‘Talking to My Daughter About the Economy: 
        A Brief History of Capitalism’ – book review 
        February 25, 2019 
        Analytical book review of Yanis Varoufakis’s ‘Talking to My Daughter About 
        the Economy: A Brief History of Capitalism’  by Atharva Mehendale. 
        Economics is one subject that most of us (including me) dreaded as school 
        and junior college students. This is usually because most texts in economics 
        are difficult to understand in a single read. The discipline of economics is 
        based on models. Economists often use technical jargon while explaining 
        these models which makes it extremely difficult for a layman to understand. 
        While most of us ended up studying Economics just to score marks and sail 
        through, ironically that is not how it should’ve been done. This is because 
        economics is  one  discipline  that  has  answers  to  everything  that  we  see 
        around us. This book comes as a breath of fresh air when bogged down by 
        your usual text on economics. The author of the book, Yanis Varoufakis 
        shares the same emotion as he admits having completed the book in merely 
        9 days sitting in his island home in Aegina. You should give this book a read 
        if you’re someone like me who’s always been sceptical about picking up a text 
        on economics due to the very fact of it being too technical. If you’re someone 
        who has a degree in economics or who is usually not bogged down by 
        technical jargon, I suggest you still read this book. It would surely be a rather 
        refreshing take on something you already know. Finally, if you’re someone 
        who writes book on economics, this is how it is done! 
        Varoufakis is a Greek economist and politician. Born in Athens in 1961, he 
        went  on  to  obtain  a  master’s  degree  in  mathematical  statistics  at  the 
        University of Birmingham and a PhD in Economics at the University of Essex 
        in the United Kingdom. He served as the Minister of Finance for Greece from 
        January 2015 to July 2015. He has also been a professor of economics at the 
        University  of  Athens  and  the  University  of  Sydney.  He  has  penned  two 
        bestsellers before he went on to write this book. ‘Adults in the Room: My 
        battle with Europe’s Deep Establishment’ recalls his time serving for the 
        Government and ‘And the weaksuffer what they must?: Europe, Austerity 
      and the Threat to Global Stability’ talks about Capitalism in Europe and 
      policies to reform it. 
      This book came out of the author’s belief about the economy being too 
      important to leave it to the economists. He wanted to explain the seemingly 
      difficult concepts in economics in a language that the young would easily 
      understand. The tone of the book is conversational. He has written it as if he 
      was  actually  having  a  conversation  with  his  daughter  Xenia  about  the 
      economy and answering her very basic question ‘Why is there so much 
      inequality?’. This is why he has written it without any odds and ends usually 
      used in case of academic writing; like footnotes and references. The author 
      said he enjoyed writing this book since it was a relatively lighter book after 
      his earlier ‘Adults in the room’ and also because he initially wrote it in Greek, 
      his mother tongue. This is exactly why it makes it a light and easy read for 
      the readers. Any book on economics is incomplete without capitalism since 
      it  is  something  that  has  grappled  society  for  long;  thus,  becoming  an 
      important  element  in  explaining  economics.  All  major  problems  in 
      economics find its roots in capitalism. Capitalism forms the central theme of 
      this book. This is also in line with Xenia’s question that Varoufakis seeks to 
      answer. The author has however decided to use the word “market society” 
      instead of capitalism throughout the book. This is a small example of how he 
      has consciously tried to avoid jargon in the book to make it easier to read and 
      understand. 
      Money as we know is the most fundamental concept in economics. A lot of 
      us  know  that  money  eventually  replaced  the  barter  system.  But  what 
      Varoufakis tells us is that money in the form of shells was invented to record 
      debts.  The  very  first  accounting  records  showed  how  much  of  the  total 
      agricultural produce that was in surplus was owed to the farmers by the 
      landowners. 
      A number of countries have had a colonial past which made the country at 
      the receiving end of colonialism poor. Something that I (and I’m sure a lot of 
      you) never thought about was why was it that the European countries ended 
      up colonizing countries in the East and not the other way around. The author 
      traces the answer to this to the simple concept of ‘surplus’. Surplus is that 
      extra bit that is accumulated when the production exceeds consumption. 
      This according to the author is the most basic element of an economy. This 
      surplus made traders in Europe set sail in ships in search of other markets 
      which then led to colonialism. People inparts other than Europe did not feel 
      the  need  to  ‘produce’ for  a  very  long  time  since  nature  was  sufficiently 
      providing for their needs. This meant that there was no ‘surplus’. 
      Something that makes the book interesting to read and keeps up the readers’ 
      interest in it alive is how the author seamlessly moves from one chapter to 
      another while still talking about the same concept. The concept of surplus 
      that  the  author  previously  used  to  explain  the  formation  of  state  and 
      colonialism was then used to explain the foundation of Industrial Revolution 
      in Europe. With surplus, ‘economics’ moved out of the confined household. 
      More and more goods started to turn into commodities and gained an 
      ‘exchange value’ rather than a mere ‘experiential value’. Increasing global 
      trade made landowners want to grow cash crops. Serfs who worked on these 
      lands were thus forced to sell their labour for money. This was where the 
      commodification  of  land  and  labour  began.  This  gradually  led  to  the 
      establishment of factories where men, women and children worked under 
      inhuman conditions leading to widespread inequality in the economy. There 
      was wealth in the hands of the factory owners and misery, poverty and 
      slavery  on  the  other  side.  This  is  what  the  author  calls  the  ‘great 
      contradiction’  –  “the  coexistence  of  unimaginable  new  wealth  and 
      unspeakable suffering”. It is interesting how Varoufakis comes back to the 
      central theme of inequality towards the end of every chapter and explains 
      how different  facets  of  the  economy  have  over  time  contributed  to  the 
      inequality that we see around us today. 
      Examples form a significant part of any book. They play an important role in 
      increasing the author’s ability to reach out to the readers. Varoufakis in this 
      book has given several real life  as  well  as  fictional  examples  to  explain 
      complex economic concepts. One example that the author has very aptly 
      incorporated in this book is that of the German prisoners-of-war camp to 
      explain the concept of money and debt. He goes on to explain how the 
      prisoners in the camp received packages from the Red Cross that included 
      all kinds of items like coffee, tea, chocolates and cigarettes. As goods started 
      to be traded across the camp, the need for a ‘currency’ was felt. Cigarettes 
      emerged as the currency in the camps since they were durable, convenient to 
      carry, divisible into smaller portions and could easily be stored. With this, a 
      banking system came up where some “savvy” prisoners started loaning out 
      cigarettes to inmates. The Red Cross acted as a central bank for these banks 
      in the prison as it handed out funds (in the form of cigarettes). The author 
      here  makes  a  point  that  though  the  central  banks  of  countries  are 
      independent just like the Red Cross was, they are usually forced to adhere 
      tothe whims of national and global politics. The author creates a comparison 
      and  explains  the  concepts  central  banking,  money,  debt,  interest  rates, 
      inflation and deflation. 
      You  don’t  usually  come  across  books  on  economics  with  references  to 
      Hollywood movies. Varoufakis here however seems to be a big fan of movies 
      apart from being an economist. This fandom of his has worked out very well 
      for his readers. He has used examples of movies like The Matrix and Blade 
      Runner to explain the impact that technology has had on the economy. Going 
      back into history, the author talks about how technology has always been met 
      with resistance from the workers. Increasing automation makes the machine 
      and factory owners richer and leads to wide scale unemployment. This is 
      again a stark example of inequality in the economy. Giving the example of 
      Charlie Chaplin’s movie ‘Modern Times’, the author tries to highlight the 
      negative impact technology has had on workers. The author believes that 
      there would come a time when machines would completely take over from 
      human labourers and also it is only a matter of time before technology 
      creates human replicants that are able to do a majority of work. If this ever 
      becomes a reality,  Varoufakis  envisages  a  future  where  everyone  would 
      benefit equally from the benefits of automation. 
      It is not just movies that the author has quoted time and again. If you’re not 
      a fan of movies but someone who enjoys literature references, you would not 
      be disappointed either. To explain the labour market, Varoufakis has used 
      the reference of the story “The stag, the hares and the power of optimism” 
      written by Jean-Jacques Rosseau. The author says, ‘If a goal can only be 
      achieved collectively, success depends not just on every individual pulling 
      together;  but  primarily  on  each  individual  believing  that  every  other 
      individual will do so’. This is how he explained that if workers dropped the 
      wage rates and agreed to work for pennies, there would be even lesser jobs 
      available. 
      The story of Oedipus Rex who killed his own father and married his mother; 
      all as a result of a prophecy written by Sophocles has been used to explain 
      the labour and money markets. The author says, ‘Prophecies can be self-
      destructing. The power of prophecy makes the labour and money market and 
      all those people who make up those markets prone to self-destruction. If 
      entrepreneurs see wages and interest rates falling low, the prophesy that 
      economic activity will go down or remain slow and so avoid borrowing 
      money and hiring workers; thus, ensuring wages and interest rates stay low