Assange and Varoufakis warn why the prevailing economic crisis could lead to fascism

Support for Julian Assange
Support us and go ad-free

On the day the far right clashed with police in London, economist Yanis Varoufakis spoke by phone with WikiLeaks founder Julian Assange, currently held in custody in Belmarsh prison. Their conversation was about the prevailing economic crisis resulting from the coronavirus (Covid-19) pandemic and what it could lead to.

Their conclusion is frightening.

Collapse of capitalism as we know it

On Saturday 13 June, former Greek finance minister Varoufakis received a phone call from Assange. It lasted just under 10 minutes. Assange asked: “I want a perspective on world developments out there – I have none in here”.

Varoufakis observed:

We watch in awe as GDP, personal incomes, wages, company revenues, businesses small and large, collapse while the stock market is staying relatively unscathed. The other day, Hertz declared bankruptcy. When a company does this, its share price goes to zero. Not now. In fact, Hertz is about to issue $1 billion worth of new shares. Why would anyone buy shares of an officially bankrupt company?

The answer is: Because central banks print mountain ranges of money and give it for almost free to financiers to buy any piece of junk floating around the stock exchange.

Varoufakis then explained how:

Read on...

Support us and go ad-free

Central bank money printing keeps asset prices very high while the price of ‘stuff’ and wages fall. This disconnect can go on growing. But, when Hertz, British Airways etc. can survive in this manner, they have no reason not to fire half the workforce and to cut the wages of the other half. This creates more deflation/depression in the real economy. Which means that the Central Banks must print more and more to keep asset and share prices high. At some point, the masses out there will rebel and governments will be under pressure to divert some income to them. But this will deflate asset prices. At that point, because these assets are used by corporations as collateral for all the loans they take out to stay afloat, they will lose access to liquidity. A sequence of corporate failures will commence under circumstances of stagnation.

Varoufakis concluded:

I don’t think capitalism can easily survive, at least not without huge social and geopolitical conflicts, this conundrum.

But he was not suggesting a post-capitalist utopia could arise from the ashes. Just the opposite.

The impending danger

Varoufakis says Assange responded by asking:

How important is consumption to capitalism? Also, what percentage of GDP is at stake if consumption does not recover? Do the corporations need workers or customers?

In reply, Varoufakis explained that when people don’t have enough income to live on this will likely lead to widespread discontent.

Assange argued that this kind of crisis would benefit Donald Trump, who could exploit the discontent by blaming the crisis on upper class elites. Or, as Varoufakis puts it:

socialism for the oligarchy and austerity for the many, in the end, feeds the racist ultra-right. That we are experiencing again what happened in the 1920s in Italy with the rise of Mussolini.

It is a shocking but plausible analysis and a wake-up call.

Assange further responded by observing that there is an alliance between the rich and the discontented working class, and he gave the US under Trump as an example.

The phone call then abruptly ended.

Wider implications

But it can be argued that the final observations made by Assange and Varoufakis in that short conservation were not just about Trump and the politics of the US, but can easily apply to the UK. In particular, the ‘populist alliance’ between the current Tory elite, led by the likes of Boris Johnson and Dominic Cummings, and disenchanted workers across the UK, worried that the prevailing economic crisis has no end.

Progressives would likely hope that when an economic crisis reaches its zenith, the dispossessed would seek to overthrow by ballot or other means the government that has helped create that crisis. But it can easily result in a very different scenario – of a push, by stealth, towards authoritarian rule. In effect, a non-militarised version of fascism.

Another warning

Ironically, it’s that same authoritarian tendency that has seen publisher and journalist Assange jailed, to face possibly decades in prison in the US gulag. And with the full cooperation of the UK political and judicial establishment.

That too is a warning. We ignore these warnings at our peril.

Featured image via Mohamed Elmaazi

Support us and go ad-free

Do your bit for independent journalism

Did you know that less than 1.5% of our readers contribute financially to The Canary? Imagine what we could do if just a few more people joined our movement to achieve a shared vision of a free and fair society where we nurture people and planet.

We need you to help out, if you can.

When you give a monthly amount to fund our work, you are supporting truly independent journalism. We hold power to account and have weathered many attempts to shut us down and silence the counterpoint to the mainstream.

You can count on us for rigorous journalism and fearless opposition to an increasingly fascist government and right wing mainstream media.

In return you get:

  • Advert free reading experience
  • Behind the scenes monthly e-newsletter
  • 20% discount from our shop

 

The Canary Fund us
  • Show Comments
    1. Pleased to learn from this that Julian Assange is still able to think and discuss important issues even though he must be suffering terribly both mentally and physically from his totally unjust isolation.

    2. Well, the triumph of the Right over the past four decades is truly stunning. You have to hand it to them, they’ve been brilliant. Nixon’s decision in August 1971 to ditch the Bretton Woods system, the oil price crisis a few years later, rampant inflation and governments submitting to the IMF and the corporates, contributed to the creation of an atmosphere of fear and atomisation. Unions were emasculated. Any politics which strayed even into social democracy was deemed far-left. Remember that in 1974 Labour won two elections on a manifesto of shifting wealth and power to working people and their families. By 1976, Callaghan and Healey were slashing the public sector, imposing wage restraint and kissing MIlton Friedman’s feet. What has happened to the Labour movement? Short answer: it has been suborned. The Labour Party is a vehicle for careerists, the unions are hierarchical and their bureaucrats are more powerful than their members. What we are up against is the business-State-media complex. What we need is a movement characterised by four things: fluidity, headlessness, absence of hierarchy and absence of bureaucracy. Think of Banksy. No one knows who he is. He plans his actions carefully. He executes them without being seen. He’s come and gone before anyone realises. We need a Banksy style political movement: no leaders, no official structure the State can legislate to control; an ability to form to fight a particular action and then melt away. If you want to call this an underground, so be it. There is nothing to hope for from the power suits in Labour. There is everything to hope for from a movement which is Puck-like, mischievous, impossible to pin down and always, always on the side of the poor, the oppressed, the vulnerable, the weak, the common folk of the world. Fascism makes us of the business-State-media nexus. We must create an exciting, countervailing force the people can believe in.

    Leave a Reply

    Join the conversation

    Please read our comment moderation policy here.