Via Economic Policy Journal

Greta Thunberg

Yanis Varoufakis, a former finance minister of Greece and current leader of the Greek MeRA25 party and Professor of Economics at the University of Athens, has published an essay at Vox titled, Greta Thunberg, Donald Trump, and the Future of Capitalism.

The essay is in response to Treasury Secretary Steve Mnuchin’s quip that Greta Thunberg needs to study economics.

The implication in the Varoufakis essay is that Thunberg need not study any economics.

He explains why she should ignore the subject:

One reason is the discipline’s framing and default settings. We all know the power of the default or baseline. In societies where organ donation is the default setting – automatic without a signed opt-out – the supply of transplant organs is substantially larger than in countries where people must carry donor cards. Framing is crucial in every setting where the human mind and heart must be energized against some ill.

Economics is no exception. The economic textbooks Thunberg would have to read begin with models of markets where the unfettered private profit drive is shown mathematically to serve the public interest. Only after she has learned these theorems, and has practiced the mental gymnastics needed to derive their mathematical proofs, will she be exposed to “exceptions” – for example, “externalities” of the production process, like climate-change-inducing pollution, which imposes costs not fully borne by the polluter. The very framing of market failures as an “exception,” perhaps caused by some “externality,” is an immense propaganda victory for the Trumps and Mnuchins of this world.

Of course, the problem here is the framing by Varoufakis.

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Sound economics has nothing to do with mathematical models. The Nobel laureate Friedrich Hayek wrote a book about this, The Counter-Revolution of Science.

Varoufakis also frames without taking into consideration the private property aspect that can drive clean air. The book, edited by Dr. Walter Block, Economics and the Environment: A Reconciliation has essay after essay on the topic.

Judging by the Varoufakis framing, he is not aware of any of these directions in economics. He just writes on without this understanding and its importance to the debate:

Trumpism is nonetheless an honest manifestation of the historic moment when late capitalism pushed humanity past the point of no return…The only alternative to their policy of accelerated climate change, to the oil and finance curses that drive capitalism, is the wholesale disintegration of today’s technostructure. 

Perhaps, before he starts giving advice to youth not to study economics, he should absorb himself in the topic to understand how the important stuff goes well beyond his framing.

And one wonders what he really understands about climate change when he isn’t completely grounded in the topic he was trained in, never mind atmospheric climate.

And he certainly shouldn’t get any points for his adopting the Frankfurt School claim of such a thing as “late capitalism,”  since the philosophers in that school probably knew less economics than even he does.