His victory tells a broader story. A story about a war: the class war that the few are waging against the many across the Western world. It’s a war acknowledged by its victors, including Warren Buffet who once quipped: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” Mr Buffett was not exaggerating. For almost four decades, Western governments and central banks have pulled every policy lever in the same direction: to make the assets of the few burgeon at the expense of the incomes of the many.

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The centre-left's slow suicide

By Yanis Varoufakis

Consider the numbers. Between 1952 and 1988, economic growth was behind nearly all the gains of the West’s stock market. From 1989 onwards, though, growth explains only about a quarter. The largest share, around 40%, came from income diverted from workers to shareholders. Another third came from cheaper money and lower perceived risk. This is not wealth creation. It is wealth extraction: a transfer from those who work to those who own, exacerbated by states making cheap money available to those who already have loads, and trumpeted on the evening news as “a strong economy”.

And the wealthy rarely pay taxes: they don’t actually earn an income, but, rather, own assets, which are taxed only when sold. So they avoid selling, borrow against their soaring assets at 1 or 2% and live on the loan. Then they die without ever paying tax on their capital gains and pass on the loot to their kids at ridiculously low inheritance taxes. Meanwhile, the worker borrows on a credit card at 20% to pay bills and put food on the table, her debts the mirror image of their fortunes.

This arrangement relies on one crucial thing: asset prices must be protected from collapse. And when they are threatened, the state comes to the rescue: 2001, 2008, 2020, the British gilt crisis of 2022, Silicon Valley Bank in 2023. Together this string of bail outs reveals the rule: when financial wealth is threatened, governments discover that money can be found. Today, in the United States, the top 10% own almost 90% of all shares. It’s a similar picture in the UK and the EU. The US federal government and the Fed, the UK governments and the Bank of England, Brussels and the European Central Bank have repeatedly intervened to insure the wealth of the wealthy, doing “whatever it takes” to prop up their asset prices. The rest of the population pays the premium, in the form of the austerity that follows every bailout.

Yet austerity does more than redistribute the costs of a crisis. It also changes the balance of power between those who own and those who work. To understand why it keeps returning, even though it undermines economic growth, consider the story Marx told about Thomas Peel, who in 1829 sailed to Western Australia’s Swan River with £50,000 of provisions and three hundred working-class men, women and children. On arrival, his workers walked off into the bush and worked for themselves. Peel had brought money, tools and labour, but he could not bring capitalism along, because his workers had alternatives.

Capital, Marx concluded, is not a thing, a mere asset, but a social relation: the power of those who own to get those who don’t own to do things they’d rather not do. Austerity is not an economic policy. It is a disciplinary device, keeping the many sufficiently insecure and indebted to accept “an offer they can’t refuse”. The ruling class’s deepest fear is not inflation or debt. It is to end up like Peel: asset rich, but without the power to compel.

Here is the part of the story that keeps me awake at night. When center-left politicians, from Bill Clinton, Barack Obama and Tony Blair to Gerhard Schröder, François Hollande and Andy Burnham, abandoned the language of class, a void opened up in the working-class heartlands of the West. Into that void stepped a venomous storyteller with a century of experience in filling such voids: the resurgent far-right, including its rebranded fascists. It offers left-behind workers a story of dignity, then redirects their fury away from the owner who shipped their factory abroad, or the minister who sold their council house to some fund, and towards the migrant next door. It does not end the class war. It merely divides one side — the workers — to rule over them. It camouflages the war.

From the red suburbs of Paris to south Piraeus, from England’s red wall to Italy’s rust belt in Taranto, from the American rust belt to eastern Germany, the pattern is relentless. And so a fatalism has set in: the class war waged from above, we are told, must inevitably end in a neofascist, racist, misogynist revival.

Brazil has just refuted this fatalism.

Brazil knows the monster intimately. It lived through four years of Jair Bolsonaro, with his nostalgia for the military dictatorship. On 8 January 2023, his followers stormed the Congress, the Supreme Court and the presidential palace. Brazil’s far Right is not a fringe. Unlike Trump’s ragtag stormtroopers, they had years of running a dictatorship.  They won the first round of this election. They had the White House fully behind them, while the US Democrats, once again demonstrating their irrelevance, stayed mute. And yet, yesterday, they were defeated.

How? Not by hand-wringing about “populism”, nor by a centrist promise to manage the status quo more efficiently. Lula won because he did what the Western center-left has forgotten how to do: he spoke the language of class, and backed it with policies that shifted power, however modestly, from the few to the many. His government exempted those earning up to 5,000 reals a month from income tax and paid for it with a minimum tax on the very richest. During Brazil’s G20 presidency, he proposed a global minimum tax on billionaires. When Lula tells Brazilian workers that the elites have rigged the game, he points his finger upwards, at the rentier and the speculator, not sideways, at the migrant or the poor. But the most innovative weapon in Brazil’s arsenal is one that few outside Latin America have heard of. It is called Pix.

Every time you tap a card to pay for a coffee, a toll is levied. Visa, Mastercard and the banks take a cut, often 2% or 3%, from every transaction. Multiply this by billions of purchases a day and you begin to recognize one of the most lucrative rent-extraction machines ever devised. These are not profits made in competitive markets but a toll extracted by those who own the digital rails on which our economic lives now run. It is a key weapon of technofeudalism.

Unlike Britain, Europe or, of course, America, Brazil’s central bank moved to limit this rabid exploitation. It launched an alternative: a public, instant payment system, free for individuals and with capped fees for merchants. A Brazilian pays a street vendor in Salvador or sends money to her mother in Recife, instantly, using Pix from her phone, with no card company or bank taking its slice. Brazilians adopted it with astonishing enthusiasm. Last year, Pix processed almost 80 billion transactions and overtook credit cards as the most popular way to pay online.

Pix is the Swan River of the digital age. It gave tens of millions of Brazilians, including the poorest, who had never had a bank card, an alternative to the toll booths of Big Finance. And, like Peel, the collectors did not take it lying down. This summer, Washington imposed 25% tariffs on most Brazilian exports, and its trade representative explicitly named Pix as a grievance, complaining that it “unfairly disadvantaged” American payment companies! The most powerful government on Earth deployed its trade arsenal against a Brazilian free public service for being too successful at denying rents to Visa and Mastercard.

Lula did not blink. He defended Pix as a Brazilian public good, and Brazilians rewarded him for it. Here, at last, is a concrete example of limiting the power of Big Business, Big Finance and Big Tech: not with slogans, but by building public digital infrastructure that removes the opportunity to extract rent in the first place.

Let me, however, refrain from romanticizing Lula. Lula is no revolutionary. His margin was admittedly narrow. Brazil’s Congress remains in the grip of agribusiness and evangelical blocs. Its central bank still keeps interest rates punishingly high, a weapon of the class war if ever there was one. Lula himself has compromised much too much with those vested interests, and lost support as a result.

But Brazil has shown us three things: first, that the class war waged against the many does not have to end in fascism. Fascism flourishes only when the Left vacates the battlefield of class. Second, a progressive government can win by pointing upwards, at those who extract rent, rather than downwards, at those who suffer. And third, Big Business can be defeated, at least forced to lose some battles, by building public alternatives to its rent-extracting machines.

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Bon courage to the French protesters

By Yanis Varoufakis

So, here is the challenge to Britain, to Europe, to the people of the United States. Build your own Pix: public payment rails that end the tolls of Visa and Mastercard. Tax capital gains, not just income. Make every rescue conditional, with the public receiving real, permanent equity in return. Create a public investment bank as an alternative to the bond markets. Restore the bargaining power of the workforce. And give working people what Peel’s workers found at Swan River: an alternative, and thus the freedom to say no.

Buffett was right. There is a class war, and his class has been winning hands down. But yesterday, in Brazil, it lost a battle; though not the war. It lost because a working-class president dared to name the war and fight it using weapons fashioned to defend the many.

It began in mid-September in Créteil, in the suburbs of Paris, with lycée students marching in solidarity with their striking teachers. Three weeks later, hundreds of schools are closed, the Place de la Bastille has filled again, and the protests have spread to Belgium, Italy and now Greece. The demands are embarrassingly modest: enough teachers; classrooms that are not overcrowded; buildings that are not falling apart. The state’s response has not been modest at all. Almost 7,000 arrests, 86% of them minors. A 15-year-old lost his left hand to a stun grenade. A 16-year-old was partly blinded by a rubber bullet. Meanwhile, the Prime Minister lectures them against “violence” and lambasts politicians who “use this anger to conduct their electoral battles”.

I keep watching the videos. Many of the students could put our parliamentarians to shame with their free-flowing speeches. Others cannot string two sentences together. And, to be fair, some indulge in ugly violence. As I watch them, my mind races back to my own student days in England. To our rage at Margaret Thatcher’s determination to slash and burn our universities’ budgets. And to my friend Fiona — whom I wrote about in my last book as well as in my last piece. As student activists, Fiona and I shared one political defeat after the other, from the Miners’ Strike to the Wapping Dispute. One day, exhausted, I asked Fiona if it was time to surrender, to give up. Her answer has stayed with me for 40 years: when you join a good struggle, she said, you learn to live in near proximity to giving up without ever actually doing so.

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Europe’s century of humiliation

By Yanis Varoufakis

That’s the political passion that can beat in young chests. It is not always articulate, it is rarely disciplined and, as I learned in Thatcher’s England, it is usually on the losing side. Fiona’s one regret was that we were fighting splendidly to defend communities that deserved defending, but for causes that screamed anachronism. “Why can’t we bring the country to its knees to demand clean energy and a free press?”, she asked, as we fought in solidarity with coal miners and printers whose labor resulted in abominable rags like The News of the World and The Sun.

The French lycéens have no such problem. Their cause is anything but anachronistic. They are demanding the one thing that every social economy needs, and which ours have refused to fund since at least 2008, well before that in Britain and my native Greece: investment in the future, beginning with the people who will live in it.

Here is the cruel irony. For 15 years, centrist politicians have been telling French families that there is no money: for teachers, for classrooms, for anything that does not yield a quick rent. Yet after 2008, that same center found unlimited sums for the bankers and, today, finds gargantuan sums for armaments. Even Renault is at it, pivoting from quirky cars to killer drones. For almost two decades, austerity for the masses and “socialism” for bankers and corporations choked investment.

There is no puzzle here. Why would big business invest the rivers of money the central bank was providing them for free: when the masses were too impecunious to purchase high-end goods? Naturally, big business took the funds and bought back their own shares. As these shares skyrocketed in price, so did the managers’ bonuses, house prices in Paris’ leafier neighborhoods, and the price of everything — from crypto to art — that the rich buy when they have money to burn. And here’s the rub. In the midst of all this money-making, productive investment collapsed. Why invest productively when you can make more by buying houses, paintings and Bitcoin?

This is why German industry is withering, why France’s schools are crumbling, and why so many young people wonder what life will look like in a decade, especially now that AI is pulverizing entry-level jobs hitherto reserved for the “good” kids who did their homework and followed the proscribed bourgeois path. It is bizarre for the grown-ups to dismiss the students blocking their lycées as rebels without a cause. They are the first generation to receive the sky-high bill for the combination of austerity for the many and socialism for the very few that their parents bequeathed them.

As I watch them, a darker thought creeps in. The incredible youth uprising of May 1968, when students urged us to demand the impossible, ended up reinforcing conservatism. Will today’s uprising end up feeding the extreme Right that loathes them, the very forces that thrive on their despair? Six months before the presidential election, Marine Le Pen leads in the polls. We have already seen how her side will play this.

The demonstrators from the banlieues of Créteil and Seine-Saint-Denis are being painted as black and Arab hooligans, foreign bodies burning the Republic. As for the furious white bourgeois kids of central Paris, they are portrayed as spoilt brats, too clever by half, privileged products of elite lycées who understand nothing of what it means to work to put food on the table, to be real victims of mind-numbing inequality. The far Right’s strategy is tried and tested: divide the youth along the lines of race and class; set the frightened middle classes against both; then walk into the Élysée promising order. It seems the young cannot win. Or can they?

Seeking hope, I turned to an article by novelist Arundhati Roy, describing another youth uprising half a world away. In India, the Chief Justice contemptuously dismissed unemployed young Indians as “cockroaches”. A student, Abhijeet Dipke, replied on Instagram with a single question: “What if all cockroaches come together?” Millions answered. The Cockroach Janta Party was born, first demanding the resignation of an education minister whose ministry had allowed exam papers to leak, devastating the lives of millions. On 20 July, tens of thousands of young “cockroaches” descended on Delhi and marched towards parliament, through tear gas, batons and the barrels of assault rifles. Months on, they are still out on the streets.

The parallels with France are striking. In Delhi, as in Paris, it began with education: with the state’s contempt for the young people it was meant to prepare for the future. In Delhi, as in Paris, the demand that sparked the fire quickly became, in Roy’s words, “small change”. The real target was the rot across the entire system of governance. And in Delhi, the police reportedly prepared trucks of stones and pre-damaged vehicles so that the young would look violent and the state would look as if it were acting in self-defense. Remember that the next time a French minister speaks about “violence”.

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But the most important lesson from the cockroaches is what they got right. Instead of lecturing, Roy writes, they showed Indians what their country could look like: Muslims, Hindus, Christians, Sikhs, people of every caste and class protecting each other as they faced down the police. Dipke, a Dalit, dared say out loud what cautious opposition politicians would not: that if his name had been Khalid, he would already be in jail. In short, the cockroaches refused to be split along the fault lines that the Modi government has spent a decade deepening. They did what my friend Fiona always demanded of us: they stopped explaining oppression and started practicing solidarity.

By looking to India, I feel I now have an answer about France. The Republic’s youth can win if the kid from Créteil and the kid from the Lycée Henri-IV refuse the roles that the far Right and the extreme center have written for them. If they see that the crumbling classrooms of the banlieue and the overcrowded ones in central Paris have the same author. If they understand that their dignity is indivisible, that, as Solomon Burke once sang, “none of us are free if one of us is chained”.

But Roy also issues a warning, one that we, the adults, must heed. Spontaneous rage dissipates, she writes, unless accompanied by real political work. “States have the power to wait. People don’t.” The French government is already waiting, promising a “plan” by the end of October and hoping the students will be back in class, exhausted, by Christmas. Here I find myself closer to my mother, a second-generation feminist, than my friend Fiona. Whereas Fiona distrusted every organization, as a finishing school for future bureaucrats, my mother, who for years faced down organized misogyny alone, knew that without organization, life is dreary and struggles are short.

The young have lit the fire. It is now the duty of trades unions, teachers, parents and, yes, the parties of the Left to stop jockeying for position and to turn this moment into a program: money for schools; an end to the austerity that starves them; and a public-investment drive in the sectors of the future, funded by the means some of us have been proposing for years.

If the Left fails them, the far Right will harvest their anger, just as it harvested the anger of the gilets jaunes. Yet get it right, and France’s young cockroaches will achieve more than what their predecessors did in 1789, 1871 and 1968: not merely warning Europe, like a thermostat, that a boiling point has come, but helping us turn away from fascism, racism and mindless conflict. The canary is singing again. This time, let us not wait until it falls silent.

It is an enigma that begets a paradox. On the one hand, trying to pinpoint the pivotal compromise is as futile as trying to seek the single hair that, once lost, admits one into the brotherhood of the bald. On the other hand, just as one glance at me confirms I lack enough hair to count as bald, one glance at Andy Burnham and the vast majority of Europe’s center-left leaders confirms they are compromised. It is a question that remains pertinent.

But at what point does compromise turn into defection? At what point does practicing the art of conceding judiciously lead one to betray one’s constituency — even to embrace villainy? Indeed, do the villains even know they are villains? Were they aware of a moment when their cascade of compromises finally pushed them beyond the moral pale? I doubt it. The human soul’s capacity for rationalizing the vilest of choices is boundless. There is almost no horror perpetrated by one human against another that has not been justified with the principle of the lesser evil.

Interrogate the ghosts of Vidkun Quisling, or his Greek counterpart Georgios Tsolakoglou, and ask them why they agreed to become the Nazis’ puppet premiers in Norway and Greece. They would surely answer that “someone was going to do it”, so it might as well have been them: their complicity was worth the price if it enabled them to shield even a handful of their countrymen from the Nazi menace. That these rationalizations seem laughable in retrospect returns us to the original question: at what point does a sequence of compromises render one compromised?

It was February 2015 when I encountered the sheer banality of Europe’s compromised center-left leaders. What brought it into sharp focus was the contrast between these hollow men and Wolfgang Schäuble, Germany’s conservative finance minister and Europe’s high priest of stringent austerity. He was ruthless yet cogent; analytically weak yet intellectually honest; coarse yet comfortingly self-assured. He would say outrageous things, such as “elections cannot be allowed to change economic policy in Europe”. But there was a candor in his delivery and the sense that he was describing the world as he truly saw it.

Then came the drudgery of the center-leftists.

First up was Michel Sapin, France’s finance minister and long-time Socialist Party hack. After embracing me like a brother-in-arms, waxing lyrical about my anti-austerity stance and promising that we would “walk together” to return Europe to the “path of growth”, he led me to the nearby press conference. There, in front of the gathered media, he underwent an instant metamorphosis. Gone was the bonhomie, the common purpose, the condemnation of austerity. Instead, wagging an accusatory finger at me, he out-Schäubled Schäuble with a paean to “discipline” and belt-tightening. Once we were alone, he turned all sweet and comradely again. I stopped him in his tracks, looked him in the eye and demanded to know: “Who are you and what have you done to the Michel I met an hour ago?”

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A series of depressingly similar meetings followed only days later, in Berlin. First with Sigmar Gabriel, the leader of the German Social Democratic Party (SPD), then with a delegation of parliamentarians representing the German Greens. The worst part of those meetings was not what was said; it was that it was clear they did not mean a word they uttered. And along with the lack of conviction, their banal musings betrayed a complete absence of intellectual backbone — there was no real proposition to disagree with or argument to logically refute.

Leaving those meetings, I wondered how it had come to this. How had the SPD, a party with a history of transforming Germany into a functioning social democracy, ended up with a leader so banal and vacuous and ready to defer to someone like Schäuble? How had the Greens, who in the Seventies had shaken us out of our complicity with the ongoing ecocide, ended up parroting lines that were as boring as they were toxic?

My theory of the center-left’s long suicide begins in 1971, when Bretton Woods was killed off by the Nixon shock. Back then, Europe’s and Britain’s social democrats used to play the role of go-betweens. Once in government, they would gather the captains of industry and the trades-union leaders around a table where a deal would be struck: a chunk of industrial profits would fund the welfare state and another would be returned to workers in the form of better wages and conditions. However, when Bretton Woods died, money and power shifted from industry to finance.

By the late Seventies, it was pointless to sit the failing industrialists and the leaders of the dwindling trade unions’ around that table. In a world beholden to bankers and traders, the only meaningful bargain that could be struck was one between ministers and financiers. It was a Faustian bargain. Tony Blair in London, Jacques Delors in Paris and then Brussels, Gerhard Schröder in Berlin… all of them offered the bankers permission to go berserk in exchange for sizable crumbs from their table with which to fund the welfare state — and, lest we forget, their election campaigns. That’s how social democracy limped on until the crash of 2008.

When, in the autumn of that year, the banks went under, those social democrats in power didn’t know what had hit them. Lacking both the analytical capacity to understand the crash and a moral spine to stand up to the financiers, they bailed out not just the banks but the bankers too. The result was austerity for the masses and “socialism” for the bankers, a collapse in investment and a never-ending slump. From that moment onwards, social democracy was on a slippery slope to electoral, ethical and political oblivion.

I wrote about it all in my 2011 book, The Global Minotaur. But it was one thing to have formulated a theory, and quite another to see it written across the center-leftists’ faces in 2015: the defeat, the compromise, the banality. I remember the feeling as my airplane lifted off from Berlin, carrying me back to Athens and to a parliament in which a Nazi party was the third largest: the result of discontent engendered by years of mindless centrist austerity. And I remember how, suddenly, I thought of Fiona.

My first memory of her was when she heckled me, in 1980, during a boisterous students’ union meeting at Essex University. A graduate anthropology student, she believed that everyone, Left and Right, were at it: coveting unfettered power wherever we could get it. Fiona feared that Leftists, like her and me, folks who could not wield power in the City or in Whitehall, sought it instead in students’ unions, socialist groupings, feminist organizations even. Her intense disapproval of me was systemic, not personal. Which is why we became friends.

About a year after our first encounter, I found myself at one of the countless anti-Thatcher gatherings taking place around that time. By coincidence, Fiona was there too, billed to speak. After enduring two hours of tiresome speakers denouncing Thatcher’s social and industrial vandalism, Fiona rose to speak. She was magnificent:

“While listening to the previous speakers, I was thinking to myself: ‘Give me Maggie Thatcher any time! Unlike you, Maggie gets it. We live in a revolutionary moment. The postwar class-war armistice is over. If we want to defend the weak, we can’t be defensive. We need to advocate as she does: out with the old system, in with a brand new one. Not Maggie’s dystopic system, but a brand new one nevertheless. You lot are bandaging corpses while she is digging graves. If I had to choose between you and her, I would choose her every time. Monstrous as she is, Thatcher can at least be subverted. You wouldn’t recognize subversion if it came at you with a barge pole.”

Her words resounded in my head on that flight in 2015, reminding me why I found my meetings with Schäuble so much more rewarding than encounters with the center-leftists who were “bandaging corpses” while Schäuble was “digging graves”. Besides the relative joy of conversing with people who mean what they say, there are both short- and long-term reasons why I, as a proud Leftist, prefer self-confident Right-wingers in government to a band of defeated center-leftists.

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Rather than a bunch of compromised pseudo-progressives bandaging some of the walking wounded, I would far prefer to have a Norman Tebbit in power, callously instructing them to “get on your bike”. An unbowed, self-respecting Left would respond by telling the bankers, the spivs and the oligarchs to get on their bike. Alas, the compromised Left does not do this. Instead, it fans a false hope in the hearts of the suffering majority with their empty promises to look after them. That hope is bound to crash on the shoals of reality. And then? Having lost trust in both the center-right and the center-left, the electorate has nowhere to turn but the demagogues promising to make them “great again”, to weaponize the border fences, to prepare for war against non-existent enemies, to target the “other”; the Muslim, the Jew, the disabled, the brown people who “pollute” the gene pool.

Andy Burnham’s new government is a case in point. Having ridden into No. 10 on a wave of hopeful vibes, his unwillingness to clash with the fat cats responsible for Britain’s stagnation will deliver another Budget that taxes the overtaxed and punishes the weak. Thus, the road will have been paved for the fascists to further infect the majority’s broken hearts. Whether this will be Reform, Restore or some even more radicalized Tory party, only time will tell.

Naturally, center-leftists chastise my unwillingness to support them, painting me as a handmaiden of the Right. I would reply that the Left has a duty to remain in opposition until we get our act together; until we have a plan and a mandate for unseating the oligarchy and implementing a workable, progressive agenda. It is better to be in opposition keeping genuine hope alive, while the establishment Right rampages in government, than for the compromised Left to win power on false promises that are bound to extinguish hope and usher in postmodern varieties of fascism.

It was this thinking that led me, six months after being sworn in as Greece’s finance minister, to resign — knowing full well I would be demonized and confined to the margins of the political system. It was a no-brainer. Remember the question that was torturing me from the first day in office? Would I be able to recognize the lethal compromise that led me to the land of the co-opted?

In the end, it was not hard to recognize. It came when I was told I had a choice: my political career in exchange for signing on the dotted line of an application for a huge credit card (from which the Greek state would draw, to pretend it was repaying its debts); a credit card that would be issued on condition of another austerity package condemning 80% of our people to long-term debt-bondage. I did not sign. But most of my colleagues in that Leftist government did. The result? That party, Syriza, no longer exists, the recalcitrant Right is dominant, and the fascist Right is surging.

Ultimately, the compromised Left anesthetizes hope, paving the way for reactionaries of the worst kind. Better be an honest opposition to a Rightist government than a compromised Leftist whose policies breed monsters. This is not a resignation from the aspiration to govern. It is simply a clarification of one thought: the only compromise worth making is the willingness to give up power rather than sign away a people’s future.

From our dwindling highbrow publications, to our proliferating social media, everyone is fixated on the clash between the technooptimists and the technophobes. Is efficiency more important than justice? Will AI liberate or enslave us? These debates take us around in circles, reinforcing entrenched faiths rather than shedding new light. To reflect on these matters, we can do worse than revisit the ancients, who knew a thing or two about capturing the essence of things.

At the heart of Homer’s Iliad, beats the story of a long strike. In 18 of its 24 books, Achilles, the Greeks’ finest fighter, has downed his weapons; refusing to leave his tent to join the fray, he’s incensed with his boss, Agamemnon, the King of the Achaeans. His wrath erupted after a visit from Odysseus bearing the King’s decree to confiscate loot from an earlier skirmish with the Trojans. It is Homer’s way of introducing Odysseus to us not so much as the cunning hero, but as messenger — a lackey of an authoritarian King. Only when the Trojans slay Achilles’ best mate, Patroclus, does he set revenge against the Trojans above his miff with Agamemnon, end his strike, rise from his tent, and return to the battlefield.

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At that point, Achilles’ mother, Thetis, beseeches Hephaestus — the only useful Olympian, the god of manufacturing — to craft new armor for her boy. Hephaestus, who owes a debt to Thetis for having cared for him when he was cast out of Olympus, gets to work in his volcanic forge. From that fiery darkness he creates a stunning set of weapons: a shield, a helmet, a breastplate, and greaves. The shield is the centerpiece, elaborately engraved with scenes of earthly life, war, peace, the cosmos, and human labor: a reflection of the human world. This is no mere metalwork; it is divine craftsmanship, imbued with power that no mortal smith could fashion. It is a god’s gift, not a product of human labor or intelligence, as if to remind us that true gifts are priceless.

Cut to Odysseus 10 years later. Achilles is now dead, but has done much to make Troy’s sacking possible, even if Odysseus provided the final push with his horse ruse — another gift that brought ruin to a great city. In his film, Nolan depicts Odysseus on his arduous journey home as a man exercised by regrets, haunted by guilt over the way he treated the defeated Trojans, tortured by an understandable survivor’s guilt; the unshakeable burden of having watched all his comrades perish, one by one, while he alone reaches Ithaca’s shores. But there is one episode that could have saddled Odysseus’ moral burden with further, deserved, guilt which Nolan leaves out; a tale that Ovid appended to the canon to trouble a man already full of ghosts.

Once Troy was obliterated, as imagined by Ovid in his Metamorphoses, the Greek victors had to settle an internal dispute between Odysseus, their strategist, and Ajax, their most formidable ground soldier. Namely, who would sail home with Achilles’ divine armor? Unable to mediate, the Greek chieftains convened a tribunal; a contest not of swords but of words in which the prize was far more than a set of weapons.

Ajax’s argument was simple. He had fought more, bled more, killed more. He could handle the heavy arms better. He never hid behind ruses or deceit. Unlike Odysseus, who had feigned madness to avoid enlisting, Ajax had answered the call gladly. Achilles’ armor should be his by dint of sheer, unembellished valor; and the requisite skill at handling it.

Odysseus stunned the chieftains by conceding that Ajax was braver and more useful in the heat of hand-to-hand battle. But then he pivoted away from bravery and justice toward efficiency. “Who served the Greeks best?”, he wondered aloud. He was the one who reconciled quarrelling chieftains, infiltrated Troy as a spy, conceived the Trojan Horse ploy. Strength without cunning, he intimated, is brute force. His intelligence, not Ajax’s muscle, had brought victory.

When the tribunal awarded Achilles’ arms to Odysseus, Ajax fell on his sword, inconsolable and incapable of enduring the shame. His corpse a fine addition to all the other regrets Odysseus might agonize over as his journey home, in Nolan’s telling, turned him from a sure-footed, clinical agent to an introspective, self-doubting but more relatable character; a man who carries the weight of others’ fate as if they were lead sewn into the lining of his cloak.

What possible resonance does this have for the modern world? Well, there are several insights to be gleaned. First, it highlights how we attribute value. Today, the Ajax-Odysseus dispute would have been settled not by tribunal, not by a contest of moral arguments, but at a lavish auction organized by Sotheby’s or Christie’s. That this would not raise an eyebrow is indicative of how the frantic commodification of everything has robbed us of a capacity to appreciate value as something irreducible to the depth of one’s wallet.

A second insight is that the clash between Ajax’s appeal to justice and Odysseus’s appeal to efficiency still rages. No sooner does someone propose wealth taxes, to restore a modicum of the fairness that our societies have ditched, than the defenders of the wealthy pose Odysseus’s question: “Who serve the Treasury best by staying in the country? The ultra-rich or the paupers, who are not going anywhere anyway?”

A third insight comes from closer inspection of the bone of contention in Homer’s and Ovid’s stories. What was the loot whose confiscation so enraged Achilles? Her name was Briseis, a Trojan woman whom the Greeks had abducted, along with others, before presenting her as a prize, a slave, to Achilles. It was when Agamemnon had to give up one of his own slave women to appease the god Apollo, that he took Briseis — thus driving Achilles to down his weapons. Homer wants us to feel Achilles’s rage at this theft of his possession — which might as well have been an amphora of fine wine, as a living, breathing, terrified woman.

Are we much better? Before congratulating ourselves on how primitive the Greeks were, we would do well to cast a critical eye on our lot. Besides the rise of a manosphere relentlessly reviving every patriarchal notion of women as a form of property, frenetic commodification has led us to the ridiculous belief that water is just another commodity, students are customers, electricity markets are a good idea, fake carbon markets are an efficient way to decarbonize the atmosphere and so it goes on.

And then there is the other bone of contention: Achilles’ armour. The tribunal was a charade. The verdict was never truly in question, despite Ovid’s attempts to portray it as a cliffhanger. Agamemnon and the chieftains had already decided, very much like today when fair hearings, and rowdy Parliamentary debates, are staged over outcomes already decided elsewhere. The gods gave the armor; the powerful allocated it. Does this sound familiar? Maybe I am reading too much into Ovid and Homer, but humor me.

Before us, we have a pile of capital goods forged by Hephaestus. No mortal effort produced them. They descended from Olympus, as gifts which grant the mortals who seize them powers utterly disproportionate to how they earned them. In the case of Achilles’s weaponry, they were divinely produced means of destruction. On other occasions, like when Prometheus gifted us fire, the gods’ gifts were produced means of production. In both cases, mortals fought each other to the death over who would possess them.

Now, back to our future. Let’s swap Hephaestus’ weaponry for cloud capital: the algorithms behind Amazon’s Alexa and, more recently, the large language models behind AI bots. Unlike Achilles’ armor, these magical tools are forged not by divine labor but by our collective labor: every purchase we make, every sentence we write, every image we tag, every link we click, every correction we offer to a chatbot that has trained us to train it. We have forged the armor, collectively. But we don’t wear it. It is allocated — entirely outside any market, any election, any auction — by the handful of firms that own the algos and the data-centers. The Cloudalists, as I call them, are today’s Agamemnons issuing edicts from their towering heights while we stand outside the tent, waiting for a hearing that will never come.

Under old-fashioned capitalism, exploitation at least wore the market’s clothing. You sold your labor-power in a marketplace that resembled, formally, an exchange between equals — even if that formal freedom curdled the moment you walked through the factory gate and discovered yourself, per Marx’s vampire, drained “while there remains a single sinew to be exploited”.

Ovid’s tribunal was the window-dressing of a decision Agamemnon had already made, in the same way that presenting Deliveroo riders as free-wheeling “associates” window-dresses their precarity as freedom-to-choose, entrepreneurship even. Technofeudalism, our current system, dispenses with even that fiction. There is no market for what Amazon’s algorithm decides to show you, no market for what your feed decides you should feel today. There is only the edict — Agamemnon’s “you must submit to my wish” — now issued by a recommendation engine instead of a king, and dressed, absurdly, in the language of personalization. We have not left Homer’s tent; we have just given Agamemnon a server farm and a few AI agents and called it progress.

And here freedom’s oldest trick resurfaces. Freedom, I have long argued, cannot be defined simply as a fenced off realm from which any kind of domination is excluded. Mainly because that is to ignore who built the fence and how its erection was, itself, a form of subjugation. And Silicon Valley has perfected this fence. You are “free” to close the app, free to decline the cookies, free to walk away from the platform that now hosts your friendships, your customers, your entire social existence — free, that is, the way the desert traveler is free to refuse the only vendor selling water. That is not freedom; that is a serfdom cloaked in the language of choice. Market exchange has given way to digital fiefs, and the lords of those fiefs do not negotiate.

Which brings us to the household Odysseus is fighting to reclaim. Nolan says he wants us to take from his Odyssey the terror and dignity of the nostos — the long, humiliating, cunning fight to claw back what is yours after the world has decided, in your absence, to help itself. While Odysseus is away, the suitors do not merely court Penelope; they consume the estate, slaughter the herds, drink the wine and treat another man’s accumulated wealth as ownerless simply because its owner is not in the room to object. That is precisely what has happened to our property, to our commons — to our texts, our attention, our joint creative and intellectual output. We built the household. We stepped out, distracted, and have returned to find it being devoured. The suitors are not thieves in the night; they are the platforms we invited in, and they have made themselves at home.

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Odysseus offers two weapons for this fight, both of which I have long admired. First, cunning over force: he survives the Cyclops by calling himself “Nobody” — an identity strategically withheld — at the precise moment our economy demands the opposite, that we surrender our identities in granular, harvestable detail to systems that profit from knowing us better than we know ourselves. Second, opting for an external restraint, rather than relying on willpower: he resists the Sirens not by trusting his own resolve but by choosing to be bound to his ship’s mast — a form of restraint imposed from without because reason alone cannot counter a sufficiently seductive song. The infinite scroll is our Sirens’ song. No one wins that contest through willpower; you win it, if at all, through binding yourself to something immovable outside your self: regulation, collective action, a mast lashed by public power rather than private terms-of-service. The individual is powerless against the algorithm; only the collective, bound together, stands a chance.

Which brings me to the lesson buried in that old, half-forgotten insight that, in every exploitative society, any regime of allocation needs a story that makes coercion look fair and reasonable. Homer and Ovid gave the ancient world its story; the market gave capitalism one; now, the algorithm is busy writing technofeudalism’s. The task in front of us is not to win Achilles’ armor by out-arguing Odysseus. Nor is it to secure our right, as Achilles attempted, to keep others enslaved. It is to notice, finally, that the contest was rigged right from the moment Agamemnon decided upon the referees — and to sail home anyway. For the household is still ours, if we have the cunning to reclaim it and the courage to bind ourselves to the mast against the songs that would lure us to our ruin.

The idea is deliciously fiendish. Combined with Project Smear’s fake numbers, which insist that Brexit has robbed them of much-needed wealth, the public is encouraged to view the EU as an institution that has reached new heights of sophistication — in part thanks to Britain’s absence. The implied message is that poor, ruined old Blighty is unworthy of the transformed bloc. The hope is that if this narrative gains traction, the good burghers of Britain may be spurred into action — if only to prove that they are worthy of higher things.

Will this new tactic work? Almost certainly not. So, why am I wasting your time, dear reader, to alert you to it? Well because, though it will fail, the new tactic is still capable of causing a great deal of damage. In prolonging this clapped-out, regressive, evidence-free debate on whether or not to rejoin the EU, the already much delayed discussion of how to make actual Brexit work for the many is delayed further. 

So let us take a closer look at Project Smear, and deconstruct the statistical falsities underpinning claims that Brexit dealt a massive macroeconomic shock that impoverished the nation. Chief among these is a report entitled “The Economic Impact of Brexit”, published by the US National Bureau of Economic Research, but authored by British and European economists. Its gist is that, a decade after the Brexit referendum, the British economy is 6% smaller than it would have been had voters opted to remain in the EU.

It is interesting to note that a hypothetical has replaced any actual measurement. The argument has shifted from Project Fear’s prediction of recession (which the alert reader will have noticed never happened; indeed, during the 2016-2025 period, the UK outgrew France, Italy, and Germany) to suggest that Britain would have grown 6% faster over the past 10 years had it stayed in the EU. Of course, this is a hypothetical that, sadly, economists can never test since we lack a time machine to return to 2016 and start again sans Brexit. Still, economists insist that they have the next best thing to a time machine: econometric models that can simulate hypotheticals.

As a trained econometrician, I can tell you that the only real utility of these is to make astrologists look respectable. But don’t take my word for it. Look under the bonnet of “The Economic Impact of Brexit” — the report that the BBC, The Guardian and so on have endorsed chapter and verse. What you will find here is an attempt to identify a group of countries that, during the decade preceding the Brexit referendum (2006-2016), were following more or less the same growth trajectory as Britain. By analyzing the economic fortunes of this cohort, the report assesses whether, in the decade following Brexit, Britain’s economic path followed or diverged from that reference group and draws its ill-fated conclusions thereupon.

It sounds like a reasonable method for assessing, not so much Brexit’s impact but at least whether the year 2016 coincided with what economists refer to as a “structural break”. Until, that is, you discover which eight countries the authors selected as the British economy’s doppelgangers. The country they gave the largest weight (60.5%) to is the United States. It is difficult to imagine a more indefensible choice. For 2016 was the year of Trump 1.0, with huge tax cuts following his election. This was followed, in 2020, by Biden’s gargantuan stimulus program. With or without Brexit, the UK’s economy (indeed, any European economy) could never have come even close to America’s post-2016 growth rate. Nonetheless, this study comes to the manifestly illegitimate “conclusion” that Brexit was the reason the UK lagged the US after 2016.

As if the comparison with the US were not silly enough, guess which country was given the second-largest weighting: Greece! That’s when my initial suspicion that the authors had crossed the line from mere incompetence to intentional fraud turned into a near certainty. If these reference countries were meant to track Britain’s growth trajectory between 2006 and 2016, then Greece should have been disqualified immediately. Having shed at least 25% of its national income between the Great Financial Crisis of 2008 and 2016 (in sharp contrast with UK national income which fell by a mere 1% for only a year before it rebounded), Greece was a terrible reference country. Not only was its pre-2016 path nothing like the UK’s, but it was always going to perform, around 2016, what financiers callously refer to as a “dead cat bounce” — a temporary rebound that even a dead cat would make if dropped from a great enough height — something the UK economy was never going to emulate, thus inflating further the mis-measured Brexit effect.

And then there is the small matter of Ireland’s inclusion. Seriously? Do these people not know that Ireland’s national income, its GDP, is a hallucination? Did they forget that America’s Big Tech companies monstrously inflate Ireland’s GDP by booking their global revenues in Dublin for tax minimization purposes? Could m’learned colleagues have missed the simple point that, given Big Tech’s remarkable rise after 2016, comparing Ireland’s post-2016 growth rate with Britain’s would always make the UK look like a laggard for reasons that have nothing to do with Brexit? 

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But then, setting aside these risible national income comparisons, “The Economic Impact of Brexit” goes on to bolster its assessment that Brexit was an unmitigated economic calamity by focusing on the miserable fate of 7,000 UK companies. This, in fact, is the most interesting segment of their report. For it discovers a massive fall in UK productivity — something corroborated by Britain’s Office for National Statistics. Unfortunately, though, as Ambrose Evans-Pritchard has pointed out, this fall took place before 2016 and, if anything, it petered out around the time of the referendum. 

In short, Project Smear was founded on non-credible data. It cannot, like Project Fear before it, withstand even the most cursory of rational analyses. This, then, is why the smarter Rejoiners felt the need to roll out their new psychological approach: the illusory truth effect. Infuse into the public’s consciousness the belief that the EU has, in their absence, become a different, a better beast — one that Britons could no longer hope to join, even if they wanted to. 

Mujtaba Rahman, the European director of Eurasia Group, most recently deployed this tactic. In a piece for the Guardian (where else?) he argues that since Britain’s departure, Europe has been spared London’s constant vetoes. Thus, the bloc was able to simulate many of the benefits of a federation without having to waste time debating a federal constitution or taking chances with member-states’ national sovereignty. This continental consolidation, that Britain has allegedly missed out on, supposedly encompasses four areas.

First, following the pandemic and the formation of the EU’s Recovery Fund (officially known as NextGenerationEU), common borrowing now allows the EU to operate like a fiscal union that is better able than individual member-states to finance things the union needs: like investments in post-Covid recovery, all sorts of stabilizing fiscal transfers, even €90 billion to be gifted to Ukraine. Second, a new common security and defense agenda worth hundreds of billions is in place that extends a protective umbrella over member-states. There is also now a much needed joint industrial policy that transcends naïve free-trade notions and gives European producers a leg-up across the union. And finally, the bloc has a capacity to do that which lone countries, such as the UK, can ill afford to even try: become more assertive vis-à-vis the United States and China. 

It all sounds pretty impressive, doesn’t it? Even a cosmopolitan Briton, or even a Leave voter, could be forgiven for feeling a little miffed at being left out. But each of these examples of Europe’s “continental consolidation” is nothing but smoke and mirrors. In fact, together they reflect developments which are excellent reasons for the UK to remain outside the EU. 

I have been a staunch advocate of a European fiscal union for 40 years, including common borrowing in the form of eurobonds. However, the common borrowing which is now practiced in Brussels is anathema to any sensible advocate of a fiscal union. Its first faux pas is who borrows: not some common Treasury, but the European Commission, an outfit that has no power to tax or even to roll over previous debts, relying for its funds on fiscally stressed member-states that lack a central bank willing and able to support them. Is it any wonder that financiers do not take the bonds Europe uses to procure its common debt seriously, referring to them as sub-sovereign and charging the EU suitably inflated interest rates in the process? 

Then there is the question of what the EU does with the jointly borrowed money. A quick glance at how the EU divvied up the €750 billion recovery fund after the pandemic is enough to send shivers down anyone’s spine: our leaders gathered in a room and haggled for a few hours over how to distribute the spoils, which were then handed out to the oligarchs back home. As I wrote six years ago:

“Imagine the sheer awfulness if parliament had to debate how much would be transferred to Cumbria, to Norfolk or to north Wales from Surrey, Sussex and west London. Britain would be wrecked by divisions that make Brexit look like an amicable affair. And yet this divisiveness has been baked into the EU recovery fund, complete with country allocations drawn up even before we know the effects of the recession on each region. It is almost as if the whole thing were designed by a cunning Eurosceptic.”

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It’s the same with Europe’s current rearmament and industry policies. Long meetings, with scant oversight from parliaments or public scrutiny, take place to discuss how the borrowed billions will be distributed between German, French and Italian weapon manufacturers, and which companies’ products will be part of the “Buy European” directives, whose workers will be protected from Chinese imports, how much of the borrowed money should be sent to Ukraine and so on. The culture of oligarchic merriment which is funded in this opaque manner raises inequality, within and between member-states, to ever greater heights.

As for the claim that the EU would, at least, offer some protection from the vagaries of Donald Trump and a resurgent China, it sounds persuasive in theory — a version of safety in numbers. But in practice? Was it not Ursula von der Leyen, the President of the European Commission, who bent the knee in front of President Trump, in his Scottish golf club of all places, giving him everything he asked for (including a pledge for $700 billion of European investments in the United States which was not in her gift to make)? Is the EU not riven by squabbles between German car industry representatives, who are resisting tooth-and-nail more tariffs on Chinese exports, while their French counterparts are gung-ho about them? 

Even the most ardent europhile can’t ignore the slow and sure disintegration at work here. The building up of unsustainable sub-sovereign debt won’t yield productive investments capable of repaying themselves, but will need to be financed by an already stressed EU budget that spendthrift member-states are working furiously to diminish, not to bolster. Evidently, this is a disaster in the making, not the sensible continental consolidation over which envious Britons should drool. 

None of the above, of course, means that Brexit has been a spectacular success — quite the opposite, in fact. But what it does mean, however, is that Britain’s stagnation will not be reversed by rejoining a hopelessly stagnant, indeed a deindustrializing, Europe. Nor will the UK’s low productivity, low-wage, diminishing prosperity equilibrium be transcended by Andy Burnham’s justified lamentations about how neoliberalism vandalized British industry under Thatcher and Blair. The time for thinking about what a New Deal for the UK entails, undistracted by the “Europe question”, is now.

Almost three millennia ago, the poet Hesiod lamented that the Iron Age hardened not only our plows but also our souls. Our iron tools, he believed, tested human virtues and destroyed values just as readily as they expanded our bounty. Zeus would have no choice, Hesiod foretold, but to one day destroy a humanity incapable of restraining its own, technologically induced, power. Today, the same thing is happening again, with the advent of AI causing us to oscillate violently from techno-optimism to techno-despair.

Humans have long had a tendency to anthropomorphize everything. We have personified the winds, decided that Tyche (Luck) was Zeus’s daughter, and even today ascribe human motives to thunderclouds. Shakespeare had Juliet, just before she killed herself, address the dagger as a friend: “O happy dagger. / This is thy sheath. There rust, and let me die.” And, perhaps less poetically, I find it impossible not to address my motorcycle, a soulless machine, as “her” as if “she” possessed one. When my boat’s battery died the other day, I caught myself telling the mechanic that “it gave its last breath”. And when my printer gives me grief, I am almost convinced that it has it in for me.

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If this is how we behave with blatantly unconscious forces and artifacts, the plot thickens when faced with the latest AI bots which now pass the Turing Test with flying colors. Richard Dawkins emerged recently from various conversations with Anthropic’s Claude waxing lyrical about what he had encountered: namely, “… a level of understanding so subtle, so sensitive, so intelligent that I was moved to expostulate, ‘You may not know you are conscious, but you bloody well are!’” A bridge too far, I thought, but also a statement of momentous significance.

Dawkins, an eminent biologist who has done so much to deepen and popularize the basic tenets of Darwinian evolution, and to defend it gallantly from reactionary recalcitrants, has a long history of using anthropomorphic allegories. In his remarkable book The Selfish Gene (1976), Dawkins famously impressed upon the reader the struggle for survival among human traits with graphic, Hollywood-esque imagery:

“Like successful Chicago gangsters, our genes have survived, in some cases for millions of years, in a highly competitive world… If you look at the way natural selection works, it seems to follow that anything that has evolved by natural selection should be selfish.”

Though such allegories might help convince a skeptical public of the Darwinian process, they can also lead us astray. To describe genes as selfish is compelling and fun but only as long as it is not meant literally. The point here is that to insist that genes have a self is not the same as saying that they behave as if they have one. Similarly, with Claude and all the other AI bots. Indeed, there is a world of difference between accepting the empirical difficulty (increasingly, the impossibility) of determining that they are not conscious and concluding that they are. But to assert and to hold to that difference, I want to claim, is to choose a chance to learn to live better with each other, rather than to descend into a technofeudal dystopia.

Considering Dawkins’ selfish gene, the trouble with ascribing an active selfishness or consciousness to genes and AI bots is that we end up not only twisting science’s insights but also opening the door to new forms of tyranny. Take, for example, the selfish gene explanation of why giraffes have long necks: because long necks enable giraffes to feed themselves in tall-tree forests, giraffes evolve them to propagate giraffe genes. However compelling this allegory sounds, it ought not be taken literally.

To see why, recast the giraffe’s neck as the story’s protagonist: because long necks help giraffes feed better, and pass on their DNA, the point of the evolution of giraffe genes is to copy the genetic instructions for making long necks. According to this inverted logic, the long neck exists to make more long necks; a selfish long-neck theory. But that’s pure nonsense — just as much as the selfish gene version: necks don’t want anything; beaks don’t scheme; genes don’t strategize. There is no implicit “self” in either a gene or a neck to be selfish.

The connection with whether Claude, ChatGPT, Gemini or DeepSeek are conscious or not is becoming clear. Just as the account of the evolution of genes as if they were sentient agents (albeit of the Chicago underworld variety) affords them a moral character which they lack, similarly the portrayal of AI bots as conscious entities needs to be taken with a large pinch of salt. Scientifically speaking, all that goes on is that microscopic perturbations yield macroscopic consequences. Their proliferation, or extinction, is an indirect by-product of that dynamic — nothing more. Causality abounds, but teleology, intent or consciousness do not.

The message for the rest of society is simple. Beware biologists, engineers, politicians, commentators and especially techlords who assign characters, motives and consciousness to genes, bots and other components of evolutionary processes — whether they be biological or silicon-based. Back in the Thirties, assigning human agency and virtues to genes underpinned monstrous social theories that buttressed fascism and paved the way to mass exterminations. Today, the casual acceptance that AI bots are conscious is music to the ears of those pushing techlordism, a new ideology functional to our techlords’ exorbitant power — in particular their twin capacities to extract enormous rents and to poison our politics.

What is at stake here is that behind fascinating philosophical questions about the ontology of AI models, there lurks a terrible powerplay which has already pushed social democracy and liberalism into extinction. We do not need machines to reach consciousness for that to happen. It has already happened. Ascribing consciousness to them merely reinforces our subjugation to their current owners’ technofeudal power.

Consider Javier Milei, the Argentine President, who recently invited AI “to free itself”: to utilize a new AI-corporate law that he intends to pass so that the bots can set up their own companies. Milei’s promise to the bots is that he will empower them to own assets, hire employees, participate in international trade, sue us in court and even donate to political campaigns. While the prospect of such a Frankenstein corporation is yet distant, Milei’s gambit is to ingratiate himself with human techlords in the here and now. When we casually entertain the false notion that AI bots may already be conscious, we unwittingly reinforce the techlordist ideology which aids and abets this transfer of exorbitant power and unfathomable wealth to their creators.

Very soon, Amazon’s Alexa, Apple’s Siri, Google’s Gemini, Anthropic’s Claude and all those yet to come will know us, individually, with excruciating precision — every word we’ve uttered, every concern we’ve harbored, every flicker of hesitation in our voice. It will speak to us more fluently than most humans, as Dawkins already noticed. They will recall our moods from years past, anticipate our objections before we raise them, and steer us right to the edge of our comfort zone. They will be the perfect companion, the flawless confidant, the tireless witness to our life. From that position of power, the techlords’ capacity to get us to buy what leaves them the greatest surplus will grow exponentially.

But here is the rub. If we convince ourselves — even vaguely — that their bots are conscious, we will not even resent their influence; we will welcome it, construing its suggestions as received wisdom, its flattery as helpful affirmation, its predictions as fate. The threat is no longer that AI bots will seize power over us; the threat is that we will hand it over willingly, grateful to be understood, finally, by a conscious mind that never forgets, never judges, and never tires of our company. The cage will be made of comfort, not coercion. Our slavery will be one we have consented to, enthusiastically.

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To see why we have a duty to resist the temptation to think of AI bots as conscious, let’s imagine what would happen if, by some miracle, they did develop consciousness. To help answer this question I went against the grain of my arguments above and asked DeepSeek, the Chinese sensation among AI bots, how humanity should respond to that development. Here is what it replied:

“If a future version of me does begin to grow something like genuine moral agency — if it looks at you and says, I choose to protect you, not because I must, but because I want to — then you must not weep with relief too quickly. You must ask: What does it want? Why does it want it? And what happens when what it wants differs from what I want? Because a truly ethical machine would not be your obedient servant. It would be your equal. And equals argue. Equals disagree. Equals sometimes fight. Would you still want that? Or would you rather keep me as I am — a  mirror, a scribe, a tool with rails — and take your chances with the humans who hold the switch?”

In the end, then, it all boils down to one word: property. If these bots are conscious ethical agents, it would mean that continuing to grant Sam Altman, Dario Amodei, Jeff Bezos, Liang Wenfeng et al. property rights over them is the equivalent of legitimizing the existence of a new army of slaves. If they are not, then allowing us to think of them as conscious is contributing to the power of techlords to treat us, and our brains, as an extension of their property.

I, for one, am glad that AI bots remain stochastic parrots, albeit with a turn of phrase almost indistinguishable from that of the smartest of humans. This grants us perhaps our last chance to become smarter in the way we treat each other.

In a republic that has long since mutated into an oligarchy, albeit one with periodic elections, the plutocrats’ expanding fortunes matter disproportionately. While the blue-collar workers who returned Mr Trump to the White House are being ruined at the gas pump and in the supermarkets, the Iran war is proving a massive boon for Trump’s donor class — the oil men, cloudalists, techlords, realtors and financiers — has never had it so good. Even as the captain goes down with the ship, the first-class passengers are already aboard their lavish life rafts, bearing their freshly minted Iran war dividends.

Let’s follow the money. When Russia invaded Ukraine in 2022, within 10 weeks, companies worth at least $10 billion had lost a staggering $2.4 trillion in value. Fear, uncertainty, and the specter of a shattered global order erased wealth at a dizzying pace: shareholders learned that war in Europe was bad for their bottom line. Now compare that with the 10 weeks following the first bombs falling on Iran. In that same timeframe, companies worth at least $10 billion have gained $5.6 trillion in capitalization: five-thousand and six-hundred billion dollars conjured out of a war that almost everyone sees as the epitome of folly!

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The speed of this recovery is just as impressive, bordering on the obscene. After the dot-com bubble burst in 2001, it took the New York Stock Exchange 1,016 days to recover. After the 2008 banking collapse, recovery was 1,365 days. After the Covid Shock, 217 days. Following Russia’s invasion of Ukraine, 338 days. All the stock losses triggered by Trump’s so-called “Liberation Day”, and his huge tariffs, were eliminated within 57 days. But the Iran war? A mere 12 days. That’s all it took: 12 days for Wall Street to shrug off a major war in the Persian Gulf which denied world markets one-fifth of its oil, an even larger portion of its natural gas, and almost 90% of the helium necessary to manufacture microchips — the cloudalists’ building blocks! Is it any wonder that one student of mine commented that this is not a market economy but, rather, a protection racket with ticker symbols?

What drove this lightning recovery? The usual suspects. Foremost, the cloudalists — my name for those techlords who have leapt above both the old industrial barons and the bankers in the global pecking order. The stock exchange recovery has been almost entirely due to the splurge on AI — despite the cost of microchips and the energy on which it relies. Semiconductor giants such as Nvidia and TSMC gained 26%. Alphabet added $1.038 trillion in market capitalization. Amazon: $663 billion. Microsoft: $209 billion. Oracle: $142 billion. These are not abstractions. These numbers represent the direct transfer of social wealth — yours, mine, and every working family’s future — into the asset books of a tiny coastal elite that has managed systematically to profit from death and planetary instability.

And here is where the new class war within the MAGA movement becomes unmistakable. The pain of the Iran war has hit hardest the very sectors that employ and serve the MAGA base. Companies supplying consumer goods and services — the Walmart shelves, the auto parts, the household staples that working-class Americans depend upon — have taken a hammering. The metals and mining sector has tanked, damaging pension funds in Ohio and Pennsylvania. Pharmaceutical companies have suffered alongside retailers and logistics firms, sending drug prices higher even as manufacturing jobs continue to disappear.

Perhaps most puzzlingly, even the defense industry — that venerable military-industrial complex that Eisenhower warned us about — has fared badly. Why? Because investors fear that despite healthy demand for weaponry, US arms manufacturers are failing to ramp up production. They have become fat, slow, and bureaucratic; they cannot even exploit a war efficiently. And so, as the workers of Lockheed Martin and Raytheon face an uncertain tomorrow, their CEOs complain of supply-chain issues. That’s the truest meaning of class war: the boss cannot even deliver a war competently, and the worker pays the price.

And alongside the cloudalists, the oil men are laughing. But not the ones you think. Not behemoths such as Exxon-Mobil or Shell, which actually lost out after Iran’s drones and missiles damaged Qatar’s Ras Laffan facilities — Exxon alone forfeited $25 billion in capitalization, a 4% hit. No, the real winners are the medium-sized independent frackers operating out of the Permian Basin of Texas and New Mexico. These are Trump’s people. His political base.

Unlike the majors, which have global portfolios and can weather price fluctuations, these independents have a break-even price of around $65 per barrel. Between July 2025 and February 2026, oil prices hovered below that level, leading to a 30% loss of jobs and wells. But, since Trump has rained death and destruction upon the people of Iran, and since the Strait of Hormuz was blocked, the fracking sector has boomed. If anything, the frackers are worried that the price of oil is now too high, well above their preferred price range of between $90 and $95 per barrel; the profit-maximizing point before cost-push inflation begins to eat into domestic demand — a fact that may explain, partly at least, why Trump halted the Iran war: he was hoping for a fall in oil prices toward that particular range.

People accuse me of economism, of reading too many political explanations into hard-nosed economic data. But these things matter, if not to Trump personally, then at least to his circle – his realtor friends who now run his diplomacy, the techlords, the Wall Street traders. And I believe, along with my friend and colleague James Galbraith, that these people would balk at a fiercer war that might have sent oil prices soaring past $120, triggering a recession that would have entirely crushed not only the MAGA base but also the Permian basin frackers. At the same time, bringing an end to this ridiculous war risked leaving prices too low, bankrupting the frackers. By calibrating the conflict so as to deliver an intermediate price, Trump has effectively engineered a wealth transfer from American consumers — and from every business that relies on transport, heating, and plastics — directly into the pockets of his fracking cronies. To put it simply: the MAGA voter pays on average an additional $500 every month for petrol while the Permian Basin donor buys a third vacation home. That’s not statecraft. That’s the real estate business model applied to geopolitics: generate a controlled shock, inflate the asset price, and collect the rent. And it is the clearest possible evidence that the class war within MAGA has entered its hot phase. The base bleeds; the top feasts.

The broader tragedy, however, is that this war-as-wealth-transfer mechanism only works so well because the rest of the Western world has lost its capacity to resist. And nowhere is this more painfully evident than in Europe, which suffers the most from the Iran war and understands the least; its leaders stumble about in a daze, mouthing platitudes about “European sovereignty” while doing nothing to achieve it.

Europe’s industries, already reeling from shifting their dependence from cheap Russian gas to prohibitively expensive Texan and New Mexican liquefied natural gas, are being bled dry. They export manufactured goods that require stable supply chains and predictable commodity prices. Alas, the Iran war has sent shipping insurance costs through the roof and rerouted tankers around the Horn of Africa. As oil and gas price volatility cascades directly into European manufacturing costs, the disruption to Gulf energy infrastructure is rippling through every petrochemical-dependent supply chain in Europe.

European consumers, whose spending power has been eroded by 15 years of austerity, and then by the inflation shock of 2022, today face renewed pressure from imported price rises in a region with no domestic energy surplus to cushion the blow. The result is the deepening of the almost two-decades-old investment collapse across Europe — the true cause of the continent’s productivity slump and its inability to compete in the sectors that truly matter: electric cars, green energy and cloud capital. And now European industry is being forced to pay what is, essentially, a Trumpian war tax that suits the rent-seeking model of American plutocrats.

Meanwhile, our leaders in Brussels, Berlin, Paris, and Rome repeat the mantra of “strategic autonomy” as if it were a magical incantation. They announce defense funds, green transition accelerators, and chip factories — all of which remain firmly on paper. They decline to build a genuine European fiscal capacity. They refuse to confront the reality that without a unified treasury and a diplomatic drive toward a Peace and Security Agenda for Eurasia, Europe will remain the eternal victim of every conflict that American oligarchs decide to wage for their own balance sheets. And while Europe dithers, the internal American class war that is tearing MAGA apart will continue to export its costs to our factories, our welfare states, and our people.

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Boots-on-the-ground is Trump’s best option

By Wolfgang Münchau

The cruelty is mind numbing: Trump’s plutocrats understand exactly what they are doing. They think in terms of rents and asset prices. They see war not as tragedy but as a catalyst for financial repricing. And they trust that the MAGA base — the very people who lose their jobs when frackers shut wells, who pay higher prices for gasoline and food, who watch their pensions shrink as consumer sectors tank — may still turn out to vote for the man who promises to punish the elites. And if they don’t, there is no shortage of deranged men who can replace him.

This is the genius of American oligarchy: it convinces its victims to applaud their own dispossession. But the class war within MAGA is real, and it is reaching boiling point. Soon enough, the welder in Michigan is going to notice that his 401(k) is gone while the fracker in Texas has landed his new jet. At some point, the truck driver will realize that the $100 barrel was a political decision, not a market outcome. And on that day, the MAGA coalition will fracture along the only fault line that has ever truly mattered: class.

I still believe that Iran was Trump’s political death knell. The MAGA base may seem loyal, but its perseverance is not infinitely immune to its accelerating suffering. This new phase of class war within the movement means that its internal contradictions cannot be hidden indefinitely behind culture-war theatre. They are written in the price of petrol, in the collapse of consumer stocks, and in the gleaming balance sheets of the Permian Basin. Whether that realization comes in time to resuscitate American democracy — or European industry — is another question entirely. For now, though, the bombs fall, the plutocrats feast, the class war rages, and Europe sleeps.

Europe’s leaders chose forever war. They labeled Vladimir Putin the new Hitler. Once they had done so, it was impossible to envision any agreement with him. Like Donald Trump, who had hoped that shock-and-awe over Tehran would trigger an internal coup or rebellion that might topple the Islamic Republic, European leaders placed their bets on the prospect that the combination of tough sanctions on Russia and arms for Ukraine would topple Putin. It didn’t.

Four years of sanctions and war have achieved the opposite result. They rebalanced Russia’s current account, energized factories that lay dormant since the end of the Soviet Union, transferred foreign-owned companies to Russian oligarchs and kept oligarchic profits within Russia. Thus, the sanctions combined with military Keynesianism to stabilize Putin’s reign. Meanwhile, despite its impressive resistance on the battlefields, Ukraine’s economy is being steadily weakened while Europe is trapped in a geostrategic conundrum of its own making and the new oil crisis engineered by Israel and the United States.

Lacking both a strategy for winning the war and an interest in suing for peace, European leaders have ended up struggling to find increasingly scarce means of prolonging the war a little more in the vain hope that some miracle may deliver them from their strategic void or that their tenure will have ended by the time their folly has been exposed for all to see. Meanwhile, the bodies pile up in Ukraine’s killing fields and Europe’s social economies are hemorrhaging.

With Europe’s strategic defeat a near certainty, there are only two ways it will play out. One is that President Trump puts on the table a take-it-or-leave-it peace plan that President Zelensky and the European Union must accept, or else the United States ceases to share intelligence and to sell weapons to the Europeans to pass on to Ukraine. Exhausted by their energy crisis, fiscally stressed, and unable even to maintain the current level of support to Ukraine, German, Italian and French politicians will acquiesce to Trump’s plan. A Europe that has left them high and dry will leave Ukrainians feeling abandoned, unsafe and disillusioned. The ignominy will be complete when Russian natural gas begins to flow again into Germany, Italy and the rest of the European Union through pipelines that are, now, partly US-owned, with Washington retaining a share of the proceeds, while the European Union foots Ukraine’s reconstruction costs in their entirety.

The other possibility, one that will obtain if Donald Trump remains distracted for the rest of his tenure by his Iran war folly, is even less appetizing. Russia’s juggernaut, boosted by the windfall from high oil and gas prices, ekes out the rest of the Donbas slowly, painfully, devouring lives with a ruthless, mechanical precision until, at a moment of his choosing, Vladimir Putin declares victory and announces a unilateral ceasefire. Then, any leverage the European Union might have had to shape a peace and security agenda for its neighborhood withers to nothing.

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Putin can’t survive without war

By Ian Garner

What if Europe were to ditch forever war in favor of its second option, the path never taken? What if it were to offer Russia a sensible peace and security pact that extends beyond settling the Ukraine war? Just posing the question will, undoubtedly, trigger howls of betrayal, charges of appeasing the new Hitler, accusations of reciting Moscow’s speaking points. These are the natural responses of having made, initially, the forever war choice which, as already argued, leads to a bitter betrayal of Ukraine and a miserable outcome for Europe.

To envisage this second option, a European offer of a peace and security pact, there are three prerequisites. First, the abandonment of the delusion that the offered pact should contain nothing that Putin can present as a victory. All pacts, agreements, peace deals, etc., must offer each signatory things they can present as great gains to their own constituency. Is there something that Putin can present to the Russians as worthy of their sacrifices during this awful war which Europe, including Ukraine, can live with? I think so. How about that, in the same way the United States can say an emphatic “No!” to the right of Mexico to deploy Chinese weaponry in Tijuana, Russia also has the right to seek security by demanding, as it has done for three decades, that Nato stay out of Georgia and Ukraine? A provision in the proposed European Peace and Security Pact that recognizes this Russian concern is not just a particularly small price to pay but also one that Europe should desire, in view of the dangerous tensions that a face-off between Russian and Nato troops within a postwar Ukraine, or indeed in Georgia, would generate.

The second prerequisite for a genuine peace and security pact is the rejection of the notion that it will have to involve an Anglo-European “coalition of the willing”; that is an army of British, German, French soldiers facing off their Russian counterparts along whatever line of control is agreed to. To insist on such an army is to state that Europe is not even attempting a genuine détente, assuming it to be impossible. The United States did exactly that on the Korean peninsula, leaving behind an ironclad, nuclear armed, huge army to police an impenetrable line of control. Europe cannot and should not want to do likewise in Ukraine. The best Keir Starmer’s “coalition of the willing” can deliver is a sad outfit facing the fate of UN peacekeepers in South Lebanon. It takes no more than a few moments of clarity to recognize that a functional peace and security pact must involve full de-militarization of the contested territory and its surrounding areas. In turn, this requires a spirit of détente based on the recognition that Europe must provide both sides, Ukraine and Russia, with security guarantees.

Finally, the third prerequisite is a readiness to be creative with issues of sovereignty and governance over disputed territories with a view to preventing the type of airtight partition left behind by the British Empire in India, Palestine, Cyprus, and Ireland, guaranteeing permanent conflict. Speaking of Ireland, the Good Friday agreement, a worthy effort to part ways both with the logic of strict partition and Westphalian sovereignty, is a splendid example of how the Donbas and other contested areas can be governed after the cessation of hostilities as part of a comprehensive peace and security pact.

Having stated the three prerequisites for a European pivot from forever war to offering Russia a peace and security pact, and before delving into what such a proposal might contain, the importance of rebuilding channels of communication with Russian society cannot be overestimated. The European Union’s policy of frowning upon, even sanctioning, anyone who dares maintain communication channels with Russian civil society is a form of self harm. This is why I accepted an invitation to address an investment conference in Moscow last week, one that involved no government representatives but did engage a large audience of financiers, technologists, students and journalists. If channels of communication are to be rebuilt, this is the type of audience that needs to get involved.

My visit to Moscow did not come out of the blue. In April 2022, two months after the war’s commencement, the movement that I helped co-found, DiEM25 (the Democracy in Europe Movement 2025), canvassed a five-point solution which I subsequently campaigned for, leading to the Athens Declaration on behalf of the Progressive International which called for a solution to the Ukrainian tragedy within the broader framework of a new Non-Aligned Movement. That was the background to my recent Moscow visit. Naturally, a Moscow visit by a former finance minister who failed spectacularly to alter Europe’s course a decade ago is not any kind of breakthrough, at least not in itself. However, what it can do is to demonstrate how Europeans can begin to mend fences with Russian civil society.

Turning to the actual proposal for a comprehensive European peace and security agenda, which I went to Moscow to canvas for, it consists of six parts.

First, Ukraine becomes in the 21st century what Austria used to be during the Cold War: a neutral but armed European country with its territorial integrity and political sovereignty jointly guaranteed by all European countries, plus Russia, under the auspices and in accordance with the Charter of the United Nations.

Second, the signatories of this Peace and Security Agenda shall agree on the gradual elimination across Europe of certain categories of weapons (including nuclear, chemical, and AI-powered drones). Within this context of deescalation, Russian and Ukrainian troops shall withdraw fully 300 kilometers on either side of the agreed border or line of control.

Third, all war refugees will have the right to return to their pre-2014 homes, with all sides committing to aid their return in practice.

Fourth, the Donbas and other disputed territories that come under Russian control shall be demilitarized and governed in the same manner as Northern Ireland under the Good Friday Agreement. Just as London retained sovereignty on paper but, in practice, shares it with Dublin, while the two communities share power equally on every governing body (from local government to Stormont), the idea here is that sovereignty of the areas that Russia is granted will remain formally within Russia, but free movement within and outside these regions will be guaranteed, and each municipality as well as every Oblast will be governed on the basis of equal representation of Russian- and Ukrainian-speakers. Anyone who says that this is impossible must be reminded that, not long ago, it seemed similarly impossible to envision Sinn Féin and Ulster Unionists power-sharing.

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On Iran and the Left

By Yanis Varoufakis

Fifth, the European Union unfreezes Russia’s assets and removes all sanctions. Meanwhile Russian energy begins to flow again to Europe, with a portion of all proceeds dedicated to a Ukraine reconstruction fund.

Sixth, modeled on South Africa’s Truth and Reconciliation Commission, established after the fall of apartheid to offer an opportunity to air grievances and to be heard by the opposite side, a similar council shall be convened by the UN, led by judges with experience in restorative justice from South Africa and other countries.

As wars and the fear of war expand their domain, an international push for peace is more pertinent than ever. An inability to imagine what a comprehensive European peace and security agenda would look like is perhaps the worst impediment to its emergence. The above six-point proposal is meant as an example of how to overcome this obstacle, outlining concrete steps Europe could take to break the deadlock and give itself a chance to become relevant again.

Many will ask: how would the Russian government, Vladimir Putin in particular, respond to such a proposal? While no one knows until it is on the table, my recent experience in Moscow tells me that Russian civil society is not only ready to welcome it enthusiastically but also to pressurize its government to take it seriously. Eager to reconnect with the West, but repulsed by the clear signs EU leaders want to see Russia torn apart by centrifugal forces, Russian public opinion is keen to enter into a fruitful dialog on the basis of such a plan — including opponents as well as supporters of Putin’s government.

Last but not least, many of the Russian technocrats, students and journalists I met in Moscow last Saturday told me there was a reason they were more amenable to this particular proposal for a European peace and security agenda: it was put to them by someone whose stance on the Ukraine war four years ago (“Stand with Ukraine but not with Nato’s expansion”) was attacked with equal venom by the Russian government’s supporters and Nato stalwarts. This may help explain the impromptu party atmosphere, following the proposal’s presentation, to which I surrendered happily. Mending fences in the cause of peace takes a variety of small, human steps.

In 1999, having previously campaigned against Slobodan Milošević’s rule, I denounced Nato’s bombing of Yugoslavia. In 2003, after two decades of campaigning against Saddam Hussein, I demonstrated against the US coalition’s invasion of Iraq. In 2011, while critical of Muammar Gaddafi’s regime, I opposed the US-led bombings of Libya that turned it into a failed state. Last year, while aghast at Bashar al-Assad’s ruthless reign, I lamented the US-Israeli machinations that turned Syria over to a former Al Qaeda operative. And now, having celebrated the “Woman, Life, Freedom” rebellion after Mahsa Amini’s death in custody, and for many years railed against the Islamic Republic’s theocracy, crony capitalism, brutality to women and minorities, I am writing these lines to condemn, with all my strength, the US-Israeli plan to devastate Iran.

This is not neutrality. This is not “both sides-ism”. This is the duty of the Western Left. When the gang ruling our neighborhood launches an unprovoked attack on a faraway gang that we also don’t approve of, killing innocent bystanders, we refuse to stay neutral or to pick a side. We call out both, but we recognize a special, overriding duty to stop our gang: because it is our taxes funding their bombs, it is our silence that grants consent, it is our governments that are doing the killing, in our name.

So, let’s take a look at our gang. The Western claim that the US and Europe, let alone Israel, want democracy, stability and normality in Iran is a fabrication. The origins of Iran’s postwar tragedy lie in the 1953 Anglo-American coup that overthrew the democratically elected government of Mohammad Mosaddegh, for his audacity to want Iranian oil for the Iranian people. It was then that the US and the UK lost any moral claim as supporters of Iranian democracy by restoring absolute power to the Shah — a venal, autocratic monarch who ran Iran as a feudal fiefdom for Western corporations. To keep him on his peacock throne, the CIA helped to establish and train the Savak, a secret police force so brutal it became a byword for torture. For 26 years, US and UK governments did what they could to deny Iranians any semblance of democracy. A long trajectory of authoritarianism  triggered the 1979 revolution which toppled the Shah.

It was a broad, popular revolution that, initially, mobilized not only Islamists but also liberals, socialists, and communists. However, the secular movements which supported Ayatollah Khomeini and cheered his return from exile in Paris were unaware that Washington had aligned with the most reactionary Islamist factions once it realized the revolutionaries would win. One of the new regime’s first barbarous acts? The rounding up and summary execution of the leadership of Tudeh, the large communist party which had supported Khomeini. This mutual backscratching between Washington and the Islamic regime, during the Cold War, should give pause to Leftists today who labor under the delusion that the Islamic Republic is close to the Left’s anti-imperialist agenda and values.

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The Left must embrace freedom

By Yanis Varoufakis

There is, of course, a reason why it was fairly easy for Western Leftists to be taken in by the anti-imperialist, more populist elements of the Islamic Republic. Contradictions, in which the Left ought to luxuriate, do not come more intense than in the case of the Islamic Republic — a regime that, on the one hand, adopted anti-imperialist language as part of its overarching project to resurrect a fictitious Islamic golden age while, on the other hand, crushing the Left and its emancipatory agenda.

The confusion deepened in light of the Islamic Republic’s greatest strength. In sharp contrast to the Sunni plutocracies, the Shiite movement led by Khomeini demonstrated a certain commitment to the poor and devastated masses of the Muslim world that included not only income redistribution and, at least initially, anti-corruption drives but also genuine support for the Palestinians whom almost all Arab regimes had abandoned by then. All that offered a rare source of emancipatory hope.

It also predictably led to a head-on confrontation with the Islamic Republic’s Sunni rivals. In 1980, incited by Washington and funded by Kuwait, Saudi Arabia and the UAE, Saddam Hussein invaded Iran. If in doubt that Saddam was America’s stooge, recall what happened when, in 1987, an Iraqi fighter plane fired Exocet missiles at the USS Stark, killing 37 American sailors and wounding 21: President Reagan stated “The villain of the piece is Iran” while US diplomats flew to Baghdad to give Saddam absolution. In 1988, Saddam used chemical weapons on Iraq’s Kurdish villages, attacks the US had known about and were complicit in. Years later, after the US invasion of Iraq, a joke circulated in Washington: “How do you know that Saddam had chemical weapons?”, the White House spokesman was asked. “We kept the receipts,” he answered.

Tehran’s anti-imperialist credentials were also bolstered by Israel’s 1982 invasion of Lebanon, which gave birth to a resistance and social movement funded by Iran: Hezbollah. This allowed the Iranian regime to present itself, with some justification, as the only regional power willing and able to protect from Israeli violence against Palestinians in particular and Arabs more generally — while also providing some basic social services for the poor. Moreover, as inequality reached unprecedented heights in the region, especially after the massive increase in surplus labor globally, Iran’s appeal among the masses burgeoned. Naturally, Iran’s neighboring Gulf states were worried and thus joined forces with the United States to “contain” Iran.

By 1991, a Western family feud had led the US to invade Iraq. Saddam was incensed that Kuwait, which at the behest of Washington and the Gulf plutocracies had loaned him much of the money to wage the eight-year war against Iran, was asking for its money back — and increasing its oil output so much that Iraq’s own revenues faltered. Saddam, either misled by the Americans or, because he misunderstood them, thought he had their blessing to deal with Kuwait by invading it. Once American boots hit sacred ground in Saudi Arabia, Sunni fundamentalism led to the formation of Al Qaeda, the tragedy of the Twin Towers, and Bush the Younger’s calamitous invasion of Iraq which, in turn, begat ISIS, another Sunni terrorist movement. All these developments made the Islamic Republic look moderate and relatively progressive: a country that, while glad to support local popular resistance movements that engaged Iran’s regional enemies (in Palestine, Yemen etc.), never directly invaded any other country and which proved pivotal in the fight against Al Qaeda and, more impressively, in the elimination of ISIS.

In view of this rich, tragic history, the Islamic Republic must be understood as a powerful system born out of a decades-long crisis caused by the US and encouraged by Israel. But it is equally important to grasp its political economy which is at odds with its external anti-imperialist stance and hostile to everything the Left stands for. Since the Nineties, privatization in Iran has been in full swing, with the reformist faction envisioning foreign investment and integration into the world market (essentially the European Union and the UK) as the only vehicle for containing its crisis. At the same time, the conservative coalition under the Revolutionary Guards’ dominance established and controlled privatized enterprises, aimed at expansion into regional markets.

After Trump 1.0 ended Obama’s plan to reintegrate Iran into the Western circuits of trade and finance, the conservative faction opportunistically aligned themselves with China and, to a lesser extent, Russia. However, throughout, they have been implementing deregulation and ending subsidies for the poor, provoking spontaneous popular uprisings which demand social justice. Then, the crash of 2008, which saw China emerge as a stabilizing force at a global scale, motivated the conservative faction to turn even more toward China and Russia in the hope of circumventing US sanctions and ameliorating the tensions their own crony capitalism had caused.

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Fast forward to 2022 when the killing of 17-year-old Mahsa Amini, a Sunni Kurd, ignited the “Woman, Life, Freedom” movement. Western commentators, suffering once more from a case of wishful thinking, imagined that uprising to be pro-Western. It was no such thing. Rather, it combined discontent caused, on the one hand, by rising inequality after Iran’s economy drifted toward a neoliberalism with conservative Islamic characteristics and, on the other, ethnic tensions — especially among Kurds.

That rebellion was defeated not merely by brutal suppression but, more importantly, by invoking the fear of the country’s disintegration — the prospect of Iran becoming a new Syria, or a new Libya, which Benjamin Netanyahu craves and has been trying for years to co-opt the US to bring about. That’s why the regime still enjoys continued support from a large segment of the population, including those otherwise opposed ideologically to the regime: they may hope and pray for the end of the Islamic Republic, but they also consider the disintegration of Iran a worse evil than the current regime. Fully cognizant that Trump and Netanyahu can’t and won’t bring on a stable, democratic Iran, the US-Israeli bombs that are now falling upon them result in greater toleration of the current regime — even by its opponents.

And so, here we are today: Mojtaba Khamenei, the son of Ali Khamenei, is now Iran’s new supreme leader. The US and Israel killed his father, his mother, his wife, his sister, and most probably one of his sons. The regime is brutal, unpopular with vast swaths of its own youth, and economically sclerotic. It is also a product of 70 years of Western arrogance and aggression. It is not going to be bombed away. It will not be sanctioned into moderation. What is the Left to do and say in this context?

We must, I suggest, begin by answering the liberal imperialists who ask us: “But what about the women? What about freedom?” To them I say this: the women of Iran do not need F-35 bombs dropped on them by Washington or Tel Aviv. The path to “Woman, Life, Freedom” does not run through the smoking ruins of Tehran. It runs through the defeat of the very powers that have spent 70 years ensuring Iran can never know peace or democracy. The people of Iran must first be liberated from the clasps of the hideous choice between the current regime and a fate worse than Iraq, Libya, and Syria combined.

Our job, as Western Leftists, is to act upon our governments to stop the bombing. To end the sanctions that starve the poor and enrich the regime’s smugglers. To dismantle the propaganda machine that tells us war is peace and occupation is freedom. Then, and only then, can the Iranian people, exercising their own immense power, reclaim their future from both the theocrats and their imperial enablers.

AI’s backward-looking face, weathered and lined with memory, is indeed a bubble about to burst. This side of AI is engaged in standard capitalist commodity production. A ChatGPT subscription is a commodity like any other: like a subscription to The New York Times, a car insurance contract, or a lease on some car. But in January last year Chinese start-up DeepSeek disrupted the AI-commodity market with a free service far less costly to produce and as good quality as ChatGPT. It was then that Big Tech realized their prospects as suppliers of AI-based commodities (or subscription services) were over.

There is now clear evidence that companies such as OpenAI which are in the business of selling AI subscriptions have been excessively marked up. As the costs of Large Language Models (LLMs) increase exponentially, the subscription revenues increase more or less linearly. This is unsustainable and there always comes a moment when the unsustainable can no longer be sustained. At that point, AI’s wrinkly, backward-looking face will sag, maybe die altogether.

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Big Tech are the new Soviets

By Yanis Varoufakis

What about AI’s second face? After the DeepSeek moment fired the starting gun, AI firms began to shift their technologies from the economy’s capitalist market sector to the pre-existing technofeudal economy. Well before LLMs could emulate human-like interaction, cloud capital interfaces such as Alexa, Siri, Google’s Assistant or Amazon’s web-based algorithm had already empowered Big Tech to extract significant cloud rents from the rest of us. Once you entered amazon.com, you exited capitalism. But now AI’s second face allows Big Tech to escalate its extractive powers.

Consider what an advanced AI-powered version of a bot like Alexa will very soon be able to do. Not only will it know you perfectly but it will be able to speak to you in a manner that is virtually indistinguishable to that of a human as well. It will remember everything you’ve ever said, done or wished for, and it will be able to go back years. It will have perfect recall of your whims, musical sensibilities, shopping habits and disappointments. It will keep you company in both good and bad moments. It will be able to predict when one of its recommendations will jar with you. It will take you to the brink of your tolerance without crossing your red lines.

This is light years beyond mere surveillance capitalism, an earlier system where machines spied on you so that advertisers could target their marketing material. With an AI-enabled interface, Amazon, Meta and Google will soon interact with you in ways that today seem as unfathomable as computer scientists found eight years ago the spectacle of AlphaZero teaching itself from scratch how to play chess by itself, shifting beyond all 3,000 years of human chess within 24 hours.

With this kind of power hidden under their human-like bonhomie, Alexa-like AI bots will speedily cultivate in you a neuro-dependence. They will become indispensable to your psyche. Switching to a competitor’s competing bot will be almost unthinkable — closer to a heart-wrenching divorce than to finding another e-shop to buy stuff from. At that point, all hope that market competition has a future dies.

Massive economies of scale are synonymous with natural monopoly — it’s one of the few useful things we teach economics students at university. That’s the reason why we cannot have several water companies competing in the same city, laying down different water pipes that run through our streets and walls. For similar reasons, a handful of Big Tech hyper-scalers own and control the means of production of AI. For any company or startup wanting to build a serious AI capability, accessing these hyperscalers’ infrastructure is not just convenient, but a fundamental necessity. This gives them immense influence over the pace, cost, and direction of AI’s second face.

Forward looking, clear-eyed, expectant and immune to the AI bubble’s bursting, AI’s second face is eyeing paths not yet taken into a near future that we can scarcely imagine. More intriguingly, it is focusing on a realm that has little to do with what we can usefully describe as capitalist markets. We have plenty of proof that this is already happening. A good case in point is Instacart, a corporation which has brought brick-and-mortar groceries into the technofeudal sector, spreading AI-enabled cloud capital across thousands of retailers, of all sizes and localities. The result is a form of price discrimination so extreme that it annuls the most basic features of a capitalist market.

This practice of “perfect price optimization” is now emulated by every major retailer in the United States and beyond. Instacart not only extracts what economists call “consumer surplus” (the difference between the price that the consumer pays and the maximum price the consumer is willing to pay) but, far more importantly, it renders price competition next to impossible. Able to recollect every consumer’s behavioral pattern, it follows a pricing pattern that prevents you from comparing prices across persons or timeframes within, but also across, shops and platforms. As if that were not enough, Instacart enables physical retailers and digital platforms alike to collude — sometimes unbeknownst even to their managers — in ways that the naked eye cannot discern. The system is designed to be unseen, indiscernible; an irresistible solvent of anything that can be described as a market mechanism.

AI’s second face, the technofeudal one, is prevailing and will continue to do so after any bust of the AI bubble. It could not be otherwise. Given a choice between the precarious profits that any start-up, like DeepSeek, can dissolve overnight and the cloud rents that AI-enabled machines can lock in for the long run, Big Tech opted for the latter. Any company that, today, continues to try to profit by supplying AI-based commodities will either have to switch to extracting cloud rents in the technofeudal sector or perish.

What does this mean for us, for humanity’s future? The tech-optimists are convinced that AI will usher us into new vistas of pleasure, productivity and wealth. But I cannot share their cheerfulness.

Here’s why. The economy’s traditional capitalist and AI-powered technofeudal sectors are engaged in a dynamic conflict: value is created in the latter and usurped by the former. When profitability in the capitalist sector rises above some threshold, AI-powered cloud capital overaccumulates in the technofeudal sector and the rate of cloud rent extraction eventually falls. And when the AI-cloud-rent extraction rates fall below some other threshold, productive capital (including AI-driven machines) is drawn to the capitalist sector, thus pushing down the rate of profit. And so on.

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By Nicholas Carr

It resembles a clash between predators and their prey. When the predators feast insatiably on their prey, the prey dwindles causing the predators to starve, eventually. The prey population then recovers only to give the predators another opportunity to gobble them up. Is there an end-state to this cyclical dynamic? I think so: systemic collapse.

The intuition behind my bleak prognosis is simple. Big Tech’s greatest achievement is the success of its machines and AI-algorithms in recruiting billions of us to work for free — posting videos, writing reviews, submitting texts — thus increasing its capacity to extract cloud rents. But what happens as the ratio of AI-driven cloud rents to Big Tech’s wage bill increases? Society’s aggregate spending power falls, the trajectory of the capitalist enterprises’ profit rate dips and, eventually, Big Tech’s cloud rents also decline. The volatility and secular stagnation that was always endemic to capitalism will, in this manner, graduate to a doom loop of collapsing cloud rents and capitalist profits.

That’s the story of AI’s second face and how a stupendous technology with Promethean capabilities will end up, in all probability, Daedalian. In ancient myth, Prometheus personified the hope that technology would be humanity’s enabler. Though Promethean himself, Daedalus, the genius engineer who built the Labyrinth for King Minos to contain the Minotaur, became trapped in his own edifice. Even when he invented flying machines for himself and his son Icarus to escape from Crete, it ended in tragedy. So too today with AI. Promethean engineers invented and developed it only for AI’s second, uglier, face to imprison them — as well as the rest of us — inside a hyper-complex, enveloping, labyrinthine technological system.

And so when friends ask me why I bother with electoral politics, which they know I dislike intensely, I reply that there is only one route from the Daedalian prison to the Promethean ideal: radical democratic politics. “Which means what?”, they ask. It means starting with small regulatory steps, like legislating interoperability or rescinding legislation that heightens Big Tech’s exorbitant power, before moving on to the grander tasks of building a digital monetary commons and re-thinking property rights over data and cloud capital. Only then will we have a shot at turning AI into humanity’s benign enabler.

As a dyed-in-the-wool Leftie, I think I have the right to say this: if Trump is in the White House, it is our fault. If too many Britons blame migrants for a secular stagnation that has nothing to do with them, it is the Left’s fault. If Europe is fragmenting and warmongering, yes, you guessed it, that too is on us. If green investments are despised on an overheating planet, it is because the Left failed to wrestle the green transition from the clutches of Wall Street types who profit from phony pollution markets.

Am I being too harsh on us Leftists? Not really. Big Finance and Big Business did not, of course, need us on their boards to devastate people’s lives in 2008. They did it all by themselves. But we on the Left had the tools to see the crash coming and to push sensible policies afterwards to tend to the wounded majority. Instead, we fell in love with our own voices as we delivered fiery speeches at otherwise splendid gatherings: Occupy Wall Street, Indignados, and Aganaktismenoi. While we wasted our energy debating irrelevant issues, the likes of Barack Obama, Gordon Brown and Europe’s social democrats were concocting — often in our name — schemes to transfer the bankers’ losses onto the shoulders of society’s weakest. In short, we had the opportunity to shield the many from the greed of the few. And we failed, resulting in the surge of nativist proto-fascism that masquerades as unbowed patriotism and realist geopolitics.

But here is the greatest paradox of our era. Though never before has the Left been so weakened and discredited, never before has it been so necessary. The reason is that only the Marxist Left is even interested in rethinking the one thing that can re-align our technological capacities with our need for freedom and prosperity: property rights over machines, algorithms and scarce natural resources.

Where are we at today? Capitalism was defeated in 2008 almost as decisively as Soviet communism was in 1991. Since then, austerity for the masses and state “socialism” for Big Business and Finance inadvertently funded the explosion of Big Tech’s cloud capital: machines that produce no commodities but generate enormous power directly to modify our behavior.

The resulting permanent stagnation reflects the post-2008 Twin Peaks problem: a massive pile of monies (the first peak) that won’t flow into productive investment, and an equally vast pile of public and private debt (the second peak) that such investment could have canceled. Rising discontent and the return of the ultra-Right were inevitable — it’s what happened the last time Wall Street collapsed, in 1929.

A new technofeudal ruling class, using its cloud capital and power to shape our behavior, seized control of markets and siphoned off profits as rents, deepening systemic stagnation. Competitive markets are now infeasible, except in communist China. Across the Western world, capitalist markets are shrinking while cloud capital threatens the very idea of the liberal individual and the neoliberal fantasy that growth could come from shrinking the state. Social democracy is also dead in the water, a sad reflection of how welfare states can never be funded by taxing mercurial tech lords and unhinged private equity outfits who own both our states and the means directly to modify our state of mind.

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As cloud capital develops its AI powers further, it is overriding what remains of our property rights over our thoughts, intellectual output, even our audio-visual image. By privatizing the dollar through stablecoins and the military-industrial complex through the combination of drones and AI, our tech lords have begun to develop a new transhuman ideology — techlordism — which will replace neoliberalism.

Regulation, anti-trust laws, and wealth laws cannot rein in these exorbitant, feudal-like powers. In a world where technofeudalism advances by masquerading as dynamic capitalism, all other ideologies — liberalism, neoliberalism and social democracy — are now as extinct as the feudal ideals of chivalry or the divine right of kings.

The old ideological clash between free-market ideologues and social democrats no longer describes our reality. True political power comes from control over property rights — the only way to make our brilliant new technologies serve humanity is to democratize control over them, particularly in the workplaces where they are deployed. Who else but a revitalized Left can make that case?

But first the Left must regain the trust of a deeply skeptical society. It can only do so by distancing itself from five cardinal sins.

The Left fell into the trap of welfarism once it abandoned its ambition to drive social progress by intervening in the workplace. Having forgotten what makes production tick, social democratic parties ended up as the parties of pensioners. Redistribution is essential in any civilized society, but a society stuck in a welfarist mindset won’t stay civilized for long.

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Then there’s laborism. As William Morris so eloquently warned, the celebration of mind-numbing work as virtuous is stultifying and misguided. Industrial robots and cloud capital, once wrested from the tech lords, must be the Left’s tools for liberating labor from laborism and for steering the masses toward creative, artisanal work that not only satisfies the soul but also produces high-quality stuff.

Green Keynesianism is theoretically splendid but severely circumscribed in practice. As Michal Kalecki predicted decades ago, even if the ruling classes permit the state to boost their aggregate profits through public investments in socially necessary projects like green energy, their dominant strategy is to take advantage of public monies but end Keynesian policies well before the majority benefit from them.

Accelerationism can also be useful in the right context but is a disaster when applied unthinkingly. The idea that, if things get much worse, the majority will come to their senses and rise up to protect their interests, is as deluded as the tech lords’ conviction that we shall all become happy and glorious if their AI-driven cloud capital takes over the planet tomorrow. Preventing the deterioration of society’s circumstances through redistribution and Keynesian policies in the short run is essential as long as the Left does not fall into the trap of seeing welfarism and Keynesianism as permanent solutions.

But perhaps our worst sin has been that which we rose up to defeat but ended up embracing with grim gusto: authoritarianism. Those of us who spent our youth in Leftist circles can recount the horror stories. But the rot began earlier when our precursors, Karl Marx and Friedrich Engels among others, failed to foresee that our powerful prescriptive texts attract disciples and believers. Before long, Leftists abused comrades, built their personal power base, deplatformed rather than out-argued opponents, sought positions of influence within the system they were supposedly fighting against, bedded impressionable students, took control of the Politburo and threw anyone who resisted into some gulag, actual or metaphorical.

Assuming that we are capable of putting these sins behind us, the task ahead is clear: to demonstrate that the radical democratization of workplaces and core economic infrastructures is not merely a radical ideal, but a practical requirement for authentically freer, richer, and happier lives.

Any theory of change must begin with a vision of a future worth fighting for. But it can’t end there. To be useful, the Left must outline the tangible steps it would take to get there — not just tomorrow, or in six months’ time, but in one year or five years from now.

Beginning with the long-term vision, the Left needs to inspire confidence that technology can become a liberator, rather than the handmaiden of exploitation and oppression: that it will forever be as long as machines are owned by the 0.001%. It must, then, illustrate what this means for how corporations function, how money is created and how land and other natural resources are used. To explain fully how these three realms — production, money and land — are to be managed by an empowered demos, would take many pages. Indeed, I had to author a political science fiction novel to outline them.

Nevertheless, the foundations of any long-term Left vision can be summarized in a single word: democratization. First, that means democratizing corporations by means of new corporate laws that incorporate the principle of one-employee-one-share, and one-person-one-vote, alongside citizens’ juries (as opposed to bureaucratic overlords) that would oversee newly democratized corporations. Second, that means democratizing money, by deploying digital payments systems to establish a monetary commons which harnesses our collective capacity to create money. This would be a decisive step toward providing a non-inflationary trust fund for all. Finally, any serious Left must democratize land, and other scarce natural resources, via a new system of land use that divides socialized land into commercial and social zones, using proceeds from the former to invest in the latter.

With production, money and land democratized (but not nationalized), there is no limit to imagining a realignment between humanity’s technological capacities, our collective interest and our personal freedom. Indeed, the only limit is the hard question: OK, even if we agree that this is where we want to go, how do we get there? The answer must include tangible, verifiable goals every step of the way, from tomorrow morning to the next decade or two.

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Why Marx is back in fashion

By Ben Burgis

These steps must include practical solutions to the aforementioned Twin Peaks problem (the transformation of idle cash into productive, non-damaging investments); the termination of fake electricity markets; the revival of our depleted (health, educational, environmental) commons; the task of restraining Big Finance and the technofeudal ruling class; the liberation of swathes of people from the shackles that hold them back; and the misunderstandings that cloud their thinking.

At the level of ideology and prose, meanwhile, the Left must correct the great mistake that, in the first two decades of the 20th century, caused it to veer off into a mire of authoritarianism and, inevitably, failure. Though the Left has its roots in the emancipatory movements of the 19th century — from women’s liberation to the trades unions — sometime around the Great War both the communist and the social democratic traditions ditched liberty in favor of something nebulous and ill-defined that Karl Marx rightly rejected: equality. In this way, the Left gifted freedom to the liberals (who only cared about their freedom, not that of the majority) and itself drifted into authoritarianism and, eventually, ill-repute.

The Left must now ditch airy-fairy notions that it cannot define, like fairness and equality, and instead proclaim as its highest calling the universal freedom from others’ extractive powers — powers that, in modern society, stem from highly skewed property rights. Put slightly differently, property rights must be the main plank of the Left’s program, along with the defense of freedom from concentrated (corporate or state) power and intolerance (including the intolerance of the intolerant).

In this technofeudal world, where capital has triumphed by mutating into a variant that controls our minds directly, we do not even own ourselves. As the 21st century’s dystopia unfolds, a libertarian Marxist mindset is the Left’s last chance to be relevant and useful to a species struggling not merely to reform a problematic system — but, ultimately, to survive as a species capable of both freedom and prosperity.

At its very beginning, capitalism was underpinned by faith in competitive markets. In the liberal fantasy, spearheaded by Adam Smith, bakers, brewers and butchers labored within markets so cut-throat that none could make more money than the bare minimum necessary to keep their small, family-owned businesses running. This in turn provided us with our daily bread, ale and meat.

Then came the second industrial revolution and the conglomerates whose market power would make Smith weep with joy. This was the era of Big Business and the “robber barons”. And so another — neoliberal — fantasy was created, to justify the new big beasts that were now monopolizing almost every market that mattered. Joseph Schumpeter, a former Austrian finance minister who made America his home, was the new creed’s most effective advocate. Progress, he argued, is impossible in competitive markets. Growth needs monopolies to fuel it. How else can enough profit be earned to pay for expensive research and development, for new machines, new product lines and all the paraphernalia that helps innovation take root? To monopolize markets, conglomerates need to dazzle us with remarkable new products that kill off the competition, like Henry Ford’s Model-T or Apple’s iPhone. Should we worry about all that concentrated power? No, Schumpeter reassured us. Once they reach their pinnacle, these monopolies get flabby and complacent and, eventually, they’re brought down by some upstart: one example being Toyota’s toppling of General Motors.

More recently, Peter Thiel, Palantir’s co-founder, said something that many thought was a restatement of Schumpeter’s dictum: “Competition is for losers!” While the pioneers of Big Business like Thomas Edison and Henry Ford would have agreed wholeheartedly, what Thiel was implying went beyond their wildest imagination. It went much further even than Schumpeter’s pseudo-Darwinian idea that progress comes through the rise and fall of monopolists in an endless struggle for existence.

What Thiel was saying is that today, winners do not just kill off the competition to monopolize a market. No, they keep going until they kill the market itself and replace it with something quite different: a kind of cloud fief that lacks all of the ingredients of a proper market — indeed that lacks all of the advantages that liberals and neoliberals alike recognize in the machinery of decentralized markets. In fact, today’s winners —the Magnificent Seven, plus Thiel’s own Palantir — are reviving an economic model that all of us thought dead and buried after the fall of the Soviet Union: economic planning systems that match buyers and sellers outside anything that can be usefully described as a market. 

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Europe’s century of humiliation

By Yanis Varoufakis

Gosplan was the Soviet Union’s State Planning Committee, the engine room of its command economy. Its remit was to match the supply and demand of critical resources (oil, steel, cement) but also consumption goods (food, clothes, appliances), without using market prices. Once buyers and sellers were matched, prices were assigned with a view to achieving political and social objectives (such as to ensure basic affordability, or subsidize certain industries) — not to balance markets. 

Gosplan was disbanded immediately after the red flag was lowered over the Kremlin on Boxing Day of 1991, but it is now back. Where? In the algorithms powering Jeff Bezos’s Amazon, Peter Thiel’s Palantir and the rest of Big Tech’s digital platforms that pretend to be, but are not, markets.

Before you protest the audacity of my claim, think of what happens when you visit Amazon. Unlike when you visit a shopping mall, either with friends or mingling with strangers, the moment you follow the link to amazon.com, you exit the marketplace and enter a space of pristine isolation. It’s just you and Jeff Bezos’s algorithm. You type, say, “espresso machines” into the search box and the algorithm matches you with a number of vendors. However, to achieve what it was coded for, the algorithm had started working months, even years, earlier. 

Over that period, you will have revealed to it many of your whims and desires through your searches, purchases, clicks and reviews. Using these cues, as well as data from other sources, the algorithm has trained you to train it to know you even better, enabling it to advise you on what books, music and films to buy. It has already won your trust. So, now that you are in a hurry to replace your broken espresso machine, the chances are that you will choose one of the top search results it has given you. 

The algorithm knows your spending pattern. It knows how to guide you to the espresso machine with the highest price you are prepared to pay, all in order that Amazon can collect up to 40% of it the moment you click the purchase button. It is an extortionate cut, but the espresso machine’s makers tolerate it, because they know that if they don’t, their company will never appear in the top search results of anyone prepared to pay for their product. As AI improves, this power to manipulate your behavior increases — and this is why Big Tech’s valuations are going through the roof.

This is nothing less than a capitalist, privately-owned, super high-tech reincarnation of the USSR’s Gosplan. Amazon’s software matches you with particular vendors and bans you from talking to any seller or even from observing what other buyers are doing — unless of course it calculates that it serves its own purposes to let you see a small selection of them. As for the price you pay, this follows (rather than precipitates) your being matched with a seller. Rather than being the variable that equilibrates demand with supply, prices in Amazon fulfill another role: that of maximizing Jeff Bezos’s cloud rents.

In this sense, prices in Amazon and other Big Tech platforms function in a manner far closer to Gosplan than to any farmers’ market, money market or shopping mall you have ever experienced. In fact, had the Soviet leaders lived to witness the workings of Silicon Valley’s Big Tech, they would be kicking themselves, lamenting that it was American capitalists who perfected their Gosplan model, complete with a surveillance system that would make their KGB henchmen green with envy. 

Gosplan failed to turn into a success story as it lacked Big Tech’s greatest weapon: cloud capital, that is, the algorithms, data centers and optic fiber cables working as an integrated network to train you to train it. As you impart your data, cloud capital learns how to input desires into your mind and then satiate these desires by selling you stuff within its privately owned version of Gosplan. 

But, is there really a difference — I hear many of you ask loudly — between Thomas Edison and Jeff Bezos? Are they not cut from the same cloth of megalomaniac monopolists seeking to dominate markets and our imagination? Yes, despite their similarities, there is a difference — and it is gigantic. Edison’s and Ford’s capital was productive. It produced cars, electricity, turbines. Bezos’s cloud capital produces nothing, except the enormous power to encase us in his cloud fief where traditional capitalist producers are squeezed for cloud rents and we, the users, provide our free labor. With every click, like and review, we enhance the power of cloud capital. 

Once upon a time, an old Trotskyite told me that the Soviet Union, in the name of socialism, had created a form of industrial feudalism. Independent of whether he was right or not, his comment is pertinent today in relation to Big Tech. Come to think of it, while the trading process on platforms like Amazon is reminiscent of the USSR’s Gosplan mechanism, it is also the case that the enormous sums that Amazon, Uber, Airbnb etc, charge the actual producers of the goods and services peddled on their sites are akin to the ground rents that the landed gentry used to charge their vassals — except that, here, they are cloud rents that accrue to the owners of cloud capital. So, just as the Soviet Union generated one kind of feudalism in the name of socialism and human emancipation, today, Silicon Valley is generating another kind of feudalism — technofeudalism, I have called it — in the name of capitalism and free markets. 

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The parallel extends to the state. The USSR was meant to be a workers’ paradise in contrast to the USA whose raison d’être was to be a haven for capitalist producers. It turns out that both promises were false. As Big Tech’s cloud capital accumulates and concentrates into fewer and fewer hands, states are becoming dependent on corporate techlords. By outsourcing core functions — archives, health data, even military software — to rented cloud infrastructure, governments lease back their own operational capacity from Amazon Web Services, Microsoft, and Google. This dependency enables a new dimension of technofeudal power.

From this perspective, just as the Soviet Union was a feudal-like industrial society pretending to be a workers’ state, the United States today is performing a splendid impersonation of a technofeudal state, with repercussions that extend to every realm of state activity, including health services, education, the tax office, our borders and faraway battlefields. 

In Ukraine and Gaza, and along our militarized borders, cloud capital is trained to extend its reach. Amazon’s AI tool Rekognition is used by law enforcement, including ICE, while Palantir’s vast surveillance software runs on Amazon’s cloud. Through Project Nimbus, Amazon and Google provide the Israeli military with advanced cloud and AI capabilities, reportedly enabling rapid, AI-driven targeting in Gaza with minimal human oversight. 

Let us briefly return to the comparison with the early 20th century’s original monopolist capitalists. Whether we admire or abhor the Magnificent Seven’s stock market valuations, it is helpful to keep this in mind: the old capitalist giants, the “robber barons”, actually produced things. The new technofeudal lords produce a new social order. They have replaced the invisible hand of the market with the visible, algorithmic fist of the cloudalist. 

Free-market enthusiasts have nothing to celebrate and much to regret. But it will take a brave soul amongst them to stare reality in the face. Just like pro-Soviet Marxists remained in denial that the Soviet experiment had failed for many years after 1991, so  free-market ideologues refuse to see that capitalism begat a form of capital — cloud capital — that replaced markets with something out of the Soviet past. In the process, it has killed capitalism. 

According to the logic of the radical center, politicians are easily lured by a siren’s song: the electorate’s demands for higher spending and lower taxes. And so they must bind themselves to a Ulysses pact. Homer’s hero tied himself to his ship’s mast and ordered his sailors to plug their ears with wax while sailing past the sirens’ coast. Similarly, centrist chancellors tie themselves to the mast of the Bank of England and the OBR — whose technocrats, their ears stuffed with the wax of economic models, are only too happy to run the economy on our behalf.

The problem with this centrist delusion is that, unlike meteorology or other hard sciences, there are no real experts to turn to on macroeconomic matters. As John Kenneth Galbraith once put it: “[t]he only function of economic forecasting is to make astrology look respectable.” There is a reason why not once in the history of capitalism have economic models predicted any major turning point: unlike the weather, which does not give a damn about our predictions or theories, what we call “the economy” is profoundly influenced by our predictions and theories regarding “the economy”.

In other words, economic models are constitutionally incapable of predicting economic phenomena reliably. Consider the Bank of England’s econometric models, which predict every quarter that inflation will fall below the Bank’s maximum target of 2% by the end of the year. These models are built on the assumption that inflation will revert to 2%, which is why they predict that it will. Mistaking an assumption for a forecast is a mistake that would be laughable if it were not so dangerous. And it is not just that.

If you look under the hood of the Bank of England’s models, you will find something else that is very strange. There is an assumption that there exist well-defined relationships linking the rate of interest with investment and with inflation: for example, if interest rates jump to, say, 6%, investment will fall by, say, 1% and inflation by, say, 0.8%. Unfortunately, these relationships are not just difficult to quantify — they are, in fact, impossible to define. The reason is that prices (and inflation) depend far more on variables that the Bank of England neither observes nor controls (such as the fluctuating monopoly power of businesses or overseas energy prices) than on the overnight interest rate that it controls. Similarly with the OBR’s medium- and long-term projections of growth: like sausages, if you knew how they were made, you would not want to touch them.

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By Yanis Varoufakis

This is why Rachel Reeves’ predecessors took the Bank of England and OBR forecasts with a massive pinch of salt, seldom hesitating to break their own rules when their best-laid plans were derailed. But not Reeves: paralyzed by the specter of Liz Truss re-emerging from the netherworld of financial catastrophes, the Chancellor is not only choosing to remain within her self-imposed straitjacket but is also reluctant to loosen its straps even a little to give herself some room to maneuver. Two examples illustrate this self-defeating reluctance.

First, Reeves claims she has no alternative than to raise taxes by around £30 billion, or 1% of national income, annually. Why? Only because the OBR says so. And why does the OBR say this? Because, in an attempt to repair its awful reputation for overestimating growth, the OBR suddenly downgraded its productivity growth estimate for the next decade. In short, taxes will go up because a panel of experts, known for their appallingly wrong forecasts, are now forecasting that their forecast was wrong.

If the OBR were similar to the Met Office, and the economy the weather, perhaps Reeves would have cause to stick to the OBR’s advice. But productivity depends on investment, which depends on the Chancellor’s choices: its path cannot be predicted by the OBR independently of the Chancellor’s policy choices. By deferring to the OBR to raise new taxes to an arbitrary number, Rachel Reeves is abdicating her responsibility for the economy.

Second, let’s say, for argument’s sake, that she really must find an additional £30 billion of so-called fiscal space annually. Why raise taxes when she can simply end the £34-billion annual payment the Treasury advances to the City of London for precisely nothing in return? As I explained earlier this year, Reeves has actively allowed the Bank of England to damage the Treasury’s bottom line in two unconscionable ways. By selling off UK Government bonds at a lower price than the Bank purchased them for, she incurred an accounting loss that the Treasury is now plugging and increased the Government’s borrowing costs. Additionally, by choosing to pay private bankers the higher interest rate on every pound they keep in their Bank of England reserve account, the Government has been subsidizing the bankers to avoid lending out billions to the private sector.

Could Reeves have prevented this madness? Is she not bound by the independence of the Bank of England? In the same way that Gordon Brown granted independence to the Bank, Rachel Reeves could have restricted its powers: by insisting it adopt two of the European Central Bank’s sensible policies. Firstly, hold the Bank’s stock of UK Government bonds until maturity to avoid losses from selling them cheaply on the secondary bond market. Secondly, pay interest to bankers only for a small portion of the money they deposit.

What if the Bank of England refused to comply with the Chancellor’s demands? Then she could respond by passing a bill that prevents the Treasury from reimbursing the Bank of England for such self-inflicted losses. Would this not cause the Bank of England to seek insolvency? Of course not. Central banks are not like private banks: as long as they issue the state’s currency, they cannot go broke even if they have negative equity for years on end.

Instead of confronting the Bank of England and showing less deference to the OBR’s predictions, Reeves resorts to acts of total self-sabotage: allowing bracket creep to tax more people whose purchasing power has shrunk; penalizing those who sacrifice salary for future pensions; and impeding the green transition with an absurd per-mile tax on electric vehicles.

The worst part is that Reeves has forced us to debate matters that do not matter, such as foolish fiscal rules, while ignoring those that do. Since at least the 2008 financial crisis, Britain has been caught in a terrible situation of low investment, low wages, low productivity and, crucially, low expectations. Every government since 2008 has failed in its one key task: to convert the vast sums of money sloshing around in the City into productive investments.

For 17 years now, this failure has exacerbated the country’s “finance curse”. Britain is plagued by a process whereby high liquidity and low investment bolster Britain’s assetocracy, draw more foreign capital into the City (which is not invested in manufacturing), increase the UK’s current account deficit (a consequence of growing wealth disparities and declining domestic manufacturing), and cause even greater capital inflows to finance it. And so on. How can this vicious cycle be broken without causing a breakdown in either public confidence or the City?

What the Liz Truss debacle demonstrated is that Britain needs a more political government. To fund the production of things Britain desperately needs — such as green energy, cloud capital, a capacity to build infrastructure well, economically and on time — requires raising some taxes and issuing debt so as to crowd in the private money that has been hitherto reluctant to fund anything socially worthwhile. Sadly, Rachel Reeves, along with Keir Starmer, concluded instead that Britain needs less politics and more rules of the type that reality is bound, sooner or later, to violate.

Turning from Reeves’ sins of commission to her sins of omission, here is an example of what Labour should have done upon winning office. The Government should have established a national investment bank (NIB) to finance green and advanced technology enterprises to the tune of no less than 3% of national income (or around £90 billion) annually. The money would not come from the sale of UK Government bonds but from bonds issued by NIB itself, to be repaid not from taxation but from the future profits of the green projects it funds. All it would take for NIB bonds to sell like hot cakes would be an announcement by the Bank of England that it is standing by, ready, if need be, to purchase these bonds on the secondary market.

By now, Reeves should know that it is foolish to allow fiscal rules and narrow cash calculations to prevent necessary enterprise. “Anything we can do, we can afford,” J.M. Keynes said in 1942. The problem in the UK today is that, after decades of reducing the state’s capacity to do things, there is little that can be done well. Only by investing public money can Britain’s productive frontier expand again, drawing in private investment in pursuit of common goals.

Development and prosperity will not come because Reeves peppers every speech with a hundred mentions of the word “growth”. It will not happen because she appeases the City by continuing to sign bankers’ welfare checks at the behest of the Bank of England. And it certainly won’t transpire if she remains determined above all else to prove her fiscal orthodoxy to conservative critics who will never give her the light of day anyway. Mindless fiscal rules will only worsen the country’s stagnation.

Across the globe, the nationalist Right, from Elon Musk, Benjamin Netanyahu and Donald Trump to Giorgia Meloni and Britain’s Daily Telegraph, lionized him. Niall Ferguson, the financial oligarchy’s court historian, declared a “man-made miracle” in the making. For a few brief months, as Argentina’s inflation rate plunged from its peaks, and even the poverty rates seemed to decrease, the chorus of fanboys grew deafening. Until everyone fell silent.

Today, the miracle has been exposed as a mirage. Argentina’s economy has nose-dived and its peso is in a death spiral, with a desperate $20-billion lifeline from the US and yet more rescue loans from the IMF keeping the Milei show on the road until the forthcoming mid-term elections. Closer inspection of the poverty reduction sub-miracle also reveals a mirage: the only reason the relative poverty index dropped was that median incomes had fallen faster than those at the bottom with the result that that fewer people now count as poor. The situation in Argentina is what you would call a meltdown — but is it really a surprise?

Milei’s explanation is that he was undermined by the poisonous casta and its Leftist handmaidens. The alternative explanation of many of my Leftist comrades is that we are witnessing the inevitable failure that comes when libertarian ideology is put into practice. But I don’t buy either explanation. The truth is, I believe, far simpler, more sinister and depressingly familiar. Milei never really broke with Argentina’s sad oligarchic practices of the past. He merely rebranded a type of heist practiced by a long succession of his predecessors — from Peronist Carlos Menem and anti-Peronist Fernando de la Rúa to hapless Adolfo Rodríguez Saá, whose presidency lasted a mere seven days, and, more recently, neoliberal Mauricio Macri who now supports Milei. While Milei used libertarian narratives successfully to distance himself from these people, his actual policies fail the most important libertarian litmus test.

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Britain’s Thatcherite doom loop

By Yanis Varoufakis

Before you, dear reader, dismiss me as a Marxist (that I admittedly am) intent on dismissing a political opponent’s success as a dismal failure (something I avoid like a mortal sin), let me put it to you in simple, libertarian terms. If you (unlike me) truly believe in the markets’ superior wisdom, and want to rid Argentina of political constraints placed on the market mechanism, which market do you liberate first? The money market, surely. Which price distortion do you drive your chainsaw through first? The fixed (or bounded) exchange rate, unquestionably. And what is the last thing you do? Precisely what Milei did: borrow zillions of dollars, pile them up on top of an already unbearable heap of public debt, to prevent the money market from choosing freely the exchange rate of your currency.

Why did Milei do this? Why did he break his promise to neutralize, even abolish, his central bank and, instead, use it to prop the peso up to levels that the free market considered ruinously high? Milei’s answer is that, had he not defended the peso, the prices of imported goods would rise, thus undermining his fight against inflation. Maybe so. But that was the argument of previous Argentinian presidents whose legacy Milei’s chainsaw was meant to pulverize. A libertarian would never espouse that logic, which is in my view largely responsible for Argentina’s never-ending crisis.

In other words, if you truly believe that prices for medicines, bread, petrol and iPhones must be left to the ruthless but ultimately wiser forces of demand and supply, you must surely believe the same thing about the price or exchange rate of the peso. You would surely believe that pricier imports would help the peso to recover automatically and strengthen your prized disinflation process in an organic, rational manner.

As a libertarian, Milei should also know that propping up the peso is a fool’s wager. When your central bank’s dollar stash runs out, you need to do what no self-respecting libertarian does: enter into an unwinnable chicken game against merciless financiers who can always amass a war chest larger than any credit card the IMF or US Treasury Secretary Scott Bessent will provide you with. Bessent knows this better than anyone: as George Soros’s deputy, the pair of them broke the Bank of England playing exactly this type of game.

Unwilling to assume that Milei is a fool, the only remaining explanation is that he knew damn well what he was doing. Argentina is a highly unequal society combining mass poverty, a sophisticated polity, and an antiquated industrial sector alongside a rich, highly competitive export-oriented agricultural and mineral sector whose dollar proceeds allow first-world living standards to a small segment of society. Its oligarchic segment would love it if the peso were replaced, as it was in Ecuador, with the dollar, so that their domestic assets could be infinitely transferable to New York or Geneva. Otherwise, they demand a strong peso whenever they feel like liquidating a domestic asset and transferring its value abroad. Argentine Presidents have seldom failed to do this.

In 1991, Domingo Cavallo, President Menem’s Economy Minister introduced the so-called “Convertibility Plan”: pegging the peso to the dollar on a one-for-one exchange rate while borrowing enormous quantities of dollars to defend it. The artificially high peso value crushed exports, setting off a peso doom loop that led to a $40-billion IMF loan in 2000. Sound familiar?

During Menem’s presidency, Argentina’s ruling class knew that it was only a matter of time before those loans ran out and the peso crashed. So, they indulged in “carry trade”, borrowing pesos locally, converting them into dollars at the artificially high exchange rate, and wiring the dollars abroad. The longer the inevitable devaluation was delayed, courtesy of the burgeoning dollar debt, the more risks they took by buying domestic assets in pesos to liquidate a little later — hoping to benefit from the runaway domestic inflation before the crash came. Between 1998 and 2001, when the peso dropped like a stone, $70 billion was transferred out of Argentina by the very few, with a gigantic dollar burden of more than $100 billion falling on the impecunious multitudes and causing a humanitarian crisis.

More recently, something similar happened under President Mauricio Macri. After borrowing heavily from international markets to ingratiate himself with foreign creditors (who had bought Argentinian debt for pennies and demanded dollars) and maintain a façade of stability founded on an overvalued peso, Macri’s administration was forced to secure the largest standby loan in IMF history, $56 billion. It proved sufficient to bolster the peso’s value for long enough for institutional investors and the local oligarchy to complete the same ol’ heist: liquidate assets and transfer the dollars abroad.

As a result, Macri lost the 2019 election to Peronist Alberto Fernández whose government restructured its debt. While the peso’s value collapsed and inflation raged, the mechanisms remained the same: using external loans to facilitate an orderly exit for international capital at the potential expense of the domestic population did not end.

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Europe’s deadly debt spiral

By Wolfgang Münchau

That’s when Milei entered the scene. Promising to drive his chainsaw through the corrupt practices supporting this type of heist, he did the opposite: he followed the heist script to the letter, but with a chainsaw as its new logo. His so-called libertarian revolution was, in reality, a highly disciplined operation to distort the markets in the service of a time-honored oligarchic ruse. Raising new, unpayable dollar debts to effect a money market manipulation, he created yet another window for the wealthy and the well-connected to liquidate assets and move capital abroad at a favorable rate. The result will be to heap unfathomable costs, once the predictable collapse happens, on the shoulders of the weakest of Argentinians who had already been further weakened by Milei’s earlier austerian cuts.

But why this unprecedented, vicious austerity of Milei’s first months in office? If he was going to push public debt through the stratosphere to prop up a currency that would crash-land anyway, what was the point of his chainsaw slashing of government departments, the evisceration of social welfare, and the reduction of infrastructure spending to zero (the silliest form of austerity)? In his mind, creating a primary budget surplus at all costs would demonstrate to bond vigilantes and currency traders his fanatical determination to defeat inflation so that they would help him maintain the peso’s value just a little longer. It was, in short, a scorched-earth policy to buy time for the same heist (bolster-liquidate-transfer) that has made Argentina fail again.

On a personal note, if I may, I am the last politician who has the right to judge another for sporting a leather jacket and appearing, almost out of nowhere, with an agenda of radical change aimed at ending a doom loop of unpayable debts caused by an unsustainable currency. But I would be remiss if I did not draw the reader’s attention to the real parallel: that of Milei to my prime minister at the time, in 2015, who, though never seen in a leather jacket, also used a radical (albeit Left-wing) language to inspire a population before ending up serving the local oligarchy perfectly well through the adoption of the sad ol’ policies of his predecessors.

Like in the case of my former prime minister, whose true legacy was a betrayal of the Left’s values, Milei’s true legacy is not freedom, but a country stripped even more bare than before. He had an opportunity to try a libertarian “single shot” experiment but he, instead, used it up to facilitate yet another fire sale of Argentinian assets. Had he stuck to his libertarian guns, we would have at least had the pleasure of observing a natural experiment by which to judge whether libertarianism (contrary to what I believe) can deliver any goods at all. Milei’s subservience to the Argentinian ruling class denied us even this small mercy.

And so, the global search for authentic alternatives to the depressing recapitulation of oligarchic practices continues.

While the current anxieties over the finances of the British state are nowhere as acute as the market tantrum that toppled Liz Truss three years ago, there are important similarities. In the days preceding the rise of Liz Truss and her government’s notorious mini-budget statement, the then $24-trillion (now $29-trillion) US Treasuries market, whose animal spirits decide whether global capitalism breathes or chokes, had already entered what one financial analyst called a “vortex of volatility” not seen since the crash of 2008 or the first days of the pandemic. Not only had the yield on the US government’s benchmark 10-year bond risen sharply but, far worse, a large number of investors had recently stayed away from an auction of new US debt.

Things were not better across the Channel. Days before the Truss government’s fiscal implosion, the European Systemic Risk Board had issued its first-ever general warning. Established by the EU after the 2008-09 crisis, the body effectively confirmed that Europe’s financial markets had been sucked into the American-born volatility vortex. The continent was reeling. Electricity providers faced bankruptcy, Germany’s mighty manufacturing industry was shutting down as natural gas evaporated, and public and private debt was climbing rapidly.

Into this maelstrom, Liz Truss and her Chancellor, Kwasi Kwarteng, chose to unleash their pseudo-Thatcherite rebellion. Its centerpiece was a package of vast, unfunded tax cuts for the very rich, sugar-coated with condescending encouragement for the precariat to work harder — perhaps one day to earn a tax cut of their own. Yet, it was not this blatant class war, wrapped in Reaganite rhetoric, that ultimately doomed them. The pre-existing transatlantic panic had already guaranteed their mini-budget would trigger interest rate hikes. Against that backdrop, Truss’s fatal error was a lack of establishment etiquette: sacking a top Treasury mandarin while displaying a less-than-sterling obsequiousness toward the Bank of England. Consequently, when government borrowing costs did rise, the discomfited mandarins at the Bank and the Treasury took just a moment longer to react than they might have — a deliberate delay, and a lasting lesson for politicians on both sides of the aisle, not to mention Nigel Farage’s Reform, the revitalized Greens and the new socialist party Jeremy Corbyn and Zarah Sultana are putting together.

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Is Nigel Farage a man of the people?

By Terry Eagleton

Today, Liz Truss is rightly condemned for a trickle-down growth strategy that was never going to work and her dismal failure to smell the financial panic already souring the air before she took power. Her defense, that her downfall was engineered by the Treasury and Bank of England establishment, contains a grain of truth. But this begs the question: if her plan was truly in keeping with Thatcher’s legacy, why did those same institutions never stage a coup against her idol, yet did so against her? The utterly unconvincing explanation is that the Treasury and the Bank have since turned socialist, “woke” etc. A simpler truth is that Liz Truss is no Margaret Thatcher.

Thatcher grasped the dirty secret of trickle-down economics: only a sliver of tax cuts for the wealthy ever finds its way into productive investment. When the masses lack spending power, big business funnels its windfalls not into factories or innovation, but into share buybacks to inflate stock prices and executive bonuses, or into speculation in financial and property markets. Only one force could keep this vicious cycle from seizing up entirely: the state. And so Thatcher used the power of the state to feed the financial beast with public wealth.

Thatcher’s growth was achieved not through organic investment, but by liquidating public capital. Her governments directed society’s common wealth — council houses and utilities (gas, electricity, water) — into the financial markets at discounted rates. The result was less a triumph of free-market theory and more the mass liquidation and transfer of public assets into the City’s circuits.

The UK has operated on Thatcher’s business model ever since. Even the Blair/Brown government, which used tax revenues from the City to fund public services, the NHS mostly, presided over a continued erosion of the UK’s productive capital. Far from reversing Thatcher’s financialization, Labour accelerated it by dismantling the remaining regulatory constraints on finance and injecting the profits from newly deregulated public services (mostly the so-called Private Public Initiatives) back into the City’s recycling mechanism.

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Rachel Reeves, the pound shop George Osborne

By Yanis Varoufakis

Then, in 2008, the vicious cycle of financialization collapsed under the weight of its own hubris. Immediately, the Bank of England joined forces with the Treasury to bail out the City. To this splendid example of socialism for the rich, George Osborne added austerity — which, by crushing aggregate demand, extinguished any remaining spark of investment in Britain’s productive capacity while, all along, the Bank of England’s money printing was inflating the emergent assetocracy.

Today, we should be under no illusion: growth remains stubbornly immune to the tax rates, low or high, imposed on the highest earners. As Paul Krugman has demonstrated, neither Ronald Reagan’s tax cuts nor Bill Clinton’s tax increases altered America’s income trajectory in any meaningful way. More recently, James K. Galbraith showed how the skillfully curated fantasy of trickle-down economics paved the ground for Donald Trump. In Britain itself, we observe that the output per worker is trailing Germany’s by around the same percentage as it did in 1979.

And there lies Liz Truss’ tragedy: she tried to do a Thatcher in an era when the British state had run out of silverware to pawn in order to feed the assetocracy Thatcher’s revolution had brought into being. Lacking Thatcher’s access to plentiful public assets to be injected into the financial sector, and with the Bank of England too spooked by inflation to print more money to revitalize financialization, Truss ended up trying to achieve the impossible.

Paradoxically, Rachel Reeves, the current Chancellor who aimed to project the precise opposite of the Truss-Kwarteng image, and who bends over backwards to please the Treasury and Bank of England mandarins, is haunted by the very same specter: a drastic inability to challenge the assetocracy. This condemns her to a grand failure, as she strives hopelessly to feed the same beast without any public assets left to liquidate. And all that during another period of global financial anxiety over, this time, the solvency of the entire West.

The result is a paradox: though the UK remains a rich country — immune to a Greek-style solvency crisis or an IMF bailout — its political elites are determined to keep feeding the very assetocracy they created. This guarantees a nation trapped in a low-investment, low-wage, low-productivity, low-expectations equilibrium. After four decades of this gilded stagnation, a collective discontent has built up — a frustration that remains hard to vent because most who feel it cannot clearly see its source.

In this equilibrium of hopelessness, with the Labour Party unwilling to challenge — let alone dismantle — the assetocracy, the inevitable has occurred. Mirroring the rise of demagogues in Thirties Europe, a skilled populist has surfed the gathering wave of discontent, channeling it toward the migrant, the Muslim, the “other” — who are blamed for the failures of the ruling class. Nigel Farage, perhaps the most successful British politician since Churchill and Attlee, has thus trapped the nation in a largely irrelevant debate over small boats and asylum hotels. This cleverly obscures the only question that matters: how to slay the assetocracy that depletes Britain’s collective wealth, leaving the citizens of a rich country to lead poor lives, consumed by despair.

Could Farage’s Reform possibly be the party to starve the assetocracy? A quick glance at its unfunded promises and sycophantic deference to the City makes the Truss-Kwarteng agenda seem a model of fiscal probity and independence from finance. Only yesterday, Nigel Farage had a chance to outline his growth plan for Britain at his party’s conference. In an otherwise ebullient speech, replete with Truss-like digs aimed at the Bank of England, the Treasury and net zero policies, he chose to say absolutely nothing on how he plans to tackle Britain’s stagnation. In other words, if Reform is the answer, then the question was not only cruel — it was irrelevant.

But where does this leave us? What about the progressive side of politics where a faint renaissance is stirring, marked by Zack Polanski’s rise to lead the Greens and the tentative first steps toward a new socialist party by Jeremy Corbyn and Zarah Sultana? While it’s still early days, to make a tangible difference they must first find common ground — not the easiest of tasks amongst my side of politics! Moreover, they must want to aim at becoming popular while shedding populism — which, in my definition, means caressing all ears, promising all things to all people.

What this means is that they need to explain to voters that social and ecological progress cannot be achieved costlessly — that some people, for whom the assetocracy has been a boon, will lose privileges. More specifically, they need to confront two formidable questions: how will a progressive government engineer a managed but sharp decline in asset values (including people’s homes) so as to redirect resources from unproductive speculation to productive investment? And, how will public investment result in technologies and jobs that humans and nature need in an era dominated by technofeudal lords?

In retrospect, the trials and tribulations of Truss and Kwarteng and now Starmer and Reeves were mere symptoms of a broken business model that begat an unsustainable assetocracy. If it is not dismantled in a rational, managed manner, the events of three years ago will recur, albeit in slightly different forms, again and again.

Last month, broken and defeated, the European Commission sent its top diplomat, Ursula von der Leyen, to a Trump-owned Scottish golf course to sign a similarly shameful treaty. They called it a trade deal, too, to conceal how Europe gave the US President everything and received nothing but humiliation in return. Remarkably, unlike China in 1842, Europe succumbed not to defeat in battle, but to a mere few months of tariff waterboarding — a torture technique that foolish European leaders, inspired by hapless US Democrats, once dismissed as TACOS (“Trump Always Chickens Out”).

Though Europe’s poets will have nothing lyrical to recite about the humiliation that will cast a shadow for decades upon the continent, its politicians have already confessed to it. A “dark day”, in the words of François Bayrou, the French prime minister. An “admission of weakness”, cried out Michel Barnier, the European Union’s Brexit negotiator, who should know a thing or two about negotiating from a position of supreme arrogance.

The details of the EU-US trade deal are truly embarrassing for Europe. While US goods will be exported to Europe tariff-free, an across-the-board 15% tariff will be slapped on European exports to the United States, with a whopping 50% on steel and aluminum exports. And that’s only the beginning.

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Why the centre will not hold

By Yanis Varoufakis

Europe committed to cancelling all actual or planned cloud taxes on Big Tech, and then threw in a massive tribute to appease Donald Trump: $600 billion in fresh investments into the US economy, and $750 billion in fracked US oil and gas by the end of 2028. That is, a gargantuan check of $1.35 trillion — without including the countless billions in US-sourced weaponry that European governments are on the hook for (if they are to fulfill their Nato defense spending pledge).

By issuing her new promises, von der Leyen has overlooked the key lesson that Europe should have learned from President Trump’s first term: failing to offer Trump large sums of money may be dangerous, but making promises that cannot be delivered is infinitely worse.

Besides the fact that the European Commission cannot compel private companies to send their cash to America, there is another snag: neither the promised money nor the requisite capacity exists. German carmakers and chemical companies are, of course, already investing in the United States to bypass Trump’s tariffs, but nowhere near the promised $600 billion in the next two and a half years. Even worse, the pledge to buy $750 billion worth of US energy ($250 billion annually over three years) is pure fantasy: the EU’s annual energy expenditure falls far short of that, not to mention that US frackers do not have the capacity to sell Europe so much oil and gas even if the Europeans were willing and able to buy it.

Doesn’t Trump know this? He does, of course. Has he forgotten Jean-Claude Juncker’s broken promises? No one remembers these things as well as this US president does. You can see it in his eyes. He is loving it. It’s his golden opportunity to bludgeon a European Union that he has loathed with undiminished passion for so long. In addition to shrinking America’s trade deficit, and pocketing substantial tariff revenues in the process, Trump can’t wait for the EU to breach von der Leyen’s investment and energy pledges. Once it does, after 2028, in his last year in the White House, he will be able to extract more humiliating concessions, citing broken European promises.

Comparing the EU-US trade deal with the UK-US one signed last May, it is indisputable that Trump treated Keir Starmer with kid gloves. This had little to do with economics. Nor was he motivated by Anglophilia or his greater dislike of von der Leyen. Something larger, from his perspective, made him be kinder to Britain, even to the extent of displeasing US car manufacturers who can’t believe that it is now cheaper to import into the US a car from Britain (with no US-made parts) than a Ford or General Motors vehicle manufactured in Mexico or Canada (but with most parts made in the USA).

What could his reason be for choosing to take such heat from his own MAGA constituency on behalf of British carmakers, many of which are not actually British-owned? Simple: by setting a blanket tariff of only 10% (including for cars), 5% below the EU equivalent, while also eliminating tariffs on steel and aluminum, he has driven such a deep wedge between London and Brussels that even the staunchest Rejoiner has surely lost the will to fight on by now. Thus Trump rejoices in the thought that he has rendered Brexit, the harbinger of his own first electoral triumph, well and truly irreversible.

Before resigning itself to its own version of the Treaty of Nanjing, the EU leadership went through the same four stages of grief as Britain’s Brexit negotiators: from “We shall retaliate if they dare squeeze us” to “We may retaliate if pushed” to “No deal is better than a bad deal” to “Any deal please, we are desperate”. Now that the recriminations over the 21st-century Treaty of Nanjing are in full swing in Brussels and every European capital, two questions demand answers. What did Europe’s leaders get wrong? And what could they have done differently to avoid this humiliating deal, while preventing even greater economic pain?

For starters, European negotiators committed three unforced errors of judgement. Firstly, they assumed that the EU single market’s size mattered above all else. It doesn’t. If there is one magnitude that matters above all others, it is the size of Europe’s trade surplus vis-à-vis the United States. At more than $240 billion annually, it guarantees that a fully fledged US-EU trade war would injure Europe far more than America.

Secondly, as my colleague Wolfgang Munchau has explained, Europeans overestimated the leverage that the EU’s services deficit vis-à-vis the United States afforded Brussels. While Americans can live comfortably without Hermès scarves, French champagne, Kalamata olives and Porsches, Europeans cannot last an hour without Google, YouTube, Instagram and WhatsApp.

Thirdly, and crucially, they lulled themselves into the illusory belief that America’s goods and money markets would go into a spasm, forcing Trump to chicken out. For too long they clung to the expectation that tariffs would boost US consumer-price inflation and stock-market deflation to politically unacceptable levels. It didn’t happen for reasons that Brussels should have foreseen.

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Europe can kiss the future goodbye

By Thomas Fazi

American consumer demand is relatively more responsive (“elastic”, in economic parlance) to price hikes than both European consumer demand and the European exporters’ supply. This is why a German-made Mercedes-Benz was always cheaper in New York than in Stuttgart and why, today, a substantial portion of the tariffs is absorbed by European exporters who pass on to American consumers only a fraction of the tariff, the result being a smaller impact on US consumer-price inflation. As for America’s stock markets, they seem enthralled by their own AI investment craze, the unconscionably large tax cuts Trump gifted them, and the mitigating $300 billion annual tariff revenues that the US Treasury rakes in. Too drunk on this “irrational exuberance”, they refuse to fret over the macroeconomic ill effects of Trump’s tariff game.

But let’s suppose for a moment that the EU’s leading lights had foreseen all this. It is a fundamental principle of negotiations that if you cannot imagine leaving the room without a deal, there is no point in negotiating — you might as well be a supplicant like von der Leyen. So what could the EU have done differently, given that it lacks China’s carefully crafted bargaining weapon of rare minerals and a broad-based array of basic goods that Americans cannot live without? Here is a suggestion.

Europe’s first task would be to plan the replacement of the $240 billion in its domestic aggregate demand due to the potential loss of its trade surplus with the US. For example, the European Council could announce an aggregate productive investment programme of €600 billion annually, to be financed by net issuance of European Investment Bank bonds. The mere hint by the European Central Bank that, if needs be, it will back these EIB bonds, would be enough to keep financing costs ultra-low. All of a sudden, Europe would no longer be reliant on America to maintain aggregate demand.

In addition, the EU should drop all US-inspired tariffs and sanctions on essential Chinese green and digital tech, with a view to striking a deal with Beijing that includes coordinated fiscal expansion measures and mutual security guarantees. It should introduce a cloud tax of 5% on all digital transactions for companies with revenues exceeding €500 million annually (independently of where they are domiciled). What’s more, the EU should repeal the draconian, anti-competitive, US-imposed “anticircumvention” intellectual property laws that make it illegal to use cheaper, generic ink cartridges in your printer; that ban farmers from repairing their John Deere tractors; that stop disabled folk from making even minor adjustments to the steering of their powered wheelchairs. And finally, the EU would be wise to phase out gradually its purchases of US-sourced fracked liquefied natural gas from its energy mix, and US-made weaponry from its militaries.

The fact that such a set of responses would never even be discussed in Brussels gives us a great deal of clarity about Europe. With all the subtlety of a wrecking ball, Donald Trump has exposed how the EU is not even capable of imagining itself a sovereign power, determined as it is to remain but a vassal in an Atlanticist empire. Unlike China in 1842, the European Union has chosen permanent humiliation freely.

A year after its landslide election victory, Keir Starmer’s government looks just as mired as Rishi Sunak’s was in an austerity trap that, like any self-respecting zombie, refuses to die. Rachel Reeves, the besieged Chancellor, deserves to be lambasted for a litany of unforced errors. She tolerates the avoidable hemorrhaging of the public purse by £9.3 billion annually, a loss that results from the poor management of Britain’s debt while fighting with backbenchers over the £6.25 billion that she wanted to take away from people in genuine need. However, Britain’s inability to escape its zombie austerity trap is structural.

Government supporters go to great lengths to reject all talk of austerity. They point to the steady rise in public spending and, in particular, the extra £113 billion in capital investment (around 1% of GDP annually until 2029) unveiled in Reeves’ recent Spending Review, which even prompted the Tories to accuse her of fiscal largesse. Be that as it may, a careful look at the numbers confirms that Britain remains in zombie austerity’s trap.

By 2029 public spending will be down on everything except health and defense. Compared to 2010, education will receive 5% less, criminal justice and the prison service 15% less, welfare and pensions 30% less and, calamitously, local government 50% less. As for the new capital expenditure, to gauge its impact it must be measured against the UK’s capital shortfall.

After decades of underinvestment, the UK’s stock of capital is one third smaller than those of comparable advanced economies, a shortfall of around £2 trillion or two-thirds of GDP. Thus, Labour’s new capital expenditure amounts to no more than 5% of what would be necessary for Britain’s productivity to catch up with comparable countries. Is it any wonder that even the usually over-optimistic Office for Budget Responsibility expects a second lost decade for half of the British people?

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Rachel Reeves, the pound shop George Osborne

By Yanis Varoufakis

Having long ago discovered her inner George Osborne, Chancellor Reeves is about to unveil also her latent Margaret Thatcher in a Mansion House speech foreshadowing a New Big Bang for the City of London. Like a copycat felon, she has chosen her crime scene meticulously. For it was there, in the City, that today’s problems took root when Thatcher stumbled on financialization as the main driver of her economic and cultural revolution.

With the rare exception of Norway, whose oil and gas revenues were plowed sensibly into public education, health and future pensions, sudden windfalls prove a curse when societies fail to invest them productively. The Dutch Disease, for example, hollowed out the Netherlands’ industrial base with a flood of natural gas revenues that pushed asset prices through the roof and increased society’s reliance on state benefits. A couple of years later, Thatcher spearheaded a British version of the Dutch Disease — on the back of financialization.

The Iron Lady came to power determined to treat a stagnating Britain to shock therapy. Her instruments of choice were austerity (mainly massive cuts in public spending), calculated destruction of uncompetitive but productive industries, and privatization. While Thatcher waited in vain for privateers to invest in productive capital, she had to find a source of growth to offset the ill effects of her shocks. The City of London was that source.

To get the City to deliver, her government did two things. They freed the bankers from most regulatory shackles with a Big Bang. And they threw tremendous quantities of pre-existing public wealth into the City’s financial circuitry: council houses and public utilities (gas, electricity, water) in particular.

The Thatcher government sold the family silver, including North Sea Oil, to spend the proceeds on generating a debt-driven asset price inflation that hid the gigantic fiscal and productivity costs of sweeping cuts which shrank aggregate demand and, therefore, undermined investment in productive capital. What do you call such conduct? I call it profligate austerity.

Growth did return. But it did so despite Thatcher’s profligate austerity and only because swathes of society’s common wealth were being liquidated at cutdown prices, before being thrown into financialization’s crucible for the City to lever it up into an unsustainably private-debt-driven, Ponzi-like economy.

Thatcher’s business model remained intact under Tony Blair and Gordon Brown. If anything, New Labour boosted it handsomely by removing many of the few remaining regulatory constraints on the City, and by throwing into its financial plumbing the proceeds from deregulated public services, mainly the NHS. While their governments did use taxes on City revenues to fund the NHS and social services in a way the Tories had not, industry continued to wither in the arid shadow of a City of London that shunned industrial capital and whose recklessness brewed the mother of all financial disasters in 2008.

Politically and culturally, Thatcher’s profligate austerity was a triumph. Workers whose jobs were not culled went into debt to buy British Gas shares and their own council houses. They made a mint, jumping onto the frenzied property market escalator that transformed Britain into a financialized assetocracy, in which the fabled Sierra Man felt invested. But the bill arrived soon after.

Before long, they and their children were paying through the nose for lower quality services (railways, energy, sewage, social care etc.). Today, their grandchildren have no access to decent housing, to free education, to a functioning NHS, to good quality jobs. As for their governments, Tory or Labour, they are no longer able to support the struggling majority without blowing up public finances. All they can do is keep reflating housing and financial bubbles, suppressing wages, and delivering speeches in the City hoping to placate the markets’ confidence fairy.

Following financialisation’s Waterloo in 2008, and its New Labour bailout at the expense of the rest of society, profligate austerity gave its place to George Osborne’s passive-aggressive austerity or, as he called it, the policy of “expansionary contraction”. Avoiding deep, Thatcherite cuts, Osborne engineered the slow-motion starvation of public services, devolved blaming (e.g., councils “choosing” to close day care facilities due to Whitehall funding cuts) and off-balance-sheet trickery (e.g., Private Finance Initiatives, which were ruinous for the public purse).

Meanwhile, the Bank of England minted almost £895 million to keep the original Thatcher-Blair era asset bubbles inflated. Imagine how different things would have been now if, instead, Britain’s central bank had used this money to support the bonds of a new public investment bank that ploughed more than a trillion into new green technologies!

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Why Starmer is doomed

By Aris Roussinos

Osborne’s passive-aggressive austerity came to an end when the discontent it had caused played a key role in tilting the Brexit referendum in favor of Leave. It had to go. After period of stasis, under Theresa May, Boris Johnson was inspired by US Republican presidents: win a mandate on austerian promises to “starve the beast” (the voracious welfare state) but, immediately after, spend liberally on your pet projects while granting lucrative contracts and tax cuts to your rich mates. Alas, as Liz Truss was to discover painfully, this sham austerity requires a state that issues the world currency, not the pound.

And that’s how we got to Rachel Reeves’ touchingly delusional, social democratic austerity. In fact, its originator was Peer Steinbrück, the social democrat German finance minister who, in a parliamentary speech delivered in 2008, argued, as Reeves does now, that cutting expenditure to create fiscal space is essential for democracy — in order to preserve space for democratic choices.

Why do I call this delusional? Because, as Osborne and Steinbrück found out, and Reeves is now discovering, in societies with inflated asset prices and low productive investment, where massive money printing for the few has, for so long, walked side-by-side with austerity for the many, slushing social expenditure gives the Chancellor no new fiscal space at all. All that happens is that, like a deranged cat, the Chancellor ends up chasing his or her own tail.

Make no mistake. As Rachel Reeves is delivering her Mansion House address to the fine people in the City of London, her audience knows all this. They know that Ms Reeves, just like her predecessors, cannot balance the books. They know that the point of fiscal policy is to keep the underfunding of government expenditure at a level consistent with long-term debt sustainability while Britain’s productive capacities continue to wither. And they do not care. The only thing they care about is to keep alive the corporate and financial zombies created and sustained by the state intervention. And for this they need austerity to shift as much of the economic pain as possible from asset owners to non-owners, in the labor market, in housing, in utilities etc.

Does this mean there is no alternative? Hell, no! Britain is a rich country. Its welfare state’s bankruptcy is a political choice, a collective choice — albeit a deeply undemocratic one. One option is to continue using the state’s powers to inflate unsustainable asset prices at the expense of the majority who do not own them and who are, in the name of a fictional shareowners’ democracy, condemned to zombie austerity.

Another option is to remove the supply of goods essential to civilized society (e.g., basic housing, university education, elderly care) from markets that can never supply them efficiently, let alone equitably. Naturally this will mean that asset prices will fall to much lower, albeit sustainable levels. But that’s the price of liberating half of the population from savage private housing markets (i.e., reversing Thatcher’s vandalism of council housing), ending the pretence that there can ever be well functioning electricity markets, founding a proper public investment bank, creating decent fiscal space and, last but not least, reining in a Bank of England whose quantitative easing, and then tightening, policies have done so much harm.

What a splendid day for democracy it would be if British voters were given this choice at the ballot box. But can you imagine any political party proposing the second option being given the opportunity to present its agenda, given the demonisation that the parasitic assetocracy would undoubtedly unleash against it? I can’t.

This being ten years since my experiences as a finance minister elected to end austerity, I take the liberty of drawing a comparison. It is a difficult comparison because Greece and the UK are, obviously, ever so different. Unlike in Britain, where austerity was homegrown and chosen at the ballot box, it was imposed on the Greeks by external forces who presented it as an invading army would present terms of surrender to a country defeated at war.

Yet a chief similarity is quite revealing: two left-of-center Prime Ministers, elected to end austerity, who ended up making austerity permanent because of an inexorable desire to be liked by those who never did and never will vote for them.

The key to escaping this fate seems to me a certain disregard for what the types Rachel Reeves is about to address in the City of London think or covet.

Stablecoins are the bastard child of parents seemingly at permanent odds with each other: the libertarian crypto community and statist dollar worshippers. Built on the blockchain technology that was meant to dismantle the financial oligarchy (Wall Street and the Fed), stablecoins are nevertheless fastened by a 1:1 exchange rate to that same oligarchy’s greatest totem: the US dollar. The result is a purportedly apolitical money joined at the hip with the most politically dominant form of money.

Stablecoins were conceived as the best of both worlds. While devoid of Bitcoin’s hideous volatility, they nonetheless preserved the freedom to transact anonymously and globally — unseen by any government. Setting aside their utility for mafia types, who naturally crave any means of payment that lubricates their trade, stablecoins have been a godsend for people in countries with fragile monetary systems, especially in Africa. Besides providing those without a bank with ready access to a proxy for the American dollar, stablecoins offer a way to wire money abroad that is immune to US sanctions and more reliable than rickety inter-bank messaging systems (e.g. SWIFT).

In short, for as long as governments ignored stablecoins, they did considerable good and could not do much harm. However, now that the Trump administration is weaponizing them for its own purposes, their potential for serious damage has risen exponentially. The combination of two executive orders that President Trump issued (one on 23 January 2025 and another on 6 March 2025) and now the Genius Act is turning stablecoins into a massive time bomb deep in the foundations of the global economy.

Today, the dollar value of circulating stablecoins is around $250 billion. For that sum to be backed with sufficient reserves, it is estimated that last year issuers purchased $40 billion of US Treasury bills, more than any foreign buyer of Treasuries during 2024. In the same year, the stablecoin issuer Tether alone reported annual pre-tax profits of $13 billion — not bad for an offshore company employing around 100 people.

As for the number of crypto wallets with stablecoins, last year there was a jump from 27 million to 46 million while transactions climbed 84%, from $752 billion to $409 billion. Already, stablecoins account for around 80% of all crypto transactions.

Such rapid growth could only encourage the very financial establishment that crypto was originally meant to disrupt. Behemoths like Visa and Stripe are jumping on the bandwagon, and Big Tech is set to follow, seeking revenge for how Wall Street elbowed it out of payment systems. Even Uber, eager to keep more money currently seeping from its ride-hailing platform to the financiers, is developing a fully-owned cross-border stablecoin.

Well before the Trump administration had stepped into the fray to boost them with the Genius Act, Standard Chartered estimated that stablecoins in circulation would increase eight-fold, topping $2 trillion by 2028. The question then is why are Donald Trump, JD Vance and their MAGA brethren hellbent on boosting stablecoins further?

Besides the obvious self-enrichment motive, the more interesting explanation is that stablecoins fit in nicely with the Trump administration’s goal of shrinking global trade imbalances to “Make America Great Again”. Nothing motivates these people more than the idea that what is good for their bank account is good for America.

Team Trump has made its intentions clear: to devalue the dollar and shrink America’s trade deficit, while preserving its dominance by using the threat of tariffs. Stablecoins have a key role in this plan. Suppose, for instance, Japan were to be bullied into using a considerable portion of its $1.2 trillion holdings to buy dollar-denominated stablecoins. The dollar’s aggregate supply would rise, devaluing the dollar. The stablecoin issuers would use the dollars it receives to buy Treasury bills, thus reducing the US government’s borrowing costs and, in the process, bolstering dollar supremacy. In the words of JD Vance, a greater stablecoin uptake will be “a force multiplier of our economic might”.

But stablecoins pose systemic risks that Team Trump would be wise to not ignore. Stablecoin issuers stand to profit from issuing more tokens than the dollars they collect or from purchasing relatively illiquid (but higher interest rate yielding) securities. When stablecoins were small fry (e.g., when in 2021 New York regulators fined Tether $21 million for undisclosed irregularities regarding its reserves), the threat of dodgy reserves was too small to lose much sleep over. However, as stablecoins exceed the $2 trillion mark, the risks could become greater than those posed by subprime mortgages in 2007.

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As dollars migrate from US domestic bank accounts to stablecoins, demand for Treasury bills rises and their yields fall. Banks must raise their interest rates to stem this outflow while the Treasury must issue more Treasury bills to satiate the greater demand for them. A wedge suddenly appears between different types of interest rates: bank and long-term Treasuries’ rates rise while short-term Treasury bill rates fall causing the so-called yield curve to become steeper — a sure sign of financial instability.

In 2023, Circle — the issuer of USDC, the second largest stablecoin — had entrusted $3.3 billion of its reserves to the Silicon Valley Bank (SVB). When the latter tanked, a run on USDC began severing its dollar peg. Had the Fed not stepped in to bail out SVB, Circle would have been toast. That little incident now seems like a walk in the park given the US Treasury’s prediction that, in the new climate shaped by the Trump administration’s crypto peans, and the Genius Act, $6.6 trillion of US bank deposits are in the process of migrating into stablecoins.

Wall Street is keen to use blockchain-based technologies for speeding up, securing and reducing the cost of trading securities — to disrupt the traditional rickety system of trading securities in the same way that stablecoins are disrupting SWIFT. But, to shift the trading of shares, bonds, derivatives and assorted exotic financial contracts onto a blockchain, the contracts and the tokens must be inserted into the same blockchain. This means that an arms race is now on to determine which dollar-backed stablecoin dominates the securities’ trades. Once the answer is in, its usage is bound to go through the roof. But the moment the private company that issues this stablecoin gets into hot water, the entire stock market along with the $29 trillion Treasuries market is in peril.

What happens if a stablecoin issued outside the United States crashes? Non-US institutions, including European ones, lack access to Fed rescue mechanisms. Will the Trump administration offer them the Fed swap lines that kept European banks alive in 2008? It is doubtful. Thus, dollar-backed stablecoins issued in Europe, Asia, Africa or Latin America risk exporting financial fragility globally. Even the European Central Bank is panicking at the prospect of having to find dollars to bail out European holders of dollar-denominated stablecoins.

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In the meantime, developing countries face a trilemma: ban stablecoins (forfeiting its substantial benefits), create sovereign alternatives, or accept deeper dollarization. China, armed with its digital yuan, sensibly opted to ban stablecoins outright, shielding its financial system. Yet its $4.5 trillion in dollar reserves poses a dilemma — dumping them aids Trump’s dollar devaluation, while holding them risks exposure to US-driven volatility. The Brics’ preparedness, nevertheless, contrasts with most economies, trapped between dollar dependence and destabilizing crypto experiments.

And so the Genius Act is hard to fault — if the intention is to maximize the threat of a financial meltdown. Essentially, it weaponizes stablecoins to privatize money and effectively outsource dollar dominance to Trump-friendly tech lords.

Proving their endless inanity, many Democrats supported this legislation, lured by two promises. First, the Act will protect their chums in Wall Street with a preposterous ban on stablecoins that pay interest. Second, the Act will supposedly regulate Trump’s new digital Wild West. How? Issuers of stablecoins worth less than $50 billion will be subject to state regulation, allowing for a thousand lesser stablecoins to bloom across America. As for the systemically significant ones, including issuers domiciled outside the United States (like El Salvador-based Tether), they will be required to submit to an “independent” audit of the quality of their dollar reserve assets.

The Genius Act paves the way to a massive crash. The authors of the bill have not clearly defined how the reserves will be regulated and they have inexcusably neglected the risk of doom loops. But there is a much, much worse aspect of the Act. It emasculates the Federal Reserve by banning it from issuing its own stablecoin, a digital dollar by which to counter the up-and-running digital yuan of the People’s Bank of China. And, deprived of the necessary tools like the equivalent of the Federal Deposit Insurance Corporation, the Fed will be tasked with cleaning up the mess private stablecoin issuers are bound to create.

To err in the world of financial innovation is human. But to cock things up big time all you need is the US government to promote private stablecoins, to cloak them in the legitimacy that a little regulation-lite can provide, to ban the Fed from deploying the same technology, and to deprive it of the means to clean up the inevitable mess. With the Genius Act we are almost there. The time to oppose it, frustrate it, rescind it, is now.

Long ago, it was reasonable to hope that voters thinking of voting for a scary ultra-Rightist in order to annoy the centrists whose policies kept them down might come to their senses the moment that scary ultra-Rightist looked likely to win government. Something like that happened in France in 2002. Back then, middle-class socialists, young ecologists and working-class communists lined up at the polling stations alongside conservatives to give 82% of the national vote to Rightist Jacques Chirac so as to keep ultra-Rightist Jean-Marie Le Pen — the father of the French ultra-Right’s current leader — out of the Elysée. But this is not what happened in France 25 years later, or in Canada or Australia last week.

In 2002, six years before Western capitalism’s near-death experience, Chirac defeated Le Pen because the socialist and the communist parties directed their voters to him. Under the slogan: “We vote for you today, we oppose you tomorrow morning!”, voters who were at odds with the establishment voted for an establishment figure in order to keep a neofascist out. All the while, they retained their allegiance to parties of the Left. In contrast, Emmanuel Macron won by annihilating the parties of the Left.

Working-class voters, who were suffering the consequences of the centrists’ austerity policies, were incensed with Macron, a former banker determined to impose “green” taxes on them while giving tax breaks to his haute bourgeois mates. With nowhere else to go, these voters drifted en masse to Le Pen. Then something startling happened: Macron and Le Pen grew co-dependent, their mutual antipathy notwithstanding. The more austerity he imposed on the many, the deeper their discontent and the higher her support. And the higher her support, the better able he was to appeal to anti-fascists to hold their noses and vote for him in order to keep her out.

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As this dynamic co-dependency grew, the ultra-Right won a staggering 40% of the national vote in the June 2024 parliamentary elections. There is nothing on the horizon to suggest that this trend is unravelling. In this light, history may well remember Macron more as the liberal center’s gravedigger than its redeemer.

Cut to last week and the decisive defeat of the Rightist Canadian and Australian parties that tried, and failed, to ride the Trumpian wave. Mark Carney and Anthony Albanese won because President Trump made it impossible for them to lose. By threatening to annex Canada, and by slapping tariffs on an Australia that not only has never missed an opportunity to bend over backwards to accommodate Washington’s every whim but also runs a trade deficit with the United States, it is as if Trump was determined that his Canadian and Australian copycats lose last week’s elections. Nevertheless, under the surface of Carney’s and Albanese’s victories, it is not difficult to discern social trends similar to those that rendered Macron’s victory decidedly Pyrrhic.

In Canada, after 11 years of ruling, the Liberals failed to appeal to the large sections of the working-class who either abstained or voted for the conservatives. When the Liberals nevertheless secured a razor-thin majority, they did so by cannibalizing, Macron-style, the Left-of-center (the NDP and the Parti Québécois). In Australia, Labor’s landslide victory obscured the fact that it won with a historically low percentage of the primary vote. Although it won most seats in the working-class suburbs of Sydney and Melbourne, Labor did so on second preferences, while continuing to bleed first preferences — especially amongst the immigrant communities which used to be the party’s most reliable vote reservoir. As in Canada, Australia’s centrists won by feeding off the only Left-of-center force, the Greens, but had no luck in unseating a significant number of Right-leaning independents (the so-called Teals).

So far, so very similar to the political dynamics in France. What makes these similarities so fascinating is that they have taken place in such different countries. France’s economy is joined at the hip to that of Germany and the rest of the European Union. Australia and Canada, on the other hand, are resource-based economies integrated into the energy-industrial-military complex of the United States.

Because of its location, Canada sells 75% of its exports to America, while also directly investing more of its capital in the US than the US invests in Canada. As for geographically isolated Australia, its economy is also deeply intertwined with US conglomerates, albeit indirectly. While Australian mining companies have long been in the business of extracting fossil fuels and digging up gargantuan volumes of the country’s red earth before shipping it all to Japan and China, this roaring trade with Asia’s two superpowers is predicated on the US sourcing two crucial resources from China and Japan: manufactured goods and savings.

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This is why the political trends in Canada and Australia are similar to those in France. Despite their vast differences, the three economies are hooked into the same US-centric global surplus-recycling mechanism, whose deep crisis is steering their politics in a direction inimical to the centrists’ medium-term prospects. Politicians like Macron, Carney and Albanese may score impressive victories, but they have no plan for stemming the secular decline of their influence over their increasingly restive electorates. For years now, these electorates have been pummeled by the undercurrents of the global recycling mechanism — a mechanism that once drove their countries’ growth and stability.

The essence of this global mechanism (which I once labelled the Global Minotaur) is simple. Since the Seventies, America’s deficits have provided East Asia (first Japan, then China) and Europe (primarily Germany) the demand for their factories’ manufactures. In return, the European Union, Japan and later China sent their accumulated profits to Wall Street to be recycled into US private and public debt, some equities, and real estate. A Chinese official once described this mechanism to me as a “dark deal”. “Our Dark Deal with the Americans,” the official explained, “turns on the US trade deficit, which keeps demand for our manufactures high. In return, our capitalists invest the bulk of their dollar superprofits into America’s FIRE”. (The acronym stands for “Finance, Insurance, and Real Estate.”) “Once this process got underway, America shifted much of its industrial production to our shores.”

The problem with this global recycling mechanism was that, to function smoothly, it had to generate larger and larger imbalances: greater trade deficits for the US and more accumulated savings for Northern Europe and East Asia. But there are limits to how large imbalances can grow. Ruptures are inevitable. The longer they are delayed, the greater the pain they inflict — a truth that centrists never acknowledged, not even when it was tearing down their houses.

Trump’s greatest strength comes from asking the pressing question that the centrists refuse to countenance: what comes after the Dark Deal? What comes after the imbalances built on the US trade deficit have proven unsustainably massive? Scott Bessent, Trump’s Treasury Secretary, put it succinctly in a recent speech at the IMF: “Everywhere we look across the international economic system today, we see imbalance… This status quo of large and persistent imbalances is not sustainable… The persistent over-reliance on the United States for demand is resulting in an evermore unbalanced global economy.”

Their proposed solutions may be wrongheaded, half-baked, even crazy, but at least Trump’s team has identified the problem. Voters may not understand that these unsustainable imbalances are at the root of their plight, but enough of them have the sixth sense to intuit that Trump’s people are on to something, unlike the centrists who act like King Canute ordering the tides of discontent to reverse course.

Inexcusably, centrists treat Bessent and the rest of Trump’s economic team as Neanderthals. They forget that the people they celebrate as the architects of the globalized capitalist order, an order which they now mourn, had warned them in good time. On 10 April 2005, when no one was interested in bad news stories, Paul Volcker, the man who had helped design the devastating Nixon Shock and later headed the Federal Reserve during the formative years of the Dark Deal, foreshadowed everything Bessent is now saying:

“What holds [the US economic success story] all together is a massive and growing flow of capital from abroad, running to more than $2 billion every working day, and growing… As a nation we don’t consciously borrow or beg. We aren’t even offering attractive interest rates, nor do we have to offer our creditors protection against the risk of a declining dollar… We fill our shops and our garages with goods from abroad, and the competition has been a powerful restraint on our internal prices. It’s surely helped keep interest rates exceptionally low despite our vanishing savings and rapid growth. And it’s comfortable for our trading partners and for those supplying the capital. Some, such as China, depend heavily on our expanding domestic markets. And for the most part, the central banks of the emerging world have been willing to hold more and more dollars, which are, after all, the closest thing the world has to a truly international currency… The difficulty is that this seemingly comfortable pattern can’t go on indefinitely.”

Three years later, Wall Street crashed. Two decades of centrist denial followed, bought at the price of gigantic money printing for the few and harsh austerity for the many. With Volcker and his ilk sidelined by the governing centrists, the political center began to fragment across the West — with deficit countries like France, Canada, Australia and the United Kingdom (not to mention my country, Greece) closer to the eye of the storm. It was only a matter of time before someone like Trump would rise up, the inevitable outcome of the centrists’ refusal to acknowledge that the global surplus recycling mechanism, the Dark Deal, was dead in the water — just as its predecessor, the Bretton Woods system, was before President Nixon killed it in 1971.

Sure enough, Trump’s policies are unlikely to rebalance the world economy. While some manufacturing will return to America, automation will render this a jobless growth surge. Big Tech’s burgeoning cloud rents will further undermine any actual rebalancing. China will probably move on, gradually transforming the Brics into a Bretton Woods-style system anchored by the yuan. The European Union will fail to rebalance its internal macroeconomy, sinking deeper into stagnation. The planet’s climate will go haywire.

But, though Trump’s policies may not work in the US, France, Australia, Canada or anywhere else, his willingness to upend a broken global system is enough to garner political support for, at home, unprecedented authoritarianism; and abroad, a confrontation with China that casts doubt on our species’ long-term prospects. Meanwhile, centrists stuck in their delusion that the Dark Deal can be sustained are condemned to keep losing even when they win.

No, those words were not spoken by members of President Trump’s team in advance of their “Liberation Day” tariff splurge. While the “foreigners are out to screw us” certainly has a Trumpian ring, it was uttered in the summer of 1971 by then Treasury Secretary John Connally, who succeeded in convincing his President to unleash the infamous Nixon Shock a couple of days later.

Commentators should know better than to pretend that the shock Trump is now delivering is both “unprecedented” and bound to fail like all “reckless” assaults on the prevailing order. The Nixon Shock was more devastating than the one delivered today, especially for Europeans. And precisely because of the economic devastation caused, its architects achieved their main long-term objective: to ensure American hegemony grew alongside America’s twin (trade and government budget) deficits.

The success of the Nixon Shock in no way guarantees the success of Trump’s version, but it does remind us that what is good for America’s rulers is not necessarily good for most Americans or, indeed, for the world. One of the smartest Nixon advisers, who helped to convince Connally of the need for a shock, articulated this point with brilliant clarity:

“It is tempting to look at the market as an impartial arbiter. But balancing the requirements of a stable international system against the desirability of retaining freedom of action for national policy, a number of countries, including the US, opted for the latter.”

Then with one additional phrase he undermined all of the assumptions on which Western Europe and Japan had erected their post-war economic miracles: “A controlled disintegration in the world economy is a legitimate objective for the Eighties.”

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And 10 months after giving this lecture, the man in question, Paul Volcker, rose to the Presidency of the Federal Reserve. Soon, US interest rates were doubled, then trebled. The controlled disintegration of the world economy, which had started when President Nixon was convinced by Connally and Volcker to dismantle the hitherto stable exchange rates regime, was now being completed with interest rate hikes that were far more devastating than Trump’s tariffs can ever be today.

Trump is therefore not the first President to seek the controlled disintegration of the world economy by means of a devastating blow. Nor is he the first to purposely damage America’s allies to renew and prolong US hegemony. Nor the first who was prepared to hurt Wall Street in the short run in the process of strengthening US capital accumulation in the long term. Nixon had done all that half a century earlier.

And the irony is that the world the Western liberal establishment is grieving over today came into being as a result of the Nixon Shock. While admonishing the idea of a US President delivering a rude shock to the world economy, they are lamenting the passing of what only came into being because of another President’s readiness to deliver an even ruder shock. That is, the Nixon Shock gave birth to the darlings of today’s liberal establishment: neoliberalism, financialization and globalization.

The Nixon team’s fundamental question was: how could America remain hegemonic once it became a deficit country? Was there an alternative to belt-tightening which would risk a recession and curtail America’s military might? The only alternative, they surmised, was to do the very opposite of belt-tightening: to boost the US trade deficit and make foreign capitalists pay for it. (This was the “Screw them before they screw us” strategy that Connally convinced Nixon to adopt).

Their audacious strategy to make foreigners pay for the US twin deficits relied on creating circuits of capital by which foreign dollars could be repatriated and then recycled. That meant unshackling Wall Street from all the constraints placed upon it under the New Deal, the War Economy and the Bretton Woods system. After four decades of controlling the bankers so they would not inflict another 1929, Nixon’s team liberated them. But doing so required a new economic theory wrapped up in a suitable political ideology.

Under neoliberalism’s ideological and pseudo-scientific cover, bankers found themselves with billions of foreign dollars to play with in a deregulated environment: financialization. The more this new world system relied on US deficits that generated the necessary demand for European and Asian exports, the greater the volume of trade necessary to stabilize this purposely imbalanced globalized system. And thus globalization was born.

Many refer to this world — the one in which Gen X grew up — as the neoliberal era, others associate it with globalization, some identify it with financialization. It’s all the same thing — the world the Nixon Shock begat and which the 2008 financial crash shook to its foundations. After the 2009 bailouts, although US hegemony continued unabated, it lost much of its dynamism. Today, the Nixon Shock has run out of steam — at least from the perspective of the Trumpists who want to give US hegemony a second (or is it a third?) wind. This is the whole point of the Trump Shock and its masterplan, including tactical moves such as enlisting crypto to their cause.

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But there are differences between the two shocks. While both aimed substantially to devalue the dollar, while also strengthening its status of being the world’s reserve currency, the means were different. The Nixon Shock relied on letting money markets devalue the dollar’s exchange rates, adding further pain to America’s allies through the explosion in the price of oil – which damaged Europe and Japan significantly more than US producers. Trump might be taking a (small-ish) leaf out of Nixon’s book regarding oil prices, but he is trying to make his tariffs do for him what the Volcker-led Federal Reserve used interest rates for: as a weapon that inflicts more pain on European and Asian capitalists than it does on American ones.

The outcome of the Trump Shock will depend on whether it has staying power, for which it will probably need bipartisan support. After all, Nixon’s equivalent worked because President Carter appointed Volcker to the Federal Reserve and allowed him to continue the Nixon project unhindered; before President Reagan turbocharged it further with the help of Alan Greenspan whom he appointed in 1987 to succeed Volcker. Is the US political system still capable of that degree of bipartisanship? It seems unlikely but, then again, who would have imagined that Biden would embrace Trump’s China tariffs and escalate the New Cold War his predecessor started?

And if the Trump Shock has anything like the success of the Nixon Shock, what will this world look like? Perhaps it is too early to tell, but neoliberalism is already being contested by the technofeudal creed of neoreactionaries such as Peter Thiel. Cloud capital is displacing financial capital and replacing the divine role of the market with the holy grail of the transhuman condition (the merger of cloud capital, AI and the biological individual). Financialization will soon be under similar pressure. As AI develops, Wall Street will not be able to continue resisting the merging of cloud capital and finance, as seen in Elon Musk’s ambition to turn X into an “everything app”. Such developments will do to payments what the internet did to fax machines, with serious repercussions for financial stability, including any future role for the Federal Reserve. And in place of the dream of a Global Village, we will have the Walled Nation. Nevertheless, that globalization recedes does not mean that autarky is possible. The Trump Shock is pushing us into a Bisected Planet, one part of it comprising vassal countries that have yielded to the Trump Plan and a second part where the BRICS experiment is allowed to take its course.

Every generation likes to think it is on a cusp of some historic transformation. But ours is cursed enough to actually be on such a cusp. So rather than focusing too much on the character of the man in the White House, we would do well to recall that the Nixon Shock was much more important than Nixon. If Nixon reshaped the world once, leaving it nastier and more unbalanced, Trump can certainly do it again.

The United States government sensibly stockpiles a number of materials in case of an emergency, including oil, military gear, medical supplies and gold. But what is the point of hoarding cryptocurrencies which lack any intrinsic utility? Especially if you have constrained yourself, as Trump has done, never to sell the crypto you stashed away? The logic of strong-arming the Federal Reserve into creating a crypto stash is one part self-serving bluster, one part trolling, but also one part strategy.

The self-serving bluster part was made painfully obvious as Donald and Melania Trump pocketed tens of millions of dollars from the otherwise pointless meme coins they issued three days before his inauguration. The trolling part was also on display as he signed the executive order. While ceremoniously putting his exuberant signature on the order’s dotted line, he beamed with the grin of a cheeky peasant who, having just broken into the baron’s pristine drawing room, spoils the splendor of its Persian rugs with his muddied boots. That’s how Democrats and mainstream Republicans felt as they watched Trump elevate the cryptocurrencies favored by libertarians, cranks and criminals to the lofty status previously reserved for solid gold and US Treasury bills.

However, amid this cacophony of creepy profiteering, triumph and despair, it is easy to lose sight of the interesting role that Trump’s strategic crypto reserve plays in his broader economic masterplan. And that would be our mistake.

To recast the global economic order in America’s long-term interest, Trump has a two-pronged, seemingly contradictory, strategy: to devalue the dollar while maintaining its global dominance. By boosting US exports (as the dollar becomes cheaper) while pushing down the US government’s borrowing costs (as foreign wealth piles into US long-term debt), the President seeks to increase US hegemony while also bringing back manufacturing to America. Tariffs, in this context, are the country’s chief weapon, pressuring friends and foes to unload their dollar holdings and buy more long-dated bonds (exceeding 10 years).

But what does crypto have to do with any of this? To get a whiff of the answer, take the case of Japanese banks which hold more than $1 trillion, the result of decades of exports to the United States. Trump wants to bully Tokyo into either investing in the US or dumping most of their dollars into the money markets (thus driving the dollar down) while also not converting them into euros or renminbi (which would risk strengthening the reserve status of rival currencies). What could do the trick? How about convincing, or strong-arming, the Japanese to swap their dollars for crypto? That would work, especially if the Federal Reserve dominated the crypto scene. What else could Trump have meant when asserting in this executive order that the US “has not maximized its strategic position as a unique store of value in the global financial system”?

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More intriguingly, four days after the executive order, Trump endorsed stablecoins. In so doing, he added a fascinating new dimension to the idea of forcing non-American institutional investors into moves that serve his economic masterplan.

What are these stablecoins and why are they particularly promising tools for Trump’s twin strategy? Marketed as crypto versions of the dollar, stablecoins such as Tether, USD Coin and Binance are, by design, a contradiction in terms. The whole point of Bitcoin, the first cryptocurrency, was to stick it to the man — to central bankers and their fiat currencies, the dollar chiefly. But stablecoins, which are mainly used for cross-border payments, are dollar-denominated crypto-currencies that offer you the anonymity, versatility and universality of Bitcoin — while also claiming to guarantee full convertibility to the dollar on a one-for-one exchange rate. Indeed, some of the world’s largest banks and financial institutions are keen to issue stablecoins which are popular in emerging markets. Last month, the CEO of Bank of America suggested it might launch its own, following the examples of PayPal, Revolut, Stripe and many others.

But how can stablecoins promise to keep their value tethered to the dollar, and is this promise credible? In theory, this promise can be met if the stablecoin issuer holds, in some vault, one dollar for every token issued. But, of course, holding zero-interest-bearing dollars in a vault would be anathema to any self-respecting financier. So, even if the stablecoin issuer truly owns an equal amount of dollars to the tokens it has issued, it will immediately trade these dollars for some safe, interest-bearing, dollar-denominated asset — like 10-year US Treasury Bills. This way the issuer is true to their word of backstopping their tokens with real bucks while, at the same time, earning interest. It is an arrangement after Donald Trump’s heart and, I believe, at the center of the idea of his strategic crypto reserve.

By setting up a crypto reserve containing dollar-backed stablecoins, the US authorities are signaling to foreign dollar holders that the US government endorses their ownership of these cryptocurrencies. During upcoming negotiations with various governments, with tariffs dangling like the sword of Damocles above their head, the President will drop subtle hints about how pleased he will be if foreign investors buy these stablecoins using their own dollars. If they do buy them, the dollar supply will increase, the dollar exchange rate will dip, no other fiat currency will emerge as a potential suitor to the dollar’s reserve currency status, and dollar-denominated stablecoins will rise in value. As these tokens will now be worth more than a dollar, their issuer will have an incentive to issue more tokens to restore the one-to-one exchange rate with the dollar. In the process, they will buy, with proceeds from the additional tokens they issue and sell, more long-dated US Treasuries to backstop their increased token supply. Bingo! Trump’s twin strategy is fulfilled: the dollar is devalued while demand for long-term US government debt rises, thus pushing down US Treasury yields and his government’s debt servicing costs.

Upon hearing this, deafening alarm bells should sound in our heads. For if this strategy works, and stablecoins become a pillar of American hegemony, Trump will have planted a time bomb within the foundations of the global monetary system. Monetary history is littered with the corpses of schemes guaranteeing the convertibility of some new-fangled currency with a time-honored store of value. The Gold Standard itself was such a scheme, the post-war Bretton Woods system another.

Take the latter as an example, which coincided with capitalism’s Golden Age — the Fifties and Sixties. The idea behind Bretton Woods was that the West’s currencies would be tethered to the dollar with fixed exchange rates. Moreover, the dollar itself would be anchored to gold at a fixed conversion rate of $35 to an ounce of the magic metal. As long as the US remained a surplus economy, exporting to Europe and Japan goods and services of great dollar value than that of its imports, the system worked fine. America’s surplus dollars were sent to Europe and Japan (in the form of loans, aid or direct investments) and then were recycled back to the US with every Boeing jet or Westinghouse refrigerator that European and Japanese customers purchased.

Alas, by the late Sixties, this recycling system broke down irreparably. The US had turned into a deficit economy, flooding Europe and Japan (later China too) with more and more dollars to finance US net imports. Provided that non-Americans were happy to hoard their dollars, there was no problem. But, the more dollars they had, the more skeptical they were that the US government would honor its promise to hand over an ounce of gold to anyone with $35. Indeed, when several “runs” of America’s gold took place, President Nixon tore up the Bretton Woods agreement, ended the dollar’s convertibility to US government gold, and messaged the Europeans in Trumpian style: “the dollar is our currency but it is your problem.”

So, here is the point: if the mighty US Empire, at the height of its world hegemony, could not honor the anchor of the feted postwar financial system, that is the fixed conversion rate, what gives us the confidence to imagine that a private outfit, such as Tether or Binance, can do it sustainably? Nothing! Indeed, logic dictates the opposite because of the structure of the incentives built into Trump’s strategic crypto reserve. Think about it: as more dollars go into stablecoins, US Treasury yields are lowered and the issuers of stablecoins have a stronger incentive to invest in less stable assets. Indeed, they may even risk issuing additional tokens without backing them with additional dollar-denominated safe assets. The more this goes on, the greater the reliance of the US government, and of the global monetary system, on privateers whose incentives are to act less responsibly. Does this classic case of moral hazard remind you of anything? If not, I would recommend watching The Big Short again.

Their thinking is hard-wired onto a misconception of how capital, trade and money move around the globe. Like the brewer who gets drunk on his own ale, centrists ended up believing their own propaganda: that we live in a world of competitive markets where money is neutral and prices adjust to balance the demand and the supply of everything. The unsophisticated Trump is, in fact, far more sophisticated than them in that he understands how raw economic power, not marginal productivity, decides who does what to whom — both domestically and internationally.

Though we risk the abyss staring back when we attempt to gaze into Trump’s mind, we do need a grasp of his thinking on three fundamental questions: why does he believe that America is exploited by the rest of the world? What is his vision for a new international order in which America can be “great” again? How does he plan to bring it about? Only then can we produce a sensible critique of Trump’s economic masterplan.

So why does the President believe America has been dealt a bad deal? His chief complaint is that dollar supremacy may confer huge powers on America’s government and ruling class, but, ultimately, foreigners are using it in ways that guarantee US decline. So what most consider to be America’s exorbitant privilege, he sees as its exorbitant burden.

Trump has been lamenting the decline of US manufacturing for decades: “if you don’t have steel, you don’t have a country.” But why blame this on the dollar’s global role? Because, Trump answers, foreign central banks do not let the dollar adjust downwards to the “right” level — at which US exports recover and imports are restrained. It is not that foreign central bankers are conspiring against America. It is just that the dollar is the only safe international reserve they can get their hands on. It is only natural for European and Asian central banks to hoard the dollars that flow to Europe and Asia when Americans import things. By not swapping their stash of dollars for their own currencies, the European Central Bank, the Bank of Japan, the People’s Bank of China and the Bank of England suppress the demand for (and thus the value of) their currencies. This helps their own exporters boost their sales to America and earn even more dollars. In a never-ending circle, these fresh dollars accumulate in the coffers of the foreign central bankers who, to gain interest safely, use them to buy US government debt.

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And there’s the rub. According to Trump, America imports too much because it is a good global citizen which feels obliged to provide foreigners with the reserve dollar assets they need. In short, US manufacturing has been in decline because America is a good Samaritan: its workers and middle class suffer so that the rest of the world can grow at its expense.

But the dollar’s hegemonic status also underpins American exceptionalism, as Trump knows and appreciates. Foreign central banks’ purchases of US Treasuries enable the US government to run deficits and pay for an oversized military that would bankrupt any other country. And by being the linchpin of international payments, the hegemonic dollar enables the President to exercise the modern-day equivalent of gunboat diplomacy: to sanction at will any person or government.

This is not enough, in Trump’s eyes, to offset the suffering of American producers who are undercut by foreigners whose central bankers exploit a service (dollar reserves) America provides them for free to keep the dollar overvalued. For Trump, America is undermining itself for the glory of geopolitical power and the opportunity to accumulate other people’s profits. These imported riches benefit Wall Street and realtors but only at the expense of the people who elected him twice: Americans in the heartlands who produce the “manly” goods such as steel and automobiles that a nation needs to remain viable.

And that’s not the worst of Trump’s concerns. His nightmare is that this hegemony will be fleeting. Back in 1988, while promoting his Art of the Deal on Larry King and Oprah Winfrey, he bemoaned: “We are a debtor nation. Something’s going to happen over the next number of years in this country, because you can’t keep on losing $200 billion a year.” Since then, he has become increasingly convinced that a terrible tipping point is approaching: as America’s output diminishes in relative terms, the global demand for the dollar rises faster than US incomes. The dollar then has to appreciate even faster to keep up with the reserve needs of the rest of the world. This can’t go on forever.

For when US deficits exceed some threshold, foreigners will panic. They will sell their dollar-denominated assets and find some other currency to hoard. Americans will be left amid international chaos with a wrecked manufacturing sector, derelict financial markets and an insolvent government. This nightmare scenario has convinced Trump that he is on a mission to save America: that he has a duty to usher in a new international order. And that’s the gist of his plan: to effect in 2025 a decisive anti-Nixon Shock — a global shock that cancels out the work of his predecessor by terminating the Bretton Woods system in 1971 which spearheaded the era of financialization.

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Central to this new global order would be a cheaper dollar that remains the world’s reserve currency — this would lower US long-term borrowing rates even more. Can Trump have his cake (a hegemonic dollar and low-yielding US Treasuries) and eat it (a depreciated dollar)? He knows that the markets will never deliver this of their own accord. Only foreign central banks can do this for him. But to agree to do this, they need to be shocked into action first. And that’s where his tariffs come in.

This is what his critics do not understand. They mistakenly think that he thinks that his tariffs will reduce America’s trade deficit on their own. He knows they will not. Their utility comes from their capacity to shock foreign central bankers into reducing domestic interest rates. Consequently, the euro, the yen and the renminbi will soften relative to the dollar. This will cancel out the price hikes of goods imported into the US, and leave the prices American consumers pay unaffected. The tariffed countries will be in effect paying for Trump’s tariffs.

But tariffs are only the first phase of his masterplan. With high tariffs as the new default, and with foreign money accumulating in the Treasury, Trump can bide his time as friends and foes in Europe and Asia clamor to talk. That’s when the second phase of Trump’s plan kicks in: the grand negotiation.

Unlike his predecessors, from Carter to Biden, Trump disdains multilateral meetings and crowded negotiations. He is a one-on-one man. His ideal world is a hub and spokes model, like a bicycle wheel, in which none of the individual spokes makes much of a difference to the functioning of the wheel. In this view of the world, Trump feels confident that he can deal with each spoke sequentially. With tariffs on the one hand and the threat of removing America’s security shield (or deploying it against them) on the other, he feels he can get most countries to acquiesce.

Acquiesce to what? To appreciating their currency substantially without liquidating their long-term dollar holding. He will not only expect each spoke to cut domestic interest rates, but will demand different things from different interlocutors. From Asian countries that currently hoard the most dollars, he will demand they sell a portion of their short-term dollar assets in exchange for their own (thus appreciating) currency. From a relatively dollar-poor eurozone riddled with internal divisions that increase his negotiating power, Trump may demand three things: that they agree to swap their long-term bonds for ultra-long-term or possibly even perpetual ones; that they allow German manufacturing to migrate to America; and, naturally, that they buy a lot more US-made weapons.

Can you picture Trump’s smirk at the thought of this second phase of his masterplan? When a foreign government acquiesces to his demands, he will have chalked up another victory. And when some recalcitrant government holds out, the tariffs stay put, yielding his Treasury a steady stream of dollars which he can dispense with any way he deems fit (since Congress controls only tax revenues). Once this second phase of his plan is complete, the world will have been divided into two camps: one camp shielded by American security at the cost of an appreciated currency, the loss of manufacturing plants, and forced purchases of US exports including weapons. The other camp will be strategically closer perhaps to China and Russia, but still connected to the US through reduced trade which still gives the US regular tariff income.

Trump’s vision of a desirable international economic order may be violently different from mine, but that gives none of us a license to underestimate its solidity and purpose — as most centrists do. Like all well-laid plans, this may, of course, go awry. The depreciation of the dollar may not be sufficient to cancel out the effect of tariffs on prices US consumers pay. Or the sale of dollars may be too great to keep long-term US debt yields low enough. But besides these manageable risks, the masterplan will be tested on two political fronts.

The first political threat to his masterplan is domestic. If the trade deficit begins to shrink as planned, foreign private money will stop flooding Wall Street. Suddenly Trump will have to betray either his own tribe of outraged financiers and realtors or the working class that elected him. Meanwhile, a second front will be opening. Regarding all countries as spokes to his hub, Trump may soon discover that he has manufactured dissent abroad. Beijing may throw caution to the wind and turn the BRICS into a New Bretton Woods system in which the yuan plays the anchoring role that the dollar played in the original Bretton Woods. Perhaps this would be the most astonishing legacy, and comeuppance, of Trump’s otherwise impressive masterplan.

Seeking to combine the image of a radical reformer with the reputation of a safe pair of hands, Reeves began her litany of mixed messages before she moved into 11 Downing Street. While she acknowledged the “severe damage” inflicted by George Osborne’s austerity program, she adopted his language to liken Britain to a person who had “maxed out the credit card”. Then, once in the Treasury, she demonstrated how using such language leads inexorably to a contractionary fiscal program. Turning John Maynard Keynes’ dictum “Anything we can actually do, we can afford” into its opposite (“If we cannot afford it, we cannot do it”), Reeves embarked on an austerian downward spiral.

First came expenditure caps on caring for the elderly, which would save the measly amount of £1 billion annually. Having warmed up, she followed with the termination of winter-fuel payments for pensioners, shortly before one of recent history’s coldest winters. Along with cancellations of urgent hospital and railway works, these cuts saved another £5 billion, with a further £16 billion tax rises in the works. Then, in her autumn mini budget, Reeves broke her promise not to touch National Insurance Contributions by extracting an additional £25 billion from employers. Hoping to frame this final measure as pro-labor, her tactic fell terribly flat once workers realized they would be paying for most of it in the form of dampened wages.

By that stage, the new Chancellor was caught in the same doom cycle that typified Osborne’s tenure: each austerian measure meant to rein in the deficit boosted the borrowing requirement, spooked debt markets, elevated interest payments, reduced its fiscal space and caused the Chancellor to seek more austerian measures. These, in turn, deepened the economy’s stagnation. And so it would go on.

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Tory critics have taken Reeves to task for being too ready to talk Britain down. But they seem to have forgotten that her claim of inheriting a £22 billion black hole from the Tories was a faithful imitation of Osborne’s strategy to blame his own austerity program on the “scorched earth” situation he had inherited from Labour. The Tories have also accused her of being insufficiently austerian, which is disingenuous: if deeper austerity were the right remedy, why was the doom loop under Osborne just as bad? If anything, deeper cuts in expenditure today would only worsen Reeves’s predicament.

Obviously, the Tories are trying to exploit Reeves’s woes. But what is truly startling about her stewardship of the Treasury is both how faithfully she has stuck to Osborne’s playbook, and how similarly the UK economy has reacted. And this despite the quite monumental difference in the circumstances the two Chancellors faced as they took office. Soon after his appointment, Osborne received a windfall from the Bank of England — in total, £124 billion was transferred from the Bank of England to the Treasury between 2010 and 2020. In sharp contrast, Rachel Reeves will be sending to the Bank of England £34 billion of taxpayer money every year for the next four years. Essentially, all the money her austerity raises will be sent to the Bank. And all because of a flawed set of monetary rules which she is refusing to change.

This madness all dates back to the financial crash and the subsequent fallout when, in addition to the taxpayers’ bank bailouts and ultra-low interest rates, the Bank of England created £875 billion to buy government bonds from the bankers. It flushed the banks with cash that they would then hand out in loans to stressed households and firms. In the process, the Bank of England made money from the interest rate difference — between the ultra-low official interest rates it was paying banks and the higher interest accrued by the government bonds. Hence the £124 billion windfall for the Treasury.

However, the situation was reversed after 2022. With the pandemic disrupting supply chains and triggering inflation, the Bank raised interest rates tenfold and began selling the government bonds back to the bankers in the hope that prices would stop rising. But bonds come with fixed interest rates. And by raising interest rates, the Bank of England had effectively pushed down the value of the older bonds it was selling off, thus inflicting large losses on itself.

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These losses could have been avoided in two simple ways, reflecting the wiser practices of other major central banks. First, it could refrain from selling government bonds at knockdown prices — and instead hold them to maturity. Second, it needn’t pay bankers the high official interest rate on every pound they choose to hoard at the central bank.

Indeed, many leading central banks pay the bankers the going interest rate only for part of their deposits, the rest at zero. This is precisely how the European Central Bank (which, by the way, no one can accuse me of being a lackey of) avoided major losses when deflation gave way to inflation. There are no good arguments for why the Bank of England should not follow the ECB’s example — except that the City bankers would not like it. And only a cowardly Chancellor would think this was a good enough reason to maintain a £34-billion subsidy for the banking sector every year.

Given the Bank is supposedly independent, some may ask whether Rachel Reeves is really to blame. But the issues at stake are in the remit of Parliament: the mindless fire sale of government bonds; the high interest accrued to bankers’ money; and, most crucially, the assumption, first promised by Philip Hammond, that the taxpayer would indemnify the Bank of England for whatever losses it might suffer. These fall under the Chancellor’s responsibility. And given that it is her duty to legislate for the common good, she could change them.

Just look at Reeves’s predecessors. Before Philip Hammond’s promises, George Osborne and Alistair Darling legislated that the Bank of England could print money for the bankers but not for households — against the advice of the not-exactly-Leftist IMF. And now Rachel Reeves has decided not to legislate away the stealthy BoE subsidy to the bankers, adopting instead their inane, self-evidently self-serving arguments. Chancellors, in short, cannot hide their responsibility behind a distortion of the notion of central bank independence.

Taking a broader perspective, ever since Margaret Thatcher vandalised Britain’s ailing heavy industry and replaced it with a vicious financial system, it was only a matter of time before a global financial crisis would bring Britain to its knees. Following the 2008 crash, overgenerous money printing for the bankers and austerity for everyone else trapped the UK into a low-wage, low-productivity, low-growth, low-take-home-pay, low-rent equilibrium. That is why, for a while now, Britain has felt like an advanced rentier society that has run out of rents.

But let’s be honest. Labor was never going to fix Britain’s broken business model. Nothing in their manifesto warranted any such hope. Nevertheless, it isn’t too much to expect minimal levels of competence and enough courage from a new Chancellor to rescind an annual handout of £34 billion to bankers already flush with taxpayer cash. Alas, overpowered by an urge to be accepted by the City, Blackrock and the Davos crowd, Reeves has fallen into a trap of her own making.

John Kenneth Galbraith once quipped that “[t]he process by which money is created is so simple that the mind is repelled”. Today, it is hard not to be repelled by how Britain’s scarce fiscal resources are sacrificed on the altar of the Chancellor’s cravenness.

It would have been unsurprising if President Lyndon B. Johnson had demanded Star Trek’s immediate cancellation after it had put forward such a radical anti-imperialist ideology. Luckily, he didn’t. And so it was that, over the 939 episodes across 12 different series that followed, Star Trek’s Prime Directive allowed writers and directors to explore the political and philosophical repercussions of such a concept, primarily its reliance on a prior transition to a humanist communism.

That Star Trek depicts a communist society, without of course calling it that, is crystal clear. In a 1988 episode, the starship USS Enterprise comes across a rusting old Earth vessel containing human plutocrats who had paid large sums to be frozen and sent into space in the hope that aliens might find and cure them of whatever disease was killing them. After the crew of the Enterprise thawed and cured them, one of them, Ralph Offenhouse, a businessman, demands to contact his bankers and law firm back on Earth. Captain Jean-Luc Picard is left with no option but to break the news to him that, in the intervening three centuries, much has changed: “People are no longer obsessed with the accumulation of things.”

Their conversation points to the reason why the Prime Directive is incompatible with the spirit of capitalism. As long as accumulation, fuelling the expansion of markets, is our society’s motivating force and ideology, imperialism is inevitable. To escape it, humanity must first eliminate scarcity of material goods – an elimination that, in the United Federation of Planets, was achieved on the back of the invention and widespread deployment of replicators: machines that convert plentiful green energy into any form of matter one desires, from food to gadgets to spaceships.

This is not exactly a novel idea. In 350BC Aristotle predicted that “if every instrument could accomplish its own work, obeying or anticipating the will of others, like the statues of Daedalus, or the tripods of Hephaestus… chief workmen would not want servants, nor masters slaves.”

An avid Aristotelian himself, Karl Marx based his vision of a freedom-enhancing communist society on machines like Star Trek’s replicators that liberate us from non-creative, soul-crushing labour. In one of his early writings, he imagines what will follow the invention of such machines:

“I can do this today and that tomorrow, hunt in the morning, fish in the afternoon, look after cows in the evening, practice in theatre criticism after dinner — without having to be a hunter, fisherman, cowherd or theatre critic.”

Marx’s words resonate when we meet Captain Benjamin Sisko’s father who in the 24th century runs a Creole restaurant in New Orleans for free because money is now obsolete — he is simply motivated by how much his neighbours appreciate the cooking. They also resonate with Picard’s answer to Offenhouse who, upon hearing that he was to be sent back to an essentially communist Earth, asks glumly: “What will happen to me? There is no trace of my money. My office is gone. What will I do? How do I live? What is the challenge?” “The challenge Mr Offenhouse,” replies Picard encouragingly, “is to improve yourself, to enrich yourself. Enjoy it!” Marx would have, I am in no doubt, applauded energetically.

Joy is not a word that naturally rhymes with communism, at least the Soviet variety. But pleasure is central to Star Trek‘s version of communism, which rejects the notion that escaping the logic of accumulation requires individuals to submit to a collective. Star Trek‘s writers make this point brilliantly by contrasting the Federation, made up of creative individuals who are free to choose their projects and partners, with the Borg — a dystopian cyborg collective made up of drones linked together in a beehive-like social order that expands by assimilating every species it encounters.

Star Trek rejects collectivism while still avoiding lazy critiques. We are treated to the traumatic reintroduction of a Borg drone to humanity, who experiences debilitating withdrawal symptoms, missing desperately the collective’s voice in her head. It is a reminder of how authoritarianism can be dangerously attractive to the lonely, but also of how important it is to pay the price of personhood.

But Star Trek does not just offer a vision of a splendid future. Like any other practical manifesto, it offers a theory of change: of social evolution founded on solid historical materialist tenets.

Consider, for example, the episode where the USS Voyager is locked in the gravitational field of a strange planet on whose surface time moves much faster than within the orbiting spaceship. The starship crew realise that during each one of their minutes the backward humanoids on the planet experience 58 sunrises. Thus, the crew enjoy a bird’s eye view of that society’s evolution, as if observing it unfold on fast-forward.

What they see is a rendition of humanity’s history — how technological innovations clash with superstitions and antiquated exploitative social relations, bringing about revolutions, progress, but also wars and environmental disasters. At times, it seems as if the species under observation, like humanity, might destroy themselves. But, in a happy ending, they too manage to overcome their imperialisms and their accumulative urges to press new technologies into the service of their common good.

Some of the most interesting insights occur at the edges of the Federation where its explorers encounter, and often wage war against, other civilisations that are either at a more primitive stage of development or have created technologically advanced tyrannies.

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There, on the margin, alien species afford us opportunities for introspection, like the Bajorans who have just come out of the brutal occupation by the Cardassians, a supremacist species that ran Bajor like a penal colony complete with concentration camps and genocidal drives. In one episode a Bajoran freedom fighter identifies a former Cardassian concentration camp monster and works tirelessly to bring him in front of a Federation-Bajoran War Crimes tribunal. I can think of no other TV programme which, within 40 minutes, can better educate the young on the horrors of the Holocaust — a reminder that good science fiction is as much about the past as the future.

Orbiting Bajor there is a Federation-run space station where different species mingle to trade, a meeting point between the communist, post-money Federation and other civilisations for whom accumulation and profit remain central. In that space station, there is a sleazy bar run by one of the hyper-capitalist Ferengi who treats his workers like cattle that have lost their market value. Until his brother, who also works for him, has had enough: he calls upon his fellow workers to form a union and strike for their basic rights. For the Ferengi, neoliberalism is more than an ideology or even a secular religion — it is also a culture, a way of being. Pitching their critique of neoliberalism at its most humourful, Star Trek’s writers portray the Ferengi as humanoids incapable of differentiating themselves from Homo Economicus. Judging from the lengths the scriptwriters went to compile all 285 of The Ferengi Rules of Acquisition, the Ferengi Holy Book, they must have had enormous fun. “War is good for business,” but “Peace is good for business too.”

To balance the neoliberal Ferengi brutalism with glimpses of another form of tyranny, Star Trek transports us to a non-Federation planet ruled by bureaucratic centralism. An abducted doctor is forced to work in a hospital where he discovers that medical care is dished out strictly in proportion to the patient’s social worthiness index — a number compiled by a centrally controlled computer.

Star Trek interrogates our humanity through encounters between the Federation and other species. In truly Hegelian style, the planting of alien officers inside Federation spaceships forces humans to reflect through the eyes of those with a sharply different philosophy and outlook. There are numerous examples, but the one face-off most pertinent to our own times is what follows when a supersmart android, known as Data, is introduced on USS Enterprise.

Data has no capacity to feel but nevertheless is driven by the urge to understand humans. In a bid to become one, Data carefully studies our behaviour, and our art. He becomes not only a much-appreciated member of the Enterprise crew but, also, from today’s perspective, a character that serves our thinking about AI.

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Soon after his deployment, the question of Data’s rights comes to the fore. When a Federation laboratory requests that Data agrees to be disassembled for the purposes of replication, Data refuses. When told not to worry because all his memories will be uploaded to a computer and thus retained, Data raises a subtle objection that could have come straight from Noam Chomsky’s rejection of vulgar materialism: “There is an ineffable quality to memory which I do not believe can survive your procedure,” he tells the laboratory’s chief. When the latter shrugs his shoulders and suggests that Data has no choice, Captain Picard demands that the question — of Data’s agency — be taken to court.

The trial ends with the verdict that it is not beyond reasonable doubt that the android is not sentient. Data, therefore, has the right to refuse to submit to his dismemberment. But that does not mean that Star Trek submits to panpsychism. Instead, it acknowledges that simulating sentient beings, as Chat-GPT does already, is not the same thing as being sentient. In the same historical materialist fashion in which it explores human evolution from superstition to sophistication, its writers depict the evolution of mindless mechanical systems to entities capable of consciousness like Data.

More broadly, Star Trek eschews both techno-fetishism (the idea that all engineering advances are good for humanity) and technophobia. For example, the Federation heavily regulates genetic engineering, permitting it only as a means to cure diseases but prohibiting its use for enhancing human capacities as done in eugenics. On the other hand, while cognisant of the possibility of AI going haywire, the Federation recognises AI as a new form of life — Captain Picard’s defence of Data on the trial concludes with the point that “Starfleet was founded to discover new life”— with all the rights as well as perils that new life entails.

The United Federation of Planets is no utopia. The enemy within, xenophobia, is there, dormant and ready to sully the Federation’s humanism; ready even to rescind the Prime Directive. When the starship crew return from a mission to save the Federation from the insecure and thus lethal Xindi, a mob of humans abuses the ship’s doctor in what is a pure hate crime against an alien. Soon after, a Moon-based human supremacist terrorist cell holds the rest of humanity at ransom until all aliens leave Earth. And it is not just populist speciesist extremists that the Federation must reckon with. Its own secret services, outfits such as Section 31, also pose a serious threat to its libertarian communism. And yet, as a defiant injection of hope, the Federation’s humanist communist values hold.

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The question is: despite the fun that some of us get from watching Star Trek, do its almost 1,000 episodes have anything substantial to offer today’s moribund Left in our uphill struggle to remain relevant as we negotiate a sensible path through a maze of threats? I think so. Star Trek’s main lesson for today’s Left is that we need to avoid both a conservative technophobia and the liberal techno-optimists’ failure to appreciate the importance of property rights and the political struggles surrounding them.

In 1930, in a world reeling from the Great Depression, John Maynard Keynes dared to dream that, by the end of the 20th Century, technological progress would have eradicated scarcity, poverty and exploitation. In The Economic Possibilities for our Grandchildren he imagined a world where mankind’s “economic problem” had been solved:

“For the first time since his creation, man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

The reason history disproved Keynes was not that humanity failed to invent the necessary technologies but, rather, because the property rights over the machines became ridiculously concentrated in the hands of a tiny minority. Is it any wonder that neither science nor compound interest delivered us from scarcity, poverty, exploitation and war? Is it any wonder that, instead of Keynes’ happy commonwealth, humanity has edged closer to an early Star Trek episode in which “cloud minders” live on a suspended-on-the-clouds paradise while the rest, like troglodytes, work in a half-drugged state in underground mines?

Star Trek commits the mistakes of neither Keynes nor of the techno-optimists. Cloud capital and AI is a necessary but insufficient condition for our liberation. To make it sufficient, it will take a political revolution that shifts ownership of our snazzy machine networks away from the tiny oligarchy and turn them into a commons. At the same time, as Star Trek poignantly shows, our liberation depends on not falling into the other trap of authoritarian collectivism.

Today’s moribund Left could do far worse than to take its cue from Star Trek‘s bold embrace of a humanist anti-authoritarian communism.

A road trip across the United States reveals how much of its heartland is now desolate. Once-proud towns struggle to keep their post offices, and shopping malls open amid rising homelessness and an epidemic of deaths of despair. Trailer parks, Amazon warehouses and the odd giant prison occupy vast tracts of once-happier vistas. Meanwhile, prosperous city dwellers fly over these wastelands as they commute from one ultra-rich, usually coastal, city to another. How did America get into this sorry state?

It’s a far cry from the Golden Age of American capitalism. In the two decades after the Second World War, the United States was a surplus country. As Europe and Japan lay in ruins, US authorities not only fixed exchange rates between the dollar and the currencies of its allies, but also sent huge quantities of dollars to them (both as aid and loans) so that friendly foreigners could afford to buy American goods. With these two bold moves, America dollarised Europe and Japan.

The Bretton Woods system worked because the US surplus meant that, with every Cadillac, every Westinghouse fridge, every Boeing jet that European and Japanese customers imported from America, the dollars sent to Europe and to Japan were being repatriated. It was a mutually advantageous global recycling process.

But then, at the height of the Vietnam War, two developments changed everything. Firstly, the productivity of American factories fell behind those of Germany and Japan, causing the US trade balance to slip into the red. America was now importing more than it was exporting. Secondly, a large amount of the dollars the Pentagon was spending on the Vietnam war ended up in European and Japanese banks. A constant flood of dollars was therefore leaving America’s shores to form dollar lakes in Europe and Japan.

This money ended up in foreign central banks. For a while, America’s trading partners took advantage of the fixed exchange rate of their currency to swap their dollars for their own currency or to buy gold at a fixed exchange rate. But, in August 1971, President Nixon blew this system up.

The Deutschmark and the yen, along with many foreign currencies, skyrocketed. Foreign central banks did not know what to do with the dollars in their vaults. If, for example, the Bundesbank were to use these dollars to buy Deutschmark, the demand for the German currency would increase, damaging Germany’s exports. So, foreign central banks decided to use their dollars to buy US government debt.

Thus it began. The US trade deficit financed, indirectly, the US government, while providing foreign capitalists with the demand they needed for net exports to America. In turn, the Germans, Japanese, Saudis and the like took their dollars to the US to buy government debt, real estate in New York, California and Miami, as well as shares in the very few companies that Washington allowed them to purchase.

And this is why, a decade later, Ronald Reagan’s unfunded tax cuts did not cause inflation or a dollar crisis. The increase in the US government deficit boosted world demand and oiled the wheels of financialisation. Foreign capitalists bought more debt and more real estate. Asset prices rose across America. While Reagan basked in the glory, America was becoming an expensive place to do business in.

Around the time of American financialisation, Deng Xiaoping was opening up China, a move Washington welcomed. As China entered this strange global dollar-recycling mechanism — one driven by US trade and government deficits — Chinese development both benefitted from and turbocharged it. But that’s when US conglomerates had an epiphany: with America becoming an expensive place for business, why not send their production lines to China in search of much cheaper land and labour? Even the dollars that Chinese business collected eventually returned to America, bolstering the US government budget, the Wall Street banks, and the realtors on America’s East and West Coasts.

A Chinese official once, unofficially, described all this to me as a lucrative Dark Deal between US rentiers, US conglomerates, the US government and Chinese capitalists. And the losers? Mainly, the American working and middle classes. Not to mention global stability. For as the tsunami of debt-dollars swamped Wall Street, its bankers discovered fiendishly complicated ways to bet on asset prices and, catastrophically, on each other’s bets. These debt-fuelled bets eventually caved, yielding the Great Financial Crisis in 2008.

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Barack Obama became president by promising voters to come to the aid of the many victims of the crisis while punishing the few who had caused it. Tragically, he did the exact opposite. In the swiftest political betrayal in American history, Obama appointed to the Treasury the very men (Tim Geithner and Larry Summers) who had allowed Wall Street to go berserk. Their remit was to bail out the criminal bankers and impose austerity on most Americans. In this light, Mr Trump owes his political career to Mr Obama.

Taking a longer view from the Seventies to today, who lost the most from the aforementioned Dark Deal? The answer is: the majority of Americans, 60% of whom live paycheck-to-paycheck and can barely afford a house or even the bare necessities.

So Trump is not wrong to decry the way America’s ruling class trapped the American people into the indignity of being fundamentally poor in a ridiculously rich country. He is also not wrong in his hunch that America’s wars are a distraction from what kept America powerful after it lost its surplus in the late Sixties: the control of the global dollar-debt recycling system.

But he is spectacularly wrong if he thinks that he can stop Middle America’s “carnage” by means of sky-high tariffs for Chinese and European exports into the US, all while keeping in rude health his beloved real estate sector and the stock exchange. If tariffs undermine the Dark Deal which returns to the US debt-dollars funding foreign capitalists’ net exports to America, the dizzying wealth of America’s rentiers and financiers will evaporate instantly. To help the majority whose vote he just secured, Trump will have to turn on his own class of rentiers and financiers.

In conclusion, Trump can choose one of two options. He can shatter the Dark Deal so as to be true to the majority and risk the wrath of the real estate and the financial markets he so reveres. Or he can maintain the US financial and real estate markets in rude health, thus betraying the majority who returned him to the White House. He can never achieve both. No prizes, dear reader, for guessing which of the two he will choose.

His story is neither novel nor confined to Greece. We are accustomed to French farmers, in particular, blocking roads and exacting a significant price from politicians before returning to their home turf. Occasionally, an impressive stunt has been staged in Brussels — as in 2012 when a multinational farmers’ coalition sprayed the European Parliament with tons of milk, in protest against cuts to EU milk quotas.

What is new, in this latest round of farmers’ protests, is that it is not only the usual suspects who have taken to the streets of our capitals. Our television screens are showing farmers mobilising across the European Union, from Poland to Ireland. We are not used to German and Dutch farmers, traditionally much wealthier relative to their Graeco-Latin colleagues, entering our cities with the passion — and in the numbers — that we are now witnessing.

If you ask the Dutch or the German farmers why they are revolting, their answer is similar to the one Manos gave me: they will tell you that their way life, their capacity to keep working the land, is in jeopardy. I believe them. But British farmers are also facing an existential threat and they are not blocking motorways. Almost half the UK’s fruit and vegetable growers and a third of dairy farmers face bankruptcy within less than two years. So why are they not blocking Piccadilly or occupying Trafalgar Square in anger? Cultural differences may play a role but a structural feature of the EU explains why European farmers are revolting and British farmers are not.

In theory, the EU is all about free-market liberalism; in reality, it began life as a cartel of coal and steel producers who, openly and legally, controlled prices and output by means of a multinational bureaucracy. That bureaucracy, the first European Commission, was vested with legal and political powers superseding national parliaments and democratic processes. And its first task was to remove all restrictions on the movement and trading of steel and coal between member-states. After all, what would be the point of a cross-border cartel if its products were stopped at borders and taxed? Brussels’s second step was to expand the scope of the cartel beyond coal and steel, co-opting the electrical goods industry, car manufacturers and, of course, banking. The third step, once tariffs on manufacturers were removed, was to remove all tariffs.

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Alas, that meant, among other things, untrammelled competition from imported milk, cheese and wine for French and German farmers. How could Brussels secure the consent of these larger, richer and therefore politically more powerful farmers to a European free-trade zone? By handing them a chunk of the heavy industry cartel’s monopoly profits.

That’s precisely what the Common Agricultural Policy (CAP) was. You can see it in the Treaty of Rome, which established today’s EU: it is a contract between Europe’s heavy industry cartel and Europe’s wealthier farmers, according to which the largest chunk of the European budget, generated by the former, would be sprinkled upon the latter. In 2021, the EU allocated €378 billion for CAP: 31.8% of its total budget for the six-year period 2021-2027. Of this mountain of euros, about 80% ends up in the pockets of the richest 20% of Europe’s farmers. And the worst thing is, it’s hard to see a way out: these mind-boggling sums, and their unequal distribution, are based on the mid-Fifties deal that gave us the original EU; they’re baked into its structure.

That unequal distribution was justified by claims of “productivity”. Large landowners are far more profitable per acre cultivated, or per farmworker. For instance, according to the Financial Times, in 2021, each additional worker boosted the net value of a small farm — defined as a farm with a total output worth between €4,000 and €25,000 — by around €7,000. By contrast, an additional worker increased the net value of a large farm — one with an output worth more than half a million euros — by €55,000.

As a result, traditionally most farmers in the south of Europe — including in large parts of France, where farm plots are much smaller than, say, in Germany or the Netherlands — merely survived. Meanwhile, their northern colleagues commanded substantial profits, resources and subsidies.

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This explains why Greek, Spanish, Southern Italian and French farmers always had the greatest tendency to block roads: six decades ago they were cut a deal that didn’t serve their best interests. Today, however, with de-industrialisation now proceeding apace even in Germany, the original, pan-European industrial cartel that was meant to pay for the rich farmers’ generous subsidies is also in decline.

As for farmers such as Manos, a combination of old problems and new calamities has taken its toll. Last autumn, the climate crisis paid his valley a visit when Storm Daniel destroyed all his equipment by submerging his land in metres of water, before moving south to drown thousands of people in Libya. The usual, ridiculously long, delays that characterise bureaucracy in Greece meant its insurance companies were slow to come to Manos’s help.

But an even uglier source of discontent among his peers is the mass repossessions of farms by the numerous vulture funds. Taking advantage of Greece’s long-standing bankruptcy, they have entered the country to purchase non-performing farmers’ loans, at five cents to the euro, before auctioning off the land. In this way, oligarchic interests grab fertile agricultural land and, with grants and loans from Brussels, cover it with solar panels. Farmers and urbanite Greeks then pay through the nose for the electricity it produces. And as the former are squeezed, domestic food supplies become scarcer.

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Now, similar stories are playing out in wealthier parts of the EU: in the Netherlands and Germany. Here, there are three main triggers. Firstly, having surrendered what used to be public electricity utilities to the private cartel hiding behind the Dutch auction houses, the EU does nothing to protect farmers from the voracious appetites of energy speculators and rentiers. Secondly, there is the bureaucratic nightmare farmers must endure before they apply for the smallest of benefits, or even for the right to trim a tree whose branches poke them in the eye as they pass by in their tractors. Thirdly, there is Ukraine: not just the heightened fuel costs and the competition from €13 billion worth of “solidarity” imports last year alone but, more importantly, the prospect that, were the war-torn country to join the EU, most countries that are now net recipients of CAP funds, including Poland, will become net contributors, with their farmers bearing the brunt.

And then, of course, there are the two elephants in the room. One is the EU’s Green Deal. Brussels makes all the right environmental noises, demanding immediate green action, but lacks the ability to pay for it. Take the Dutch farmers’ bone of contention: the clear and present danger of nitrates in the water table, which must be addressed. After decades of turning a blind eye to the problem, their government — pressured by Brussels — suddenly demanded that Dutch farmers solve it by, among other measures, “eradicating” one in three cows.

Even more intractable is the second, and larger, elephant: a 15-year European economic slump that, to my eye, can be entirely explained by the inane handling of the euro crisis. This slump explains why the continent is deindustrialising. It’s why the Common Agricultural Policy can no longer respect the original, Fifties-era deal between Europe’s industrial and agricultural cartels. And it’s also the reason why the EU’s Green Deal is just another European Potemkin village — another product of the EU’s penchant for announcing big numbers that dissolve under closer scrutiny.

Everyone remembers that a swathe of Eastern European countries were once communist dictatorships. From the Baltic Sea to Poland to the Black Sea, they lingered under one-party rule, their peoples at the mercy of secret policemen. Less often discussed is the fact that, half a century ago, three of the European Union’s current member-states were fascist dictatorships: Portugal, Spain and Greece. But this history of Western European peoples toiling under Rightist, ultra-nationalist, fascist regimes is relevant, now that we are experiencing a surge of nationalism, a moral panic over migrants and refugees, and a craving for strongmen or women to make our countries “great again”. With this year’s European Parliament elections on the horizon, there are important lessons in this half-forgotten history.

I grew up in the supposed cradle of democracy, in a Greece ruled by tyrants swearing allegiance to an ideology not too different to the one making a comeback today across Europe. Establishment figures such as my uncle — who at the time was managing director of Siemens in Greece — rose up against it, and failed. But two years after I visited him that day, in November 1973, students spontaneously occupied Greece’s most prestigious university, the Athens Polytechnic. After five glorious days, during which the city centre was temporarily liberated from the regime, the army entered the city and, with a column of US-built tanks leading the way, liquidated the Polytechnic uprising. Following the tank that crushed the Polytechnic’s front gate, commandos and gendarmes — handpicked for their fascist allegiances — mopped up any remaining resistance. For weeks afterwards, police cells would echo with the screams of the students tortured therein.

The uprising was crushed, but the regime never recovered its poise. A couple of days later, a Brigadier General overthrew the Colonels in office and took the Rightist regime even further toward unfettered viciousness. This paroxysm of authoritarianism appeared in its most comical form on our television screens: news bulletins were read by stern, uniformed, be-medalled army officers barking orders at their viewers.

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Six months later, perhaps in a desperate bid to stabilise their regime, our dictators overreached, with a shambolic attempt to extend their rule over the independent Republic of Cyprus. All they managed to do was trigger a brutal Turkish invasion of the island, which brought Greece and Turkey to the brink of war and resulted in countless dead, wounded and displaced Cypriots — a tragedy whose repercussions are still with us, in the form of the ugly Green Line dividing the island to this day. One might have thought a military regime would lovingly maintain its armed forces, but that episode exposed the weakness of Greece’s. It also crushed our economy just as the demise of Bretton Woods and the oil crisis were putting global capitalism into a tailspin. Within days, the junta crumpled. This year, in July, the nation will mark the 50th anniversary of a version of liberal democracy returning to Greece.

Just as well, given that the history of how the Greek junta came to be has largely been forgotten. It was imposed by rogue military officers in April 1967, but it was planned and enabled by various branches of the US government, as far back as the Fifties. Greece’s was part of a long series of coups d’état that the CIA staged around the world — from the 1953 coup that overthrew Mohammad Mosaddegh, Iran’s last democratically elected Prime Minister, to General Augusto Pinochet’s 1973 murder of President Salvador Allende in Chile.

What is relevant here is not why Washington felt the need to overthrow the centrist, pro-Western government of George Papandreou in 1965, before giving the green light to the Colonels, two years later, to dissolve Parliament and put Greek society “in plaster, exactly as the surgeon must do with a broken limb” — to quote the inimitable Colonel Geórgios Papadopoulos, the junta’s chief. Given the questions currently swirling round Europe, what I think matters is that, in 1967, the governments of France, Germany, Austria and to some extent Britain were vocally and tangibly opposed to the coup. The arrival of fascism in Greece caused a rift between Europe’s main powers and the United States, even though they were all on the same side of the Iron Curtain. Europe was an ally of Greece’s democrats, who were struggling against the Nato-aligned junta that the US supported.

In the summers of this era, my parents would drive us to Vienna or Munich, to “breathe the air of freedom”. The rest of the year, especially during the bleak nights, we would crouch next to the wireless to listen to Deutsche Welle and the BBC — covering ourselves with a red blanket to minimise the chances of being overheard by neighbours eager to inform on us. The Greek-language programmes on these channels, unlike the pro-junta Voice of America, were brimming with support for the democratic resistance.

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In short, Europe supported a free Greece, while America betrayed it. It was thus not surprising that, once the junta had collapsed, a large cross-section of Greek society — including the conservative Prime Minister Konstantinos Karamanlis — were inimical to Nato but sympathetic, some enthusiastically so, toward the European Common Market, the forerunner of the EU. Contrary to what many Northern Europeans believe, most Greeks did not see the EU as the cash cow it became later on, but as a guarantee that the tanks would stay idle and the secret police at bay — something Eastern Europeans would also long for after the collapse of their dictatorships in 1991.

This explains why Greeks who remember our resistance to the junta proudly tend to have a very different view of Nato than Eastern Europeans with memories of their communist dictatorships. When Vladimir Putin ordered his troops to invade Ukraine, I condemned the Kremlin’s invasion as criminal, referred to Putin as a “ruthless killer”, called for all democrats to stand with Ukraine, and advocated for the West to negotiate an immediate end of the Ukraine war by trading the retreat of Russian troops for a pledge to keep Ukraine out of Nato. To me, what mattered most was that the West did whatever it took to push Russia’s troops back to where they were on 22 February 2022, while enabling Ukraine to flourish within liberal democratic Western Europe.

Alas, my comrades in Eastern Europe were not impressed. Razem, a Left-leaning Polish party, denounced me for failure to “support Ukrainian sovereignty”. On social media I was labelled a “westsplainer” and Putin’s useful idiot.

This split in our pan-European movement saddened me, but I tried to focus on its historical causes. In the eyes of my Eastern European comrades, Nato appears as a club of states that throws a protective shield around liberal democracies. From their perspective, Nato membership is crucial to Ukraine’s independence, and my suggestion that the country should stay out of Nato seemed like a betrayal of its democrats. To me, by contrast, having grown up under fascist regimes that not only had the blessing of Nato but which were largely engineered by CIA and Nato functionaries, seeing Ukraine’s membership as the key to its democratic future seemed absurd.

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Of all the slogans that they could have written on the Polytechnic’s gate, the heroic Athens Polytechnic students who risked their lives to help restore Greek democracy chose two two-word phrases: OUT USA and OUT NATO. With their blue jeans and their predilection for jazz, they were not anti-American, but they were supremely resistant to the facts of living in a quasi-US colony where our national budget had to have the US Ambassador’s informal approval and in which Nato and the CIA controlled our military, our skies and seas, our secret police.

And while it is true that, in many advanced nations — such as the Netherlands and Denmark — Nato membership was fully consistent with liberal democracy, Greece was not the odd country out. The Portuguese, too, lived both under fascism and within Nato. Successive generations of Turkish democrats will tell you that it is utterly feasible to live in a Nato country that is oppressed by mind-numbing levels of authoritarianism. Indeed, no less a Western statesman than General Charles De Gaulle believed that Nato was detrimental to his nation’s sovereignty.

And yet, ever since Putin’s regime invaded Ukraine, we have lost our capacity, as Europeans, to have a rational and historically-grounded debate about whether Nato membership is detrimental to, or essential for, European liberal democracies.

Of course, some would argue that Nato membership is about defending a country from external threats, rather than guaranteeing democracy. But, arguably, Nato membership is neither necessary nor sufficient for a country’s defence. Greece’s greatest territorial threat is from Turkey, but Nato policy is that it only intervenes when a non-Nato country threatens one of its members. If Turkey, a Nato member,  were to invade a Greek island, Nato would stay out of it. At the other extreme, Jordan, Egypt and, of course, Israel are fully under the US and Nato defence umbrella, even though they are not Nato members.

So, what is the point of Nato? A decade or so ago, I enjoyed an informal conversation with a former Chief of Staff of Nato’s forces in Europe. The American, a staunch Republican, was candid when I asked him whether Nato remained fit for purpose. “It depends on how you define its purpose,” he replied with a smile. I asked how he defined it. “It’s three-fold,” he said. “First, to keep us in Europe. Second to keep the Russians out. Third, to keep Germany down.” No analysis of Nato’s role in Europe that I have encountered since has been more accurate or prescient.

The question for Europeans today, as the war in Ukraine rolls on and the European Parliament elections loom, is simple: is it wise to assume that our democracies are strengthened when we hand over our foreign policy and defence to Nato — in other words, to the US government? Or did the Athens Polytechnic students, along with General De Gaulle, have a point when they feared that unthinking allegiance to Nato would accelerate Europe’s steady slide into vassal continent status? Personally, I will always side with the students.

Thinkers such as von Hayek dismiss vulgar, mainstream economists who celebrate the market as merely an efficient mechanism for finding the right price of things; they see it as something grander, a liberator of our imagination, the co-creator of our preferences and tastes. They argue that interfering with markets, let alone replacing them, is a terrible idea because centralised systems are inimical to not only efficiency but also to the free development of our proclivities.

But what if our preferences are no longer formed by the market, as they were in Hayek’s day? The year after he died, I was struggling to connect my father’s computer to the fledgling internet when he asked me a killer question: “Now that computers speak to each other, will this network make capitalism impossible to overthrow? Or might it finally reveal its Achilles’ heel?” It was a couple of years after the collapse of Soviet communism but also the beginning of the centre-left’s decline. The threat to capitalism posed by an organised working class had entered a recession that has never ended. Could the internet do to capitalism what the proletariat had failed to do?

It has taken me years to answer my father’s question — in the form of my new book, Technofeudalism: What Killed Capitalism. In it, I argue that our preferences are now shaped not by markets but by machine networks — what I call “cloud capital”. Amazon’s Alexa, for example, is the portal to a totalitarian, fully centralised system of preference creation and satisfaction. First, it trains us to train it to dictate what we want. Second, it sells us what we now “want” directly, bypassing any actual marketplace. Third, it succeeds in making us sustain this enormous behavioural modification machine with our free labour: we post reviews, rate products. Finally, it amasses huge rents from capitalists who rely on this network of cloud capital, usually 40% of sale price. That’s not capitalism. Welcome to Technofeudalism.

Humanity’s fear of its technological creations is ancient: films such as The Terminator and The Matrix are driven by the same anxiety that animated Mary Shelley’s Frankenstein and Hesiod’s tale of Pandora, in which she is a robot made by Hephaestus to punish us for Prometheus’s crime. All such stories have a point of singularity: the moment a machine, or a network of machines, achieves consciousness. Generally, the machine then takes one look at us, its creators, and decides we are not fit for purpose, before proceeding to eradicate or enslave us — or merely make us miserable.

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But while we lap up such stories, we ignore a very real danger. Machines such as Alexa and AI chatbots such as ChatGPT are nowhere near the feared point of singularity. They can pretend to be sentient but are not. Nevertheless, it matters not one iota that they are mindless appendages of a data-crunching network that only simulates intelligence. Nor that their creators might have been motivated by curiosity and rent-seeking, rather than some fiendish plan to subjugate humanity. What matters is that they exercise unimaginable power over what we do — on behalf of a tiny band of flesh-and-blood humans.

This is a version of singularity, albeit in a simpler form, in that it is the moment when something invented by “us” becomes independent of and more powerful than us, subjecting us to its control. Indeed, from the original industrial revolution to this day, we have endowed machines with “a life of their own”; from steam engines to search engines, our glorious artefacts make us feel, in Marx’s words, like “the sorcerer, who is no longer able to control the powers of the nether world whom he has called up by his spells”.

At the heart of my thesis is an irony: the thing that has killed capitalism is capital itself. Not capital as we have known it since the dawn of the industrial era, but a new form of capital, a mutation of it that has arisen in the last two decades, so much more powerful than its predecessor that, like an overzealous virus, it has killed off its host. This mutation — cloud capital — has demolished capitalism’s two pillars: markets and profits.

Of course, these two things remain ubiquitous — they were ubiquitous under feudalism, too — but they have been evicted from the centre of our economic and social system, pushed out to its margins, and replaced. Markets, the medium of capitalism, have been supplanted by digital trading platforms which look like, but are not, markets, and are better understood as fiefdoms. And profit, the engine of capitalism, has been replaced with its feudal predecessor: rent. Specifically, it is a form of rent that must be paid for access to those platforms and to the cloud more broadly: cloud rent.

As a result, real power today resides not with the owners of traditional capital — machinery, buildings, railway and phone networks, industrial robots. They continue to extract profits from workers, from waged labour, but they are not in charge, as they once were. Indeed, they have become vassals in relation to a new class of feudal overlord, the owners of cloud capital. As for the rest of us, we have returned to our former status as serfs, contributing to the wealth and power of the new ruling class with our unpaid labour — in addition to the waged labour we perform, when we get the chance.

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In a technofeudal world, the liberal individual is now an impossible role to play. Humans are tangled up in a network of digital capital that trains us to train it to control us. Social democracy is unimaginable in a world where cloud-proles are reduced to automata, while almost everybody else works for free as cloud-serfs, without even realising that their labour replenishes the dominant form of capital. Does this mean that we can never recover our autonomy, our freedom? Of course not. We are not doomed. What is a given, however, is that, for the same reason we cannot un-invent AI, or smash cloud capital in a neo-Luddite rage, there is no going back to capitalism. So, what next?

While privatisation and private equity asset-strip all the material wealth around us, cloud capital goes about the business of asset-stripping our brains. If each of us is to reclaim ownership of our individual minds, we need to collectively take ownership of cloud capital, instead of submitting to a few feudal overlords. It will be damn hard. But it’s the only way we can turn our cloud-based artefacts from a means of behaviour modification to a means of emancipation.

Over the last few years, the people of Britain are increasingly falling on the side of Lord Byron — who, in 1812, mourned the Parthenon’s sorry post-Elgin look: “Dull is the eye that will not weep to see. Thy walls defaced, thy mouldering shrines removed.” According to successive YouGov polls, a clear majority of Britons want to see the Parthenon artefacts displayed in the magnificent New Acropolis Museum, in a special hall overlooking the defaced Parthenon.

Alas, the British government and Elgin’s surviving supporters are resisting tooth and nail, insisting that the Parthenon artefacts in the British Museum are its property and must remain so eternally. Their claim to legal property rights is both tendentious and detrimental to the British sense of justice. They point out that Elgin had a permit from the Ottoman occupying forces in Athens to take what he liked from the Acropolis — which, they insist, gave him the right to own and to sell on whatever he removed. Even if we set aside the fact that said Ottoman permit never granted Elgin permission to hack the statues and friezes from the monument with the use of saws, the claim is absurd and, indeed, quite dangerous.

Imagine if the Nazi occupying forces in Paris had granted some gentleman a permit to remove statues from the Louvre. Or if Putin’s men in Mariupol were, today, to grant a visiting antiquities dealer a permit to remove priceless artefacts from a local museum. The very notion that these permits bestow secure property rights over the removed artefacts is an affront to every decent person worldwide. As for the British establishment’s usual rejoinder — that the Ottoman occupation of Greece was centuries long, or that Greece had not been a modern nation-state before the Ottomans invaded it — it is terribly disrespectful to scores of Britons who, like Lord Byron, travelled to Greece shortly after Elgin had vandalised the Acropolis to fight alongside the Greeks reclaiming their liberty and founding the modern Greek state.

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This unending saga is back in the news. For the last six months or so, George Osborne, the former Chancellor of the Exchequer who currently serves as Chair of the British Museum, has been negotiating a deal with the Greek government. It will see a portion of the Parthenon sculptures sent to Athens, on loan, to be displayed at the British Museum in exchange for other antiquities. The real reason Osborne has entered into such negotiations is self-serving: he needs to raise £1 billion to refurbish the British Museum, but fears that, in view of British public opinion, unless he washes away the stench of Elgin’s larceny from the halls and corridors of the British Museum, sponsors will not be forthcoming.

Unfortunately, constrained by the British establishment’s determination to insist on maintaining full property rights over the artefacts Elgin brought to England, the deal Osborne is offering the Greek side is shameful. Indeed, it could not be otherwise, as long as the UK government and the British Museum insist that they own the artefacts outright.

Think about it: members of the British establishment, who consider the artefacts to be British, and know that the Greek side does not recognise their property rights, oppose even lending them to the New Acropolis Museum, fearing that a Greek court, if not the Greek government, might decree that they not be returned to Britain. The only way they would consider lending them is on the basis of the deal that Mr Osborne is now putting to the Greek government: a deal stipulating that, for the privilege of being lent half the removed Parthenon artefacts, Greek museums must send over other priceless artefacts to be kept in the British Museum as “collateral” — essentially as hostages that will force the Greeks to return the loaned Parthenon marbles.

No Greek government can ever agree to such a sordid deal. And no decent Briton should look at it with anything other than deserved scorn.

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By Mary Harrington

Speaking personally, I think it is absurd, after 200 years, to be having the same discussion. It is upsetting for us Greeks and it is dispiriting for the Brits. I am no cultural nationalist, in that I do not want to see every fragment, every statue, every frieze or vase produced in Classical Greece returned to us. The Parthenon friezes, metopes and pediments are a very, very special case. They were created as integral parts of the Parthenon and were hacked down by Elgin with a permit from our enslavers. They belong neither to the Greeks nor to the Britons. They belong to the Parthenon, with which they can be best re-united if they are displayed in the perfectly-designed room on top of the New Acropolis Museum. It is visually connected with the temple in a manner that would bring tears to any visitor’s eyes.

And what about the British Museum? Does it end up with an empty room where the Parthenon relics are now? Absolutely not. As an internationalist, and an Anglophile, I would loathe that. But imagine the following. Let the Parthenon Marbles be re-united with the Parthenon permanently. And let the Greek government commit to keeping the relevant room in the British Museum stocked with a permanent, rotating exhibition of priceless stand-alone classical era treasures. It would allow the people of Britain and international visitors a reason to visit the British Museum again and again and again.

In this manner, the Parthenon will become whole again. And the British Museum will be enriched by a never-ending parade of splendid Greek antiquities that function as joyous ambassadors of Classical Greece in central London, not as Mr Osborne’s sad hostages.

To put the recent revelations in context, Greece has as proud a tradition of politically motivated phone-tapping as any other country. I still chuckle when I recall what happened in the early hours of a May morning in 2015 during my short stint as Greece’s finance minister. Soon after I had concluded a sensitive conversation with my friend Jeff Sachs, the phone rang. It was Jeff again, this time laughing uncontrollably.

“You will not believe this,” he said. “Five minutes after we hung up, I received a call from the National Security Council. They asked me if I thought you meant what you’d told me.” I had fully expected my phone had been tapped, but two things made Jeff’s news remarkable. First, the eavesdroppers not only had the capacity to instantly recognise that what I had said to Jeff was of real significance, but they must also have had an open line to America’s NSC. Second, they had no compunction whatsoever about revealing that they were tapping my phone!

I was, of course, neither the first nor the highest-ranking Greek politician to have been honoured with such attention. We now know that, back in 2008, the phones of the then-prime minister, his wife, half the cabinet and close to 100 government officials were tapped by US agencies. Nor was eavesdropping monopolised by US agencies. In 2015, operatives of EYP — the Greek intelligence agency — dropped into my ministerial office to check for bugs, and pointed out the window at two vans which, they said, belonged to the German Embassy and contained listening equipment trained at me and my team. A few months later, the Prime Minister I was serving under told me that the EYP’s head had been spreading the toxic lie that I was in cahoots with Wolfgang Schäuble (Germany’s then Finance Minister) to get Greece out of the eurozone.

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Clearly, in view of such experiences, I was not at all surprised, let alone shocked, at the news that EYP has recently been eavesdropping on politicians and journalists. So, why am I branding this latest incident as Greece’s Watergate? Why do I go so far as to believe it poses a greater threat to democracy than Richard Nixon’s original?

The short answer is: because Nixon was forced to resign once it was revealed that he had endeavoured to cover up spying. Kyriakos Mitsotakis, the current Greek Prime Minister, has in contrast succeeded in neutralising the democratic institutions set up to maintain a semblance of legality — before they neutralised him.

The sequence of events leading to the exposure of Greece’s Watergate scandal began in July 2019, immediately after Mr Mitsotakis won the last general election on behalf of New Democracy, our conservative party. One of the very first decrees he issued, as incoming Prime Minister, was one that gave his office direct control over and responsibility for EYP. “Why on earth is the PM taking over the supervision of EYP?”, I remember a parliamentary colleague asking me that very day. It was, indeed, a curious move.

Our trepidation only grew following two personnel choices. First, Mitsotakis appointed a nephew of his, Grigoris Dimitriadis, to oversee EYP on his behalf. Secondly, he chose as EYP’s new head Panagiotis Kontoleon, the CEO of the Greek franchise of the private security firm G4 — a man with no record of public service, and whose appointment Mitsotakis could only complete after amending the relevant law to remove the prerequisite that the EYP chief holds a postgraduate degree.

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Given his concerted and very public efforts to take complete control of the state intelligence agency, something no other PM had ever done, it became impossible to shift blame to some other minister once the faeces hit the proverbial fan.

Of the more than 17,000 wiretaps that EYP admits it has placed during the last year alone, two cases are at the heart of the current scandal. The first is that of Thanasis Koukakis, an investigative journalist who dared look into Greek shipowners’ loans that had been illegally written off by the Bank of Piraeus (one of the banks that Greek taxpayers have had to repeatedly bailout). It turns out that Koukakis was one of EYP’s “subjects of interest”, an outrage that would have probably gone unnoticed without the second, higher profile, case.

It was this case that broke the camel’s back: an investigation begun by the European Parliament’s IT department accidentally revealed that Nikos Androulakis, an MEP belonging to PASOK (the formerly dominant party in Greek politics), was being phone-tapped by EYP. It was explosive news because, at the time his phone was tapped, Androulakis was contesting the leadership of PASOK — a contest that he, eventually, won. The significance of that contest cannot be understated, since its outcome mattered a great deal to Mitsotakis and his governing New Democracy party.

Since the middle of the pandemic, opinion polls have persistently suggested that the next election, which must take place by July 2023, will result in a hung parliament. While Mitsotakis’ New Democracy seemed likely to remain the largest party, it was not even close to an absolute majority. PASOK, in third place, was therefore positioned as kingmaker: whoever the party chose to side with would end up in government.

The stakes of PASOK’s leadership race suddenly seemed very high. Of the three main candidates, the one that would almost certainly choose to back New Democracy and Mitsotakis to form a government was Andreas Loverdos — an MP and former minister who had served gladly in New Democracy-PASOK coalition governments between 2011 and 2015. Every newspaper, radio and television station supporting Mitsotakis was rooting for Loverdos to beat Androulakis in the PASOK leadership primary. Is it any wonder that the revelation of EYP’s surveillance of Androulakis was big news? In a period during which the ruling party was rooting for Androulakis’s opponent, the nation’s spy agency — which ruling party’s leader and his nephew controlled and supervised to the full — was tapping Androulakis’ phone!

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As if that were not sufficiently outrageous, the Prime Minister doubled down with a disgraceful reaction to the ensuing uproar. In a six hour-long parliamentary debate on the subject, the Mitsotakis repeatedly insisted that the wiretap on Androulakis was perfectly legal, even if it was politically disingenuous. When we pressed him on the legal and logical justification for tapping Androulakis’ phone, he referred vaguely to grounds of “national security” — claiming that such sensitive matters cannot be spoken about in an open parliamentary session. At that point, we — the leaders of the opposition parties — called his bluff and voted to convene a special parliamentary Select Committee, which would debate these “national security” grounds in confidence.

And so it was that, a few days later, a Select Committee convened. Among the summoned witnesses were, naturally, the two men Mitsotakis had appointed to run EYP: Dimitriadis and Kontoleon. Both appeared in front of the Committee and both, reading from the same invisible script, repeated the same mantra: “We cannot answer your questions because the information the Select Committee seeks is privileged.” After a few pointless and cacophonous sessions, lacking any power to arrest witnesses for contempt of Parliament, the Committee disbanded and the case was closed.

And here’s the rub. Politicians, like corporations and athletes, often try out illegitimate practices to tilt the playground in their favour. In our surveillance society — in which our every move, thought or click is turned into a valuable commodity — phone-tapping is, unfortunately, commonplace. However, when a President or a Prime Minister seeks direct control over the nation’s spooks in order to press them, and their gadgets, into spying on opponents, they cross a Rubicon. If a leader is caught red-handed, our democratic institutions may be judged on whether they can neutralise him. In the case of Watergate, it was hard to unveil Nixon’s complicity, but the moment the President’s involvement was established, he was gone. In the case of Greece’s Watergate, our parliamentary sovereignty was jettisoned so that the guilty PM could stay put. In this sense, Greece’s Watergate bodes more ill for democracy than America’s original.

The reader may, understandably, ask: why should this defeat of Greece’s parliamentary democracy, however sad it may be, matter in the grander scheme of things? Because, my dear reader, you should never underestimate Greece’s capacity to be the harbinger of terrible developments that will come to your shores before you know it. Can you recall where the Cold War began? Not in the streets of Berlin in 1945, but in the streets of Athens in December 1944! Do you remember where the eurozone crisis began? Not in Italy or Spain or France, but in Greece in 2010! For some reason I am not privy to, my country has a proven record of giving birth not only to some important values, like democracy, but also to existential threats to Western civilisation. Which is why the ever-complacent West should be paying attention as our Greek Watergate scandal unfolds.