If there is a domain of human activity today that dominates all others, it is the economy. And yet, most people cannot claim to have much understanding of what goes on in this realm.
In Talking to My Daughter About the Economy , Yanis Varoufakis, an economist who has served as Greece’s finance minister, achieves a difficult feat: he offers a potted history of capitalism and demystifies the building blocks of economics such as debt, money, commodity, and exchange value, without recourse to economic jargon. In fact, he doesn’t even use the word ‘capitalism’, preferring instead to use the term ‘market society’.
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The book opens with a fundamental question: why is there so much inequality in the world? Varoufakis answers it by going back to the dawn of agriculture. He makes a key distinction between a ‘market’ (a place for exchange or barter) and an ‘economy’ (possible only when something is produced using labour). For thousands of years, human beings, as hunter-gatherers, lived on what nature provided — there were markets for barter, but no economy. Around 12,000 years ago, human labour began to produce food. And with agriculture, for the first time we acquired the capacity to produce a surplus (what’s left for accumulation after consumption). It was this surplus that brought an economy into existence.
Having a surplus meant noting down who gets how much of it and when (creating the need for money, writing, bureaucracy), ensuring that the surplus is distributed according to rules (the need for law), guarding the surplus from enemies (need a state and an army), and ensuring that everyone obeys the state (need for a priestly class whose job was to make the laity believe that the unequal division of the surplus was ‘divinely ordained’ or ‘natural’). Capitalism’s priestly class, according to Varoufakis, are economists.
Human history, then, has largely been a story of ruling elites vying with each other for control of the surplus while periodically putting down rebellions from a labouring majority seeking a bigger share of the pie.
Capitalism, shows Varoufakis, is the most efficient machine ever invented for generating this surplus, though with one fatal flaw: it is structurally prone to increasing inequality, which also makes it susceptible to periodic crises.
Varoufakis ends the book with a clarion call for democratising decision-making in the economic sphere, which is currently controlled by a global oligarchy accountable to no one. This is an entertaining and rewarding book that will leave you less dependant on so-called experts when it comes to understanding who’s doing what with your money.
Talking to My Daughter About the Economy: A Brief History of Capitalism ;
The Bodley Head/ Penguin,