<nettime> Varoufakis: Julian Assange just called.

[nettime's man-in-the-middle <nettime@kein.org>]

www.yanisvaroufakis.eu
/2020/06/13/julian-assange-just-called-to-talk-about-the-pandemics-effect-on-capitalism-politics/

Julian Assange just called. To talk about the pandemic’s effect on
capitalism & politics!

Julian called me a little earlier on, at 14.22 London time to be
precise. From Belmarsh High Security Prison of course. This is not the
first time but, as you can imagine, every time I hear his voice I feel
honoured and moved that he should dial my number when he has such few
and far between opportunities to place calls.

“I want a perspective on world developments out there – I have
none in here”, he said. Which, of course, placed a considerable
burden on me to articulate thoughts on capitalism’s fate during this
pandemic and the repercussions of it all on politics, geopolitics
etc. The knowledge that Her Majesty’s Prison authorities would
discontinue our discussion at any moment made the task harder.

In a feeble attempt to paint a picture for him on as broad a canvass
as possible, I shared with Julian my main thought of the last weeks:
Never before has the world of money (i.e. the money markets, that
include the share markets) been so decoupled from the world of real
people, real stuff – from the real economy.

We watch in awe as GDP, personal incomes, wages, company revenues,
businesses small and large, collapse while the stock market is staying
relatively unscathed. The other day, Hertz declared bankruptcy. When
a company does this, its share price goes to zero. Not now. In fact,
Hertz is about to issue $1 billion worth of new shares. Why would
anyone buy shares of an officially bankrupt company? The answer is:
Because central banks print mountain ranges of money and give it for
almost free to financiers to buy any piece of junk floating around
the stock exchange. “Complete zombification of the corporations”,
is how I put it to Julian. Julian commented that this proves that
governments and central banks can keep corporations afloat even when
they sell next to nothing at the marketplace. I agreed. But, I also
pointed out a major conundrum that capitalism faces for the first
time.

 It is this: Central bank money printing keeps asset prices very high
while the price of ‘stuff’ and wages fall. This disconnect can go
on growing. But, when Hertz, British Airways etc. can survive in this
manner, they have no reason not to fire half the workforce and to cut
the wages of the other half. This creates more deflation/depression
in the real economy. Which means that the Central Banks must print
more and more to keep asset and share prices high. At some point, the
masses out there will rebel and governments will be under pressure
to divert some income to them. But this will deflate asset prices.
At that point, because these assets are used by corporations as
collateral for all the loans they take out to stay afloat, they
will lose access to liquidity. A sequence of corporate failures
will commence under circumstances of stagnation. “I don’t think
capitalism can easily survive, at least not without huge social and
geopolitical conflicts, this conundrum”, was my conclusion.

Julian thought about this for a moment and asked me: “How
important is consumption to capitalism? What percentage of GDP is
at stake if consumption does not recover? Do the corporations need
workers or customers?” I answered that it was high enough to make
this conundrum real. Yes, Central Banks and robots can keep the
corporations going without customers or workers. But, robots cannot
buy the stuff they produce. So, this is not a stable equilibrium. The
losses in people’s incomes will accelerate, thus generating pivotal
discontent. Julian then said something along the lines of: That will
benefit Trump who knows how to feed off the anger of the multitudes
toward the educated, upper middle-class elites. I agreed, saying that
DiEM25 has been warning since 2016 that socialism for the oligarchy
and austerity for the many, in the end, feeds the racist ultra-right.
That we are experiencing again what happened in the 1920s in Italy
with the rise of Mussolini.

Julian agreed entirely and said: Yes, like then, there is an alliance
forming between rich people and the discontented working class. He
then added that most of the prisoners and the prison officers in
Belmarsh support… Trump. At that point the connection was cut off.

Our conversation lasted 9’47’’. It was more substantive, and of
course moving, than any conversation I have had in a while.


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