Monday, December 26, 2011

An Exchange Between Kotzabasis and Professor Varoufakis on the Merits and Demerits of Capitalism

The following exchange between me and Professor of  Economics Yanis Varoufakis at Athens University took place on his blog about the capitalist system under the post:
Ending 2011with a fable for our times-December 24, 2011
December 24, 2011 at 03:14 #
Kotzabasis says,

Is Amartya Sen’s absolute prosperity and relative inequality of the capitalist system vulgarly to be replaced by Yanis Varoufakis’s “despicable inequality?”

Professor Varoufakis distorts and defames the whole history of the dynamism of entrepreneurial capitalist wealth that shot up the standard of living of the masses to “Himalayan” heights. To claim that capitalist “wealth …needs poverty to flourish,” is just an ornamental academic trapping empty of history and fugitive from serious thought. Capitalism, like everything else in life, was never meant to be “stable” but a process of Schumpeterian “creative destruction.” But this can only be understood and accepted by realists and not by heroic ideologues, like Professor Varoufakis.

Professor Varoufakis says,
    • December 24, 2011 at 15:32 #
It is always good to encounter intransigent Panglossian views in the post-2008 world. There is something touching about undying faith, even when of the toxic variety.

  1. December 25, 2011 at 01:48 #
Kotzabasis says,

Professor Varoufakis

Are capitalist entrepreneurial creativity, wealth, and prosperity based on “intransigent” “Panglossian” naivety? And is the history of capitalism to be truncated and concentrated naively and un- imaginatively between 2008 and 2011 for you to make your uninspiring and toxic argument?

Professor Varoufakis says,
December 25, 2011 at 11:56 #
No, capitalism’s wonders have nothing to do with Panglossian naïveté. But your determination to portray it as the best of all possible systems exudes it. As for my assessment of capitalism, and your claim that I truncate the latter’s history to a period around 2008, feel free to judge it. But only after you acquaint yourself with it. (For had you read it, eg either of my last two books, you would have realized that I truncate nothing. And that I go to great lengths to analyse capitalism’s contradictions, something that entails a celebration of its achievements as well as an exposition of its failures.) Till you are prepared to become acquainted with what I am really saying, before you attack it, I shall treat you as no more than a minor Panglossian.

Kotzabasis says,

December 26, 2011 at 02:46 #
Professor Varoufakis

Thank you for your advice how to overcome my “minor Panglossian” status. But unfortunately for me I’m bound to retain it, as your crass defamation of capitalism in your POST, hardly incentivized me, to use a term of your “little man” John Howard, to read your books and be acquainted with your thoughts. And indeed, my preference is to be “treated… as a minor Panglossian” than go through the treat to major on your ‘Pandistortions’ and jaundiced strictures on capitalism.

But to come to the gist of the matter in hand, my riposte to you was not to either of your two books, which, as I imply above I have not read. My reply was specifically to your post where you wistfully and wrongfully write, “Should we dare to hope of a new era in which WEALTH NO LONGER NEEDS POVERTY TO FLOURISH,” and of the illusion that “capitalism can be stable” and where you vulgarly and gracelessly contend that capitalism creates “DESPICABLE INEQUALITY,” and in your reply to my first post where you refer to the “post-2008 world.” It might well be that these ‘populist flourishes’ had not meant to be of any intellectual seriousness and their only aim was na deleazei ( to allure) and enthuse the ignorant to rush and become volunteer workers to your construction of your ‘matchsticks’ good society, as a replacement to the infernal deeds of capitalist society. But could one do this at the cost of one’s intellectual integrity?

And it is most surprising that the Gargantuan, indeed, Cyclopean efforts that you have put in your Modest Proposal(MP)—although one must note that Cyclopean efforts without a Ulysses are fated to be wasted efforts—have the aim to save Europe, a system that according to you produces genetically “despicable inequality.” Fortunately, however, for those condemned to this despicable inequality, but unfortunately for you, Andreas Koutras’s fatal Jovian bolts demolished to ashes the MP, from which no contriving number of revisions to it will give rise to a Phoenix solution that will salvage the European Union from its peril.

Lastly, to state that “to analyse capitalism’s contradictions… entails a celebration of its achievements as well as an exposition of its failures,” is to state the obvious.

Professor Varoufakis says,

December 27, 2011 at 04:33 #
Impressed by your dedication to keep knocking down my (according to you) already demolished, and perpetually ridiculous, arguments, as well as by the amount of time you dedicate to a blog (mine) which you consider unworthy, I shall continue to post your comments. Carry on Sir!

Kotzabasis says,

Professor Varoufakis

With your Kazantzakian character I could never imagine that you would not post my comments.

Saturday, December 10, 2011

The Periclean Dimensions of Antonis Samaras as the Future Prime Minister of Greece

By Con George-Kotzabasis—December 10, 2011

We have forced every sea and land to be the highway of our daring. Pericles

In the present storm-laden dark sky of Greece, a glittering new star has made its appearance which like a beacon of the sky is attempting to navigate the battered ship of Greece into calmer waters and save it from shipwreck. This new star is the leader of the Opposition of the New Democracy Party, Antonis Samaras, who since he has become its leader two years ago, has displayed unprecedented qualities of leadership and economic and political insight and daring, in this critical economic situation that Greece traverses, that only a statesman of Periclean dimensions could exhibit.

The criticism of Samaras from early on as leader of the Opposition of the Papandreou government, which he has depicted as amateurish and inept, has been totally justified. His early warnings that the policies of the socialist government of Papandreou were wrong and the torrent of taxes that the latter rained upon the middle classes would be disastrous for the economy. In October 2009, when Papandreou began his premiership, public debt was 298 billion euros, 125% of GDP. Today it has reached the whopping amount of 360 billion euros, 165% of GDP. Gross National Product in 2009 was 238 billion and presently has shrunk to 218 billion. According to OECD estimates it will decrease even more by 6% in the near future and unemployment will increase to 18.55%, affecting tragically younger people.

Further, Samaras predicted that the first EU Memorandum that imposed draconian austerity measures on Greece would neither decrease the budget nor would it put the economy on a track of recovery. As an economist he cogently argued that in conditions of deep recession austerity measures would exacerbate the economic crisis not dampen it. He was severely criticized and reprimanded when the New Democracy Party voted in parliament against the extreme austerity measures. Moreover, he had the moral strength and political insight not to be tempted to fall to the seductive calls of Papandreou to participate in a unity government to deal with the national crisis. Samaras gave as his strong reasons that since the PASOK Government was refusing to change its economic policies, that followed the blueprint formulated in the European Memorandum without attempting to modify it in certain crucial parts that could deter the further weakening of the economy, and which had failed the country, he, and his party, would not take part in a coalition government merely for the purpose of being an “accomplice” to these flagrantly wrong policies.

Samaras made a series of proposals that he encapsulated in his “Restart of Greece” by which the country could avoid the shoals that would cause its economic sinking. Last May in his Zappeio II Proposal the Leader of the Opposition presented a number of policies that could put Greece on the road of economic recovery and its corollary, the ability to pay off its debts. His restart programme would necessitate a “shock treatment” but with positive results. (a) A severe cut in public spending and on pensions, only above the level 700 euros. (b) A reduction of taxes on household income and businesses and a decrease in VAT in all sectors of the economy particularly in tourism which is pivotal to the Greek economy. (c) The abolition of all means test for the acquisition of a house and on capital repatriation so to inject money in the financial system. (d) The legalization of all buildings constructed without permits-there are more than a million-which will bring substantial increases in state revenue. (e) The state is to pay off all its debts to private individuals thus increasing market liquidity. And banks to commit to the real economy 20% to 30% of the guarantees they receive. This will further increase liquidity in the market and be an incentive to stop capital flight. (f) The state must not make any cuts to the Public Investment Programme with its high multiplier effect that is a powerful instrument to combat recession. (g) The acceleration of denationalization of public owned entities, which the Papandreou government was slow to implement, and the stimulation of the development of property which is the economic engine of the country. All these relief measures will increase state revenue and the Restart programme will balance the budget within just over three years, and start paying off Greece’s debt.

This daring Restart programme is not an abstraction and Samaras is quite aware that to concretize it he has to convince the lenders of Greece, i.e. the EU, of the urgent necessity of making changes to the present economic policies that clearly have failed, if the goals of the Memorandum of 26th of October, to which he is irrevocably committed, are to be achieved. This task of convincing Greece’s European partners of a change in tack has been eased, as High German officials admit now that the initial programme was wrong.

Finally, Samaras warns (not exactly in the following words) that this contagion that is threatening to engulf the European continent is not only economic and political but also social, and could lead to an explosion of European Spring protests that could not be contained and could transform radically the political landscape of the continent by the reappearance of the infernal star of the swastika in the political constellation of Europe.

But History has shown repeatedly nations at moments of great dangers, produce great and illustrious leaders that saves them at the eleventh hour from destruction and obliteration. From Themistocles to Charles Martel to Winston Churchill, the invasions of barbarians and dictators were defeated by the sagacity, imagination, and moral strength of exceptional leadership. Antonis Samaras from his words and deeds without any doubt belongs to this lineage of leadership. Greece facing the abyss of economic bankruptcy, poverty, and mob rule with the dangers that are historically inherent in such combination, i.e. the resurgence of fascism, has a unique leader in Antonis Samaras that could prevent this stupendous threat from consummating which would consign the country into the doleful state of penury and into the captivity of dictatorial regimes.            

Thursday, December 1, 2011

The Fallibility of Technocrats no Reason to Debunk them

By Con George-Kotzabasis

“We work in the dark—we do what we can—we give what we have.” Henry James

Science has been built on a “mountain” of errors. No correct policy has arisen—like Athena out of Zeus’ head—from an immaculate conception but from a compilation of corrected mistakes. The task of a wise, imaginative, and intrepid technocrat is not to despair before mistakes, like professor Yanis Varoufakis, and be pessimistic about the future, but to overcome them. This is the task and challenge of both Mario Monti and Lucas Papademos as premiers of Italy and Greece respectively, whom both professor Varoufakis disparages, as well as, in the case of Greece, of the statesman, Antonis Samaras. But obviously, it is not the task that can be consummated by professor Varoufakis. Although one must admit that in his Modest Proposal, with Jonathan Swift's title, co-authored with Stuart Holland, surprisingly, he takes a positive and optimistic view how to resolve the European crisis.