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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 any transient 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 flourishing capitalism,

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spectacular growth,

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while politics remain 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 certain 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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of 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

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that has been casting a shadow
over the United States,

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Europe,

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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 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 the Euro zone,

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we have invested collectively,

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3.4 trillion dollars on all
the wealth-producing goods,

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things like industrial plants, machinery,
office blocks, schools, roads, railways,

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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, in our financial institutions,

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doing absolutely nothing
during the same period ...

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except inflating stock exchanges
and driving 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 --

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in America, in Japan and in Europe --

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out of work,

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and consequently,

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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 insured that Oedipus,
his son, would kill him.

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This is my quarrel with capitalism.

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It's 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, but before we move on,

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what do we mean by democracy?

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Aristotle defined democracy
as the constitution

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in which the free and the poor,
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
to dismiss the significance

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of ancient athenian democracy

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on the basis of whom it excluded.

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What is 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 --

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crucially --

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they acquired the rights
to political judgements

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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, our liberal democracies today,

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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,

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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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(Laugher)

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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

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from the political to the economic
sphere, 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, the economic sphere

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has been colonizing and cannibalizing
the political sphere to such an extent

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that is is undermining itself,
causing economic crises.

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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 amount is falling,

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and CEO's 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 sheres

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and better do it with demos
being in control,

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like 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 re-empowered,

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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 better do it by democratizing
the reunified sphere,

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lest you end up with
a surveillance-mad, hyper-autocracy

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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
of this moment.

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The more interesting question is whether
capitalism will be succeeded

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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 a 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 imaging 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,

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John Maynard Keynes proposed
in 1944 at the Bretton Woods Conference.

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The problem is that back then

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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
through 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

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we will be able to imagine
an authentic democracy.

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Will such a world dawn?

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Or shall we descend
into a Matrix-like dystopia?

260
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The answer lies in the political choice
that we shall be making collectively.

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It is our choice,

262
99:59:59,999 --> 99:59:59,999
and we'd better make it democratically.

263
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Thank you.

264
99:59:59,999 --> 99:59:59,999
(Applause)

265
99:59:59,999 --> 99:59:59,999
Bruno Giussani: Yanis ...

266
99:59:59,999 --> 99:59:59,999
It was you who described yourself
in your bios as a libertarian marxist --

267
99:59:59,999 --> 99:59:59,999
what is the [relevance of Marxism] today?

268
99:59:59,999 --> 99:59:59,999
YV: Well if there was any relevance
in what I just said, the Marx is relevant

269
99:59:59,999 --> 99:59:59,999
because the whole point of reunifying
the political and economic is --

270
99:59:59,999 --> 99:59:59,999
if we don't do it,

271
99:59:59,999 --> 99:59:59,999
then technological innovation will create
such a massive fall in aggregate --

272
99:59:59,999 --> 99:59:59,999
what Larry Summers referers
to as secular stagnation.

273
99:59:59,999 --> 99:59:59,999
With this crisis migrating
from one part of the world,

274
99:59:59,999 --> 99:59:59,999
as it is now,

275
99:59:59,999 --> 99:59:59,999
we destabilize not only our democracies,

276
99:59:59,999 --> 99:59:59,999
but even the [emerging?] world that is not
that keen on liberal democracy.

277
99:59:59,999 --> 99:59:59,999
So if this analysis holds water,
then Marx is absolutely relevant.

278
99:59:59,999 --> 99:59:59,999
But so is [Hagen?] --

279
99:59:59,999 --> 99:59:59,999
that's why I'm a libertarian marxist,

280
99:59:59,999 --> 99:59:59,999
and so is Keynes,

281
99:59:59,999 --> 99:59:59,999
so that's why I'm totally confused.

282
99:59:59,999 --> 99:59:59,999
(Laughter)

283
99:59:59,999 --> 99:59:59,999
BG: Indeed, and possibly we are, too now.

284
99:59:59,999 --> 99:59:59,999
(Applause)

285
99:59:59,999 --> 99:59:59,999
YV: If you are not confused,
you are not thinking, okay?

286
99:59:59,999 --> 99:59:59,999
BG: That's a very, very Greek
philosopher kind of thing to say --

287
99:59:59,999 --> 99:59:59,999
YV: That's more Einstein, actually --

288
99:59:59,999 --> 99:59:59,999
BG: During your talk you mentioned
Singapore and China,

289
99:59:59,999 --> 99:59:59,999
and yesterday night at the speaker dinner,

290
99:59:59,999 --> 99:59:59,999
you expressed a pretty strong opinion
about how the West looks at China.

291
99:59:59,999 --> 99:59:59,999
Would you like to share that?

292
99:59:59,999 --> 99:59:59,999
YV: Well there's a great
degree of hypocrisy.

293
99:59:59,999 --> 99:59:59,999
In our liberal democracies we have
a semblance of democracy.

294
99:59:59,999 --> 99:59:59,999
It's because we have confined --

295
99:59:59,999 --> 99:59:59,999
as I was saying in my talk --

296
99:59:59,999 --> 99:59:59,999
democracy to the political sphere,

297
99:59:59,999 --> 99:59:59,999
while leaving the one sphere
where all the action is --

298
99:59:59,999 --> 99:59:59,999
the economic sphere --

299
99:59:59,999 --> 99:59:59,999
a completely democracy-free zone.

300
99:59:59,999 --> 99:59:59,999
In a sense,

301
99:59:59,999 --> 99:59:59,999
if I am allowed to be provocative,

302
99:59:59,999 --> 99:59:59,999
China today is closer to Britain
in the 19th century,

303
99:59:59,999 --> 99:59:59,999
because remember,

304
99:59:59,999 --> 99:59:59,999
we tend to associate
liberalism with democracy --

305
99:59:59,999 --> 99:59:59,999
that's a mistake, historically.

306
99:59:59,999 --> 99:59:59,999
Liberalism --

307
99:59:59,999 --> 99:59:59,999
Liberal --

308
99:59:59,999 --> 99:59:59,999
it's like John Stuart Mill.

309
99:59:59,999 --> 99:59:59,999
John Stuart Mill was particularly
skeptical about the democratic process.

310
99:59:59,999 --> 99:59:59,999
So what you are seeing now in China
is a very similar process

311
99:59:59,999 --> 99:59:59,999
to what we had in Britain
during the Industrial Revolution,

312
99:59:59,999 --> 99:59:59,999
especially the transition
from the first to the second.

313
99:59:59,999 --> 99:59:59,999
And to be castigating China

314
99:59:59,999 --> 99:59:59,999
for doing that which the West did
in the 19th century,

315
99:59:59,999 --> 99:59:59,999
smacks of hypocrisy.

316
99:59:59,999 --> 99:59:59,999
BG: I am sure that many people here

317
99:59:59,999 --> 99:59:59,999
are wondering about your experience

318
99:59:59,999 --> 99:59:59,999
as the Finance Minister of Greece
earlier this year --

319
99:59:59,999 --> 99:59:59,999
YV: I knew this was coming --

320
99:59:59,999 --> 99:59:59,999
BG: Yes --

321
99:59:59,999 --> 99:59:59,999
(Laughter)

322
99:59:59,999 --> 99:59:59,999
BG: Six months after,

323
99:59:59,999 --> 99:59:59,999
how do you look back
at the first half of the year?

324
99:59:59,999 --> 99:59:59,999
YV: Extremely exciting
from a personal point of view

325
99:59:59,999 --> 99:59:59,999
and very disappointing,

326
99:59:59,999 --> 99:59:59,999
because we had an opportunity
to reboot the Eurozone.

327
99:59:59,999 --> 99:59:59,999
Not just Greece, the Eurozone.

328
99:59:59,999 --> 99:59:59,999
To move away from the complacency


329
99:59:59,999 --> 99:59:59,999
and the constant denial
that there was a massive --

330
99:59:59,999 --> 99:59:59,999
and there is a massive --

331
99:59:59,999 --> 99:59:59,999
architectural fault line
going through the Eurozone,

332
99:59:59,999 --> 99:59:59,999
which is threatening, massively,

333
99:59:59,999 --> 99:59:59,999
the whole of the European Union process.

334
99:59:59,999 --> 99:59:59,999
We had the opportunity
on the basis of the Greek program --

335
99:59:59,999 --> 99:59:59,999
which by the way,

336
99:59:59,999 --> 99:59:59,999
was the first program
to manifest that denial --

337
99:59:59,999 --> 99:59:59,999
to put it right.

338
99:59:59,999 --> 99:59:59,999
And unfortunately,

339
99:59:59,999 --> 99:59:59,999
the powers that be in Eurozone --

340
99:59:59,999 --> 99:59:59,999
in the Eurogroup --

341
99:59:59,999 --> 99:59:59,999
chose to maintain denial.

342
99:59:59,999 --> 99:59:59,999
But you know what happens.

343
99:59:59,999 --> 99:59:59,999
This is the experience
of the Soviet Union.

344
99:59:59,999 --> 99:59:59,999
When you try to keep alive

345
99:59:59,999 --> 99:59:59,999
an economic system
that architecturally cannot survive,

346
99:59:59,999 --> 99:59:59,999
through political will
and through authoritarianism,

347
99:59:59,999 --> 99:59:59,999
you may succeed in prolonging it.

348
99:59:59,999 --> 99:59:59,999
But when change happens

349
99:59:59,999 --> 99:59:59,999
it happens very abruptly
and catastrophically.

350
99:59:59,999 --> 99:59:59,999
BG: What kind of change
are you foreseeing?

351
99:59:59,999 --> 99:59:59,999
YV: Well there's no doubt

352
99:59:59,999 --> 99:59:59,999
that if we don't change
the architecture of the Eurozone,

353
99:59:59,999 --> 99:59:59,999
the Eurozone has no future.

354
99:59:59,999 --> 99:59:59,999
BG: [Did you do any mistakes] 
when you were Finance Minister?

355
99:59:59,999 --> 99:59:59,999
YV: Every day.

356
99:59:59,999 --> 99:59:59,999
(Laughter)

357
99:59:59,999 --> 99:59:59,999
Anybody who looks back --

358
99:59:59,999 --> 99:59:59,999
(Applause)

359
99:59:59,999 --> 99:59:59,999
No but seriously.

360
99:59:59,999 --> 99:59:59,999
If there's any Minister of Finance --


361
99:59:59,999 --> 99:59:59,999
or of anything else for that matter --

362
99:59:59,999 --> 99:59:59,999
who tells you after six months in a job,

363
99:59:59,999 --> 99:59:59,999
especially in such a stressful situation,

364
99:59:59,999 --> 99:59:59,999
that they had made no mistake,

365
99:59:59,999 --> 99:59:59,999
[they're dangerous people],

366
99:59:59,999 --> 99:59:59,999
of course I made mistakes.

367
99:59:59,999 --> 99:59:59,999
The greatest mistake

368
99:59:59,999 --> 99:59:59,999
was to sign the application
for the extension of a loan agreement

369
99:59:59,999 --> 99:59:59,999
in the end of February.

370
99:59:59,999 --> 99:59:59,999
I was imagining

371
99:59:59,999 --> 99:59:59,999
that there was a genuine interest
on the side of the creditors

372
99:59:59,999 --> 99:59:59,999
to find common ground.

373
99:59:59,999 --> 99:59:59,999
And there wasn't.

374
99:59:59,999 --> 99:59:59,999
They were simply interested
in crushing our government,

375
99:59:59,999 --> 99:59:59,999
just because they did not want
to have to deal

376
99:59:59,999 --> 99:59:59,999
with the architectural fault lines
that were running through the Eurozone,

377
99:59:59,999 --> 99:59:59,999
and because they didn't want to admit

378
99:59:59,999 --> 99:59:59,999
that for five years they were implementing
a catastrophic problem in Greece.

379
99:59:59,999 --> 99:59:59,999
We lost one-third of our Nominal GDP.

380
99:59:59,999 --> 99:59:59,999
This is worse than the Great Depression.

381
99:59:59,999 --> 99:59:59,999
And no one has come clean

382
99:59:59,999 --> 99:59:59,999
from the tribe of lenders
that have been imposing this policy

383
99:59:59,999 --> 99:59:59,999
to say, "this was a colossal mistake."

384
99:59:59,999 --> 99:59:59,999
BG: Despite all this,

385
99:59:59,999 --> 99:59:59,999
and despite the aggressiveness
of the discussion though,

386
99:59:59,999 --> 99:59:59,999
you seem to remaining
quite pro-European.

387
99:59:59,999 --> 99:59:59,999
YV: Absolutely.

388
99:59:59,999 --> 99:59:59,999
Look, my criticism of the European
Union and the Eurozone

389
99:59:59,999 --> 99:59:59,999
comes from a person
who lives and breathes Europe.

390
99:59:59,999 --> 99:59:59,999
My greatest fear is that
the Eurozone will not survive.

391
99:59:59,999 --> 99:59:59,999
Because if it doesn't,

392
99:59:59,999 --> 99:59:59,999
the centrifugal forces
that would be unleashed

393
99:59:59,999 --> 99:59:59,999
would be [demonic],

394
99:59:59,999 --> 99:59:59,999
and they would destroy the European Union.

395
99:59:59,999 --> 99:59:59,999
And that would be catastrophic
not just for Europe

396
99:59:59,999 --> 99:59:59,999
but for the whole global economy.

397
99:59:59,999 --> 99:59:59,999
We are probably the largest
economy in the world.

398
99:59:59,999 --> 99:59:59,999
And if we allow ourselves

399
99:59:59,999 --> 99:59:59,999
to fall into a [route?]
of the post-modern 1930's,

400
99:59:59,999 --> 99:59:59,999
which seems to me what we are doing,

401
99:59:59,999 --> 99:59:59,999
then that will be detrimental

402
99:59:59,999 --> 99:59:59,999
to the future of Europeans
and non-Europeans alike.

403
99:59:59,999 --> 99:59:59,999
BG: We definitely hope
you are wrong on that point.

404
99:59:59,999 --> 99:59:59,999
Yanis, thank you for coming to TED.

405
99:59:59,999 --> 99:59:59,999
YV: Thank you

406
99:59:59,999 --> 99:59:59,999
(Applause)