Yanis Varoufakis is one of those infuriating people who says one thing one minute and contradicts it the next. The former Greek finance minister has savaged the European Union for undermining national sovereignty, but he actively campaigns against Brexit. He has censured the EU for being too centralised, but he calls for more integration. And he has condemned the EU’s second-rate technocracy before then proposing his own technocratic plan to ease its economic problems.
His latest book, And The Weak Suffer What They Must?, is plagued by similar inconsistencies. It presents itself as a history of attempts to move towards a common European currency from the 1970s to the outbreak of the Greek financial crisis in 2010. However, it often seems to be more of an attempt to give intellectual kudos to his new role as a campaigning celebrity. Thankfully, the book provides some insights into the many weaknesses and inconsistencies in his worldview.
Before considering his arguments on Brexit, it is only reasonable to examine his account of monetary history. There is of course nothing inherently wrong with writing about the move towards monetary union in Europe, but his account is riddled with analytical flaws. He clearly has more charisma than the average finance minister – not a high benchmark – but he is lacking in intellectual rigour.
Contrary to what might be assumed, there is little on the real economy in Varoufakis’s book. For example, his account of the 1971 ‘Nixon shock’, when the fixed exchange rate between the dollar and other currencies broke down, does not properly explain why it happened. His focus is on the interactions between the politicians and officials involved in the process. There is little understanding of how the US economy’s relative decline meant it no longer had sufficient strength to maintain the dollar peg.
Strangely, Varoufakis puts a heavy emphasis on the Nixon shock to help explain the emergence of the Eurozone crisis in 2009. The thrust of his argument is that those who favoured closer alignment of currencies in Europe should have learned more from the US experience. Those who designed the dollar peg back in the 1940s were, he argues, imbued with the wisdom of Keynesian economics. But however clever they were, there were immense practical problems in imposing a common currency on diverse national economies. Even aligning some of the main European currencies more closely, before the advent of the Euro, proved difficult.