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 any transient 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
flourishing capitalism,

spectacular growth,

while politics remain 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 Fincance Minister,

I was told to know on certain 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 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 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 the Euro zone,

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 driving 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 insured that Oedipus,
his son, would kill him.

This is my quarrel with capitalism.

It's 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 is 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 judgements

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,

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 --

(Laugher)

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 is is undermining itself,
causing economic crises.

Corporate power is increasing,

political goods are devaluing,

inequality is rising,

aggregate amount is falling,

and CEO's of corporations are too scared
to invest the cash of their corporations.

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