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Inside the Disenchanted World of Left Keynesianism: A Review of Yanis Varoufakis's Adults in the Room

The publication of Yanis Varoufakis’s new book Adults in the Room: My Battle with Europe’s Deep Establishment (London: The Bodley Head, 2017) caused a considerable uproar in the Greek political discourse, as well as some international coverage. In this 500-odd page personal account of his journey as Finance Minister of the Syriza/ANEL coalition government, Varoufakis focuses on (and claims to reveal in “whistle-blower” fashion) the inside story of the negotiations between Greece and the Troika (European Commission, IMF, and European Central Bank) between January 2015 and his resignation in July of the same year. The main reason for the uproar is the simple fact that the book is potentially damaging to both the Syriza/ANEL coalition and the opposition parties in Greece, as well as raising questions about the overall framework on which Eurozone crisis management has been based.

For the Syriza/ANEL government, which is at pains to present its full endorsement of austerity as unavoidable, Varoufakis’s book contains quite strong accusations challenging their capitulation, essentially arguing that they refused to make use of the only weapons they had at their disposal. As a result, Syriza/Anel members have dismissed the book as second-class science fiction, carefully tip-toeing around any specific discussion of its contents.1 But the opposition to Tsipras’s government also finds itself in a peculiar situation. Since their opposition to the Syriza/Anel coalition is based on a schizophrenic narrative according to which the Greek government both is not complying with the Troika’s wishes and is responsible for the decline of the economy because of its implementation of austerity, Varoufakis’s clear exposition of the opposite is rather damaging. Furthermore, as the opposition’s foundation myth is the fairy-tale that Greece was about to exit the nightmare of austerity during Samaras’s government, only to be rudely interrupted by the election of the incompetent Syriza/ANEL coalition, Varoufakis’s skilful deconstruction of the “success story” of 2014 is equally damaging. For this reason, they tend to focus solely on the parts of the book that might be politically useful to them, painstakingly avoiding any mention of facts that could be harmful to their nonsense.2

This avoidance of what is actually interesting about the book allows most commentators to continue waving the charge of “narcissism”3 against Varoufakis, precluding any serious consideration of his work. Contrary to his critics, however, Adults in the Room deserves serious consideration. Not because it is “one of the greatest political memoirs’ ever,” as Paul Mason naively argued in his review,4 but because it reveals an awful lot about the political bankruptcy of the Left today—of which Varoufakis is part. But before engaging with this crucial issue, it is probably useful to explain some of the positive aspects of the book, which are, not coincidentally, what his critics see as the most negative.

Adults in the Room presents what should be obvious and rather banal truths, but are nonetheless contested by all those who try to project some sense of meaning into the meaninglessness of today’s predicament. Varoufakis is therefore forced to repeat some self-evident observations, such as the fact that Greece has been in a state of (undeclared) bankruptcy since 2010, or that the fundamental reason behind Greece’s insolvency needs to be sought in the design of the Euro currency itself. The book also allows him to skilfully destroy the persistent idiocy of treating a national economy as similar to managing a household. Coming on to more important questions, Varoufakis’s book offers a decent presentation of the workings of the Greek banking system and its role in the Greek economy and crisis, though his explication of the crucial issue of credit expansion after the creation of the Eurozone is somewhat lacking.5 Perhaps most important is Varoufakis’s description of the first Memorandum Agreement between Greece and the Troika, as focused on ensuring the salvation of exposed French and German banks, adding the truism that the Troika’s technocrats were fully aware that the accompanying austerity would never be able to revive economic activity, based as it was on the contrary goal of imposed devaluation, deflation, and reduction of GDP output.6 Equal credit belongs to Varoufakis’s lucid deconstruction of the so-called “success story” of Prime Minister Samaras in 2014, when the Greek economy recorded a fictitious surplus budget and “returned” to the bond markets by issuing one bond at a 4.95 interest rate.7

Nonetheless, however pertinent these (and similar) points are, anyone who has followed Varoufakis’s work since 2010 would already be quite familiar with his line of thought. Adults in the Room offers these observations as a background against which we can examine his activities as Finance Minister in relation to his earlier analyses. In any case, it is with the examination of his position as Finance Minister (and his take on the workings of the Eurozone) that the book begins to acquire some novel interest, since his account offers some useful insight on how he developed his negotiation strategy and what its fundamental faults were.

Before Varoufakis was given the position of Finance Minister, he tried to act as an outside adviser, offering his critique of the government’s crisis management in consultations, lectures, and extensive writing. In this capacity, the key undercurrent to notice was the breadth of his scope: his proposals were focused on the overall Eurozone and solicited a reshaping of the architecture of the monetary union, away from its neoliberal coordinates towards a comprehensively Keynesian outlook. After assuming his ministerial position, this approach was slightly altered (he was, after all, Greece’s Finance Minister not the Eurozone’s) but one can still find traces of this perspective in Adults. The confusion between suggesting a new path for the Eurozone as a whole and proposals for Greece’s relief from austerity could be read as a hint of the impossibility of halting Greece’s “fiscal water-boarding” (to borrow one of Varoufakis’ neologisms) without a radical reshaping of the monetary union. But if one were to judge from Varoufakis’ activity after his resignation, with its goal of “democratizing the Eurogroup,” it seems safe to assume that he fails to understand the implications of such a Eurozone-wide reconfiguration beyond achieving some “transparency” in relation to the closed doors of the Eurogroup. In any case, Adults in the Room provides a clearly set-out outline of the negotiating strategy chosen by Varoufakis and approved by Syriza, although Syriza’s pre-electoral program was entirely at odds with it.8

The cornerstone of Varoufakis’ negotiating strategy was debt restructuring. The size of the Greek public debt would make such a choice self-evident, but Varoufakis should be credited for being aware that, above all, the enlarged public debt was nothing but a politically useful tool for imposing austerity, with little chance of it becoming viable. He recognized, in other words, that the crucial question was not the size of the public debt, but the ability to continue funding it despite its size. In the case of the Eurozone’s so-called “sovereign debt crisis,” increased public debt was (selectively9) used as a means to exclude certain countries from the markets, so that they lost the ability to refinance their debt obligations. The effectiveness of this method was such that the obvious necessity of debt restructuring was systematically avoided. As a result, the restructuring of the economy has, in fact, increased Greek public debt. Nonetheless, even though Varoufakis seems to have recognized that a demand of debt restructuring was doomed to fail, he focused his negotiations around debt restructuring as part of a strategy to expose the inconsistency of the bailout mechanism, i.e. the irrationality of pretending to place debt at the center of a restructuring process whose direct result was in fact its augmentation.

Aware that a direct haircut was out of the question, Varoufakis’s suggestions were milder in form but substantial in content: the first proposal was to disentangle public debt from private (bank) re-financializations, a notion that Italian Prime Minister Mario Monti also (unsuccessfully) attempted in 2012. Since a phenomenal amount of the loans that Greece has received through the Memorandum Agreements has gone towards bank recapitalizations,10 Varoufakis’s suggestion would have not only significantly reduced Greece’s public debt but would have allowed for the exposure of a key formula of the crisis management model, i.e. the systematic transformation of private debt into a public burden. His second proposal was to accept the debt obligation, but to install a growth (GDP-indexed, to use Varoufakis’s term) repayment scheme that would give some breathing space to Greece’s economy.

Regardless of the apparent rationality of these proposals, the impossibility of their translation into policy acceptable to the Troika was quite evident and was directly related to Varoufakis’ own recognition of the political character of debt politics. An interesting aspect of Adults in the Room is its illumination of this contradiction, despite the fact that Varoufakis seems unable to recognise its full implications.11 In any case, he admits that “not for a moment did I believe, back in January 2015, that the unquestionable logic and obvious moderation of my proposals would win our creditors over,” adding that neither the European Central Bank’s President Mario Draghi nor Germany’s Finance Minister Dr. Schäuble seemed to have any interest in what he had to say. Despite missing the elementary reason for this undeviating stance, Varoufakis’s awareness of its existence forced him to devise counter-plans.

The experience of the Cyprus bailout procedure had alerted him to the fact that the biggest weapon that the Troika had to continue devaluation was the imposition of capital controls, a process which could effectively shut down the economy and force a quick capitulation. Consequently, Varoufakis refined two counter-weapons to this threat. The first was the development of a parallel payments system,12 the second was to impose a unilateral haircut on Greek bonds held by the ECB.13

Varoufakis’s strategy of pressuring the Troika to accept some easing of the austerity process was not superficial. As Adam Tooze notes, Varoufakis’s plan was “ingenious [and] potentially very powerful,” rendering Tooze surprised as to why “none of the reviews to date have noted the significance of this extraordinary plan.” In any case, Varoufakis’s master plan was never put to the test, as Tsipras’s preference for capitulation won the day. At least, this is the story that we read in Adults. A closer examination of his proposals, however, reveals one of the fundamental flaws of Varoufakis’s reasoning.

The first part of his proposal (the parallel payments’ scheme) was a realistic (if not temporary) solution to imposed illiquidity, as it would circumvent the inability of the Greek Central Bank (tied as it is to the Euro currency and ECB monetary control) to control monetary policy and, essentially, to maintain liquidity in the market. The proposed haircut on the ECB’s bonds, however, could only function if one presupposes (along with Varoufakis) that the decision-making process at the epicentre of the crisis management institutions is restricted by strict adherence to formal legality.

This is the only way that one can understand the proposal to blackmail the ECB by relying on its constitutional mandate, allowing Varoufakis to write things such as: “Draghi would be reluctant to do to Greece what had been done in Cyprus;” or that “Draghi’s power to continue buying government debt was conditional on protecting the ECB from any write-down of government debt the ECB already owned.” This approach, however, betrays a misreading of the recent history of crisis management, during which it has been demonstrated time and again that abstract legal principles do not stand in the way of important decisions. In point of fact, a careful reading of post-2010 policies (both at the Eurozone and the country level) reveals that “flexible” interpretations of legal formulas or their complete overlooking is more often than not the actual background of economic policies.14

The abstract understanding of the law as a crystallization of the essence of capitalist social relations that Varoufakis and others promote leads to quite a few mystifications. Perhaps most importantly, it misconstrues capitalism as a set of relations held together (and engendered) by legal statutes, whose importance surpasses that of, say, profitability. By not recognising that the content of capitalism (a historical form of social organisation of production that utilizes class divisions to achieve value creation) is reflected in (but not determined by) legal forms, this approach is not only theoretically invalid. It also results in an inability to properly situate the underlying logic of the contemporary crisis management model, which attempts to both avoid the collapse of a central pillar of the capitalist economy system (finance) and to act as an opportunity to (finally) impose in full force the monetary discipline (low state spending, low deficits, low inflation) that peripheral Eurozone countries had avoided through their ability to roll over debt due to low interest rates. It is true that in certain instances, Varoufakis appears to have a fleeting sense of this predicament. For example, in a passage about the background of the first Memorandum Agreement, Varoufakis himself admits, “When the French banks faced certain death, what choice did [Lagarde] have as France’s Finance Minister, alongside her European counterparts and the IMF, but to do whatever it took to save them?” This thought is, however, not further developed. Instead, Varoufakis considers the legal framework of the ECB as a given, a line of reasoning that forces him to explain the failure of his strategy as a result of the refusal of Tsipras to implement it when the shit hit the fan.

A similar type of mystification, admittedly of less importance but problematic nonetheless, can be read in Varoufakis’s lack of a substantial analysis of the pre-2010 condition of the Greek economy. That is the only way to explain his endorsement of mainstream banalities when he describes the “incompetent, corrupt, bloated and indebted” Greek public and private sectors. One could read such a depiction as an attempt to engage honestly with the undeniable chronic pathogenies of Greece’s economy, but in the case of Varoufakis the implications are damning. For it is this very characterization which allows him to argue that, at the end of the day, “a certain amount of austerity” was necessary, or to call any opposition to “potentially advantageous foreign investment” an indication of “archaic leftist hostility.” An analogous overtone is detectable in his treatment of the privatization of sixty-seven percent of the Port of Piraeus to the Chinese conglomerate Cosco, when he notices the “sharp contrast between Cosco’s part of the container port, which was super-modern and running beautifully, and the adjacent quay, still under state control, which looked sad, rusty and almost abandoned.”15

In short, Varoufakis’s attempt to present himself as an “outsider” to the restructuring process is, to say the least, very weak. When one deconstructs his arguments (and ignores his embarrassing self-projections of “heroism”), what is left is a classic example of an academic, and therefore minimal, viewpoint--the drastic reduction of the field of vision to those aspects that one has been professionally trained to deal with. Thus, despite his sporadic identification of certain partial truths, he misses the overall truth. Thus he maintains that austerity in Greece was nothing more than a miscalculation, almost a mathematical error, that could be corrected through the mere force of his “unquestionable logic,” while his “obvious moderation” would allow the perpetrators of this fallacy to move beyond their embarrassment and admit to their “mistakes.”

Varoufakis’ claims of moral superiority and clear-headedness presuppose the ideas that irrationality represents capitalism’s paramount flaw and that a healthy dose of expert rationality can reverse it.16 Despite having at times correctly identified the underlying paradigm that today’s crisis managers follow, he continues to argue that “all [my emphasis, P.R.] we were asking was for some common sense to prevail at the heart of European power,” as if this would be the solution to capitalism’s crisis. Contrary to what some commentators say, however, the belief that he holds the key to such common sense is not an indication of personal arrogance. It is just Varoufakis’s version of a notion at the heart of today’s Left which, in a somewhat reluctant recognition of its irrelevance, continually attempts to reanimate what it sees as its historical task, the ability to lead (or be led) by leaders, experts. This obsession does not only manifest the Left’s inability to recognize the historically recorded failure of this perspective; more than that, it marks a failure to grasp the extent to which the Left owes its continued existence to capitalist development itself.

If the social and technological development of the productive process has been adequately described as bringing forth passivity and loss of meaning to labor, depriving workers of any control over the design, rhythm, and result of their activity, little attention has been paid to a similar process that can be traced in other aspects of capitalist mediations, politics being a relevant example. The emergence of a professional political class, managerial in outlook, responsible for setting debates, providing answers, and executing the results has only rarely been seen as related to the process that took place on the factory floor. It has, in contrast, been fully embraced by the Left, which sees in this development a verification of its ideas instead of a reinforcement of capitalist coordinates. All the way from Leninist illusions of democratic centralism up to the modern Gramscian or Poulantzian insistence on the necessity of crystallizing mass spontaneity in a party-form, the Left seems unable to produce anything but a vast army of real or wannabe professional politicians, experts, and leaders. This delusional saviour complex (Varoufakis does, after all, subtitle his book “My battle with Europe’s deep establishment”) which has led the mainstream opposition to cry narcissism, is in reality an unfortunate reflection of a recurrent theme of Left politics.

It is for this reason that Varoufakis (and the Left) can present an endless list of routine banalities (such as Eurogroup meetings) as the battleground of conflicting ideas about economic management, a battleground that was in this case also confused with university-type academic debates (the natural habitat of people like Varoufakis). What they ignore, however, is another banality: that discussions at the Eurogroup level are as irrelevant as academic ones, with the exception of providing career opportunities to bloated egos or dedicated bureaucrats. It does not take much to note that what is conspicuously absent, in the Eurogroup as much as in academic debates, is the unmediated and contradictory world of struggles, the only field of possibility where transformations (in many directions) can take place.

Within this context, and despite his noted disagreements with Syriza, Varoufakis inherently expresses a position shared by most of the Left today: that the world of social movements is nothing but a secondary attachment, a mere stepping stone of uncontrolled spontaneity, whose potentialities depend entirely on the ability of some political party, state mechanism, or alliance of experts to concentrate its dynamic for a higher purpose. This is the fundamental reason why, in Varoufakis’s book, the truly radical aspects of the social movements that shook Greece between 2010 and 2012, the only historical battlefield where austerity was threatened, are ignored or treated as somehow romantic, infantile and/or confused.17 They are seen in the best of cases as useful breeding grounds for the politicians that will eventually end up representing “the people,” to the extent, of course, that these “people” conform to the role of manageable well-wishers of the decisions of the experts.18 This is, at the end of the day, one of the main reasons why so many of the experts who rise to positions of power on the backs of, and against, social movements are at the end left wondering about their repeated failures; in the case of Syriza, the failure to convince people that their government was somehow a continuation of the mobilizations against austerity. In the particular case of Varoufakis, however, one should also add that if the Troika failed to recognize his brilliance, it was not because its experts were not good at math, but because the current managers of the capitalist system, that he claimed to be in a position to save, remain understandably skeptical as to why a form of economic organisation—Keynesianism—that failed in the 1970s could provide a solution to today’s crisis.



  1. For example, in a recent interview with The Guardian, PM Tsipras himself claimed that Varoufakis’ “plan B was so vague, it wasn’t worth the trouble of even talking about. It was simply weak and ineffective.” (The Guardian, July 24th 2017,
  2. The political opposition to the Syriza/ANEL government is caught up in a contradictory and self-defeating form of argumentation. As loyal supporters of the austerity process, its smooth and uncontested implementation by Syriza’s government threatens to deprive them of any meaningful raison d’etre. They have therefore resorted to a ridiculous turf war with the government, the cornerstone of which is essentially that Syriza is a Stalinist party, attempting to impose a form of Soviet-style (!) rule over Greece. This embarrassing line of thought is not only contradicted by reality, but is consistently denied by the very same European and IMF officials which the opposition likes to consider as its natural allies, but who have instead recognised in the Syriza/ANEL government a very useful ally.
  3. What makes this accusation particularly idiotic (apart from a gross misrepresentation of the psychoanalytical category) is that it is mouthed by people who have unashamedly and immediately abandoned any personal opinion or position, when such a betrayal ensured the survival of their political careers. Varoufakis has a lot to be criticized for, without any need to resort to half-baked psychologizing drivel.
  4. The Guardian, May 3rd 2017. This appraisal of the book does not, however, stop Mason from cocking up some ridiculous excuses for Syriza’s capitulation as, for example, the ludicrous claim that Syriza’s compromise averted the prospect of a ‘rerun of the Greek civil war”. Neoliberals themselves would have find it hard to come up with the better excuse for their TINA (There Is No Alternative) formula.
  5. It is, however, available in his previous book, And The Weak Suffer What They Must? Europe, Austerity and the Threat to Global Stability (London: The Bodley Head, London, 2016) especially pp. 147–152.
  6. “Unwilling to acknowledge the design faults in their cherished programme, [the Troika] behaved instead as if their job was to assess [the Greek government’s] ability to implement that programme.” p. 253
  7. This deconstruction is not only harmful to the fairy tale purported by New Democracy that the economy was about to bounce back. It is doubly harmful to the contemporary attempts by the Syriza/ANEL government, who recently announced recently a veritable copy-cat ‘success story”: a 3.5 per cent budget surplus and a re-entry to the markets (by rolling over the same one bond that Samaras had issued in 2014).
  8. Syriza spelled out its proposals in the Thessaloniki Program in October 2014. As Varoufakis mentions in his book, this program was in direct contradiction to the strategy offered by Varoufakis (approached by Syriza already in 2012). I have analysed the inconsistencies of the Thessaloniki program in my article “Winning the war after losing all the battles” (Brooklyn Rail, February 2015). For now, suffice to say that, until its capitulation in July 2015, Syriza utilized the Thessaloniki promises as its propaganda inside Greece, while following Varoufakis’ strategy outside, in the negotiations with the Troika.
  9. Italy’s public debt is, for example, larger than Greece’s.
  10. An ESMT White Paper estimates that more than €70bn of the bailout money went directly to bank recapitalizations. See Rocholl*, J., and A. Stahmer (2016). Where did the Greek bailout money go? ESMT White Paper No. WP–16–02. 
  11. The underlying reason behind the imposition of austerity remains elusive to Varoufakis, choosing instead to present it as a case of miscalculation, supposedly enhanced by the Troika reluctance to admit its ‘mistakes’. As Adam Tooze notes in his engaging review of Varoufakis’ book: “Beyond the self-serving logic of a bureaucracy bent on preserving its own authority and control, beyond the need of politicians to cover their tracks, what purpose does [the austerity imposing] apparatus serve? This is less clear.” (Adam Tooze, “Reading Varoufakis: Frustrated Strategist of Greek Financial Deterrence,” July 2017, This crucial point will be further elaborated in this article.
  12. Had it not become a rallying point of those who despise Varoufakis, it would be entirely unnecessary to explain that a parallel payments system within the Euro does not in any way signify a parallel currency. Varoufakis’ plan concerned the issuance of IOU’s that could work as parallel payments between the State (and its tax office), employers and employees, thereby circumventing the loss of control over monetary policy that membership in the Eurozone entails.
  13. Between 2010 and 2011 the ECB had initiated a government bond buying scheme to offer some protection against the collapsing bond markets, called the Securities Market Programme (SMP). Though contested by Germany, the plan proceeded and the ECB acquired, among others, approximately €33bn worth of Greek bonds. As the constitution of the ECB forbids losses, Varoufakis’ plan was to force the ECB to think twice about imposing capital controls.
  14. The bailout of Greece itself was presumably based on the adherence to Article 125 of the Consolidated treaty of the functioning of the European Union, which forbids the bailing out of EMU members. However, it was also based on ignoring Article 122, which explicitly allows the bailing out any member State that faces “severe difficulties caused by natural disasters or exceptional occurrences beyond its control” (my emphasis). Despite the propaganda machine that purports the narrative that Greece’s financial troubles were a result of its own incompetent and falsified past economic performance, it is pretty self-evident that the near-collapse of the capitalist economy in 2007–2008 that marked the background of the Eurozone “sovereign debt crisis” was an “exceptional occurrence” beyond Greece’s control. For another example, the ECB’s decision to embark on its program of Quantitative Easing in 2015 could also be seen as a direct violation of its mandate against financing national economies in trouble. The excuse offered against this legal challenge, that QE remains within the ECB’s mandate as it only purchases bonds on the secondary market (instead of presenting itself as a primary client) is nothing but a poor excuse.
  15. The remarkable inability to recognise any contradictions in such positions allows Varoufakis to make statements such as the following: “My team and I repeatedly demonstrated the superior accuracy of our model and persevered in our arguments. The situation was truly absurd: a left-wing finance minister representing Syriza, the Alliance of the Radical Left, was arguing like a Reaganite Republican in favour of lower taxes, including for business, against supposedly neoliberal functionaries insisting on increasing them.”
  16. One should perhaps not forget that “Keynes’ political economy—and all varieties of Keynesianism—are about the production of credible stability in the face of crisis”. Geoff Mann, In the Long Run We Are All Dead: Keynesianism, Political Economy and Revolution (2017), p. 14–15
  17. A case in point is Varoufakis’ description of the mobilisations around Syntagma in May–June 2011, covered in pages 42 to 44. Not only does it contain surprising factual mistakes (the first day of the Syntagma occupation was not attended by “one or two thousand people” but around 20,000; also, the mobilizations did not go on for “three whole months” but slightly more than one) but its insertion in the narrative of the book seems to merely serve as yet another opportunity to repeat his self-importance. He could not have been, as he claims, “asked to address the crowd twice”, for the simple reason that speaking at the open assembly was organised through random rotation.
  18. As Mann rightly points out, “the point of participatory progressivism is usually to elicit a response consonant with what progressives want the grassroots to say”. Geoff Mann, In the Long Run We Are All Dead: Keynesianism, Political Economy and Revolution (2017), p. 21.


Pavlos Roufos

lives and writes in Berlin. His book, A Happy Future is a Thing of the Past, was published this year by Reaktion.


The Brooklyn Rail

SEPT 2017

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