This speech was delivered by former greek FinMin Yanis Varoufakis at Ted Global, Geneva, on Dec. 8, 2015.

Yesterday I delivered a TED Global talk in Geneva on the future of democracy and capitalism. While awaiting the video, here is the text of my talk.

Introduction: democracy is not inevitable

Democracy: In the West we make the colossal mistake of taking it for granted. We see democracy not as the most fragile of flowers that it really is but as part of our society’s furniture – as an intransient given.

We also believe that capitalism inevitably begets democracy. It doesn’t! Capitalism may have yielded liberal democracies in America and Europe but there is nothing inevitable about it.

Singapore’s Lee Kwan Yew and his great imitators in Beijing have demonstrated that capitalism can flourish, economic growth can be spectacular, while politics remains democracy-free.

It would not be inaccurate to say that most of the emerging societies in Asia and Africa may be training their antennae toward Silicon Valley but they are not terribly keen to emulate our Western experiment with liberal democracy. China and Singapore will do for them as role models. Indeed, liberal democracy is now receding fast even in the places in which it evolved.

Earlier this year, as the finance minister of a freshly elected Greek government, I was told in the Eurogroup, the governing body of the Eurozone, that my nation’s democratic process, our elections, could not be allowed to interfere with established economic policy. I can think of no more powerful vindication of Lee Kwan Yew, of the Chinese Communist Party and of cynical friends who keep telling me that democracy would be banned if it ever threatened to change anything.

Today, now, I wish to present to you the economic case in favour of an authentic democracy. To argue, against the edicts of Lee Kwan Yew, the Chinese Communist Party and the Eurogroup, that a genuine, boisterous democracy is necessary. That without it, our economic future will be bleak, our societies nasty, and our technological innovations wasted.

Speaking of waste let me point out a little-known paradox that threatens our economies today.

Twin Peaks

I call it the Twin Peaks paradox. One peak is the mountain of debt that is casting its long shadow everywhere. In Europe, in the United States, in China, the world over. Everyone can see this debt mountain. But few notice its twin – a second peak lurking in its shadow: a mountain of idle cash belonging to rich savers and corporations too terrified to invest their savings in productive activities that can generate the incomes necessary to extinguish the debt mountain and also produce things humanity needs desperately, for example green energy.

Two numbers tell the story: In the last three months, 3.4 trillion dollars was spent in America, Britain and the Eurozone on industrial plants, machines, equipment, roads, houses, railways, schools, office buildings etc. 3.4 trillion sounds like a lot of money. But consider another number: $5.1 trillion of idle cash which is slushing around in America, Britain and the Eurozone, doing nothing except inflating stock markets and bidding up house prices.

So, a mountain of debts and a mountain of idle money form twin peaks that refuse to cancel each other out through the normal operations of the markets. The result is stagnating wages, more than a quarter of 25-to-54 year olds out of work in America, Europe and Japan, and low demand that, in a never-ending circle, reinforces the pessimism of potential investors who fear… low demand thus bringing it about by notinvesting. Exactly like Oedipus’ father who, motivated by the oracle’s prophesy that he would be killed by his son, unwittingly created the conditions that ensured Oedipus would kill him.

This is my quarrel with capitalism: its gross wastefulness in using available resources. The waste of so much idle money that should be energised to develop human talents, improve lives and, above all else, finance the development of new green technologies that can save Earth.

  • The markets cannot address the Twin Peaks problem because of their Oedipus complex I just described.
  • The nominally-democratic states of the West cannot do it either because of their deficit-phobia and an unwillingness to upset the master of finance.
  • The authoritarian, top-down, states of the East know not how to empower their citizens to spend more of their savings, and to do so on things that are good for the planet.

Can I be right in proposing democracy as the remedy? I believe so.

Democracy than and now

But first, what exactly do we mean by democracy?

Aristotle defined democracy as the constitution in which the free and the poor, being in the majority, control government. It is, of course, true that Athenian democracy excluded too many – women, migrants and slaves. But it would be very wrong to dismiss Athenian Democracy courtesy of whom it excluded. For what gave Athenian democracy its substance was not the exclusion of slaves, women and migrants. It was the inclusion of the working poor who acquired not only the right to free speech but, crucially, the right to political judgments carrying equal weight in determining matters of state.

Naturally, Athenian democracy did not last long. Like a candle that burned brightly it burned out quickly. In any case, our democracies do not have their roots in Ancient Athens but in the Magna Carta, in the 1688 Glorious Revolution and in the American Constitution.

Athenian democracy was centred on the master-less citizen who was not a servant to anyone and empowered the working poor citizen. The Magna Carta, in contrast, was a charter for masters. As for Western liberal democracy, it emerged only when it was possible fully to separate the political sphere from the economic sphere, and to confine democracy to the political sphere, while guaranteeing that the economic sphere, the corporate world, remained a democracy-free zone.

Once separated, the economic and the political spheres engaged in an epic struggle, with the economic sphere constantly colonising the political sphere, eating into its power.

Have you wondered why politicians today are not what they used to be? No, it is not that their DNA has degenerated. These days politicians may be in government but not in power because power lies in a separate economic sphere beyond their reach. It is no wonder politics attracts fewer and fewer of the bright.

Aye there’s the rub: Exactly like predators who starve to death after they have decimated the prey population, so does the economic sphere fall prey to its own success at cannibalising the political sphere. Rising corporate power increases inequality, lowers the level of demand for the corporations’ products and so CEOs become too scared to invest fearing the low demand that their fear is producing.

In short, the greater the success of capitalism at taking the demos out of democracy, the higher the Twin Peaks and the greater the waste of humanity’s wealth.

What can we do? Opportunities & Nightmares

To end this waste we must re-unite the economic and the political spheres into one sphere under the control of the demos – just as in Ancient Athens, except without the slaves, nor the exclusion of women and migrants.

This is not a new idea. The Marxist Left had it a century ago when it tried to bring the working poor to the fore. We know how badly that ended. What the Soviet debacle taught us is that only by a miracle will the working poor wrestle control of government without new forms of brutality and waste.

But there is an alternative: Eliminate the working poor! Capitalism is doing this anyway by replacing human low-paid workers with automata, androids and robots. But, as long as the economic and political spheres remain separate, automation will only make the Twin Peaks even taller, waste even loftier, and social conflicts ever deeper – including in China.

The solution is to use the new technologies to unify again the political and economic spheres. But if we do unify them, we better also democratise the new unified realm lest we end up with a surveillance-mad super-autocracy – a dystopia where The Matrix–The Movie seems like a documentary.

Put differently, capitalism does not need the Marxist Left to overthrow it. It is busily creating technologies that will pull the rug from under its feet.

The question is not whether capitalism will survive the technologies it is spawning. The question is what will succeed capitalism after capitalism has overthrown itself.

A dystopia, resembling The Matrix? Or something more akin to a utopian Star Trek society, in which the machines serve humans who then spend their energy exploring the universe and debating endlessly the meaning of life in some hi-tech Agora?

It is my conviction that a happy scenario is possible. It is the Athenian Model with a Hi-Tech Makeover.

What practical forms would it take?

Two examples

Let me share two examples.

At the level of the enterprise, imagine a capital market where you accumulate capital as you work, and which follows you as you move from one company to another – with each company owned solely by those who work in it at the time. Then everyone’s income comes only from capital, from profits, and the very concept of the wage disappears, as each worker receives her profit share plus any benefits from a state that tops up incomes from taxes on aggregate profits. No more separation of those who work but not own from those who own but do not work in the company – no more tug of war between labour and capital – no more gaping gap between those who save and those who invest –no more Towering Twin Peaks.

Turning to the global political economy, imagine that all national currencies have a free-floating exchange rate with one common, digital currency, let’s call it the KOSMOS, to be issued by the International Monetary Fund and the G20 on behalf of humanity. Imagine further that all trade is denominated in KOSMOS with each country paying, automatically, into a common global investment fund a sum of KOSMOS proportional to their trade deficit or surplus – money to be used to invest into green technologies in the part of the world where investment funds are scarce. This is not a new idea – it is a high tech version of what John Maynard Keynes had proposed in 1944 at the Bretton Woods conference. Except that now we have the technology to implement it in the context of a democratised global political-economic sphere.


The world that I am describing to you is a world that is simultaneously libertarian (focusing on empowered individuals), Marxist (having confined the wage-profit distinction to the dustbin of history) and Keynesian, globally Keynesian.

But above all else it is a world in which we can begin to imagine an authentic democracy.

Will such a world dawn?

Or shall we descend into a Matrix-like dystopia?

The answer depends on the political choice we make collectively.

Yes, it is our choice. And we better make it democratically!

Thank you.

–> English text published at