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 some of 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,
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 sheres
and better do it with demos being in control,
like 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 re-empowered,
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 better do it by democratizing the reunified sphere,
lest you end up with a surveillance-mad, hyper-autocracy
that makes The Matrix, the movie, look like a documentary.
(Laughter)
So the question is not whether capitalism will survive
the technological innovations of this moment.
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 a 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 imaging 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 through 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.
Will such a world dawn?
Or shall we descend into a Matrix-like dystopia?
The answer lies in the political choice that we shall be making collectively.
It is our choice,
and we'd better make it democratically.
Thank you.
(Applause)
Bruno Giussani: Yanis ...
It was you who described yourself in your bios as a libertarian marxist --
what is the [relevance of Marxism] today?
YV: Well if there was any relevance in what I just said, the Marx is relevant
because the whole point of reunifying the political and economic is --
if we don't do it,
then technological innovation will create such a massive fall in aggregate --
what Larry Summers referers to as secular stagnation.
With this crisis migrating from one part of the world,
as it is now,
we destabilize not only our democracies,
but even the [emerging?] world that is not that keen on liberal democracy.
So if this analysis holds water, then Marx is absolutely relevant.
But so is [Hagen?] --
that's why I'm a libertarian marxist,
and so is Keynes,
so that's why I'm totally confused.
(Laughter)
BG: Indeed, and possibly we are, too now.
(Applause)
YV: If you are not confused, you are not thinking, okay?
BG: That's a very, very Greek philosopher kind of thing to say --
YV: That's more Einstein, actually --
BG: During your talk you mentioned Singapore and China,
and yesterday night at the speaker dinner,
you expressed a pretty strong opinion about how the West looks at China.
Would you like to share that?
YV: Well there's a great degree of hypocrisy.
In our liberal democracies we have a semblance of democracy.
It's because we have confined --
as I was saying in my talk --
democracy to the political sphere,
while leaving the one sphere where all the action is --
the economic sphere --
a completely democracy-free zone.
In a sense,
if I am allowed to be provocative,
China today is closer to Britain in the 19th century,
because remember,
we tend to associate liberalism with democracy --
that's a mistake, historically.
Liberalism --
Liberal --
it's like John Stuart Mill.
John Stuart Mill was particularly skeptical about the democratic process.
So what you are seeing now in China is a very similar process
to what we had in Britain during the Industrial Revolution,
especially the transition from the first to the second.
And to be castigating China
for doing that which the West did in the 19th century,
smacks of hypocrisy.
BG: I am sure that many people here
are wondering about your experience
as the Finance Minister of Greece earlier this year --
YV: I knew this was coming --
BG: Yes --
(Laughter)
BG: Six months after,
how do you look back at the first half of the year?
YV: Extremely exciting from a personal point of view
and very disappointing,
because we had an opportunity to reboot the Eurozone.
Not just Greece, the Eurozone.
To move away from the complacency
and the constant denial that there was a massive --
and there is a massive --
architectural fault line going through the Eurozone,
which is threatening, massively,
the whole of the European Union process.
We had the opportunity on the basis of the Greek program --
which by the way,
was the first program to manifest that denial --
to put it right.
And unfortunately,
the powers that be in Eurozone --
in the Eurogroup --
chose to maintain denial.
But you know what happens.
This is the experience of the Soviet Union.
When you try to keep alive
an economic system that architecturally cannot survive,
through political will and through authoritarianism,
you may succeed in prolonging it.
But when change happens
it happens very abruptly and catastrophically.
BG: What kind of change are you foreseeing?
YV: Well there's no doubt
that if we don't change the architecture of the Eurozone,
the Eurozone has no future.
BG: [Did you do any mistakes] when you were Finance Minister?
YV: Every day.
(Laughter)
Anybody who looks back --
(Applause)
No but seriously.
If there's any Minister of Finance --
or of anything else for that matter --
who tells you after six months in a job,
especially in such a stressful situation,
that they had made no mistake,
[they're dangerous people],
of course I made mistakes.
The greatest mistake
was to sign the application for the extension of a loan agreement
in the end of February.
I was imagining
that there was a genuine interest on the side of the creditors
to find common ground.
And there wasn't.
They were simply interested in crushing our government,
just because they did not want to have to deal
with the architectural fault lines that were running through the Eurozone,
and because they didn't want to admit
that for five years they were implementing a catastrophic problem in Greece.
We lost one-third of our Nominal GDP.
This is worse than the Great Depression.
And no one has come clean
from the tribe of lenders that have been imposing this policy
to say, "this was a colossal mistake."
BG: Despite all this,
and despite the aggressiveness of the discussion though,
you seem to remaining quite pro-European.
YV: Absolutely.
Look, my criticism of the European Union and the Eurozone
comes from a person who lives and breathes Europe.
My greatest fear is that the Eurozone will not survive.
Because if it doesn't,
the centrifugal forces that would be unleashed
would be [demonic],
and they would destroy the European Union.
And that would be catastrophic not just for Europe
but for the whole global economy.
We are probably the largest economy in the world.
And if we allow ourselves
to fall into a [route?] of the post-modern 1930's,
which seems to me what we are doing,
then that will be detrimental
to the future of Europeans and non-Europeans alike.
BG: We definitely hope you are wrong on that point.
Yanis, thank you for coming to TED.
YV: Thank you
(Applause)