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Yanis Varoufakis: After Donald Trump’s awful victory, the left must be more ambitious

The US election result and Brexit have shown that political revolution is possible, says the former Greek finance minister.

“I had no doubt Donald Trump would win, just like I had no doubt Brexit would happen, so maybe I’m not as shell-shocked as you,” says Yanis Varoufakis. The former Greek finance minister is speaking to me several days after the Republican candidate’s historic victory. He doesn’t sound smug about being so prescient, more resigned, deflated, defeated. The left has been here before.

Over the course of an hour-long conversation, Varoufakis soothed my caffeine-jangled nerves with the thought that there is an alternative, leftist vision for the world. Whether you agree with the viability of his ideas or not, it is at least encouraging to know that someone, somewhere has a plan. His view is that the left has become too fragmented, too focused on single-issue struggles, be it LGBT rights or Black Lives Matter, and will continue to lose elections until it can band together to form a broad electoral consensus. In the meantime, all we can do is hope that Trump’s divisive campaign rhetoric proves to be just that.

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New Statesman: It's an obvious parallel to draw but why do you suggest that Brexit shone a light on a possible Trump victory?

Yanis Varoufakis: Brexit first revealed the shifting plates beneath the political and economic establishment. People who had never voted before turned out and when that happens, it causes problems for the pollsters. This is what we also see now in the US — the xenophobic right made inroads in former social democratic strongholds such as the north of England and states like Pennsylvania which had not elected a Republican to the White House since 1988.

The narrative is already becoming that Trump managed to exploit a feeling of resentment among white working class men, to fuel his victory. Is this “whitelash” comparable to the anti-immigrant sentiment that helped swing the Brexit vote?

This is a prime example of how the left tends to over rationalise its defeats. Trump did mobilise blue collar voters but that was not enough on its own. What I am astounded by is the number of Latinos who voted for him, and the people who switched their political religion from Barack Obama in 2012 to Trump in 2016. Anyone who voted for Obama last time can't be easily dismissed as a racist. The political scene is being shaken to its foundations in a way the world has not experienced since the Thirties.

Comparisons have been drawn between Trump and the fascist leaders of the Thirties such as Hitler. Is he a neo fascist?

Hitler was not a fascist, he was a Nazi. The best comparison with Trump, for me, is the Italian dictator Benito Mussolini who ruled Italy from 1922 to 1943. Mussolini and Trump have stylistic similarities in terms of their image and choice of rhetoric, but the connection between them runs much deeper. Mussolini was the man who introduced social security to Italy. He implemented welfare reforms that directly benefited the working class to harness their support to a divisive and ultra nationalist movement. There is nothing comforting about the thought of living under a new Mussolini, but we need to keep our historical comparisons as close to the truth as possible.

Why did Hillary Clinton's campaign end in failure?

Clinton’s loss was caused by her failure to address the collapse of the economic status quo. A global epoch has ended. The period which began with the 1944 Bretton Woods conference, [convened to regulate the post Second World War monetary order], ended with the 2008 financial crash. US hegemony expanded in this era but it was the first time that a superpower got stronger by getting more into debt. The US resembled a huge vacuum cleaner sucking up the net exports of Germany, Holland, Japan and later China. It was increasing its deficit to those economies while, in a Keynesian way, aggregating demand for the global economy. The majority of profits from these Dutch, Japanese and Chinese companies were invested back into Wall Street. In 2008, this system collapsed and with it went the myth of globalisation. Obama promised to address this but he failed miserably in part because he lost control of congress. Today, 81% of US families are worse off than they were in 2004 — the median wages of most US workers have not peaked since 1973. Trump said this couldn’t go on, while Clinton offered continuity — that's why she failed.

How much was it Obama's fault?

He should take a huge amount of responsibility for this defeat. Obama had a window of opportunity when he was first elected in 2008. He was a highly popular president, with control of the Senate, who came to power when Wall Street had collapsed and the banking community was in tatters. He had a real chance to establish a New Deal programme just as Franklin D Roosevelt did in the Thirties. Instead, he employed Larry Summers and Tim Geithner as his economic advisers — the gravediggers of the New Deal institutions. They both served in the Clinton administration which dismantled the last checks and balances on Wall Street, including rendering the Glass-Steagall Act obsolete in 1996. So, those responsible for allowing Wall Street to run riot were brought in to fix the mess. Predictably, all they did was reinstate the privilege of the financial class.

Obama was relatively inexperienced when he first came to power, how much should we judge his legacy on those first few months when he was battling a huge global crisis?

In America almost every president is inexperienced. It’s not like the British system, where for example Winston Churchill was hanging around parliament for decades before he became prime minister. How do we best judge Obama? On his intellectual capacity, which is unquestionable, and also in terms of his politics. He was never a progressive. The problem for Obama was that all the left-wingers projected onto him the image they wanted to see, which was different to who he really was. He is a social climber, who wanted to become a member of the establishment, rather than to challenge it. His efforts to ingratiate himself have led to him handing over the presidency to Trump.

Do you think a more left-wing candidate such as Bernie Sanders would have defeated Trump?

I am convinced that Bernie Sanders would have walked this election. Clinton needs to think about the way in which she and the Democratic party bigwigs conspired to deny Sanders the opportunity to compete on an equal footing. If he had been allowed to do so, he would have the won primaries and walked the presidency. If you think that Trump won because there are lots of racist white Republicans out there, you are mistaken. What clinched it for him were the independents, Democrats —many of whom could not be bothered to get out of bed and vote for Hillary — and others who are not natural Republicans.

What is your view that Bernie would won so easily based on — is his rise the product of the same anti-establishment mood that has propelled Trump to power?

No. That’s like saying the International Brigades who fought in Spain in 1936-38 against the Catholic establishment had shared values with the Nazi supporters of Hitler. The financial collapses of both 1929 and 2008 were caused by capitalism crumbling due to its own excesses. This collapse is then typically followed by a great recession, or a great deflation as we have now, and the result is that the political centre follows the economic equilibrium into crisis. When the political centre crumbles you have an almighty clash between progressives and xenophobic nationalists — to say these two sides have the same genesis is an error of historical judgement.

I was more suggesting that Sanders would be able to reach out to the same disillusioned white working class voters who came out in droves for Trump.

That's true, but it’s not because Trump and Sanders come from the same source — in elections everyone competes for the same voters. You are right in that when people are tired of the status quo they demand change. Democracy can offer them change which will in the end bite them like Brexit or Trump, or it can offer progressive change.

What does Trump’s success mean for Brexit Britain? 

A Trump presidency puts pay to the Brexiteers' belief that removing the UK from the European Union will allow it to forge new trade links with the US and China. Trump’s attitude to China on trade is likely to be antagonistic [among his policy pledges were a 45% tariff on imports from China and a repudiation of the Trans Pacific Partnership]. Trump is opposed to free trade agreements, so that extinguishes any hopes Theresa May might have had of forging a deal to compensate for the loss of the single market. Britain must end this sick joke of a special relationship, which was only window dressing after the Suez Crisis in 1956. 

Putin appears to be delighted with Trump’s victory, can these two strongman leaders really cut a deal? 

Let me be clear, I consider Putin to be a war criminal and have done since he raized the Chechen capital, Grozny to the ground between 1999 and 2000, to help him win the presidency. But, the geopolitical stance of the US towards Russia over the past 15 years has been atrocious. The idiocy with which Nato and the US have promised friendly regimes such as Georgia or Ukraine military support, has given Putin an excuse to tear up all agreements with the west. By adopting an aggressive and imperialistic attitude to Russia, Obama and Clinton have allowed Putin to justify his stranglehold over his own people. Whereas Trump, as a businessman, understands the importance of the deal. He has already said that he won't endorse wars that doesn't think he will win. That’s why he opposed the 2003 Iraq War — it wasn’t on humanitarian grounds. He doesn't want to have a constant love affair with Putin, he just wants to cut a deal with him.

How should the left respond to this latest blow?

We must stop explaining away our political failures as the result of a conspiracy among the establishment and the media. It is nothing but a litany of excuses. We don't win because we can’t appeal to a substantial segment of the electorate. The entire American establishment was against Trump, even Fox News and the Koch brothers who have always in the past funded the worst right wing candidates. What Trump, and Nigel Farage, know is that political revolution is possible. Brexit proved it, here in Greece for a short five months the Syriza government proved it before the leadership caved in. The silver lining of Trump’s awful victory is that we must become more ambitious. 

Why has the notion of the liberal, or progressive, elite become so reviled?

In the past 30 years, we have allowed progressive values to become fragmented — there’s the LGBT struggle, the feminist struggle, the civil rights struggle. The moment a feminist accepts that having more women in the boardroom means a women migrant will do more menial jobs in the home for below the minimum wage, the connection between feminism and humanism is lost. When the gay movement adopted consumerism as its mantra with slogans like “shop till you drop”, which took the place of confrontations with bigotry and the police, it too became part of the liberal elite. The solution has to be a progressive movement that is international and humanist. It’s a tall order but it’s what is needed to oppose both the liberal establishment and Trump. They pretend to be enemies but in reality they are accomplies, feeding off each the other.

How worried should the world really be about a Trump presidency?

He will have his finger on the nuclear bomb, which is not a greatly comforting thought, it certainly doesn't help me sleep well at night. The best we can realistically hope for is another Ronald Reagan. When Reagan was elected, the left was deeply troubled — he was advocating for trickle down economics and reviving the tensions of the Cold War. He was also a buffon in my mind — a third rate actor, although I don’t know if that is better or worse than a rogue property developer. In the end, although Reagan did contribute to global macroeconomic instability, he turned out to be a Keynesian president who struck a good deal with the Russians on nuclear disarmament. So, there is that possibility too.

Serena Kutchinsky is the digital editor of the New Statesman.

This article first appeared in the 17 November 2016 issue of the New Statesman, Trump world

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.