Yanis Varoufakis once bought me a gin and tonic. His wife once gave me a cup of tea. While dodging my questions, as finance ministers are obliged to, he never once told me an outright lie. And I’ve hosted him at two all-ticketed events. I list these transactions because of what I am about to say: that Varoufakis has written one of the greatest political memoirs of all time. It stands alongside Alan Clark’s for frankness, Denis Healey’s for attacks on former allies, and – as a manual for exploring the perils of statecraft – will probably gain the same stature as Robert Caro’s biography of Lyndon B Johnson.

Yet Varoufakis’s account of the crisis that has scarred Greece between 2010 and today also stands in a category of its own: it is the inside story of high politics told by an outsider. Varoufakis began on the outside – both of elite politics and the Greek far left – swerved to the inside, and then abruptly abandoned it, after he was sacked by his former ally, Greek prime minister Alexis Tsipras, in July 2015. He dramatises his intent throughout the crisis with a telling anecdote. He’s in Washington for a meeting with Larry Summers, the former US treasury secretary and Obama confidant. Summers asks him point blank: do you want to be on the inside or the outside? “Outsiders prioritise their freedom to speak their version of the truth. The price is that they are ignored by the insiders, who make the important decisions,” Summers warns.

Elected politicians have little power; Wall Street and a network of hedge funds, billionaires and media owners have the real power, and the art of being in politics is to recognise this as a fact of life and achieve what you can without disrupting the system. That was the offer. Varoufakis not only rejected it – by describing it in frank detail now, he is arming us against the stupidity of the left’s occasional fantasies that the system built by neoliberalism can somehow bend or compromise to our desire for social justice.

In this book, then, Varoufakis gives one of the most accurate and detailed descriptions of modern power ever written – an achievement that outweighs his desire for self-justification during the Greek crisis. He explains, with a weariness born of nights in soulless hotels and harsh-lit briefing rooms, how the modern power network is built. Aris gets a loan from Zorba’s bank; Zorba writes off the loan but Zorba’s construction company gets a contract from Aris’s ministry. Aris’s son gets a job at Zorba’s TV station, which for some reason is always bankrupt and so can never pay tax – and so on.

Varoufakis with Christine Lagarde of the IMF during a meeting of Eurozone finance ministers in June 2015. Photograph: Virginia Mayo/AP

“The key to such power networks is exclusion and opacity,” Varoufakis writes. As sensitive information is bartered, “two-person alliances forge links with other such alliances … involving conspirators who conspire de facto without being conscious conspirators”. In the process of telling this story, Varoufakis not only spills the beans but beans of the kind the Greeks call gigantes – fat ones, full of juice.

The first revelation is that not only was Greece bankrupt in 2010 when the EU bailed it out, and that the bailout was designed to save the French and German banks, but that Angela Merkel and Nicolas Sarkozy knew this; and they knew it would be a disaster.

This charge is not new – it was levelled at the financial elite at the time by leftwing activists and rightwing economists. But Varoufakis substantiates it with quotes – some gleaned from the tapes of conversations and phone calls he was, unbeknown to the participants, making at the time.

Even now, two years after the last Greek election, this is of more than academic interest. Greece remains burdened by billions of euros of debt it cannot pay. Because of the actions taken in 2010-11 – saving private banks by saddling north European states with massive debts – it is French and German taxpayers who will pay the price when the Greek debt is inevitably written off.

The second revelation is that close members of Varoufakis’s family were threatened with violence when, with the masses in control of the streets and squares, he began to line up with those denouncing the initial bailout as unworkable. It was in response to these threats – delivered via an anonymous phone call with oligarchic calm – that Varoufakis says he left Greece for the US.

As a result, on his return, as he swung towards active support of the radical left party Syriza, Varoufakis experienced the unfolding crisis as an outsider in a different sense. When asked to speak to the crowd occupying Syntagma Square in May-June 2011, he recalls: “The last time I addressed a demonstration was in Nottinghamshire, at a picket line during the 1984 miners’ strike.”

He was about to join a cadre of leftwing political operatives – headed by Tsipras, flanked by his Glasgow-educated chief of staff Nikos Pappas – in a fight to the finish with neoliberalism. But he had scant experience of the organised Greek left and was viewed by many among them as a neoliberal himself.

Varoufakis’s academic achievements had been in the application of game theory to economics. So when he designed Syriza’s confrontation strategy, he was explicit: the enemy had to believe Syriza was prepared to default, or cut loose from the euro system – enough to persuade the EU powers to roll over loans that were coming due, and to deter them from triggering the collapse of the Greek banking system.

This worked – although at the price of a big rhetorical climbdown and retreat on Syriza’s domestic programme in February 2015. It failed in July because, having fought and won an emotional referendum campaign, Tsipras chose compromise over the prospect of a rerun of the Greek civil war.

I interviewed Varoufakis on the night of that referendum victory. He seemed stunned by its size (he admits in the book he expected to lose) and certain that it would hand Tsipras the ammunition to face down the so-called troika of lenders. It is now clear, however, that both men miscalculated. Varoufakis understood – on the authority of the German finance minister, Wolfgang Schäuble – that Germany would not try to force Greece out of the euro. By the time it did exactly this, two weeks of closed banks and collapsing growth had made the stakes of the game all or nothing.

Varoufakis gives one of the most accurate and detailed descriptions of modern power ever written

Getting sacked left Varoufakis with a clean skin – although the price has been self-imposed exile once again from active politics in Greece. If, as is possible, the situation spirals towards economic doom, his voice – together with those of veteran anti-euro communists who split from Syriza – may be all that remains to rally the left for a last-ditch fight against fascism and dictatorship.

But I continue to believe Tsipras was right to climb down in the face of the EU’s ultimatum, and that Varoufakis was at fault for the way he designed the “game” strategy. For Tsipras – and for the older generation of former detainees and torture victims who rebuilt the Greek left after 1974 – staying in power as a dented shield against austerity was preferable to handing power back to a bunch of political mafiosi backed by a mob of baying rich-kid fashionistas.

In the end, Tsipras’s government proved a not very effective shield for the Greek working class, but an effective protection for the million-plus Syrian migrants who landed on Greek shores in the weeks following the economic surrender. The Greek armed forces, judiciary and riot police are replete with people who would have gladly seen the rubber dinghies sunk, their surviving occupants rounded up, interned on landing and deported en masse.

Though Syriza’s handling of the mass migration has been at times inept, at the crucial moment – from July to December 2015 – left-led Greece provided a conduit and a haven for people fleeing terror and destruction. A right-conservative government would have given a very different and much nastier welcome to the Syrians.

In this context, Varoufakis’s version of the Tsipras story needs to be challenged. Varoufakis alleges that Tsipras is prone to frivolity, melancholy and indecision, and that he is determined to prove he is “no shooting star”. But unlike Varoufakis, Tsipras built a party capable of crushing the elite politicians who have drained Greece of wealth and credibility for a generation, and of governing. Tsipras – together with his aide Pappas, whom Varoufakis describes correctly as a major influence on events – built something that he calculated could survive defeat.

Varoufakis built a reputation, but not a party. Indeed the world of parties – of activists huddled against the rainy windows of suburban cafes, of leaflet drops, of strikes and anti-fascist demos – is absent from this memoir.

If the global left – which was on a roll during 2011-2013 – is to regain momentum, it needs leaders like Tsipras to find thinkers and doers like Varoufakis, and to nurture them. But above all it needs to talk to the mass of people in language born out of the years of toil it takes to build a party and a movement.

Adults in the Room: My Battle with Europe’s Deep Establishment is published by Bodley Head. To order a copy for £15 (RRP £20) go to bookshop.theguardian.com or call 0330 333 6846. Free UK p&p over £10, online orders only. Phone orders min p&p of £1.99.