Editor’s note: discussion topics include security in commercial housing in the Another Now model (AN), taxation in AN, income and wealth inequality in AN, inheritance in AN, time-limited or depreciating money, whether divergent incomes combined with compound interest can lead to class divisions in AN, firm size in AN, monopoly in AN, workplace management structures in AN, and the argument for equal decision-making rights within enterprises.
[After the Oligarchy] Hello everybody, this is After the Oligarchy. Today I’m speaking with Professor Yanis Varoufakis.
Yanis Varoufakis is the former Greek Finance Minister, a professor of economics, co-founder of DiEM25 and the Progressive International, leader of MERA25, and a member of Greek parliament. This is the second in a series of interviews with Professor Varoufakis, if you haven’t watched the first check that out.
Today’s conversation is in association with mέta: the Centre for PostCapitalist Civilization. And the topic is Yanis’s latest book Another Now, published in 2020, which presents a vision of a post-capitalist society. It’s an advanced discussion of the model proposed in that book. If you want an introduction, I wrote an essay and made a 40-minute video doing just that. Though I do recommend that you read the book.
Yanis Varoufakis, thank you very much for joining me.
[Yanis Varoufakis] Well thank you very much for having me on After the Oligarchy. We are living under the oligarchy, but anyway let’s imagine, let’s imagine.
[ATO] Exactly.
So again I have a lot of questions for you. We’ll begin with a question about housing, because after I posted the first interview and also the model summary something that kept coming up again and again from commenters was that they were worried about security in the commercial housing sector. The problem raised was basically that you’re saying that every year, or every period of time, I have to keep bidding to retain access to my house. And if somebody comes along who has more money than me then then I get kicked out.
And, of course, I certainly appreciate the ingenuity of the mechanism, to try to constantly reveal the opportunity cost of the land and the housing for society to be able to get that back so that there isn’t a rentier dynamic in housing.
How would you respond to that question of security?
[YV] Well, firstly, remember that this is about the commercial zone. In in my blueprint, every county – think of it as counties – chooses to create a space that’s not … I mean, it’s democratically determined how large this commercial zone will be. The purpose of this commercial zone is for it to be run commercially by the many, for the many, in order to extract rents from those who want to operate in the commercial zone; rents with which to build social housing, social zoning, social entrepreneurial activities, common spaces, the commons. So it is a good feature, a well-designed feature of the commercial zone, that anybody who wants to operate in it has to live in fear. If you wanted to live in a house that that you paid for, not in a social house, not in a unit within social housing, then yeah I mean live in fear.
Remember, it’s not just that once a year you bid for it, but it’s something like a perpetual auction whereby anybody can actually outbid you and throw you out. Which is great because the commercial zone is there to make money for the many, for every citizen who lives in the social zone and whose activities – whether they’re poetry readings, or paintings, or producing social goods – are being funded by the commercial enterprises within the commercial zone. So it’s okay if you if you live in fear. And the whole point of this permanent auction is to ensure that there is complete incentive compatibility. In other words, that when you declare to the authorities what you value that building or piece of land as that you’re truthful. And you will only be truthful if … you can undervalue it if you want, but then somebody can come and outbid you and throw you out. So I have no defence to those who say that ‘oh, the people who live there in commercial zone will live in fear’. We want them to live in fear.
And, you know, it’s a game for them. The crucial point here is that you don’t have to live in the commercial zone. I would live in the social zone. But if you want a fancy house, a much fancier house than you deserve, or you want to create an enterprise in a place that society does not deem that you should have it, then yes you pay for it. And if you make the money for it, yeah good it all goes back to social housing and the social zone.
[ATO] Okay, so it’s really that that the priority is being put on the redistributive function of the commercial housing zone.
To move on to something else, I’ve a series of questions about income and wealth inequality. This is also a concern for some people, it’s a concern for me as well and any kind of market system … so, for example let’s talk about taxation. In Another Now there are two taxes. I mean, maybe there could be a carbon tax but let’s not go into that. There is a corporation tax, which is a tax on the revenue of all firms, and then there’s a land tax and we were talking about that there.
[YV] Land tax only in the commercial zone, only the commercial.
[ATO] Yes exactly, on the commercial zone. One might say ‘well, are you serious? There’s no income tax?’
[YV] Yeah! There’s no income tax.
[ATO] Because there could be seriously divergent incomes, because different firms could have much different rates of profitability or revenue streams, so it’s likely, one might say, that there is a lot of inequality generated. But there’s no progressive income tax.
[YV] I’m not convinced. I don’t believe there will be. If you look at the capitalist system, or techno-feudal system, in which to live today, inequality – mind numbing and soul-crushing inequality – is the result of two things. Firstly, the private ownership of firms, of the means of production, shares, share markets. That’s one, and finance is the second one. That’s where the huge inequality that is destroying our spirit comes from. Not to mention our planet.
In Another Now there would be neither. Because shares are distributed on the basis of one employee, one member, one share, one vote. And there is no financial sector, the financial sector has been taken over by a distributed ledger of the central bank. And therefore this highly problematic toxic duet – duetto in Italian – between the banker and the mogul, the banker creating, printing, money out of thin air, lending to the mogul, who uses the printing presses of the private bank in order to corner the market in the share market and effectively own everything. And then the wealth begets wealth.
Now why is Zuckerberg so much wealthier today than he was at the beginning of the pandemic. Nothing to do with the profitability of Facebook. It’s got to do with the fact that there is this combination of financial capital – the printing presses of the central bank working for Zuckerberg, not for the people, not for the many unlike in Another Now – and ownership of Facebook. And if you break down ownership of Facebook, and Facebook is equally owned by everybody who works in Facebook, and if you end the printing presses both of the state and the private sector banks operating at full throttle on behalf of the very, very, few, then the inequality that you and I are used to goes.
Not everybody’s going to earn the same. Yes, some companies are going to make more money than others. And some people will make more money within the same company because of the bonuses system that I have envisaged. But the differences between pay and capacities of those people will be minuscule. I don’t want to live in society where everybody gets exactly the same independently what they do. But the magnitude, the order of magnitude of equality that we’re facing is simply impossible in a system like the one I describe in Another Now.
[ATO] Okay, I have two responses to that. The first is that one might say ‘yes the inequality could be much less’ – and it would be, I think it’s hard to imagine that it would be anything like it is at the moment – ‘but the levels of inequality now are so outrageously great that it’s not a reasonable point of comparison’. So we need to think about whether the inequality that would exist would be tolerable rather than whether it be less than what exists now.
This point though is very interesting. Somebody might say ‘okay I see what you’re saying but why not have any progressive income tax?’. What’s the reasoning behind that?
[YV] Well, because we want a simple society in which people don’t pay taxes. The only reason why we care about income tax today is because we have a classist, stratified, society where some have everything and the rest have nothing. And the rest of the world who don’t have much say ‘well, we really need an income tax, it’s a way of recouping something back from the bastards who have everything’. Well, if we do away with social classes based on private ownership of means of production, then that sentiment and the argument simply disappears. We will not need income taxes. And certainly not sales taxes or value added taxes (VATs). What’s the point?
[ATO] What would be a range of incomes that you think would be acceptable? We don’t need to get too particular about it, you know ‘1.7’, but roughly what do you think?
[YV] Anything that that comes out of Another Now. And let me let me be clear on this. The problem I have with inequality in capitalism is that it is the result of exploitation.
You see, liberals, free marketeers, and right wingers, present capitalism like an Olympic 100-metre sprint: some people are faster some, people are slower, and what can we do? The faster man or woman is going to win a gold medal, the others can just dream of it. But this is an awful metaphor for capitalism. Capitalism is not a race where some win and some lose. The problem is not inequality, the problem is exploitation. So, if you really want a parable for capitalism the 100-metre sprint is not a good one.
I’ll give you my parable. It’s like when the Brits went to the Himalayas as conquerors during the Raj, during the British Empire, and beyond that. They had their sherpas carrying them, and their pianos, and their desks, all the way to Mount Everest. So, if you get rid of this relationship, if the sherpas are not carrying the colonial masters on their shoulders, then I don’t mind if somebody manages to get up to Mount Everest and somebody else doesn’t.
So, if there is inequality when we do not have capital fuelling exploitation, which then results into much greater inequality, which then results into more capital that then fuels exploitation, then I don’t have a problem.
And, by the way, in Another Now, of course you never can predict. Human malice can always seep in and subvert even the most beautiful social arrangements, rules of the game. Well, there is a fallback position, there is an insurance policy. It’s the juries of citizens, randomly selected like in the Irish assembly in the case of your [2018] referendum on abortion, and those jurors have the capacity to disband a company that is misbehaving or producing exploitation of some kind of form that we are not in a position today to predict. So you have that insurance policy as well.
[ATO] That’s a very good analogy for capitalism. The exploitation that you’re talking about is very important. You’re talking primarily about the exploitation of the working class by the capitalist class, say within a firm. The pre-distribution of income from the people who do the work to those who make an income just by having some legal title, some claim to the ownership of property. And that’s crucial.
But to play devil’s advocate, would you not think that there’s also an element that a market society itself as a mode of distribution, and the competition involved in that, even through purely statistical effects, will lead to pretty big divergences in income and hence wealth over time? That it’s something that arises from the nature of the system itself rather than just the structure within a firm, and that this could over time lead to a polarization so that without a progressive income tax this would happen or it would happen even faster?
[YV] No, I don’t think so. I really don’t think so. I think that we are making the mistake of assuming, because that has been the historical reality up to now, that property rights go hand in hand with markets. If you take away property rights over means of production, then markets do not have this tendency. Yes, there will be patterns, there will be patterns. And there will be waves, ripples. Think of a pond with ripples of inequality. There will be ripples, there will not be massive waves like in Hawai’i. And they will dissipate because don’t forget – and maybe I’m preempting one of your questions here – that you will not be able to leave to your children a house, building, land, shares, means of production, capital. So the whole thing will dissipate. There will be ripples that will be lost in the sand.
[ATO] Yeah, the next question was actually about inheritance. So, very good. Just to be clear, is there any private inheritance at all?
[YV] Of course. Not of means of production.
[ATO] So what inheritance is there?
[YV] My stamp collection I can live to my daughter. My books, my writings, you know, my favorite jumper, my watch that my father gave me, I can leave all this to my kids. But I cannot leave productive resources like houses, like land, like shares, like factories.
[ATO] What about money? Can you leave money?
[YV] Yes you can leave money. But money does not breed money in Another Now. Because money cannot buy you capital – ha! – and that is the essence. It cannot buy you shares, it cannot be financialized, and therefore … it can be lent at an interest, but that’s neither here nor there in terms of inequality boosting and creation.
[ATO] Well, that was another question. To take this in two different directions: would you not think that … there’s a Legacy payment which is a large trust fund that every resident gets and that would be something that would be on the order of a year’s salary maybe two years salary (or ‘return to capital’, whatever way you want to put it). And so is private inheritance not redundant in that case? Since everybody starts off with the Legacy, private inheritance only serves to make a more uneven starting place for everybody.
[YV] Look, I wouldn’t mind a situation whereby in the revolution that begets the other now we say ‘okay, let’s all start from zero’, and we all get a Legacy payment, and then we have our Dividends (our basic income), and so on. I wouldn’t mind that.
But if you want to win over people to this idea, you want to make it maximally acceptable to them. And I don’t mind telling a rich person in person you can keep your dough, keep your money. What you are not going to be allowed to do is to use it in order to buy up productive resources by which you can exploit others who don’t have them.
And then I really do believe that even if you start with very unequal bank accounts – or accounts in our distributed ledger central bank system – the important thing from where I’m standing is that whatever inequalities in resources in monetary resources there are, they cannot buy the capacity to exploit. If means you can you can buy more stuff, buy more stuff. I mean, what are you going to do with it, with more stuff you? You’re going to end up with a garage full of rubbish. But you would not be able to create more power for yourself to exploit others. That is the essence and once you do that the whole thing is going to dissipate. You can have inequalities but you are not going to have exploitative capacities or extractive power that can generate the kind of abysmal social clashing and conflict that we live in today.
[ATO] I know you’ve talked about this before: the question is about having money which depreciates over time or is time-limited as a measure to preclude or to reduce the hoarding of wealth. Is it something that you would consider?
[YV] No, not in the Another Now, it’s not necessary. In capitalism it would be a good idea, it would be a way of doing two things: on the one hand, making it difficult for people to hoard money, and, on the other hand, to stimulate the economy when you’ve reached a serious recession. Because as we know from the last 10, 12, 13 years after 2008, when interest rates reach zero they’re going to become negative because people will simply hoard cash. But if the cash is not physical and it’s digital and you can have a negative interest rate, that’s effectively shrinking money. But these are all second-rate, sub-optimal, remedies for something that cannot be remedied: capitalism. But in Another Now you don’t need that.
[ATO] One more thing on this topic. When we’re talking about inheritance and the ability to turn money into money. So, finance would work very differently in Another Now than under capitalism. However, consider the situation where if somebody starts with one million euro and they’re earning 3% or 5% on that they’re going to gather wealth at a much faster rate than somebody who starts off with one hundred thousand or ten thousand. This is even though finance works very differently in Another Now. This is still a way that people can turn money into money. And perhaps initially all they can do is turn that into higher claims on consumption of final goods. But eventually, maybe a generation or two along the line – or who knows – that could form into class divisions. So, I’m just throwing out that question. What do you think about that?
[YV] I’m not worried about this because, firstly, the rich who transition from capitalism to Another Now – the postcapitalist Another Now – yes, they will be able to use a compound interest rate to have more and more. But that will not result in a different social class. It would result in more spending power.
The reason why we have social classes in capitalism is because it’s a zero-sum game, or constant sum game. If you have money and the other doesn’t, then you can buy means of production that the other one will not have access to. And by ensuring that the other one does not have access to it you can actually make them do things. You can grant them access to the means of production, to the tractor, to the land, to the factory, and so on. You have power over them. And that’s where society becomes abysmal and just cruel.
But if all it means is that they can buy more rubbish, let them buy more rubbish. I don’t care if some people have a capacity to fill their houses with gadgets. Let them buy gadgets. That doesn’t give them power over me, or over my daughter, or son. You see what I mean? So I’m not worried.
[ATO] Yes. Let’s move on to something a little bit different. This is about firms. The first question is that in Another Now you state that, for the most part, firms would have less than, say, 300 staff. Not all of them, but most of them. And this would be because, firstly, the flat management structure and, secondly, the lack of a share market. So, the question is could you just elaborate on, talk about, that a bit? And, also, would this really be the case? Would there not be firms which would be bigger?
[YV] Well one never knows. This is an empirical question. We have to institute Another Now and then watch what happens.
Remember, even if this happens and we don’t like it – there are two ‘if’s here – if it happens and we don’t like it – because it may happen and it may not be a problem, you may have a large corporate firm which is actually good for society – but let’s say for argument’s sake that both ‘if’s are fulfilled. Then what happens? Well, we have the Socialworthiness Index and the juries, we can break them up, those companies. There’s nothing that stops us. And it’s not the state that does it, it is the juries of citizens who are representative of the stakeholders in some kind of sector or enterprise. So, we have the means to break up companies if they get large and we don’t like that they are large.
But beyond that I don’t think they would get large, organically speaking, in an evolutionary sense, because the whole point about corpo-syndicalism – this corporate law that I have imagined, that I’ve conjured up, in Another Now – is that every member of a company, every worker, every employee, has one share and one vote. Which means that everybody who wants to participate is participating in decision-making. Now, would you want to be in a situation where you have to make collective decisions with another 20,000 people? I don’t think you would.
So, if you if you take a company like General Electric, for instance, or Facebook for that matter, any large corporation today, and you introduce corpo-syndicalism, you’ll find very quickly that people will want to spin off; that employees themselves will say ‘okay, now we’re the division making washing machines for General Electric. Why do we need to be the same company as the ones who are making jet engines? So let’s split them up’. They’ve got nothing to lose from doing that except peace of mind and a better capacity to make decisions. Why do the washing machine makers want to make decisions together with the ones who make jet engines? I don’t think they would want to do that. It would be just too unwieldy for them. It would reduce their capacity to play a significant role if they did that. If they agreed to keep the company large just to make the company large, they would then have themselves to validate and to endorse the creation of a managerial class within the company of some of their colleagues who would be doing the management, which will be too unwieldy. Why would they want to do that? Why would they want to create bosses for themselves?
[ATO] Well this leads on to the next question, which is closely related, about monopoly. Let me get into that by answering that question. Let’s say, again playing devil’s advocate, there are economies of scale which come from market size and there’s an opportunity to have greater market power and hence achieve greater rates of profit. So, you might have a workplace where they decide because of market competition that they would like to get bigger and bigger, because that’s one strategy that you can use to achieve higher profits and market share. So, whether or not that would happen, that would certainly be one motivation for this to happen.
So, there’s that, and the question is what about – you’ve kind of answered this already – what about private monopolies? Because if we’re transitioning to Another Now from this society, we’d already be starting with many markets which are monopolies and oligopolies. And then also we could imagine that they might arise from time to time. So, what’s the approach there?
[YV] Well, the key social device that stops that is a jury. The jury can break them up, say ‘you’re not in the public interest, your Socialworthiness Index is too low, and therefore we break you up. Unless you want to stop operating this way, and here is a set of conditions for you to fulfill if you don’t want to be broken up: price, quantity, quality of the product, and if you don’t want to do that then we’ll break you up’.
But there can be a positive input from the juries. The juries can say ‘society, here we need a X, Y, and Z’ and says ‘okay, who wants to bid for X, Y, and Z, to produce X, Y, and Z, under these conditions that we set?’.
[ATO] I mean, we already have anti-trust legislation, or anti-monopoly legislation. If that was actually implemented things would look very differently, even in capitalism.
[YV] But you see the reason why in capitalism they’re not being implemented is because of private ownership, the fact that there are some people who own a whole range of corporations and therefore own the government, and own the authorities that are supposed to police the anti-trust legislation. That’s why the anti-trust legislation doesn’t work. And in Another Now there’s no such problem.
[ATO] Yes, absolutely. The political process is completely captured and an instrument of class rule.
Okay, these worker-owned firms in Another Now, you say that they have a flat management structure, a fluid way of organizing themselves, pretty much as non-hierarchical as you could imagine. And something that came up in the comments a few times was that people were asking: this would certainly be appropriate in some cases, but is this appropriate in all cases? And you could add in: unless this way of organizing a firm is legislated, why would a firm necessarily choose to do this? Surely they might choose to do different ways in different firms.
[YV] That’s correct. That’s a complication which I don’t have in the book. After all, it is a novel.
[ATO] Yeah, well, that’s why we’re having these conversations. Because how can you do all that in 200 pages?
[YV] And I thank you for the opportunity to go beyond the novel.
But I think the way in which corpo-syndicalism is described in the book is a good way of describing the default, the basic case. And then, of course, you can have special cases.
Now, for instance, I was thinking myself, take a newspaper or a news website. Somebody has to decide what goes on the front page. Horizontal management is not appropriate for that. Horizontal management is appropriate for allowing anybody on this newspaper, this electronic internet newspaper, to write whatever they want, and to pursue whatever line they want to pursue, and do whatever investigation they want to do.
But then of course it is perfectly possible to have a situation where and people actually vote for the article that will go on the front page, or to even appoint an editor. But the editor would be appointed by the shareholders who happen to be everybody writing pieces in this newspaper. Not some shady person nobody knows of who owns a company, that owns another company, that owns another company, that owns the newspaper. So, there may be room, and there should be in the corporate legislation, there should be room for adjusting and amending the management style to the needs of the particular sector. But as a basis, this must be a decision that the shareholders make, in other words the workers.
[ATO] Onto something different, it’s about the Disjointedness Criterion. And just to explain to viewers, the Disjointedness Criterion in Another Now is the way of deciding who gets to have a share in the company and who doesn’t; who’s a member of the cooperative, and who provides a service or a good to the company as an outsider.
I’ve got a question from two different directions, let’s start with this one. Because I’m sure this is something that a lot of people are thinking. There were some comments about this. Somebody gave this long story, I’m not going to go into all of it. Basically the issue of ‘look, it’s a nice idea that everybody is a member but what if you have’ – I think they gave an example of – ‘a psychotherapist’s or psychiatrist’s practice, and they hire a secretary, and they’re both equal partners in the practice and they’re both making decisions, but one of them has decades of experience and the other one is, you know, a 20-year-old who doesn’t know anything about it.’ I mean I’m sure you’ve heard this a million times. But there was another example about somebody who created – I think it was – a meditation business, and they brought people on and it became a cooperative, but it was their dream and they were the most committed to it, and then other people don’t necessarily share that same commitment, and so forth. So, if you could respond to that because this is something which comes up whenever anybody, not just in Another Now, proposes worker-owned enterprises.
[YV] Well, we all have the right to retain a monopoly of ownership of our dreams. But we don’t have the right to exploit the labor of others as part of pursuing our dreams.
When it comes to, for instance, the case of the psychiatrist and the secretary, creating a hierarchy in our head is fine. There’s no doubt that without a psychiatrist there will be no psychiatric service. But when it comes to politics, the political arena, the political market – let’s put it in this awful way – you’re going to have similar arguments. And they’re very powerful arguments, arguments against democracy. You have somebody who has given their life, you know, somebody like a modern day Socrates who is a philosopher, and a wonderful citizen, and somebody who really thinks deeply about the matters of the state, the matters of society. And then you have one completely illiterate fool, you know, he’s a gambler, and a drug addict, and an idiot, and they have the same vote. How can you assume that these people have the same vote? What do you do? Because that’s democracy. That’s the beauty of it. One person, one vote. So this is my answer regarding the first example.
Regarding the second example, it’s your dream, well if it’s your dream make sure you bring in people that share your dream. And if your dream is powerful enough and you’re bringing the right people in, those people will actually share your dream, and they will serve your dream, and if, in the end, they outvote you it means that your dream has either not been particularly powerful or you were not very careful as to whom you went into association with.
[ATO] Yeah, I think that’s a good argument.
I mean one of the ways I think about this, even at the most deflationary level, is that no economic system is going to be perfect. No system, in general no machine, no anything, is perfect. There are always pros and cons. So whenever we’re considering a system and its function, we need to think about what are the errors we’re willing to tolerate. We need to pick a set of errors that are the least bad and pick them. And so a cooperative society, a socialist society, is going to have its own cons, and for me the idea is that those cons are going to be much less harmful, much less pernicious, than the ones which come from what we have today.
[YV] I don’t even think that it is a con. In other words, a disadvantage. Not a ‘con’ in the sense of being a con job. If I have a dream about something and I bring people in as wage labour, then if this is a successful enterprise I have power to force them to do things that they would rather not do. I don’t think that this is wrong, that it is wrong to remove this power from anybody who has a dream and who was the originator of the company. It forces people like me, you, the meditation expert – that guru that you mentioned before – it’s not a bad thing, I don’t think it’s a disadvantage to force us to carry people with us. To inspire them, not to force them to do as they are told because we own the business and they don’t.
[ATO] Just be clear, I agree with you. I mean, that’s really the point. What I was saying is that even when that causes problems, even when it causes inefficiencies, if something doesn’t happen, the point that I’m making is that that’s something that I think we can live with because of the benefits.
[YV] The beauty of Another Now is that the market is there, it is liberated from capitalism, but it’s not everything. So, let’s say you create this meditation centre. You bring in the wrong people, you make a mistake, and you have these very difficult characters, and you can’t get rid of them because now they are members and they are the majority. You leave. So what? You do something else. Your whole existence does not rely on this business. We are moving away from this. I try to imagine a society where we don’t need business but we do business because it’s fun. And we do it in a cooperative way and if it doesn’t work, you know, bugger it, go, we’ll do something else, we’ll find another group of people to play with. This capacity to choose your partners and without the fear that ‘my goodness, if this partnership breaks down, how am I going to put food on the table? How am I going to make the rent? How will my children go to school?’ That goes away.
[ATO] A brilliant note to end on, because we’re out of time. I want to thank you for taking the time to speak with me again. Wonderful discussion as always.
Just quickly in terms of other interviews, are you generally interested in continuing this? Because there are a lot of questions and issues to discuss.
[YV] In a month’s time. I’m quite happy, this is a very good discussion.
[ATO] Okay that’s great.
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