Cooking the Books: Saving Greek Capitalism

The new Greek Finance Minister, Yanis Varoufakis, has been variously described as a Marxist tinged with Keynes or a Keynesian tinged with Marx. He certainly has a knowledge of Marx.

A blog item of his from 4 April 2012, entitled ‘On Keynes, Marx and the value of models at a time of Crisis’, showed that he recognises that Marx advanced a theory that capitalism could recover from any economic crisis because these eventually created the conditions for a recovery.

‘What Marx did was to take the model of capitalism that had the most kudos in his time (i.e. the theories of Adam Smith and David Ricardo) and show that, by their own criteria, and under the force of their own assumptions, even the most efficient, most competitive, corruption-free capitalism would, unavoidably generate crises. To show this, Marx strove to demonstrate that, even if all profits were automatically saved, capitalism would periodically fall in deep holes of its own making.’

However, Varoufakis went on to claim:

‘There is something important missing in Marx’s analysis of crashes and crises. What? The possibility that, when the ‘faeces hits the fan’, and some monumental, as opposed to run-of-the-mill, Crash occurs (as it did in 1929 and then again in 2008), capitalists will simply fail to play the game that Marx said they will. What game is that? Of investing in capital goods, production, labour, every penny they have accumulated as a result of past and present profits.’

But Marx did not make this distinction between ‘run-of-the-mill’ and ‘monumental’ crises. It might take longer but capitalism could still recover from a Crash with a capital C. Capitalism could always get out of the holes it periodically dug for itself — and will until its gravediggers come along to bury it.

According to Yaroufakis, Keynes

‘instinctively understood something important about capitalism that Marx did not allow himself to dwell upon: that when capitalism digs a hole and then falls into it, it is perfectly capable of failing to climb out again. You see, the difference between Keynes and Marx was that Keynes believed in capitalism; he thought of it a little like Churchill thought of democracy (a terrible form of government but the best of all available alternatives). In fact, Keynes was eager to save capitalism from itself; to identify faults in its functioning and fix them so as to prevent crises from turning into implosions with the capacity to undermine its long term future. Marx, on the other hand, had an agenda for transcending capitalism (socialism, he called the ‘next’, more developed, phase)’.

Because he doesn’t think that the economic and political conditions during a big crisis are good for a socialist transformation of society, he argues that Keynes’s policy recipes should be tried to save capitalism from collapse so as to buy time for more favourable conditions for a changeover to socialism to emerge.

This won’t work. Surprisingly, Yaroufakis himself admitted this when he wrote in the same blog:

‘Marx was right: capitalism cannot be civilised by means of some benevolent government that applies the right dosage of fiscal and monetary policy at the right time.’

Another economics professor, who is advising the Syriza government, even understands what socialism involves:

‘The transition from capitalism to communism is necessarily related to the abolition of value form, i.e. money and commodity, and the form of enterprise’ (John Milios, The Critique of Political Economy as a Critique of the Left, Thesseis #101, 2007).

It’s not going to make any difference, though. The Syriza government won’t be able to civilise capitalism even if saves Greek capitalism.