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 Finance Minister,

I was told in 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,

of 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, new 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)