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.

The slang-words describe two teenage tribes. One wore Reebok Classics, brands like Ellesse or Diadora, and (often Burberry) baseball caps. They smoked straights, drank alcopops (if they could get hold of them), liked football, and listened to the charts. The girls wore large earrings and carried drawstring bags from sports shops. The boys gelled their hair.

The other lot wore Vans and DC skateboarding shoes, baggy jeans, and Billabong hoodies or rucksacks. They smoked roll-ups and cannabis (if they could get hold of it), liked skateboarding or hacky-sack, and listened to rock or reggae. The girls had heavy eye make-up, and sometimes a nose piercing. The boys did not gel their hair. Read Mods and Rockers, but for pubescents growing up at the turn of the century.

This was a culture war played out in miniature, in an era of relative prosperity and peace. But it’s one which I think, as I’ll explain later, helps us understand modern political divides.

At my secondary school in Norwich, the two clans were omnipresent and — to start with, at least — mutually exclusive. I was ushered into the former tribe, when it became clear that I liked football and had never stood on a skateboard in my life. Each UK region had different descriptors for the groups, I later learnt, but our area used “townie” and “pikey”. “Pikey” being a derogatory term, albeit used to describe something completely different, I’ll use the word “mosher” in the rest of the article, to describe the skater tribe’.

As well as a general mood of sectarianism between the two groups — a “mosher” girl in my class was beaten up by “townies” from another school in Year 8, and retributions followed — there were political differences, too. Those who marched against Iraq were mostly of “mosher” heritage. And “mosher” saw themselves, more generally, as upholding social liberalism. This largely involved mimicking the other side’s use of the word “gay” (an all-purpose “townie” insult at the time) by grunting “Yer gay” in the broadest Norfolk accent they could muster. This backfired, in progressive terms, as many “moshers” discovered a liking for the term “gay” once they’d sampled it, and were soon chucking it about just as casually as their “townie” peers.

By age 16, affiliations had weakened. The clans had discovered common ground — or common enemies. People mixed and matched. And every now and then a “mosher” would surprise the “townies” by revealing themselves, under the big shoes and pocketed trousers, to be good at football. In particular, the ubiquitous desire for marijuana, alcohol and cigarettes made it necessary for the identities to mingle. A large group of smokers in our year — of both “townie” and “mosher” vintage — took to loitering in a circle at the end of the field, furtively imbibing cannabis or tobacco, and hocking phlegm into a huge, symbolic puddle of shared mucus.

Yet a duality remained. Many former “townies” left school at 16 or 18, and went to work — sometimes earning decent salaries and getting on the housing ladder, sometimes not. They had more money to spend and went out in different clubs — the sort where local footballers frequented the VIP area. And they learnt to drive.

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“Moshers”, meanwhile, morphed into hippies or indie kids. They did not want to be known as “geeks” any more than the “townies”. But when the moment came, they were more likely to stay on at Sixth Form — and then, often, to leave the city to study or travel. As economic inequality moved into focus post-2008, some will have learnt to see terms such as “townie” and “chav” as marks of bigotry — little better than racial slurs. Many former “moshers” may now, in fact, be more offended by these words than those they once used them against.

The phenomenon I describe — evident across many parts of Britain, and especially away from big cities — ran far deeper than hobbies and fashion. Its roots were social. Where I grew up, “townies” mostly came from houses built this side of the Second World War. Some lived on the council estates which formed part of the school catchment. Many others lived on newer developments further out, or in expanses of owner-occupied suburban semis. We lived in a city and were proud of this status, but the “townie” strongholds — as their label, I suppose, implies — tended to be the areas which were least urban or least urbane.

The “mosher” spirit, by contrast, emanated from — although was not unique to — the Victorian or Georgian terraced houses closer to the city centre. These had bay windows and smaller gardens, and were en route to the university, in and around an area known as the Golden Triangle. This neighbourhood was characterised by its shabby chic tastes, strong social capital and high house prices. It was not super-rich, by any means, and may not even be much more affluent than “townie” dominated areas further out. But its sense of itself was quite different.

So, what does this nascent identity politics, conducted on the playing fields of Blair’s Britain, tell us about the UK in 2023? It would be daft to overstate it, but I think some contemporary fault-lines are evident.

The first is about what I’d call “the glossy and the matte”. This is a political distinction for all the ages; between those looking to advertise their social status and those looking to disguise it. Dressing up and dressing down, new money and old, gaucheness and “good taste”. Even George Eliot’s Middlemarch, set in the 1830s, touches on the same theme. It’s telling, I think, that my school, comprised as it was of a pretty ordinary economic intake, devised an alternative caste system on the basis of glossy and matte preferences.

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Many of the subtler barriers to modern social mobility come down to the same distinctions. Amol Rajan’s documentary “How to break into the elite” depicts working-class graduates donning sharp suits for job interviews in the arts, only to find that the well-paid executives interviewing them are wearing t-shirts and trainers.

The second fault-line is between economic and cultural capital; materialism and post-materialism. It’s a while since I read Chavs by Owen Jones, but one thing that didn’t ring as true when I did was the idea that anti-“chav” sentiment sought to deride poverty. In my experience, at least back then, it was about a mutual contempt, between those who valued the signifiers of wealth or status and those who valued the signifiers of taste or intellect. It’s true that most of those in social housing were “townies”, but it’s also true that most of the “townies” I went to school with did not live in social housing.

I do think that the hierarchy which “moshers” sought to create was just as bad as that which “townies” were cultivating. But I don’t think it was quite as simple as “haves” mocking “have-nots”. Certainly, this isn’t what “pikeys” thought they were doing. Many regarded themselves as the underdogs, and their primary accusation was that “townies” were parochial — not that they were poor. In return it was they — the “dirty mosher” — who were disparaged for their lack of respectability.

The most obvious modern echo here is the Corbyn project. Scruffy and proud of it, the movement was contemptuous of what Tony Blair called “aspiration”. Corbyn and his team spoke primarily to post-materialist values and higher cultural capital, and appeared to see those who valued economic capital — “townies” and their ilk — through the lens of “false consciousness”.

Third, the fissure exposed a fault-line between mainstream and alternative. One interesting thing about my school’s dynamic was the fact that “townies” and “moshers” were so evenly matched in terms of numbers. A generation beforehand, “mosher” culture might have been peripheral, but by the time I went to school there were whole industries dedicated to “mosher” clothing and music. “Mosher” — ism was, at core, an act of rebellion — against suburban conformity and materialism. But, by 2001, striking out in this way was a popular pastime.

This links to a perennial question for those in the “alternative” corner: what happens when the identity you champion becomes mainstream? Many culture war debates relate to this. James Harris recently critiqued Stewart Lee, for example, for continuing to base his comedy on the idea that he’s part of a pioneering Left-wing vanguard. In fact, Harris writes, Lee’s liberal values are now very common.

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Finally, as I’ve already touched upon, the “townie”-“mosher” split often ran along the fault-line between those who stay in the town and those who migrate elsewhere. Analysis from a few years ago cast this as a central tension in US politics, determining which way people voted in 2016. And Brexit may well have followed the same pattern.

Why were “townies” more likely to stay in the place they grew up and “moshers” to move to bigger cities? Beyond some of the socio-economic reasons, and those relating to access and expectations, there was a values dimension. Just as “townie” clothing was about adhering to the rules of contemporary fashion, the “townie” approach to life was commonly about succeeding within the framework of the place you lived. “Moshers”, by contrast, often styled themselves as misfits, for whom “every day was like Sunday”. They rejected the framework and were less tied to the place itself.

The upshot of this is that many “townies” and “moshers”, pulling in opposite directions from the very start, may have diverged more and more as the years passed. This applies to the age they had children, their experiences of the UK housing market and whether they cycle or drive.

So, what became of the “townies” and the “moshers”? They’re now in their mid-30s, and the world has changed shape since they were buying Nokia phone cases, watching Ali G, and half-listening to their parents discuss 9/11. The caps and skateboards have been retired, the gold chains and hacky-sacks decommissioned. But in a sense, I think, the confused conflict which they were engaged in lives on.

It governs how people define “success” in their own lives, and it explains why many of the polarisations which emerged after Brexit were so heavily rooted in symbolism, be it TV or food preferences. For millennials trying to make sense of all this, it’s worth taking a trip down memory lane, to the classrooms of 2000s Britain and the strange social eco-system which existed there.

Smith’s most celebrated panorama relived his ascent of Mont Blanc in 1851 — which had been an astonishing physical feat for a clubbable bon viveur (though he had to be dragged to the summit barely conscious, he claimed to have celebrated by drinking a bottle of champagne and smoking a cigar). He pulled out all the stops to recreate Mont Blanc on the stage of the Egyptian Hall, Piccadilly in 1852, importing woodcarvers from Chamonix to recreate a Swiss chalet. St Bernards roamed the aisles and during the interval hot baked potatoes were dispensed for those in the audience feeling a glacial chill from the buckets of cold water placed around the hall. The stage was decked with alpine plants; there was a waterfall with real water, a mill wheel and a lily pond; the walls of the theatre were hung with chamois skins. “The Ascent of Mont Blanc” ran for six years and 2,000 performances, and on top of the fortune he made in ticket sales, Smith cannily expanded his repertoire by selling colouring books, fans, board games and miniature models of Mont Blanc.

Smith, an unrepentant populist (he liked to shock Thackeray by saying that Shakespeare was “all rot”), knocked the high culture out of the touristic experience. He made the adventure of foreign parts bite-sized and accessible — if not in reality, at least in dreams. He called it “the Alps in a box”. Figuratively speaking, Smith’s panoramas boxed up the great sights of the classical Grand Tour and sold them in miniature form, building them up with a dramatic flourish then cutting them down to size with a knowing dig in the ribs. Smith’s success runs parallel with the emergence of photography, the industrial manufacture of souvenirs, and the “I was here” frame of the postcard. After Smith, it became possible to think of “buying” the travel experience without actually going very far, framing it, and taking it home with you. Antiquarian high-culturists looked for quiddity and oddity when abroad but Smith encouraged a joyful appetite for mass-produced kitsch. His own apartment off Tottenham Court was a riot of knick-knackery from his travels. There was a figure of a Swiss peasant with a clock-face in his waistcoat, Venetian glasses, miniature Swiss chalets, soap from Vienna in the shape of fruit and a working model of a guillotine.

The tourist boom in Chamonix inspired by Smith was viewed with horror by those who thought the mountain were theirs to command. Ruskin found the “white leprosy of hotels” and souvenir shops that followed the visitors into the Alps was a blasphemy against “all the deep and sacred sensations of nature”. Everywhere the new tourists went, reported a journalist in 1856, they brought with them “Cockneyism, Albert Smithery, fun, frolic and vulgarity”. The rise in popular tourism to Europe, sparked most importantly by Thomas Cook, had highlighted a divide which has characterised British travelling ever since. In this paradigm, the tourist is the new bug and the traveller is the old soul. And even when they are gazing at the same view, the latter thinks the former is spoiling the view. The distaste is notable in how often crowds of tourists were, and still are, described in terms of mindless cattle or insects — they come in “herds” and “swarms” and “flocks”.

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Naturally as most people like to think they are an old soul, the tourist, as Evelyn Waugh put it, “is the other fellow”. Wherever the crowd goes, it is sure to be perceived by those in another crowd to debase the special spirit of place. Quite what the original spirit of place is often hard to define, but traditionally the British tourist thinks that their fellow countrymen are trampling on it. Newlywed Emily Birchall in 1870 found her visit to St Peter’s ruined by the sight of a British tourist reading his guidebook under the high altar and one feels her pain. The more expensive and bespoke the tourist experience, the more it will sell itself as being particular and unconventional, off the beaten track, away from the throng; until the throng reaches Easter Island or Lapland or Everest. Which of course it almost always does.

Thomas Cook, progenitor of the modern package tour, was a much more serious character than Smith, a former printer and temperance campaigner whose package tour business started as an effort to keep working men away from the pub on the holidays (more properly known as holy days) that constituted their only days off. By the time Smith had conquered Mont Blanc, Cook had been running tours to the Continent for several years. He had become used to the jibes about “Cooks’ Tourists” with their aspirational itineraries and their guidebooks, with points of interest rated by stars or exclamation marks. But Cook was proud of his groups and of what he was introducing to people unaccustomed to travel. “Practical people from the provinces and representatives of the better style of the London mercantile community” is how he described his tourists and he loved them. And they loved him too — a Thomas Cook tour became a byword for trustworthiness and paternal consideration. What Cook offered was something new: the holiday as a collective as well as an individual experience. And it brought with it all the expansions and limitations of the group itself.

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France, the last bastion of bullfighting

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From Lawrence Sterne’s fastidiously risk-averse Dr Smelfungus to a coach tour of larky cockneys in Carry on Abroad, the humour that can be squeezed out of the comical figure of the Brit abroad still seems inexhaustible. One of Albert Smith’s many insights was that tourists like laughing at their fellow countrymen. The ingénue, the know-nothing, the stuck-up type, the travel bore, the vulgarian and the gullible lady traveller all make appearances. They were a satirical speciality of comic novelists like Thomas Moore (The Fudge Family in Paris) and Thackeray (The Kickleburys on the Rhine). The one defining feature is that the reader does not recognise herself in these hopeless embarrassments: they are other ones, the noisy passengers in the overcrowded night train or the ones (snigger) demanding a cup of tea in bad French. Those for whom maintaining social distinctions was important have found plenty to criticise in their fellow tourists but increasingly, others were delighted by the general flattening of class signifiers. By the Thirties, a passenger on a cruise noted: “The thing about cruising is that everyone is dressed in the same kind of light and bright clothing, and so you cannot tell the dukes from the dustmen.”

In the end most people, it appears to me, are after the same thing. British tourists of all types are surely at heart seeking a slice of pastoral, however mass-produced it might be in reality. It doesn’t seem to matter how inauthentic the peasant culture or the artisanal breakfast may be, for tourism simultaneously kills and preserves the thing it seeks. Even the hermetically-sealed world of the beach resort offers its own version of a lost arcadia. So what if the price of arcadia is other people?