Yanis Varoufakis – The Global Minotaur (3rd Edition, Zed Books 2015)
Yanis Varoufakis originally wrote The Global Minotaur in 2011, and then revised and expanded it for a 2013 edition (reprinted again in 2015). It is a full-length book treatment of a topic he introduced (with co-author Joseph Halevi) in a 2003 journal article of the same name. He later became internationally known because of his brief time a Greek minster of finance for the Syriza party in 2015, before resigning in the run-up to Prime Minister Alexis Tsipras’ betrayal of the Greek voters’ referendum that rejected creditor blackmailing.
The Global Minotaur is a book whose primary strengths are its brevity and readability. Varoufakis adopts metaphors from ancient Greek mythology to explain concepts about the political economy of the post-WWII period through the ~2007 financial crash. The metaphors end up being quite durable and useful. The book presents itself as a novel analysis, but there are really few if any new insights here. The book’s history of the Bretton Woods system (what Varoufakis calls the “Global Plan”) can also be found in any number of other economic history books. This discussion tells of the international negotiations that took place after WWII to re-establish a gold standard for currency convertibility between nations, and the various geopolitical aspirations of the handful of nations involved in setting up the system, as well as the special favoritism shown to Germany and Japan in the system that emerged. Varoufakis laments the rejection of John Maynard Keynes‘ proposal for an International Currency Union system based on a neutral bancor currency in favor of the U.S.-imposed Bretton Woods system. When the chronology reaches the collapse of the Bretton Woods system during the Vietnam War era, a new international economic system emerged that Varoufakis dubs the “Global Minotaur”, in reference to a mythical beast of Crete to which ancient city-states paid tribute in exchange for a kind of regulated stability. Similarly, the emergent “Global Minotaur” system involved the United States acting as the trusted center of the global economy. Varoufakis describes four “charismas” of this “Global Minotaur”: (1) the U.S. dollar’s status as the world’s reserve currency and the currency in which energy is denominated (sometimes called “petrodollars” by others); (2) rising global energy costs (from which the U.S. was shielded through the “petrodollar” paradigm); (3) devalued and cheapened labor; and (4) America’s geopolitical might used in the service of corporate and financial interests. In a sense these four “charismas” are kind of the economic pillars of the so-called “neoliberal” era. The central story is about how the Global Minotaur came and went. It arrived when the United States unilaterally terminated the Bretton Woods international economic system when President Nixon formally took the United States off the gold standard in 1971 (informally since 1968, but Varoufakis does not mention that), turning the United States’ debt and trade deficits into weapons of sorts that kept other countries subordinate the U.S. economy (though somewhat confusingly, Varoufakis sometimes refers to the Global Minotaur coming into its own only in the early 1980s during the Thatcher/Reagan era, which is really more a matter of degree). Varoufakis’ analytical framework discusses these events in reference to a “global surplus recycling mechanism” between surplus and deficit nations (this topic is discussed further below).
As others have already pointed out, the “Global Minotaur” metaphor describes a phenomenon that Michael Hudson first described in his groundbreaking book Super Imperialism (1972) many decades before. Varoufakis never cites Hudson, which is a bit odd. Anyway, Hudson’s book is much more in-depth and better supported with evidence, but it is also a much more difficult read. Hudson tends to explain the “Global Minotaur” scenario as more of a tense standoff. The United States coordinated a system in which it acted as the center of the global economy and any country wishing to challenge its economic hegemony — Hudson emphasizes factors akin to Varoufakis’ four “charismas” — must be willing to suffer either (or both) a military intervention (possibly covert) or a short-term economic collapse. To move away from this system required a sort of partial suicide. The U.S. wager held for decades. Almost no foreign political leaders were willing to suffer the short term consequences to escape the U.S. dominated system in the long term.
When The Global Minotaur‘s historical account reaches the ~2007 financial crash, Varoufakis provides a summary of the official response, which amounted to unconditional bailouts of the bankrupt financial institutions coupled with punishing austerity for the most vulnerable. His term for this period of global rule by bankrupt banks is “bankruptocracy”. The old “Global Minotaur” system no longer worked, but seemingly every attempt was made to keep the wounded, bleeding beast limping along. There are many, many other books available about this period, with more detail and juicier exposes of the unbelievable malfeasance of the government officials and bankers, but what Varoufakis brings to the table is a crisp, clear narrative that balances accounts of interrelated events in different nations. He then concludes the newer editions with a brief update on the post-crash world. The added material includes some informative graphs that emphasize how the old paradigm no longer holds. He is sharply critical of Germany’s self-serving and rather viscous stance toward the rest of the European Union, forcing the most indebted EU states to bail out its banks. His boldest prediction is that China’s strategy is not quite sufficient, which has been borne out since 2013, but he holds out hope that China will devise some kind of new “Global Plan” or alternative Bretton Woods system.
Varoufakis is good at getting to the point about the ambitions that drive the international economic landscape, from a truly international perspective. He has described himself as an “erratic marxist”. What this really means is that he blends post-keynesian economics with a marxist insistence on political questions of domination and exploitation and the interconnectedness of oppositional deadlocks. So, for instance, he tends to explain economic crises in terms of both the marxist notion of an objective/structural lack of expected profit returns to producers and the keynesian notions of a lack of aggregate consumer demand and investor confidence. Probably the biggest benefit of his overall approach is that he foregrounds questions of ideology, and is great at bluntly stating the ideological grounding for the actions of the global financial elites. His cavalier attitude also breaks him free of orthodox marxists’ typical ignorance of finance and monetary policy matters (despite the existence of Marx‘s posthumous Capital Vol. III; this is a topic Hudson has discussed at length along with members of the MMT school of thought). And yet there is also a certain sloppiness to his theoretical framework as well, as he adopts certain marxist critiques of capitalism while rejecting most marxist goals/solutions in a way that certainly seems “erratic” and haphazard — there is no categorical rejection of private property, capital accumulation, or markets expressed in these pages, just reformist improvements in the functioning of a global capitalist system.
This is an important and valuable book, and hopefully it continues to be read by people who feel they know little or nothing about international economics. Even as of this writing in 2018, the book is still extremely relevant. But given this book’s importance, it is worth pointing out some of Varoufakis’ assumptions and perspectives that limit some of his analysis and, especially, his policy recommendations.
First off, for all his admirable attempts to highlight the fundamentally political nature of global financial doctrines, technical rules and mechanisms, Varoufakis could have stood to explain the political foundations of his emphasis on surplus recycling mechanisms. He tends to present this in a technocratic way, explaining how having such a mechanism produces better results than when such a mechanism is missing. But it is precisely at this point that the political aspect is most acute. “Better” results are always subjective and political. Allow me to explain. Varoufakis emphasizes that when one country (or even region within a country) has a “surplus”, such as by producing more goods than that country consumes, another will tend to have a “deficit”, and there is a need to balance out these surpluses and deficits. There is a wealth distribution, “welfare” aspect to this, although Varoufakis mostly argues in a technocratic keynesian vein that it is in the economic self-interest of the “surplus” countries to create effective demand for their goods by addressing the deficits abroad (by “recycling” surpluses there). He does not address the position of anyone on the far right who seeks to maintain surplus and deficit statuses to induce a crash, in order to cement permanent hierarchies and drive some people to abject destitution, death, or whatever else they “deserve”. Nor does he adopt the purely marxist notion of the basic immorality underlying these uneven levels of development and production — it is not clear how his vaunted surplus recycling mechanism would apply to a communist/socialist economy, if at all.
Second, Varoufakis may call himself an “erratic marxist” but he unquestionable supports a global market-based system of capitalism. Where this comes to a head is his rather uncritical insistence throughout the book that a functioning global economy requires growth. Both marxist economists (even orthodox ones) and the so-called ecological economics school (Herman Daly et al.) have called this paradigm into question, given the impossibility of infinite growth on a finite planet. Varoufakis acknowledges the problem of global climate change and planetary ecological collapse in passing, but never ties those consequences to their roots in economic theory (the same theories he advances in this book). Reviewers who have pointed out this issue are spot on.
Third, Varoufakis goes a bit light on his exploration of the role of the U.S. military in the global paradigm he describes. Without a doubt, he identifies quite explicitly and astutely that the U.S. military enforces its economic interests. In fact, his explicit reference to a state of continual warfare waged by the United States since WWII is a crucial pillar of his analysis. But, on the other hand, these references are somewhat cursory and lack supporting evidence and an explanatory background, which has raised the ire of detractors and apologists for the status quo. Of course, informed readers will recognize that there is plenty of support for these points about U.S. militarism available elsewhere. For instance, William Blum‘s books like Killing Hope document these U.S. imperialist adventures of the post-WWII era, as do works by Michael Parenti and many others. Michael Hudson also frequently ties actions like the U.S.-sponsored coup in Ukraine to U.S. cold war and new cold war imperialism, including the sponsorship and promotion of “color revolutions”. And even popular writers tend to emphasize the U.S. military role in the Pinochet coup in Chile as a classic example of imposing U.S. economic interests through military force, even if its involvement is indirect and has the sheen of plausible deniability.
Lastly, Varoufakis is a little sloppy in presenting evidence. This book could stand to have many more endnotes for sources, and have stricter adherence to the contents of cited sources. For instance, he misquotes President Dwight Eisenhower’s famous “military-industrial complex” term, calling it instead the “military-industrial establishment”. Also, the occasional reference to funding budget deficits runs a bit askew of principles established by Modern Monetary Theory. While some of the gloss is understandable as a trade-off for making the book short and accessible, sometimes though, like with the Eisenhower (mis-)quote, it seems to reveal a cavalier approach to research. He could have stood to include more footnotes to further sources to allow readers the opportunity to seek out further information. Granted, Varoufakis is mostly correct, but the sloppiness and thin use of citation potentially allows detractors to ignore the main substance of his arguments.
This excellent book has found a solid audience through numerous reprints, and deservedly so. So much of the discussions of international business, finance and geopolitics that the news media presents in a confused and disconnected way comes into sharp focus when considered in light of the economic history Varoufakis’ recounts here. The “erratic” nature of some of his theories and recommendations might be off-putting to hardliners, but at the same time Varoufakis is writing in a much different geopolitical climate than a hundred years ago when the political left had enough of a base to actually seize control of multiple countries. So he tends to advocate for a sort of new “New Deal”. This kind of political “realism” leads to a few reformist compromises, less than fully satisfactory near-term prospects, and a bit of self-aggrandizement, but none of this undermines the basic value of the book. Anyone interested in this topic would do well to also read some of Michael Hudson’s books, such as Super Imperialism, Trade, Development and Foreign Debt (an impressive, if dry, discussion of how “free trade” ideology promises economic convergence between states while actually leading to polarization/inequality — Varoufakis tacitly adopts a similar perspective), and The Bubble and Beyond (discussing the post-2007 crash era from a historical perspective stretching back to ancient Mesopotamia). Steve Keen‘s writings may also provide a resource for anyone seeking to better understand some further context for Varoufakis’ generalized economic stances. Varoufakis continues to write and speak internationally, maintaining his own web site and participating in the DiEM25 (“Democracy in Europe Movement 2025”) organization he co-founded.