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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 long 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

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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 in the Eurozone,

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we have invested, collectively
3.4 trillion dollars

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on all the wealth-producing goods.

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Things like industrial plants, machinery,

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office blocks, schools,

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roads, railways, 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,

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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
in America, in Japan and in Europe

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out of work.

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And consequently, 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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Its 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,

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but before we move on,

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what do we mean by democracy?

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Aristotle defined democracy


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as the constitution in which
the free and the poor,

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being in the majority,

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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

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to dismiss the significance
of ancient Athenian democracy

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on the basis of whom it excluded.

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What was 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,

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our liberal democracies today
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 are 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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(Laughter)

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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
from the political to the economic sphere,

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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,

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the economic sphere has been colonizing
and cannibalizing the political sphere

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to such an extent that it is
undermining itself,

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causing economic crisis.

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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 spheres

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and better do it with a demos
being in control,

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like in 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'd 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

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is whether capitalism will be succeeded
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 imagine 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,
John Maynard Keyes proposed

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in 1944 at the Bretton Woods Conference.

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The problem is

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that back then, 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 [dusting?] of history

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the division between capital and labor,

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and Keynesian ...

258
00:13:15,762 --> 00:13:17,759
global Keynesian.

259
00:13:18,653 --> 00:13:20,232
But above all else,

260
00:13:20,232 --> 00:13:22,015
it is a world in which

261
00:13:22,015 --> 00:13:25,661
we will be able to imagine
an authentic democracy.

262
00:13:26,130 --> 00:13:28,613
Will such a world dawn?

263
00:13:28,613 --> 00:13:32,723
Or shall we descend
into a Matrix-like dystopia?

264
00:13:33,212 --> 00:13:37,368
The answer lies in the political choice
that we shall be making collectively.

265
00:13:38,041 --> 00:13:39,508
It is our choice,

266
00:13:39,508 --> 00:13:41,946
and we'd better make it democratically.

267
00:13:42,522 --> 00:13:43,522
Thank you.

268
00:13:43,753 --> 00:13:45,262
(Applause)

269
00:13:49,772 --> 00:13:51,118
Bruno Giussani: Yanis ...

270
00:13:52,372 --> 00:13:56,203
It was you who described yourself
in your bios as a libertarian Marxist ...

271
00:13:58,711 --> 00:14:01,904
what is the relevance
of Marx's analysis today?

272
00:14:02,375 --> 00:14:06,062
YV: Well if there was any relevance
in what I just said then Marx is relevant.

273
00:14:06,062 --> 00:14:10,297
Because the whole point of reunifying
the political and economic is --

274
00:14:10,297 --> 00:14:11,531
if we don't do it,

275
00:14:11,531 --> 00:14:13,808
then technological innovation
is going to create

276
00:14:13,808 --> 00:14:16,191
such a massive fall in aggregate.

277
00:14:16,191 --> 00:14:20,417
What Larry Summers
refers to as secular stagnation.

278
00:14:21,155 --> 00:14:23,779
With this crisis migrating
from one part of the world,

279
00:14:23,779 --> 00:14:25,582
as it is now,

280
00:14:25,582 --> 00:14:28,333
that it will destabilize
not only our democracies,

281
00:14:28,333 --> 00:14:32,002
but even the [emerging?] world that is not
that keen on liberal democracy.

282
00:14:32,497 --> 00:14:36,349
So if this analysis holds water,
then Marx is absolutely relevant.

283
00:14:36,349 --> 00:14:38,032
But so is [Hagen?] --

284
00:14:38,032 --> 00:14:39,848
that's why I'm a libertarian Marxist,

285
00:14:39,848 --> 00:14:41,088
and so is Keynes,

286
00:14:41,088 --> 00:14:43,418
so that's why I'm totally confused.

287
00:14:43,418 --> 00:14:44,485
(Laughter)

288
00:14:44,485 --> 00:14:46,795
BG: Indeed, and possibly we are too, now.

289
00:14:46,795 --> 00:14:47,804
(Laughter)

290
00:14:47,804 --> 00:14:48,804
(Applause)

291
00:14:49,607 --> 00:14:52,358
YV: If you are not confused,
you are not thinking, okay?

292
00:14:52,358 --> 00:14:55,411
BG: That's a very, very Greek
philosopher kind of thing to say --

293
00:14:55,411 --> 00:14:57,180
YV: That's more Einstein, actually --

294
00:14:57,180 --> 00:14:59,754
BG: During your talk you mentioned
Singapore and China,

295
00:14:59,754 --> 00:15:01,771
and yesterday night at the speaker dinner,

296
00:15:01,771 --> 00:15:06,255
you expressed a pretty strong opinion
about how the West looks at China.

297
00:15:07,231 --> 00:15:08,763
Would you like to share that?

298
00:15:08,763 --> 00:15:11,294
YV: Well there's a great
degree of hypocrisy.

299
00:15:11,967 --> 00:15:15,937
In our liberal democracies we have
a semblance of democracy.

300
00:15:15,937 --> 00:15:17,392
It's because we have confined,

301
00:15:17,392 --> 00:15:18,690
as I was saying in my talk,

302
00:15:18,690 --> 00:15:20,343
democracy to the political sphere,

303
00:15:20,343 --> 00:15:23,985
while leaving the one sphere
where all the action is --

304
00:15:23,985 --> 00:15:25,362
the economic sphere --

305
00:15:25,362 --> 00:15:27,606
a completely democracy-free zone.

306
00:15:27,606 --> 00:15:28,933
In a sense,

307
00:15:28,933 --> 00:15:32,173
if I am allowed to be provocative ...

308
00:15:32,173 --> 00:15:36,487
China today is closer to Britain
in the 19th century,

309
00:15:36,487 --> 00:15:37,898
because remember,

310
00:15:37,898 --> 00:15:40,206
we tend to associate
liberalism with democracy --

311
00:15:40,206 --> 00:15:41,696
that's a mistake, historically.

312
00:15:41,696 --> 00:15:42,893
Liberalism -- liberal --

313
00:15:42,893 --> 00:15:44,308
it's like John Stuart Mill.

314
00:15:44,308 --> 00:15:48,877
John Stuart Mill was particularly
skeptical about the democratic process.

315
00:15:48,877 --> 00:15:54,525
So what you are seeing now in China
is a very similar process

316
00:15:54,525 --> 00:15:57,683
to the one that we had in Britain
during the Industrial Revolution,

317
00:15:57,683 --> 00:16:00,425
especially the transition
from the first to the second.

318
00:16:00,727 --> 00:16:03,882
And to be castigating China

319
00:16:03,882 --> 00:16:07,007
for doing that which the West did
in the 19th century,

320
00:16:07,007 --> 00:16:09,074
smacks of hypocrisy.

321
00:16:09,753 --> 00:16:11,449
BG: I am sure that many people here

322
00:16:11,449 --> 00:16:13,871
are wondering about your experience

323
00:16:13,871 --> 00:16:16,411
as the Finance Minister of Greece
earlier this year --

324
00:16:16,411 --> 00:16:17,809
YV: I knew this was coming --

325
00:16:17,809 --> 00:16:18,811
BG: Yes --

326
00:16:18,811 --> 00:16:19,811
(Laughter)

327
00:16:19,811 --> 00:16:21,027
BG: Six months after,

328
00:16:21,027 --> 00:16:23,436
how do you look back
at the first half of the year?

329
00:16:24,328 --> 00:16:26,765
YV: Extremely exciting
from a personal point of view

330
00:16:26,765 --> 00:16:28,190
and very disappointing,

331
00:16:28,190 --> 00:16:31,970
because we had an opportunity
to reboot the Eurozone.

332
00:16:31,970 --> 00:16:34,106
Not just Greece, the Eurozone.

333
00:16:34,106 --> 00:16:37,006
To move away from the complacency


334
00:16:37,006 --> 00:16:39,445
and the constant denial
that there was a massive --

335
00:16:39,445 --> 00:16:40,664
and there is a massive --

336
00:16:40,664 --> 00:16:44,679
architectural fault line
going through the Eurozone,

337
00:16:44,679 --> 00:16:46,520
which is threatening, massively,

338
00:16:46,520 --> 00:16:48,958
the whole of the European Union process.

339
00:16:49,259 --> 00:16:52,314
We had the opportunity
on the basis of the Greek program --

340
00:16:52,314 --> 00:16:53,715
which by the way,

341
00:16:53,715 --> 00:16:58,055
was the first program
to manifest that denial --

342
00:16:58,055 --> 00:16:59,296
to put it right.

343
00:16:59,296 --> 00:17:00,436
And unfortunately,

344
00:17:00,436 --> 00:17:02,493
the powers that be in the Eurozone,

345
00:17:02,493 --> 00:17:04,223
in the Eurogroup,

346
00:17:04,223 --> 00:17:06,413
chose to maintain denial.

347
00:17:06,413 --> 00:17:07,670
But you know what happens.

348
00:17:07,670 --> 00:17:09,683
This is the experience
of the Soviet Union.

349
00:17:09,683 --> 00:17:12,025
When you try to keep alive

350
00:17:12,025 --> 00:17:16,857
an economic system
that architecturally cannot survive,

351
00:17:16,857 --> 00:17:19,504
through political will
and through authoritarianism,

352
00:17:19,504 --> 00:17:21,090
you may succeed in prolonging it,

353
00:17:21,090 --> 00:17:22,484
but when change happens

354
00:17:22,484 --> 00:17:25,126
it happens very abruptly
and catastrophically.

355
00:17:25,126 --> 00:17:27,144
BG: What kind of change
are you foreseeing?

356
00:17:27,144 --> 00:17:28,347
YV: Well there's no doubt

357
00:17:28,347 --> 00:17:31,042
that if we don't change
the architecture of the Eurozone,

358
00:17:31,042 --> 00:17:33,100
the Eurozone has no future.

359
00:17:33,100 --> 00:17:35,951
BG: Did you make any mistakes
when you were Finance Minister?

360
00:17:35,951 --> 00:17:36,945
YV: Every day.

361
00:17:36,945 --> 00:17:37,945
(Laughter)

362
00:17:37,945 --> 00:17:40,046
Anybody who looks back --

363
00:17:40,050 --> 00:17:41,466
(Applause)

364
00:17:44,438 --> 00:17:45,762
No but seriously.

365
00:17:45,762 --> 00:17:47,857
If there's any Minister of Finance,

366
00:17:47,857 --> 00:17:49,586
or of anything else for that matter,

367
00:17:49,586 --> 00:17:51,520
who tells you after six months in a job,

368
00:17:51,520 --> 00:17:55,169
especially in such a stressful situation,

369
00:17:55,169 --> 00:17:56,626
that they made no mistake,

370
00:17:56,626 --> 00:17:57,938
[they're dangerous people],

371
00:17:57,938 --> 00:17:59,220
of course I made mistakes.

372
00:17:59,220 --> 00:18:00,183
The greatest mistake

373
00:18:00,183 --> 00:18:04,355
was to sign the application
for the extension of a loan agreement

374
00:18:04,355 --> 00:18:05,850
in the end of February.

375
00:18:05,850 --> 00:18:06,921
I was imagining

376
00:18:06,921 --> 00:18:10,169
that there was a genuine interest
on the side of the creditors

377
00:18:10,169 --> 00:18:11,446
to find common ground.

378
00:18:11,446 --> 00:18:12,411
And there wasn't.

379
00:18:12,411 --> 00:18:14,987
They were simply interested
in crushing our government,

380
00:18:14,987 --> 00:18:16,417
just because they did not want

381
00:18:16,417 --> 00:18:19,965
to have to deal with
the architectural fault lines

382
00:18:19,965 --> 00:18:21,911
that were running through the Eurozone.

383
00:18:21,911 --> 00:18:23,704
And because they didn't want to admit

384
00:18:23,704 --> 00:18:27,304
that for five years they were implementing
a catastrophic problem in Greece.

385
00:18:27,304 --> 00:18:30,342
We lost one-third of our Nominal GDP.

386
00:18:30,342 --> 00:18:32,320
This is worse than the Great Depression.

387
00:18:32,320 --> 00:18:33,582
And no one has come clean

388
00:18:33,582 --> 00:18:36,508
from the tribe of lenders
that has been imposing this policy

389
00:18:36,508 --> 00:18:39,549
to say, "this was a colossal mistake."

390
00:18:39,549 --> 00:18:40,569
BG: Despite all this,

391
00:18:40,569 --> 00:18:42,878
and despite the aggressiveness
of the discussion,

392
00:18:42,878 --> 00:18:45,437
you seem to remaining
quite pro-European.

393
00:18:45,437 --> 00:18:46,579
YV: Absolutely.

394
00:18:46,579 --> 00:18:51,096
Look, my criticism of the European
Union and the Eurozone

395
00:18:51,096 --> 00:18:55,206
comes from a person
who lives and breathes Europe.

396
00:18:56,010 --> 00:18:59,516
My greatest fear is that
the Eurozone will not survive.

397
00:18:59,516 --> 00:19:01,050
Because if it doesn't,

398
00:19:01,050 --> 00:19:03,855
the centrifugal forces
that would be unleashed

399
00:19:03,855 --> 00:19:05,740
would be [demonic],

400
00:19:05,740 --> 00:19:07,804
and they would destroy the European Union.

401
00:19:07,804 --> 00:19:10,134
And that would be catastrophic
not just for Europe

402
00:19:10,134 --> 00:19:11,751
but for the whole global economy.

403
00:19:11,751 --> 00:19:15,468
We are probably the largest
economy in the world.

404
00:19:15,739 --> 00:19:17,568
And if we allow ourselves

405
00:19:17,568 --> 00:19:20,291
to fall into a [route?]
of the post-modern 1930's,

406
00:19:20,291 --> 00:19:23,077
which seems to me to be what we are doing,

407
00:19:23,077 --> 00:19:24,913
then that will be detrimental

408
00:19:24,913 --> 00:19:28,221
to the future of Europeans
and non-Europeans alike.

409
00:19:28,221 --> 00:19:30,601
BG: We definitely hope
you are wrong on that point.

410
00:19:30,601 --> 00:19:32,271
Yanis, thank you for coming to TED.

411
00:19:32,271 --> 00:19:33,271
YV: Thank you

412
00:19:33,271 --> 00:19:35,921
(Applause)