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On the Power of Money: Three by Eugen Drewermann
by Eugen Drewermann and Iring Fetscher
Email: marc1seed (nospam) yahoo.com
02 Apr 2020
Only faith (as in a religion), the "invisible hand," the "law" of the "free" market can judge everything. State interventions can only be annoying. The market itself is allegedly "social". Everyone acts acording to his advantage. The system is not social but lives from the creation of permanent and growing injustice. "Needs" can be produced completely irrationally. Goods are both material and "positional" (Iring Fetscher).
ON THE POWER OF MONEY
By Eugen Drewermann
[This 2008 article is translated abridged from the German on the Internet. Dr. Drewermann is an eloquent anti-war activist and the best known German theologian.]
On the Power of Money in Fairy-Tales
Stories told by "simple" people interpret symbolically the situation of people who see themselves threatened by the fear of perishing in poverty. What can they do to bet money, power and security? What will they do when they finally gain them?
In our days, the omnipotence of money seems all-pervasive. The news on German television has only two parts: before and after the stock market reports. First part: domestic. What must be done to improve it? Second part: abroad. What are the worldwide consequences of their improvement?
When the Grimm brothers compiled their collection of children's and folk fairy tales nearly 200 years ago, the social devastation of the imminent industrial age were not remote. In bands, destitute farmhands were sucked into the factories of the cities and found enough to survive (and more).in the production of mass-produced goods and mass misery. But there was always too little for real life. Nothing about these realities is found in the Grimm fairy tales. Their world is entirely rural and sumptuous, a feudal environment outfitted with beautiful though poor millers' daughters. The question raised in these stories is always burning for our time: How can love be preserved from its strangulation?
How do people endure poverty?
Many fairy-tale motifs seem like they were taken from the third world. "A poor woodcutter lived with his wife and two children on the outskirts of a great forest. He had little to eat. When an enormous inflation hit the country, he had no daily bread anymore. The Hansel and Gretel fairy-tale begins with these words: Poverty forces a mother to hand her children over to the woods and the wild animals. The real theme of the story is how these children ultimately escaped their nervous captivity between the need to eat and the fear of being eaten. (1)
"Once upon a time, a poor man had twelve children and had to work day and night to feed them. When the thirteenth was born, he didn't know what to do. In his distress, he ran off to the country road and wanted to ask the first soul he met for bread." That was the introduction to the story "The Father's Death." Such a great band of children was common in Goethe's time as well as the problem that another child would be a misfortune overtaxing the earnings possibilities of the family. This often happened in those days. How does a child feel who comes into the world as the incarnate unlucky number? In the fairy-tale "The Father's Death," the poor man encountered the dear God but did not accept his help because he sided with the rich and let the poor go hungry... (2) The enigma of physical and mental violence and the mystery of healing grace are intimated. (3) The hopelessness of the economic situation can also drive a person to an alliance with the devil as told by the story "The Maiden without Hands." (4)
Analyzing the deformations in all these fairy-tales marked out in human souls under the pressure of extreme distress is very important humanly and therapeutically. The similarity of some scenes of Grimm fairy-tales with certain social conditions in Africa or overseas points urgently to the fact that poverty, hunger and misery are advancing on a broad front in our affluent society. "Globalization" is by no means contributing to an even ascent of the living standards of everyone. Rather, the third world enters the first world more and more in the course of a worldwide search for the cheapest work slaves. "Day after day," Jean Ziegler writes, "100,000 persons on our planet die of hunger or the immediate consequences of hunger. 826 million people are now chronically and severely malnourished. 34 million of them live in the economically developed countries of the North. The far greater number, 515 million, live in Asia where they amount to 24% of the total population. If one considers the percentage share of the casualties, Africa south of the Sahara pays the greatest price. In Africa, 186 million people are gravely malnourished, 34% of the total population. (5)
What do these numbers mean? "One dimension of human suffering is missing in this picture: "The stifling anxiety that torments every hungering person as soon as he wakes up is how will he provide sustenance to his family and feed himself on this new day?" (6) These questions were raised in the initial conversation of the fairy-tale of Hansel and Gretel and now they have an oppressive actuality in their urgency. "The destruction of millions of people by hunger occurs daily in a kind of icy normality - on a planet that overflows with wealth. The earth could feed 12 billion people in this stage of its agricultural productivity. In other words, the earth could supply a ration of 2700 calories a day for everyone. However, we only have 6 billion people on earth and 826 million of them suffer extreme sickening malnutrition. The equation is simple. Whoever has money eats and lives. Whoever has no money suffers and becomes an invalid or dies. Constant hunger and chronic malnutrition are man-made. The murderous order of the world is responsible for this. Whoever dies of hunger is a victim of a murder. Over two billion people live in absolute poverty: without stable income, regular work, proper housing, medical supplies, sufficient food, without access to clean water and without school.
The masters of globalized capital rule the life and death of a billion people. They decide day after day who has the right to live on this planet and who is condemned to die - through their investment strategies, currency speculations and political alliances that they forge. The machine of worldwide rule and exploitation established by the oligarchs since the beginnings of the 1990s reflects the most extreme pragmatism... Their weapons are mergers, hostile takeovers, building oligopolies and destruction of rivals through dumping prices on campaigns for personal disparagement. Those who came into office through corruption and unfaithfulness are among the destructions and sufferings inflicted on the people by the oligarchs of globalized capital, military empires and against mercenaries, trade and financial organizations...
Week after week and month after month, the government-friendly media gloated over the alleged reduction of unemployment numbers. They were silent that there were always more low-wage jobs and short-term working conditions than regular jobs... The system is oriented at absolute unconditional profit maximization. The mere announcement of further job cuts is enough to catapult the stock prices of certain firms to exorbitant heights. But the question is how to react to an inhuman form of economics.
THE ECONOMY EXISTS FOR HUMANKIND
By Eugen Drewermann
[This reading sample of "Economy Exists for Humankind" is translated from the German on the Internet, www.academia.edu.]
Money rules the world. That is a simple proverb and seems to be simple truth in our daily routine. "Crass differences of incomes are striking. Some live it up and others suffer privation.
If you read the newspapers, you can only shake your head. Banks are bailed out with billions of taxpayer money while money is lacking in local communities.
When you immerse yourselves in the details, you are immediately exposed to a many-voiced choir. The experts also contradict one another. Some want to flood the markets with even more money while others emphasize a more restrictive course. Some support a strict rehabilitation of state finances and others want to stimulate growth on credit. Still others shake their heads and trust or insist on the iron laws of the market that postulate a clear outcome from the laws derived from supply and demand.
When I worked as an adviser to the Boston Consulting Group at the beginning of the 1990s, I wanted to know how money functioned and volunteered to be a bank consultant. Bank consultation was a good first step since I spent several years at the university studying economics and theology and attending theological seminars. The change from one world to another was less common compared to today.
In the course of time, it was clear to me that control over money and capital can represent a seduction arousing fantasies of omnipotence. Whoever has money plays with fate - whether with ship financings, mammoth real estate credits or granting or canceling a loan. The effects on all actors are enormous.
These observations went beyond economic theories. But how I could cast a sensible bridge to my philosophical and theological training was not clear. The question about such a bridge was unusual since different social worlds were clearly separated from one another in the 1990s, the heydays of neoliberalism. Finance, the real economy, politics and society only selectively touched and mutual understanding was limited. Financial practices were seen as following natural laws. The illusion of the governability of the markets was very widespread. Sometimes politics was only regarded as assistance to the free enterprise imperative.
From the banking world, I later moved to consultation of industrial businesses. I learned what cost structures are, how globalization functions and the enormous importance of a clear strategy. Then my trust in the knowability of future developments and the planning ability of businesses was massively shaken when the market collapsed after a personal investment in a Spanish construction firm. Instead of 700,000 apartments, only 100,000 units were built annually in Spain. That was unfortunately not earmarked in the business plan.
What causes wrong business decisions? When is the right moment for a course correction even with losses? In my case, it was a sale of the business clearly below the original purchase price. Who ultimately bears the risk?
The social character of money and capital involves the distribution of chances and risks. Big banks in the 2008/2009 financial and economic crisis were given the predicate "system relevant" because people feared the consequences of an uncontrolled banking failure after the bankruptcy shock of the "Lehman Brothers" investment bank on September 13, 2008. Banks can be called the credit lines.
These examples show our sense of justice often does not agree with the logic of decisions in an economic and political system. Since intuitively "just" decisions often trigger unexpected side-effects, a conflict of opinions is pre-programmed. In short, our intuitive understanding of justice and the system logic of the economy, politics and society do not agree.
How can and should we deal with the world of the economy and finance, with the logic of money and capital?
Many people limit themselves to the horizon of their everyday duties and needs. The rent is paid, complaining about the gas price and making vacation reservations. But how are things connected? How much can we trust the instrumentally-rational theory of the homo oeconomicus that persons decide for their own advantages according to purely rational arguments? Where and how can this be supplemented?
The realizations of dreams are directed to the future. Dreams are more than expectations even if a dream coincides with the expectation of a good functioning product - in buying toothpaste for example. Interestingly, the advertisements for toothpaste are directed to dream-worlds defined by beauty, attractiveness and health and have only a "functional" expectation of clean teeth.
Every sale and every investment can be analyzed under the aspect of the underlying dreams. Dreams move people because they interweave rational and emotional motives. The dream of building a castle for a woman gave rise to the Taj Mahal, one of the most breath-taking building projects of humanity...
Dreams on one side are very personal and on the other side part of an existing cultural context. When one asks people what they would do with 1 million euros, conventional; and collective dreams are described, world travel, the beautiful house, the stylish car, help for family members and much more.
But nightmares can also come out of dreams. Investments can fail, shipping decisions can prove erroneous. The actual reality differs considerably from the imagined reality.
Referring back to the desires leading people to their dreams, goals and expectations underlie the logic of capital and money. (4) The connection of the economic world and anthropological analysis is crucial. Dreams, goals and expectations can be discussed, changed, criticized, adjusted and realized in an open society. Economic life and conduct should be discussed in the middle of society and not reserved for an exclusive club of the intelligentsia...
Reflecting about philanthropic economics is an unconditional future task when capitalist transaction consists in exchanging capital for dreams. The context for this is the world in which we live, the global civil society at the beginning of the 21st century. The world can be organized so coming generations will not have a worse situation than they have today - despite great challenges like climate change, belligerent conflicts and hunger.
If this succeeds, the economy will exist for people - as an experienced reality and not only as a normative statement. That is a great dream!
Dream and Social World
... Capital defines relations, whether we approve or not. In many cases, control over capital leads to control over social conditions and over life and death... The primal act of capitalist transformation is buying, changing money into commodity, the exchange of goods and potentiality into real symbols, goods and services...
By Eugen Drewermann
[This reading sample of his 2017 book "Finanz Kapitalismus" is translated abridged from the German on the Internet. Eugen Drewermann, born in 1940, is a well-known emeritus professor of theology, church critic and anti-war activist.]
The "law" of the "free" market is in effect. All entrepreneurs of the same branch are in competition with each other. Each of them can do what he wants but he can only do what brings economic advantages over his competitors - or is punished with destruction. Secondly, the maximization of profit is the highest goal of all his activities. All personal motives and considerations are secondary to this supreme goal. Thirdly, the entrepreneur is the owner of the means of production. As a feudal lord, he was once the owner of the land; now as industrial capitalist, he controls the necessary machines, work halls and marketing systems. The more complex the business structure, the more ambitious the plans and the greater the dependence on the funds of the creditors, banks and shareholders.
What is money and how does capital arise out of money? The entrepreneur as a CEO or head of a firm depends on his investors. Like entrepreneurs, the investors act involuntarily on the "free" market according to the "law" of mutually destructive competition. They are only interested in the surge of profits, in shareholder value. Creating this is his function, his obligation and his "moral" responsibility. (All the terms of the middle-class world must appear in quotation-marks. They do not mean what they seem to mean; they are only the surrogates of a redirected human decorum.)
Fourthly, only faith (as in a religion), the "invisible hand," that "law" of the "free" market, can judge everything. State interventions can only be annoying. The market itself is allegedly "social." Everyone acts according to his advantage. Growing sales, increased trade and higher profits automatically multiplied the wealth of all market actors, producers and consumers. Every "entrepreneurial-based:" economic theory (and policy) propagates this creed.
The dynamic with which industrial capitalism changed the world is enormous. Around 1800, hardly 10% of the population in Germany lived in communities with more than 5000 inhabitants. Then ever-larger masses of workers concentrated around factories. Basic provisions were guaranteed; the deficiency-economy was overcome by mass production. The average life expectancy rose. In 1870, it was 37 years, around 1900, it was ten years higher and around 1930 it was 61. A girl born in 2004 could expect to live to 82 and a boy to 76. Feudalism was swept away; the businessman replaced the feudal lord. The farmers' liberation created the prerequisites for forming reserve armies of the industrial proletariat... Railroads connected factories, cities and harbors. Coal- and steel production were supporters of industrial progress. The development of chemistry allowed the production of improved medicines. Electro-technology made possible the telegraphs, the electric motor, the lighting of rooms, cities and work halls. The 24-hour day was the law of working hours. Diesel motors conquered the streets...
The list of achievements of the capitalist economic system is impressive and cannot be denied. However, something is monstrously wrong in this system. This system is not "social" as Adam Smith and Friedrich August von Hayek argued. Rather it lives from the creation of permanent and growing injustice. It divides poor and rich and is maintained by force. The slave holding of feudalism continued in the wage-slavery of industrial workers who were slaves of the machine with originally up to 90 hours of working hours per week. Around 1900, they were on average 58 hours. The hygienic conditions were catastrophic and child mortality was high. The population grew under these circumstances. The German population grew to 67 million in 1914 with the outbreak of the First World War. Pensions and health insurance were introduced in 1883 under Bismarck. "Workers and the middle class stand in the center of social discussion and no longer emperor, kings and landlords" [Stefan Schmitz: Kapitalismus 1830-1918, in: Stern Extra Nr 3/ 2009: The Power of Money]... .Steam locomotives rolled on 42,000 miles of track, dams were created and tunnels bored. For the first time, persons formed nature according to their needs and did not adjust to nature.
However, an insoluble core problem of the capitalist economy was unnoticed in this newly awakened pride in the early days of economics. The demand for constant growth is the extraordinary dynamic with which capitalism puts all market actors under pressure. Growth is the fifth characteristic of this kind of economics. Capitalism can only survive if it grows. Joseph Schumpeter's "creative destruction" is its nature.
But something has changed. In the past, the furor of quantative self-expansion and qualitative changes resulted from the competitive conditions of production. Only the largest, strongest and fastest could survive in this social Darwinian struggle for life. They were the richest. The dependence of the capitalist entrepreneur on his creditor develops its own power dynamic. In the past, the prices for raw materials and worker wages were included in the production costs. Then the interests for repaying credits were added. An economic form that must constantly expand can never rest. It is structurally incapable of creating a balance of person and nature. Rather, it consists in an ever more efficient exploitation of nature. Humanity grows with its "blessings." The economy must grow. Producers need their consumers. More and more goods are produced with ever more workers. Every one knows this cannot continue. Nature is not infinite.
In 1946, a law was passed in the US that the government must encourage "maximum employment, production and purchasing power." These three goals: full employment, economic growth and price stability (fighting inflation) constitute the "magical triangle" of economics...
There are no alternatives to growth. In 1967, a Stability- and Growth law was passed according to which the state was obliged to compensate "low demand with investments." The state is responsible for "proper economic growth" and "not only for price stability." Thus, the demand for economic growth is even identical by law with "increasing the well-being of the state." In practice, this means "unbridling the market forces" through tax reductions on business profits and "privatization" of health care and old age necessities by reducing "non-wage labor costs," if necessary by lower interests and subsidies... The neoliberal ideology of Milton Friedman and his Chicago Boys encouraged this development.
In Germany, the liberal theory of Walter Eucken (1891-1950) was predominant in those days. Summarized as "fair" competition, the state should be obliged to fight cartels and misuse of power. No one touched the core question: Where does unchecked growth lead? Can its pressure to expansion constitute the whole basis of capitalism? Can a government goal prescribed by law, growth (or the "Growth Acceleration law" from December 2008) amount to an unavoidable catastrophe? - This is reality and not only a possibility! The faster capitalism overcomes space and accelerates time (as a money-bringing production factor), the more tightly the world concentrates and the more certainly it hits the wall. The danger exists that the whole humanity will be dragged to an abyss since capitalism makes the whole globally interlinked humanity subject or subservient.
An unlimited growth in a limited world is impossible without damages. The devastation of the soil, the contamination of the waters, the over-fishing of the oceans, the clearing of the tropical rainforests, the pollution of the air, the manmade global warming with all its consequences, the unscrupulous exploitation of animals in industrial agricultural and the growing rate of animal- and plant species becoming extinct - all this shows the absolute incompatibi9lity of a capitalist economic system with the basic rules of an ecologically "sustainable" association with nature that is infinitely more than only the environment of the human species. Naomi Klein is right. "Rescuing" the climate, "rescuing the world" as half-heartedly envisioned in Paris in December 2015 can only be realized by removing the capitalist economic system (Naomi Klein speaks "of the blind faith in technical miracles and the veneration of charitable billionaires and champions a "change from below")... "Externa" changed everything.
Remember - prices (according to the conventional theory) form an equilibrium of the marginal costs of the manufacturer and the marginal costs of the consumer. On the supply-side, a businessperson will manufacture a product as long as the costs are affordable. He will fix the price of his commodity on the cost level. The consumer focuses on the benefits of buying a commodity. If he has great hunger, he will even accept an extremely high price for a slice of bread. The more bread he buys, the less benefit he derives from a certain point when he has enough. The marginal utility, as described by Leon Walras, is the value of the last bread unit. The market mechanism of supply and demand tends to a balance point or equilibrium according to neoclassical economic theoreticians in the 19th century (Adam Smith and David Ricardo)...
A human type as a market actor is presupposed that does not exist: a homo oeconomicus with sufficient information to competently judge market transactions and acts rationally corresponding to cost- and benefit calculations (that is, optimally in favor of his advantages and interests).
"Needs" can be produced completely irrationally. The whole advertising branch is based on this possibility. The Dutch tulip mania and its end in 1637 represent the most fantastic (and most instructive example for all speculation bubbles of later times. Originally a wild plant in Central Asian valleys, the tulip found its way across Persia and the Osmanian Empire to Europe and was promoted as the flower of the rich. The precious bulb whose rarest varieties cost up to 10,000 gulden assumed the function of a currency. People calculated in tulips and traded with tulip derivatives... The bubble burst in February 1637 when investors suffered losses. "Within weeks, the average tulip investor lost 95%. With one blow, the bulb derivatives became entirely worthless" (cf. John Kenneth Galbraith).
IN a certain way, this epoch points to the - far greater - financial crisis of 2008. It "illustrates the thriving irrationality in the behavior of all market actors: the producers and traders as much as the buyers and investors. Thorstein Veblen agreed. The social whims of vanity often impress the market. How else can the sales of Porsche cars, Rolex watches, diamond-collars or 1000-euro wines be explained? The "benefit" here lies only in the demonstration - a status symbol that is very lucrative. Instead of being mere "mathematics," market "laws" manifestly result from a number of accidental psychological constellations. In other words, they are not "laws."
In the capitalist competition of the "free" market, there is an aspect of price formation that is subject to an iron pressure. To sell his commodity, the manufacturer has to keep the production costs as low as possible. In the industrial age, this means acquiring the necessary raw materials as cheaply as possible. A merciless ruinous exploitation of nature and a military expansion of the colonial age are the consequences. The state, itself the product of monstrous power projection, has greatly encouraged and by no means restrained the drives of capitalist entrepreneurs. Where princes, barons, bishops and counts waged wars in feudalism, now businessmen and owners of capital dictate to the governing how the general prosperity should be increased...
People hardly see that the accumulated wealth in the northern hemisphere does along with the systematic impoverishment of large parts of the southern hemisphere. Ownership of the land - this ancient privilege of the church and nobility in feudalism - is fought over in the world conquest strategies of capitalist companies. For reasons of justice, economists like Leon Walras urged a socialization of the land. The economist Alfred Marshall saw "the struggle against poverty as the true legitimation of his guild." They thought of Europe not of the disastrous practices of the French, Brits, Dutch, Spaniards and Portuguese in North- and South America, Africa, India, Southeast Asia and the Far East.
Something important could be learned here. As with the land, so with the water; as with housing, so with all the basic needs of life. These necessities should not fall into the hands of capitalist entrepreneurs who offer them for sale as their "products" on the world market! The market "laws" in capitalism only work to their profit by making the rest of humanity dependent on them in all vital necessities. This is not a "market failure" in capitalism but its explicit goal and the inevitable result of this kind of economic "order."
Do you want more evidence? Et voila! The smog in Peking, Singapore and Maitland in December 2015 forced drastic precautionary restrictions. Breathing the air in the cities is increasingly unhealthy. What a profit chance for a service system in offering healthy air to breath! Air capsules could be erected all over the cities... This idea is not only a thought-experiment. These air capsules actually exist in Tokyo. The urgent question is: when will people notice that capitalism pollutes their air? Capitalism steals all vital necessities from them by changing everything into commodities for sale. Capitalism steals their nature from them: their dignity.
"The dignity of persons is inalienable." The German Basic Law declares. A person should always be considered as an end and never as a means to an end, as we read in Immanuel Kant. However, capitalism consists in the systematic exploitation of humans by humans. This is possible because the means of production are in the hands of businessmen. The employer can dictate wages at a level that does not lessen his profit ("surplus value"). The "law" of supply and demand also rules on the labor market according to the traditional economic theory...
Workers have nothing to offer except themselves: the muscle power of their bodies and the mental faculties of their memory and vision...
What happens when work is shifted abroad? Outsourcing has become a magic word of today's capitalism. In the days of colonialism, the indigenous population in overseas countries was forced to subservience to trading companies and producers with draconian means. They had to plant or provide products for the French, Brits, and Spaniards etc. In the exploited countries, the impoverished population was used in a neocolonial way as low-wage workers. In the days of digitally-linked structures, people work in the banking
business from Wall Street and the City of London to Singapore and Dacca. Workers in supplier- and manufacturing branches of cars, computers, clothes or toys toil for miniscule wages without the annoying non-wage labor costs. German clothing firms manufacture 97% of their products abroad today. "More than 1 million jobs were shifted in the branch since 1970 and quietly disappeared." In the 1990s, they were moved to Poland, Chechnya and Rumania, then to Tunisia and Morocco and finally to Hong Kong and Korea.
But the tables are now turning. The population of developing countries can produce the products on their own that they need or sell on the world market instead of foreign investors and entrepreneurs extorting the indigenous population. So Mahatma Gandhi in the struggle against British colonial rule found it absurd to pay British producers for a nutrient like salt instead of drawing it from the ocean themselves. The nonviolent march to the beach became a political spectacle of the first order. In textile manufacturing, why ship cotton from India to England and then buy the expensive manufactured scarves instead of weaving one's own cloth in millions of huts in the cottage industry? The spinning wheel became a sign of freedom and independence of the new India.
Gandhi's concept was a private enterprise concept. China today is different. When communism collapsed in 1989, the chance of a simple conversion arose for the central committee in Peking. Rather than screening the state against western capitalism, it seemed wise to reorganize the centrally-controlled economy according to a seemingly superior capitalism. A state capitalism came out of state socialism. The exploitation of workers continued now in its own direction. A union leader Bernd Link said resignedly in retrospect: "For decades, we fought for more humane working conditions and for somewhat less stress than when women had to squat and bend over before the sewing machines. Now the jobs (e.g. Bielefeld textile industry) are gone. Those toiling today labor under even worse conditions."
The textile industry's development is mirrored in all areas of the economy. Shipping coal from China across three world oceans is still cheaper than relying on domestic miners. This is a main cause of the decline of German coal mining - alongside the reasons for protecting the atmosphere.
Industrial capitalism has taken hold in this ruthlessness toward "human capital." The products manufactured abroad can be exported profitably. Germany is in first place among export nations. No country in the world sells more goods abroad than Germany, 995 billion euros in 2008. Hundreds of specialized businesses utilize the chances of the globalized market and not only big businesses like Siemens and BMW. Germany also ranks at the top in third place in arms exports and fell to fourth place behind China in 2015. It maintains its position with arms deliveries to Saudi Arabia that bombs Yemen and supports radical Islamic groups in Syria, to Israel that continues its land robbery policy in Palestine and to Turkey waging war against the Kurds... Money is never dirty. That is capitalism.
This is a boom season as never before. The volume of world trade tripled within 20 years. The economic output of the world nearly doubled in a quarter-century. Computers and containers enable an ever-faster expanding world trade... In 2008 just before the great banking crisis; the US imported $671 billion more goods than it sold to foreign countries. The US foreign trade deficit took a parasitic form. The US consumes on credit, above all through the mass importing of Chinese goods. These dislocations are seemingly accepted or tolerated since one's businesspersons are relieved and local workers are paid comparatively higher wages.
Entirely in the sense of neoliberal economic theory, the economist Arthur Laffer in the 1980s under Ronald Reagan recommended lowering corporate taxes so paradoxically the revenue of the state would skyrocket since he believed a lower tax rate would stimulate econmi9c growth and at the end befriend the state with higher revenue. This was completely wrong but convinced the American president , England's "Iron Lady" and in a certain sense also Helmut Kohl, the SPD chancellor Gerhard Schroeder and his CDU successor Angela Merkel. To be sure, the economy was stimulated in this way and the new German indebtedness fell to zero (the total indebtedness is still at the hardly imaginable 3 trillion euros). As a result, Europe's southern countries fell into a dangerous debt swamp. While Germany exported massively, Spain, Portugal, Greece and Italy imported far beyond their solvency. The 2008 financial crisis forced up the unemployment rate to socially unbearable levels and plunged the countries into economic recession...
People believed the so-called "knowledge advantage" of western industrial nations. In itself, this idea sounds absurd. "Knowledge," a common asset of humanity based on universal laws of nature, can be instrumentalized into a means for securing Germany as an industrial location (or other national economics). However, this political strategy proves to be very short-sighted. The Asian states are catching up dramatically in the global competition of everyone against everyone else.
Here is a little example. "On December 31, 2002, a 20-mile cableway was opened in Shanghai. Its manufacture and use was felt to be too expensive in Germany. This was described as a commercial breakthrough of the high-tech cableway that no one in Europe wanted. At the beginning of 2006, the Chinese cheerfully announced they would build a magnet-suspension train. For decades, European states had promised the Airbus consortium billions so jobs arose in the old world in the airplane industry. The Chinese would only buy more jets if Airbus built a plant in their country and allowed technology sharing. Learning the manufacturing procedures was primary. Computer specialists, engineers building airplanes or missiles, nuclear scientists and biochemists in China and India were trained in the West and successfully returned to their countries of citizenship. Capitalizing on the knowledge advantage proves increasingly to be an absurdity.
Concerning globalized trade, the developing countries need fair access conditions to the world market. This includes a worldwide adjustment of wages instead of an ever-greater exploitation of wage differences. Equal wages for equal work proves absolutely necessary...
Only the well-to-do would have access to most products if they were priced at what they really cost. The business profits must be socialized for the products to be accessible to everyone.
People are also shamelessly exploited in their "price" or wages and not only nature. When the social externa are included, the goods and their prices could first benefit everyone. However, the basic conviction of capitalism opposed this. In 1986, the American management consultant Alfred Rappaport explained:"Creating shareholder value is the only social responsibility of economics in a market economy that honors the rights of private property." Still, the social dislocations caused by this way of thinking - like the ecological damages - are too expensive in the end.
Up to now, the principle of capitalist economics was privatizing all profits and socializing all damages and losses. This is not possible any more in today's globally interlinked world. The causal agent principle is in force. Whoever inflicts harm must compensate for the damages. Whoever fires workers to "trim" the production cycle through "rationalizations" - measures must help the "released" workers through continued wage payments or tax surcharges in favor of social institutions.
Stakeholder value in which businesses see themselves as public institutions obliged to recognize the needs and interests of everyone affected by the decisions and measures and not only their own goals should replace the theory of shareholder value. The profit expectations of shareholders are by no means the only consideration. The health interests of consumers, security needs and supply shortages, the social support of the unemployed and those unable to work as well as the ecological, economic and social interests of society are important. A business can only act under society's cultural and structural presuppositions.
Wouldn't renewing the old communist demand for socializing the means of production be ultimately the bet course? Halfway measures in capitalist enterprises are already occurring. In Japan, managers believed the work output of their employees could be raised if they shared in their businesses. Whoever shares in the profits of the firm should be responsibly zealous for possible increased sales.
The ecological and social consequences of business conduct must be socially controlled or regulated... Capitalism could begin to transform itself from an economic stream of unbridled self-enrichment of individuals to a service system for the general public. A manageable coach for everyone could emerge out of the rocket-propelled car without brakes. A balance-oriented economy of preservation could come out of a predatory global economy.
Financial capitalism stands in the way of this transformation today, not industrial capitalism... In the days of feudalism, selling a commodity (C) brought money (M) to produce new commodities (C). Now the cycle is M > C > M which includes a highly speculative element... Persons are condemned to be winners or perish. The vast pressure to success undergirding the dynamic of capitalism is tooted in the dependence of the entrepreneur on his creditors, not only in the principle of competition on the "free" market. He must pay back what he borrowed with interest and compound interest... The development of the steam engine cost enormous sums of money...
Industrial capitalism depends on financial capital and this dependence forces constant innovations and expansions. Innovation and expansion are its preconditions and not only accompaniment. This is a characteristic of industrial capitalism. "The new capitalists use money to produce goods and gain more money through their sales. They exchange money for goods for more money. Today, this sounds like a no-brainer. At that time, it was spectacularly new. Between 1850 and 1960, Western Europe's economy grew forty- to fifty times faster than in the previous 600 years."
Money-lenders use money to gain more money. Capital dependent businesspersons are put under a success pressure. What if this fails, the borrowed capital does not flow back and the debts of the borrower remain? What if money only has the goal of earning money? What then motivates the risk-burdened roundabout way of producing goods and offering them for sale on the market? The tendency that the financial world increasingly uncouples from the real economy is part of capitalism.
Today, 90% of the worldwide money streams serve purely speculative businesses and have nothing to do with the production and sale of goods. "In the global computer networks of the financial markets, speculation with credits bundled with currencies, stock options, financial derivatives and "certificates" is overwhelming. During a year, there is more trade on the Chicago Board of Trade alone than the gross domestic product of the whole world... Money only works for itself and no longer for people" (Arne Daniels: Kapitalismus 1989-2006)...
This helps no one. It has long been up to the governing to free the real economy again from the fangs of casino capitalism in favor of more justice, prosperity for everyone and an urgently necessary end of the growth economy. More and more goods should not be produced for ever-more people. Rather, we should learn a qualitative growth toward compatibility of culture and nature, economy and ecology and person and world, instead of quantitative growth. What and how much do we really need and how many people can inhabit this earth?
The question what people do with money - and what money does to people is fundamental. What is money? How does it become capital? What drives the banks? How does interest operate? What role is played by financial speculation? Solutions for the second central question of our time why wars and how can war be overcome? Arise when we first understand how capitalism functions and why we cannot afford it any more. Maintaining the most aggressive of all conceivable economic forms and expecting peace at the end of constant use of force against nature and persons is impossible. How is it possible to disarm the states of the world, rethink military policy and military alliances and delegate decisions over conflicts that cannot be solved locally to a nonpartisan arbitrating authority not guided by economic interests? -
Then the most important question is: Who are we really as persons? How can an economic order of sacra-egoism be "without alternative"? What drives us to consider profit-seeking, avarice and greed as entrepreneurial virtues and to set money and moneymaking in the center of our whole life. "In the West, people believe in money, not in God," Gandhi said more than 80 years ago. [Mahatma Gandhi: Words of peace: "I am convinced Europe today is embodying Satan's spirit, not God's Spirit or Christianity. Satan has the greatest success where he appears with God's name. Europe today is only Christian in name. In reality, mammon is worshipped. "It is easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of God." Those are Christ's words. His followers measure their moral progress by their material possessions." In: Young India, 8/6/1920]..
Gandhi was right. People of our culture must be liberated from the dance around the golden calf. Grappling with the capitalist economic system inevitably involves the question: In what is it really rewarding to believe? What we are as persons is decided there.
THE DANGER OF LACK OF IMAGINATIVENESS AND THE ARGUMENT OF UTOPIANISM
By Iring Fetscher
[This article published in "Survival Conditions of Humanity. The Dialectic of Progress" is translated abridged from the German in: "Lust am Denken," Piper 1983.]
... The powerless can only dream about everything they will do when they have power. The rulers do everything to maintain their power. This is obviously not a particularly imaginative project. In reality, they do everything to maintain the conditions to which they owe their power and not only everything to preserve their power.
Sometimes one can gain simple insights of a new aspect when one translates them into another language. Karl Deutsch proposed a definition of power in the language of system theory. Power means "not having to learn anything." A system is all the more powerful; the less regard is taken for its environment. A super-power can afford a distorted inaccurate picture of the rest of the earth because it does not need to consider this political environment... The Rand Corporation in California published studies about the world in 2000 and 2010. Interviews with hundreds of top-flight experts in all possible areas of natural scie4nce, technology and social science. There would be bulldozing in the 21st century through which the earth's gravitational field would be changed and instruments that can "read" the mind of the leader of a hostile power. Dolphins could be trained to discover and combat U-boats and much more that would hearten the authors of science-fiction novels.
However, the studies on the whole seemed marked by an astonishing deficiency of imagination, not by a surplus of imagination. For example, the division of the world into two hostile camps, one led by the Soviet Union and the other by the US. The socio-economic structure of the two rival and conflicting social systems was assumed to be completely unchanged. Not a single expert - or a statistically relevant number of experts - regarded this condition as changeable. The picture of the future that emerged from the Rand studies was the result of a simple extrapolation from the current development trends of science and technology - plus a few "scientific-technical" breakthroughs...
The critical experiences made by some Hungarian students of Georg Lukas with the planned economy of their countries (and other countries of "command socialism") offer a second example of a similar lack of imagination. Instead of asking: "How will people live in the future" How do we want to work? What concrete consumer goods will we want? What services will we need? How must the economy of our country be systematically developed so these goals can be realized as quickly as possible? Instead of all these questions requiring an extensive questioning, enlightenment and discussion with the population, and a certain measure of anticipating imagination, the leading planners were satisfied with setting certain quantitative growth rates and extrapolating the observed developmental trend of their economy by extending it into the future. In addition, they used data and statistics from developed (capitalist) industrial countries. On the whole, they followed the same procedure used by the "experts" of the Rand studies.
Why can western experts and eastern planners develop so little fantasy? Why can't they imagine a qualitatively changed future society? I presume both have so much power or have so completely identified with their rulers that their imaginations necessarily suffer. Power and imagination seldom go together. But lack of imagination is not a harmless deficiency. Lack of imagination becomes dangerous when the thoughtless extension of "natural" development leads to catastrophic consequences and an alternative development is called impossible and not promoted.
Economists tell us again and again our prosperity cannot hold and full employment cannot be guaranteed without quantitative economic growth. But growth - according to the next logical thought step - can only be guaranteed under the presupposition of an increased energy supply...
There is no alternative to this development acceptable by the population. The higher risk is the price everyone must pay for ensuring future prosperity. This is an unshakable thesis.
Lack of wealth of ideas (or resourcefulness) encounters us everywhere as sorrow encountered Kierkegaard... Here is the second lack of imagination. Nearly all studies on future energy needs start from unused and undeveloped sources of energy - like wind and solar energy, geothermal energy, bio-gas energy and so forth - that were only used marginally in the past. Many economists simply cannot imagine a greater contribution of these technologies to the general energy supply since these technologies were hardly developed in the past... Under the influence of modern technologies, production and economic growth tend to generate social costs that are not covered by free enterprise expenditures.
3. The third lack of imagination appears to me as the greatest. It consists in the assumption that our habits or ways of life and the constantly growing demand for more and more goods and commodified (or publically distributed services) are unchangeable. The assumption is that these trends correspond to the striving for the "good life" or the "greatest possible happiness of the greatest number" (Bentham). This is also refuted by studies on growing neurotization and increasing unease despite greater consumer possibilities. The lack of imagination could be described here as the inability to distinguish between increased consumption and happiness.
The "power" that leads to this obvious blindness involves structural pressures originating from the reproduction mechanisms of a goods-producing economy dependent on constant growth. In his important work "The Social Limits to Growth," (Harvard University Press, 1976), Fred Hirsch showed that certain expectations and promises of happiness generated by a goods-producing consumer society must be frustrated again and again. Yes, this constantly-produced failure (disappointment) is the most important motor for the tremendous dynamic of this economic system.
Hirsch distinguishes two kinds of goods: material goods and "positional." As material goods, he describes those that satisfy direct material needs. Positional goods, on the other hand, serve the satisfaction of prestige, the increase of self-esteem, gaining acknowledgment, respect and admiration. While a certain satiation can be achieved relatively soon with the first kind of goods by raising the productivity of the economy, this is impossible on principle for the second kind (not only on account of "shortage"). The "positional good" is valuable for the individual by giving him or her advantage over others. Since a really higher social status is always only reserved to a minority in a hierarchically-structured society, a high need for status -surrogates in community-form arises that everyone can attain...
Fred Hirsch describes a very perverse result of this general race for "positional goods." The greater the prosperity of a community in the US, the greater the organized resistance against all income transfers in favor of the disadvantaged social strata... The cause of resistance to redistribution, according to Fred Hirsch, is "intensified competition for positional goods and privatization of common access facilities."...
One important consequence of this endless race for positional goods is the mounting destruction of the environment and the accompanying psychological damage. Society as a whole (and the socially weak in society) must bear the burdens resulting from the primacy of the commercialization of all goods and services and the constantly increasing search for "positional goods." "The perverse outcome is encouraging the further expansion of material production while worsening the environmental condition in which the products are used."...
Convincing large parts of the population of the manifest absurdity of their "search for happiness" (or the perversity of their way, to speak with Fred Hirsch) condemned to fail will be hard as long as commodity advertising and the tempting offer of goods are so predominant compared to alternative offers... The real possibility of permanent happiness already known to the great thinkers of antiquity is joined to democratic forms of community - active participation possibilities - and to the capacity for active leisure. Beyond the satisfaction of the elementary needs of life, acknowledgment, friendship and confirmation of one's worth by the group are the most important prerequisites for contentment and happiness. Persons are different but should be acknowledged as equally valuable...
Unfortunately, my imagination is not sufficient to describe alternative societies in detail - like Charles Fourier. These societies can open up more possibilities of happiness than the dynamic and successful capitalist industrial societies of our days with their massive unease, their neuroses and their excluded "de-classe" or uncoupled...
1. Society must be "de-hierarchized." Functional elites may not also be economically privileged. Rather, they must renounce on part of their greater claim to consumer goods to compensate other members of society for their positional disadvantage...
2. "Free time" should cease to be almost only considered with regard to reproduction of work capacity... As the "kingdom of freedom" beyond the kingdom of necessity - according to Marx' formulation -, it should open up chances for comprehensive individual development of artistic, scholarly, athletic and other abilities... Learning becomes an end-in-itself and thus a pleasure or enjoyment.
Such concepts are often denounced as "utopian" and "romantic" but they seem far more realistic to me than the promise transmitted day after day by the brand article advertising: "Soon you will be as happy as Jackie Onasis." Envy is not a natural human quality but the result of a hierarchized competitive society (that claims to be egalitarian). That competitive society awakens envy and thrives by arousing jealousy.
Such an alternative society would be different from present industrial societies by taking nature seriously as the first condition of human life and no longer regarded as a "controllable object" of unlimited exploitation under which the sovereign person stands as a supposedly "independent subject." The problem of an absolute rule over nature has proven to be deceptive and disastrous like the promise of happiness through endlessly increased consumption.
The media often report of little fanatical groups that imagined acts of violence legitimated in the service of radical utopias... But in truth, both the idea of liberation through a violent community and the idea of liberation through an infinitely increased rule of humans over nature and increased consumption are utopian. Both ideas - and their combination in the lands of "command socialism" - have suffered shipwreck.
Ideologies that profit from the status quo or believe they can profit even more have long arisen out of old utopias. Those who call to conversion in the name of future generations and in the name of the exploited and oppressed nature are far removed in their modesty from the old promises of the utopias.
The slander of those demands for rethinking and conversion as "utopian" and "superfluous" seek to divert from their own bankrupt utopia that has become an established power according to the method "Stop the thief!" The liberation of the imagination and the implementation of a "civil right to creativity" (Hermann Glaser) is a more important contribution to reflexive criticism that must ultimately flow into that nonviolence and solidarity struggle urged by Hans Christoph Buch (a German author, essayist and reporter).