"[A]n island of refugees in a world of crazy people".

The president of Uruguay, José Mujica, was recently profiled in the Guardian for his unique leadership style. If anyone could claim to be leading by example in an age of austerity, it is José Mujica, who has forsworn a state palace in favour of a farmhouse, donates the vast bulk of his salary to social projects, flies economy class, and drives an old Volkswagen Beetle. Since becoming leader of Uruguay in 2010, he has won plaudits worldwide for living within his means, decrying excessive consumption and pushing ahead with policies on same-sex marriage, abortion and cannabis legalization that have reaffirmed Uruguay as the most socially liberal country in Latin America.

The president is a former member of the Tupamaros guerrilla group, which was notorious in the early 1970s for bank robberies, kidnappings and distributing stolen food and money among the poor not unlike Robin Hood. He was shot by police six times and spent 14 years in a military prison, much of it in dungeon-like conditions.

"I'm just sick of the way things are. We're in an age in which we can't live without accepting the logic of the market," he said. "Contemporary politics is all about short-term pragmatism. We have abandoned religion and philosophy … What we have left is the automatization of doing what the market tells us."

At the United Nations' Rio+20 conference on sustainable development last year, he railed against the "blind obsession" to achieve growth through greater consumption. But, with Uruguay's economy ticking along at a growth rate of more than 3%, Mujica – somewhat grudgingly, it seems – accepts he must deliver material expansion. "I'm president. I'm fighting for more work and more investment because people ask for more and more," he said. "I am trying to expand consumption but to diminish unnecessary consumption … I'm opposed to waste – of energy, or resources, or time. We need to build things that last. That's an ideal, but it may not be realistic because we live in an age of accumulation."

When he was asked for a solution to this contradiction, the president admitted he didn't have the answers, but the former Marxist did say that the search for a solution must be political. "We can almost recycle everything now. If we lived within our means – by being prudent – the 7 billion people in the world could have everything they needed. Global politics should be moving in that direction," he said. "But we think as people and countries, not as a species."

Over the course of their interview Mujica and his wife chat fondly about meetings with Che Guevara, and the president guesses he is probably the last leader in power to have met Mao Zedong, but he has mixed feelings about the recent revolts and protests in Brazil, Turkey, Egypt and elsewhere. "The world will always need revolution. That doesn't mean shooting and violence. A revolution is when you change your thinking. Confucianism and Christianity were both revolutionary," he said.

But he is cynical about demonstrations organized by social networks that quickly dissolve before they have a capacity to build anything lasting. "The protesters will probably finish up working for multinationals and dying of modern diseases. I hope that I am wrong about that."