what is going on .. perhaps better term.. agoranomy.. laws of the marketplace..


global trade resulted in getting rid of perishable crops..  build fences… replace w sheep.. wool sold for a mint.. thus.. britain experienced one of the most violent transformations in human history, the so called enclosures.. more than 70% of peasants thrown out of their houses.. and off their ancestral lands..t

so.. begging for food & shelter.. the birth of the labor market – a market in which humans lacking access to land/tools must survive by auctioning off their labor, by commodifying their toil.. only thing they had to sell: their own labor..t


notice how all the serfs became merchants of some sort at the very moment their ancestral lands became a commodity     .. after the serfs were evicted, the majority of the population were forced to participate in some kind of market..t

evicted ness


from enclosures.. serfs finally find jobs as industrial workers.. side by side w new steam engines..


a simpler, more succinct explanation of how this came to be: humanity invented the profit motive..

and now.. and even more puzzling idea: the rise of profit as a major incentive for people to do things came hand in hand w a new role for debt

3 – the marriage of debt and profit

4 – the black magic of banking


market societies can very suddenly lose their capacity to recycle. and at the heart of that recycling failure, you will, if you look closely, recognize a familiar figure: the banker (who can make money from thin air)


loans.. bankrupt.. et al.. who can put an end to this dizzying doom spiral?.. the state.. by lending money to the banks so they can remain open.. gets money from central bank (in us.. called federal reserve)


the diff is that when the central bank conjures up money out of nothing – borrowing exchange value from the future – its motivation has nothing to do w profit making.. its purpose is to save the bankers from themselves.. to prevent econ from being devastated.. and.. then.. acquires some authority over those banks..


not so diff from past.. in truth, there is no great diff between these inscribed shells and the money issued by a central bank.. what matters.. is if numbers on shells or ledgers is believable..

what’s new.. is now private bankers have now privilege of conjuring up money from thin air


no company/family/country can recover if it remains forever in the clutches of an unpayable debt..  this is why in scripture it is stipulated that debts should be periodically culled, just as forest need some of their fallen branches to be burned in order to prevent devastating forest fires..


a world in which the bankers are excused but all other debtors, including govts, are not: this is the worst of all possible worlds..


only salvation is for citizens.. to demand the coordinated intervention of the state to write off unpayable debts..  only way process of recovery can begin.. .. only way root cause of the econ’s faltering can be addressed but this is a matter for later..

perhaps not only way.. ie: short bp


one of the most prevalent arguments they (wealthy) make against the state is that wealth is produced individually, by heroic individuals.. taxation is therefore seen as an unjustifiable confiscation of what is rightfully theres.. nothing could be further from the truth. to see this.. go back to.. when serfs were being kicked off their ancestral do you think landowners managed to get rid of serfs so efficiently..?  to put it simply, private wealth was built and then maintained on the back of states sponsored violence..t


also have provided means for rich to become wealthier..  roads et al


bonds are in bankers’ parlance, ‘the most liquid of assets’ as such they lubricate the banking system to keep its cogs and wheels turning..


when the powerful .. demonize the sate, scoffing at the govt and public debt, remember that they need the state as badly as they need their kidneys and livers..

to be fair, bankers are just that: massive amplifiers. the root causes of market society’s fundamental instability lies elsewhere, buried deeply in the weird nature of two peculiar commodities: human labor and money

5 – two oedipal markets


if econ is the engine of society and debt is its fuel, then labor is the spark the life breathing force that animates that engine, while money is the lubricant w/o which that engine would seize up..

6 – haunted machines


after chapter (to me) filled w money gymnastics: star trek’s captain picard: ‘people are no longer obsessed w the accumulation of things. we’ve eliminated hunger, want, the need for possessions. we’ve grown out of our infancy’

imagine.. we can go there now.. ie: short bp

7 – the dangerous fantasy of apolitical money


on cigarettes as money in pow camps: the purchasing power of a unit of currency has nothing to do w how much it costs to produce but rather its relative abundance or scarcity..


the greek word for ‘coin’ (nomisma) straddles the verb ‘to think’ (nomizo) and the noun for ‘law’ (nomos).. indeed, what gives value to coins and paper money is the legal obligation to accept them cross the realm and the belief that they are and will remain valuable..


after 2008.. trying to get money to work like cigarettes did (no central bias).. w/o people being able to print/reuse if digital.. et al.. bitcoin became the answer.. the beauty of nakomoto’s algo was that it did away w the ledger run by a central authority but still managed to ensure that single currency unit could never be copied or spent twice..


money is political and must always be.. that money is political is not something bitcoin’s supporters dispute.. their love for bitcoin and other so called cryptocurrenices stems from what they see as their anarchic, anti establishment, counter authoritarian nature. this is as political as it gets.. what bitcoin supporters would not like however is what i am going to say next: the idea that money can be kept separate from the state and form the political process that leads to the formation of our govt and their policies is a dangerous illusion

w bitcoin being out side jurisdiction of state.. no one come to rescue.. (like state would if your bank is robbed)..we might dislike it,.. but the state is ultimately our only insurance policy against organized crime

i’d rather have gershenfeld sel


greatest and most dangerous weakness (of bitcoin).. no intervention in money supply is possible.. so safe from manipulation by govts/bankers.. but.. impossible to adjust total quantity in response to crisis.. and this makes a crisis worse..


already happened.. after crash of 1929..  gold standard.. which is very close in spirit to the aversion to political money that lies behind bitcoin.. it was only after the british govt in 1931 and pres roosevelt’s so called new deal govt in 1933 decoupled the quantity of currency from gold holding that some relief came..

but of course as soon as a govt or central bank manages the money supply, political money has returned..


to recap: controlling the money supply is our only faint hope of charting a course that avoids the scylla of bubbles, debt, an unsustainable development on the one hand and the charybdis of deflation and stagnation on the other.. but it can never be impartial..  there is only one thing to do.. democratize it.. give the power to control it to the people on the basis of one person, one vote.. it is the only defensible way we know..

we could disengage from money.. we’ve known that for longer than we haven’t

of course to democratize our money we will need to democratize our states first..

asked my dad if cigarettes had ended up becoming currency units in the camps on the islands of makronissos and ikaria.. where he spent several years as a political prisoner during the greek civil war of 1046-9..  he said: no.. we shared whatever packages each of us received..  passed them on to others w/o expecting anything from them in return.. that’s how it was.. we helped each other out

there is a lesson somewhere here, but i shall leave it to you to tease out

let’s detox ourselves from money.. perhaps using ubi as temp placebo.. humanity’s undisturbed ecosystem begs we let go of money/measure

8 – stupid virus?

(on humans being like destructive virus to planet)


if a tree or a microorganism has no exchange value, our market society behaves as if its destruction is meaningless.. if exchange value can be derived from its destruction, we can’t act fast enough

marsh exchange law


in ancient greece a person who refused to think in terms of the common good was called an idiotis – a privateer, a person who minded his own business .. in the 18th cent.. british scholars w a passion for ancient greek texts gave the word idiotis its current english meaning – a fool.. .. in both these senses our market societies have turned us into idiots..t


can private and planetary interests be wedded..? most certainly.. the aborigines managed it just fine, collab ing beautifully to sustain themselves w/o hunting and fishing all day.. allowing them to dedicate their free time to ceremony, story telling, painting and recitals.. as individuals, but also as societies that sought to live in harmony w nature, they achieved an authentic well being..t..  that was the envy of many of the englishmen who encountered them..

today if we are to have any chance of saving the planet and ourselves, we must find ingenious ways to reactivate humanity’s appreciation for experiential values that no market can even recognize, let alone respect..t

2 convos that io dance.. as the day.

a nother way

one solution.. has been .. to impose as a legal rule an agreement that say, no fisherman catch trout for more than none hour per day

your dad didn’t need that with cigarettes.. let’s go there.. gershenfeld sel


another is to convert every last remaining experiential value into exchange value.. currently all the rage..


only practical solution: authentic democracy..t

i’d say: eudaimoniative surplus


why so much emphasis on democracy? because to paraphrase winston churchill’s tongue in cheek remark, democracy may be a terrible, terrible form of govt – as flawed, fallible inefficient, and corrupt as the people who participate in it – but it’s better than any of the alts..

not any more man – as it could be..

your era will be typified be the momentous clash between two opposing proposals: ‘democratize everything” vs ‘commodify everything’.. powerful people say commodify.. democratize is the recommendation i have been building thru this book. take your pick




my fear stems from a larger worry: that most people have no time to scrutinize society. we just want to get on w our lives..


living a successful life, a life in which authentic happiness is a possibility, is a process of becoming – for which the greeks had a word, eudaimonia, meaning ‘flourishing’ in which our character and our thoughts and thus our preferences and desires, constantly evolve.. t

from sponataneous law.. to eudaimoniative surplus


halpevam is designed to do that which market society strives to accomplish: to satisfy your preferences..  judging by the wholesale unhappiness around us, market society does so terribly incompetently but the point is that you live in a type of econ that is not only terrible at achieving the goals it sets itself but far worse, an econ whose goals should never be met..

indoctrinations.. that get us to perpetuate the market: malls; mass media; economics


our ideology (keeping us beholden to the market/rulers): economics.. to most ‘the econ is too technical and boring to bother. i should leave it to the experts’.. except the truth is that there are no real experts and the economy is too important to leave to the economists..

the reason i became an economist.. i refused to leave it to the experts..

as it could be..

ie: hlb via 2 convos that io dance.. as the day..[aka: not part\ial.. for (blank)’s sake…]..  a nother way


Yanis on democracy now may 14 2018 – on nuclear deal.. but at 25 min – this on his daughter:

she doesn’t want to talk about any of these things w me (esp anything ending in ism).. but .. the one thing form a young age.. 8-9.. that seemed to energize her was .. inequality..t

equity.. everyone getting a go everyday

inequality really doesn’t make sense to an 8 yr old.. and that was my gateway..

happened thru process of commondification/marketization..