Democracy.
In the West, we make a colossal mistake taking it for granted.
We see democracy not as the most fragile of flowers that it really is,
but we see it as part of our society's furniture.
We tend to think of it as any transient given.
We mistakenly believe that capitalism begets, inevitably, democracy --
it doesn't.
Singapore's Lee Kuan Yew and his great imitators in Beijing
have demonstrated beyond reasonable doubt
that it is perfectly possible to have flourishing capitalism,
spectacular growth,
while politics remain democracy free.
Indeed, democracy is receding in our neck of the woods,
here in Europe.
Earlier this year while I was representing Greece,
the newly elected Greek government in the Eurogroup as its Fincance Minister,
I was told to know on certain terms,
that our nation's democratic process, our elections,
could not be allowed to interfere
with economic policies that were being implemented in Greece.
At that moment,
I felt that there could be no greater vindication of Lee Kuan Yew,
or the Chinese Communist Party,
indeed of some recalcitrant friends of mine who kept telling me
that democracy would be banned if it ever threatened to change anything.
Tonight, here, I want to present to you
an economic case for an authentic democracy.
I want to ask you to join me in believing, again,
that Lee Kuan Yew, The Chinese Communist Party,
and indeed the Eurogroup,
are wrong in believing that we can dispense with democracy.
That we need an authentic, boisterous democracy,
and without democracy,
our societies will be nastier,
our future bleak,
and our great technologies wasted.
Speaking of waste,
allow me to point out an interesting paradox
that is threatening our economies as we speak.
I call it the twin peaks paradox.
One peak you understand --
you know it, you recognize it --
is the mountain of debts
that has been casting a shadow over the United States,
Europe,
the whole world.
We all recognize the mountain of debts.
But few people discern its twin.
A mountain of idle cash belonging to rich savers and to corporations,
too terrified to invest it
into the productive activities that can generate the incomes
from which you can extinguish the mountain of debts
and which can produce all those things that humanity desperately needs,
like green energy.
Now let me give you two numbers.
Over the last three months,
in the United States, in Britain and the Euro zone,
we have invested collectively,
3.4 trillion dollars on all the wealth-producing goods,
things like industrial plants, machinery, office blocks, schools, roads, railways,
machinery, and so on and so forth ...
3.4 trillion sounds like a lot of money
until you compare it to the 5.1 trillion
that has been slushing around in the same countries, in our financial institutions,
doing absolutely nothing during the same period ...
except inflating stock exchanges and driving up house prices.
So a mountain of debt and a mountain of idle cash
form twin peaks failing to cancel each other out
through the normal operation of the markets.
The result is stagnant wages,
more than a quarter of 25 to 54-year-olds --
in America, in Japan and in Europe --
out of work,
and consequently,
low aggregate demand,
which in a never-ending cycle,
reinforces the pessimism of the investors,
who fearing low demand, reproduce it by not investing.
Exactly like Oedipus' father,
who terrified by the prophecy of the oracle
that his son would grow up to kill him,
unwittingly engineered the conditions
that insured that Oedipus, his son, would kill him.
This is my quarrel with capitalism.
It's gross wastefulness,
all this idle cash,
should be energized to improve lives,
to develop human talents,
and indeed to finance all these technologies --
green technologies --
which are absolutely essential for saving planet Earth.
Am I right in believing that democracy might be the answer?
I believe so, but before we move on,
what do we mean by democracy?
Aristotle defined democracy as the constitution
in which the free and the poor, being in the majority, control government.
Now of course Athenian democracy excluded too many --
women, migrants and of course, the slaves.
But it would be a mistake to dismiss the significance
of ancient athenian democracy
on the basis of whom it excluded.
What is more pertinent,
and continues to be so about ancient athenian democracy,
was the inclusion of the working poor,
who not only acquired the right to free speech,
but more importantly --
crucially --
they acquired the rights to political judgements
that were afforded equal weight
in the decision-making concerning matters of state.
Now of course, Athenian democracy didn't last long,
like a candle that burns brightly, it burned out quickly.
And indeed, our liberal democracies today,
do not have their roots in ancient Athens.
They have their roots in the Magna Carta,
in the 1688 Glorious Revolution,
indeed in the American constitution.
Whereas Athenian democracy was focusing on the masterless citizen
and empowering the working poor,
our liberal democracies,
founded on the Magna Carta tradition,
which was, after all a charter for masters.
And indeed liberal democracy only surfaced when it was possible
to separate fully the political sphere from the economic sphere,
so as to confine the democratic process fully in the political sphere,
leaving the economic sphere --
the corporate world, if you want --
as a democracy-free zone.
Now in our democracies today,
this separation of the economic from the political sphere,
the moment it started happening,
it gave rise to an inexorable, epic struggle between the two
with the economic sphere colonizing the political sphere,
eating into its power.
Have you wondered why politicians are not what they used to be?
It's not because their DNA has degenerated --
(Laugher)
It is rather because one can be in government today and not in power.
Because power has migrated
from the political to the economic sphere, which is separate.
Indeed --
I spoke about my quarrel with capitalism --
If you think about it,
it is a little bit like a population of predators,
that are so successful in decimating the prey that they must feed on,
that in the end, they starve.
Similarly, the economic sphere
has been colonizing and cannibalizing the political sphere to such an extent
that is is undermining itself, causing economic crises.
Corporate power is increasing,
political goods are devaluing,
inequality is rising,
aggregate amount is falling,
and CEO's of corporations are too scared to invest the cash of their corporations.
So the more capitalism succeeds in taking the demos out of democracy,
the taller the twin peaks
and the greater the waste of human resources,
and humanity's wealth.
Clearly, if this is right,
we must reunite the political and economic sheres
and better do it with demos being in control,
like ancient Athens except without the slaves,
or the exclusion of women and migrants.
Now this is not an original idea,
the marxist left had that idea 100 years ago
and it didn't go very well, did it?
The lesson that we learned from the Soviet debacle
is that only by a miracle will the working poor be re-empowered,
as they were in ancient Athens,
without creating new forms of brutality and waste.
But there is a solution.
Eliminate the working poor.
Capitalism's doing it
by replacing low-wage workers with automata, androids, robots.
The problem is
that as long as the economic and the political spheres are separate,
automation makes the twin peaks taller,
the waste loftier,
and the social conflicts deeper,
including --
soon, I believe --
in places like China.
So we need to reconfigure,
we need to reunite the economic and the political spheres,
but we better do it by democratizing the reunified sphere,
lest you end up with a surveillance-mad, hyper-autocracy
that makes The Matrix, the movie, look like a documentary.
(Laughter)
So the question is not whether capitalism will survive
the technological innovations of this moment.
The more interesting question is whether capitalism will be succeeded
by something resembling a Matrix dystopia,
or something much closer to a Star Trek-like society,
where machines serve the humans
and the humans expend their energies exploring the universe
and indulging in long debates about the meaning of life
in some ancient, Athenian-like, high-tech _________
I think we can afford to be optimistic.
But what would it take --
what would it look like --
to have this Star Trek-like utopia, instead of the Matrix-like dystopia?
In practical terms,
allow me to share, just briefly,
a couple of examples.
At the level of the Enterprise,
imagine a capital market,
where you earn capital as you work,
and where your capital follows you from one job to another,
from one company to another,
and the company --
whichever one you happen to work at at that time --
is solely owned by those who happen to work in it at that moment.
Then, all income stems from capital, from profits,
and the very concept of wage labor becomes obsolete.
No more separation between those who own but do not work in the company,
and those who work but do not own the company.
No more tug-of-war between capital and labor.
No great gap between investment and saving,
Indeed, no towering twin peaks.
At the level of a global political economy,
imagine for a moment,
that our national currencies have a free-floating exchange rate,
with a universal, global, digital currency,
one that is issued by the International Monetary Fund,
the G-20,
on behalf of all humanity.
And imagine further,
that all international trade is denominated in this currency --
let's call it "the cosmos" --
in units of cosmos.