By Yanis Varoufakis
Publisher: Zed Books, www.zedbooks.co.uk
Reviewed by: Lynard Barnes, 2 February 2013
Summary: The complete title of this book is THE GLOBAL MINOTAUR: AMERICA, THE TRUE ORIGINS OF THE FINANCIAL CRISIS AND THE FUTURE OF THE WORLD ECONOMY. It tells of the rise of the American super-state, post-1929, and the cause of the 2008 financial crash. Part of a series: ECONOMIC CONTROVERSIES by ZED BOOKS.
It takes a certain mindset to really appreciate the art and science of Economics. Concepts as simple as production, distribution and consumption can, under the right hands, become a labyrinth of ideas free-floating above a sea of esoteric numbers: ideas are the art, numbers the science. Thus, economics is a social science. THE GLOBAL MINOTAUR proves the point.
In THE GLOBAL MINOTAUR, Yanis Varoufakis uses economics to deconstruct the rise and, after 2008, fall of the United States as a financial superpower. What is so fascinating about Varoufakis’ perspective is his recognition of the artificiality of the foundation upon which American rose to dominate world finance, and his perpetuation of the perspective to suggest the decline of America’s dominance in the world of finance. Granted that this shaky logic is the foundation of his argument, wading through THE GLOBAL MINOTAUR is well worth the effort.
VALUABLE STUFF AND STUFF OF VALUE
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.
Adam Smith – quoted from Smith, A., 1976, The Glasgow edition, vol. 2a, pp. 26–7. WIKIPEDIA, “Adam Smith” accessed 2 February 2013
Though Adam Smith, the Scottish moral philosopher and headmaster of economics, never mentioned the term capitalism, he is the premier advocate of the capitalistic system. He lived from 1723 to 1790. Jump ahead around a hundred years and we find the German philosopher Karl Heinrich Marx and his co-heart, Friedrich Engels. Together, these two hashed out the philosophy of socialism which looked at capitalism and arrived at dialectical materialism—the evolutionary class struggle between those who own the means of production and those who must consume “production”. The clash between the big C of capitalism and the big S of socialism remained in the philosophical sphere until Russia went through Marx’s evolutionary economic system within the space of two years: oligarchy to socialism to the “dictatorship of the proletariat” —communism. How did that work out? Not too good obviously. It should have been obvious to the man who erected the Russian “socialist” state, Vladimir Lenin. The only reasonable explanation for Lenin’s shortsightedness is that he focused so narrowly on the numbers part of economics that he cavalierly dismissed the idea that there are people involved.
So it goes with Economics 101.
Yanis Varoufakis has come up with this analogy of America as a global Minotaur. In this analogy, the United States is the monster in the center of the financial world to which all nations pay tribute in the form of goods and capital. America needed the tribute in order to sustain its twin deficits of expenditures and trade. The analogy is built upon a foundation of numbers: the science of economics. Varoufakis does an excellent job of explaining all this. We have a nation—the United States— after World War II in which the greatest industrial society still standing has no outlet for the goods and capital it produces. So, it concocts a world trade system (the Global Plan resulting from the July 1944 Bretton Woods, New Hampshire conference of 730 delegates) that would prop-up the capitalist system and prevent another capitalist system melt-down as occurred in 1929 (the Great Depression). From Bretton Woods we got the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), now known as the World Bank. America would rebuild the industrial base of the defeated nations of Germany and Japan and remake these nations in its own image. By the numbers.