Book club: The Global Minotaur

If the financial crisis is all Greek to you, Hannah Langworth has the perfect read

The Global Minotaur

By Yanis Varoufakis

Zed Books, 2011

According to Greek mythology, the Minotaur was a monster hidden by the powerful King Minos of Crete deep within his palace at Knossos. The half-man, half-bovine creature was the product of his queen's unnatural attraction to a white bull, caused by the god Poseidon after Minos offended him by failing to sacrifice the bull to him. Minos fed the insatiable greed of the Minotaur with regular tributes of young men and women, until the monster was eventually slain by Theseus, the mythical founder of the city of Athens.

Such a detour into the labyrinth of Hellenic legend seems appropriate, as Yanis Varoufakis, an economics professor at the University of Athens, sees this story as an almost perfect analogy for the history of the world's economy from the mid-twentieth century up to the current European sovereign debt crisis.

Varoufakis reads US efforts to reindustrialise Germany and Japan in the postwar years as an initiative to create new markets for American goods and cement America's position as the world's strongest economy. However, he relates, during the 1960s the US had to meet the costs of the Vietnam war and social reform, and eventually found itself with a budget deficit thanks to the massive debts it had thereby accumulated, and a trade deficit as it manufacturing prowess was challenged by a reinvigorated Germany and Japan.

This new state of affairs led, argues Varoufakis, to a dramatic shift in the way in which America would attempt to maintain its global economic dominance. Instead of exporting its goods to reviving foreign industrial centres, the US would instead provide demand for their output. This demand could be funded by the constant massive flow of capital into the US economy resulting from the dollar's position as the world's reserve currency of choice.

Thus, argues Varoufakis, was the "global Minotaur" of the late twentieth and early twenty-first century US economy created, - a "giant vacuum cleaner, absorbing other people's goods and capital", an "embodiment of the grossest imbalance imaginable on a planetary scale". As he expands his argument, the list of the Minotaur's monstrous features expands to include "the rise of financialization, the triumph of greed, the retreat of regulators, [and] the dominance of the Anglo-Celtic growth model."

Varoufakis derives his thesis from core principles of Marxist economics. For him, capital - "machines, money, securitised derivatives and all forms of crystallised wealth" - has usurped human will and owns us, who serve it. Capitalism is "not a natural system, but, rather a particular system with a propensity to systemic failure" that "strives to turn us into automata and our market society into a Matrix-like dystopia". But his book is no one-sided polemic, but instead a clear and useful history - his month by month tracking of the financial crisis is particularly well done, striking a balance between detail and clarity that many explanations of the events have not been able to find. And the way in which Varoufakis narrates events in terms of his all-encompassing Minotaur narrative often brings interesting new perspectives - for example, he attributes German reluctance to do more to support the ailing Greek economy to German desire to maintain the role the nation acquired as a result of the flawed Minotaur system.

Regardless of the extent to which you agree with his arguments, the flair of Varoufakis's work makes it a pleasure to read. His application of the Greek mythological universe to current economic events is extremely clever - at one point he manages to link the dilemmas facing Europe's fiscal policymakers to "the impossibility of the match between Laelaps and the Teumessian fox". But it's not necessarily fanciful to connect economics with Greek mythology; as Varoufakis points out, the Minotaur myth may well have arisen out of the position of Minoan Crete as the "economic and political hegemon of the Aegean region" which demanded tribute from weaker states as a mark of their subjection. Good parallels are also drawn with the current mythologies of popular culture - the film The Matrix is particularly well used in this way. There's also much imaginative use of language. Varoufakis sprinkles his text with useful and witty neologisms - bankruptocracy, for example, and makes illuminative use of Greek terms like aporia, dystopia and parallax.

But, in the end, perhaps the neatness of the book's conceits belies the complexity of its topic. Varoufakis's concluding hope for the future - that the death of the American economic Minotaur might herald a "new, authentic humanism" - is surely overly idealistic, and perhaps his argument as a whole, like the well-crafted maze Theseus found a path through to kill the Minotaur and escape, has a simplicity inherent in its elegance that is its nemesis.