A Textual Analysis Example
European Crisis according to Yanis Varoufakis
N.B.: The above picture was downloaded from the BBC website on June 25h 2016.
June 23rd 2016 the people of the UK decided to 'leave' the European Union.
The causes and the consequences of this event will be discussed for decades.
the meantime, all European people are faced with three main problems which actually
are strictly connected:
a) the reception and the integration of thousands (and thousands) of immigrants, who - above all - are young people ;
b) the management of the economic crisis, i.e. debt reduction, income redistribution, new investments etc.;
c) the transformation of the European Union institutions through a democratic process.
In recent times, the most useful insights about the economic crisis - which actually is a global crisis - have been provided by several economists (e.g. Joseph E. Stiglitz, Thomas Piketty, Paul Krugman, Robert B. Reich, Yanis Varoufakis etc.), some of whom have decided to take social actions. In particular, regarding the European crisis, two proposals deserve special attention: one by the Progressive Economy group, which has published a manifesto named Call for Change ('From the crisis to a new egalitarian ideal for Europe'), the other one by the DiEM25 movement lead by Yanis Varoufakis, who - with Stuart Holland and James K. Galbraith - has also published a A Modest Proposal for Resolving the Eurozone Crisis.
analysis example that I am presenting concerns two of Varoufakis' books, namely:
- The Global Minotaur: America, the True Origins of the Financial Crisis and the Future of the World Economy (Economic Controversies) (2nd edition, 2015);
- And the Weak Suffer What They Must?: Europe's Crisis and America's Economic Future (2016).
For the purpose of this example, the two books have been analysed as a single corpus (i.e. as a single file including two sections), also because - according to the author (2016) - the second book (which aims to 'cast Europe as the protagonist') began life as a sequel to the previous one ('in which America had the lead role').
In my opinion, the two books in question are interesting for various reasons: 1) the author aims to propose a theory of the crisis, i.e. a genetic model which explains global events underpinning the 2008 crash and its consequences; 2) the historical relationships between economic and political events are well documented; 3) the author speaks as a human being truly interested in sharing his personal memories and findings.
technical details concerning my analysis of the Varoufakis 'corpus' will be
explained in the short Appendix at the end of this page. Now let us comment
on the main findings.
By using a T-LAB tool, the first map I have obtained shows nine Thematic Clusters (see below), each of which consists of a set of text segments sharing similar patterns of key-words.
Both the labels used for the clusters and those used for the two axes of the graph result from my interpretation of the data, and I will comment on this later.
the above map the bubble dimensions refer to the percentages of text segments
belonging to each cluster.
A further version of the same map with the labels only (see below) also includes the respective positions of the two books as supplementary points.
More information about the main differences between the two books are provided in the final section of this page (see Figg. 11-13).
at the map in Fig. 1, the main question by which
I am intrigued is the following:
is this map - obtained by a text analysis modelling - consistent with the economical and historical analysis proposed by Varoufakis in his two books?
Actually the main model used by Varoufakis (2015) is the so-called Surplus Recycling Mechanism (SRM), which - by regulating the exchanges (of money, goods and services) between surplus countries and deficit countries - 'is necessary to avert crises and to subdue them when they occur'.
According to the Author:
Coming back to our map, we can see that the 'BRETTON WOODS' point - when projected on the vertical axis (i.e. 'surplus countries' vs 'deficit countries') - occupies an intermediate position; moreover, by following the red arrows, we can reconstruct some historical trajectories which are quite interesting (see below).
I have also to add that the 'proximities' between two pairs of bubbles in the above mentioned map are consistent with the narrative proposed by Varoufakis. In fact, in his view, France and Germany are the leading countries of the European Union, while the way in which the financial system (see the Bank_CDOS point) managed the relationship with the Greece debt is similar to 'predatory' behaviour used with the people who purchased subprime mortgages. To this purpose, see how 'Franz', a man who worked for a major German bank for twenty-five years, confessed to Varoufakis (2015) to have become a "predatory lender" (more information about the Franz episode is provided below) .
Here are the list of the key words which most contributed to the vertical axis bipolarity.
When looking at the deficit countries, we have to remember that Varoufakis - above all in his book 'And the Weak Suffer What They Must?' (2016) - is talking about Europe. And, in his view, Europe cannot overcome the big crisis in which it is involved without rethinking its political projects and strategies, and without implementing a sort of SRM which shares the Bretton Woods spirit. As a matter of fact, in his opinion the Maastricht Treaty and the ECB policies are just condemning countries like Portugal, Ireland, Italy, Greece and Spain (i.e. the so called PIIGS countries) to increase their debt and to be pray to speculators and of a deregulated bank system.
So, let's try to add some arrows to our map (see below).
The reason way I labelled the semantic opposition along the horizontal axis 'Financialization/Speculation' vs 'Political (and democratic) Process' comes from an interpretation of the following data, i.e. from the key words which most contributed to the 'negative' (left side) and 'positive' (right side) poles of such axis. Here are their lists.
Having explained the context in which the main
characters (i.e. the thematic clusters) of our map interact with each other,
let us now take a look at their main characteristics.
In the following table the first 30 key words with the highest Chi square values in each cluster are listed in descending order.
As T-LAB automatically scores the text segments belonging to each thematic cluster, here is a list of the three text segments which obtained the highest scores within each cluster.
European Union's troubles cannot be due to the impossibility
of forging an overarching European identity that
does not usurp their separate national identities. They
are simply bamboozled as to how the European Union can evolve from bureaucratic institutions in
the service of an economic cartel to a European democracy serving a sovereign European people
the concern of the great and the good is about Greece's debt to the European Central Bank—the ECB. You see, dear reader, a year before, in 2010, an ill-fated
attempt to shore up Greek government bonds by the ECB's president, Monsieur Jean-Claude Trichet, involved
the purchase by the ECB of a bunch of Greek bonds at low, low prices.
one economy's trade surplus is another's
deficit, growing net exports of a large
economy ( like China's or Europe's ) means that it also exports deflation to the rest of the world.
A 9 percent eurozone trade surplus would destroy America's, China's, Latin America's, India's,
Africa's and south_east Asia's hopes for
stability and growth.
|FRANCE & GERMANY||
April 1993 the governor of France's CENTRAL_BANK thought it wise to repeat the
outrageous ( and not just to the Bundesbank ) claim
that the French and German currencies were equals and would provide comparable support to the
single currency. It was as if France were demanding
a few more smacks from the Bundesbank before
Germany shared its money with the French.
then, Volcker had already risen through the ranks of successive Democratic
and Republican administrations to become instrumental in the dismantling
of the BRETTON_WOODS system. 16 The
1971 announcement of the Nixon Shock may be remembered in John Connally's Texan accent but it was “probably that goddamn Volcker, ” as President Nixon once referred
|WAGES & WORKERS||
first dynamic determines the wage share ( total wages as a share
of NATIONAL_INCOME ): as employment increases
above a certain threshold, say E, labour becomes
scarce, workers'bargaining power rises, and therefore so does the wage share.
N.B.: After the above sentence, Varoufakis (2015) adds a chart (see below) which illustrates eloquently how the logic of 'Global Minotaur' has damaged the average people. In other words, it has incresed the income inequality.
the eurozone is ruled by an informal group ( the Eurogroup ), meeting in secrecy, that never reports to the European
Parliament—as it does not, formally, exist. These revolving
doors between legislative power at the center
and executive power in the member-states was designed
CDOs were, in effect, instruments for bending the very rules
designed to save the banking system from itself. 2 An alternative to keeping
the CDOs in the bank vaults was
to pawn them off to a CENTRAL_BANK ( e. g. the Fed ) as collateral for loans, which the banks could then use as they wished: to lend to clients, to other banks, or to buy even more CDOs for themselves.
|GLOBAL MINOTAUR (Theory of the Crisis)||
pure Panglossian theory! REH: no one should expect any theory of human action to make accurate predictions in the long
run if the theory presupposes that humans systematically misunderstand or totally ignore it. for
example, suppose a brilliant mathematician were to develop a theory of bluffing at poker and schooled you in its use.
By using a T-LAB tool which allows exploring network relationships between thematic clusters, the following graph has be obtained.
N.B.: The above graph has been created with Gephi by importing a .gml file created by T-LAB.
Also T-LAB allows us to map the relationships between keywords within each thematic cluster. For example, the following two pictures refer to the Greece Debt cluster.
in both the above charts there is a reference to the so called Ponzi
scheme, let's recall a key memory quoted by Varoufakis (2015).
"Franz and his banker colleagues had been, in effect, running a huge Ponzi scheme in the deficit nations of Europe's monetary union. This is what Franz meant with the sad admission, "I had become a predatory lender. " And when those pyramids crashed, as Ponzi schemes inevitably do, "Ponzi growth " metamorphosed into what I once called "Ponzi austerity".
As far as the main differences between the two books included in our corpus, they can be summarized in two ways:
1) by comparing the respective percentages of the thematic clusters (see below)
2) by comparing the word occurrences, either of the typical words (i.e. in which of the books they occur the most, see below Fig. 12) or of the exclusive words (i.e. used in one book only, see below Fig. 13)
Other types of comparisons would be possible, but - for the purpose of this example - I prefer not to add further outputs.
To conclude, while the UK people has decided to 'leave', I recall three things:
The version of T-LAB used was T-LAB Plus 2016.
words about the pre-processing steps:
- the two books by Varoufakis have been assembled in a single file (i.e. the corpus);
- the automatic lemmatization has been applied;
- a list including specific multiword expressions (e.g. 'Interest Rates', 'Financial System', 'Great Depression' etc.) has been used;
- a customized list including 1,533 key words (occurrence threshold = 10) has been applied.
The thematic map with 9 clusters (see below for a 3d version) has been obtained by using the Thematic Analysis of Elementary Clusters tool. This means that the map has been obtained by a modelling process which includes (a) a cluster analysis of the context units (i.e. text chunks) resulting from an automatic segmentation the two books of Varoufakis and (b) a correspondence analysis of a contingency table with 1,533 rows (i.e. the key-words used) and 9 columns (i.e. the thematic clusters);
- the measures reported in Fig. 4 and Fig. 6 are the absolute contributions resulting from the correspondence analysis;
- the graph in Fig. 8 has been obtained by applying a Sequence Analysis ('Sequences of Themes' option) and by saving a .gml file by means of the Graph Maker tool;
- the MDS chart in Fig. 9 has been obtained by using the T-LAB Co-Word Analysis tool and by plotting a list of key words belonging to the thematic cluster named 'Greece Debt';
- the graph in Fig. 10 has been obtained by using the T-LAB Word Associations tool;
- the bar chart in Fig. 11 is a customized version of an output of the Thematic Analysis;
- the two table in Fig. 12 and Fig 13 have been obtained by using the T-LAB Specificity Analysis tool.
N.B.: The reason why 'DEUTSCHMARK' and 'DEUTSCHE_MARK' are respectively present in the left and the right table of Fig. 13 is that they are spelled differently in the two books.