An extract from the book “Germany after Capitalism – The Wagenknecht Doctrine”
by Ralph T. Niemeyer, former editor – in – chief
Human Dignity dies when a person’s each and every action has to be efficient, economically justifiable and sustainable. Where only profit maximisation rules, there is no room for Democracy. The ‘survival-of-the-fittest – credo’ is the opposite of Freedom and Equality. A different World is not possible, a different Society based on a New Economic System is.
The citizens of Europe do not want to live in a Society in which the upper class bathes in Champagne while more and more children have to grow up in a devastating poverty Europe hasn’t witnessed for the past 100 years.
The citizens of Europe do not want to live in an economy in which dividends and shareholder values explode while more and more people can not make a living in dignity from their hands work.
And, the citizens of Europe overwhelmingly reject a regime in which a few multinational corporations decide over the life-perspectives of billions of people while brutal exploitation and wars over resources go hand in hand with a renewed Imperialism depriving many countries of any hope and by this of any future.
Champagne parties for the rich, soup corners for more and more poor and a declining standard of living for the vast majority aren’t the givens of Globalisation but of global Capitalism.
Drastic consequences of unregulated Capitalism are to be endured by 547 million Europeans of which 75 million live below the poverty line while hundreds of millions work for minimum wages that buy them nothing and let them merely survive, not live.
Jobs are axed by major corporations despite high profitability only because of some shareholder’s hunger for one-time effects, national governments go through the social net with a chainsaw in their hands, although an ever higher productivity amid stagnating social expenditure and tumbling birth rates would allow for an increased social security, equal and non-discriminatory access to education and health care.
Neo-liberal Jedi Riders have managed to let the interest of CEOs and owners become political guidelines of the European Union. This agenda is a slap into the face of the majority of Europeans and especially of those who had lived under dictatorial Stalinist regimes and saw the Berlin Wall that separated my Fatherland by an barbaric border finally collapse under the weight of the desires for Human Rights, Freedom and Democracy we all had dreamed of in 1989.
Since it started to exist, Capitalism had ignited productivity, inventions and innovation wherever profit could be made. It has created enormous wealth while it makes sure that billions of human beings are excluded from participating in such. Capitalism has created the technological predicaments in order to overcome poverty while it cements a world order in which every ten seconds a child dies of hunger and more than a billion human beings be denied access to clean and consumable water. With all possible brutality destroys Capitalism production and wealth, exercises profligacy causing climatic calamity and wanton destruction of natural habitats as long as this maximises profit.
During the transition period from the 19th to the 20th century for the first time market dominating major corporations combining the capital-typical profligacy with the power to define the investment priorities of entire industries and by this subordinate state politics to their interests emerged.
These conglomerates profited from the exploitation of colonies while they manifested inequality as well as a rigid distribution of wealth giving the rich by taking from the poor in industrialised countries. The latter resulted in declining sales of consumption products and led to more and more capital being pumped into financial – as well as stock markets. Market value of American stocks multiplied between 1924 and 1929 whereas the stock of assets grew only rather modestly on a worldwide basis.
An increase of profits which because of real-economic givens of decreasing growth rates and shrinking demand has become an impossibility that had been simulated instead by speculative gains until the massive financial blasé burst in October 1929 resulting in the until today most terrible economic crisis of Capitalism’s history.
The consequences have been massive destruction of productive industrial capacity, return of hunger and extreme poverty in industrialised nations, fascist dictatorships as well as a deadly World War, costing millions over million’s lives.
The western European post war model can be seen as an answer to the barbaric experiences of an unregulated Capitalism. In France, Austria, Italy and Great-Britain strategically important economic sectors were nationalised in West-Germany those conglomerates at least were unbundled. Strong unions, and immediately after 1945 also broad anti-capitalistic movements and the establishing of an alternative economic and social model in Eastern Europe led to a generous social system also in the West as well as wages keeping pace with productivity.
Governments regulated many areas of the economy and by this limited excesses of profit maximisation. This model worked quite well as long as rapid growth rates and a steady increase of productivity guaranteed the profit margins of major corporations. The economic crisis of the 1970ies marked the end of this dynamism. Growing unemployment rates, the disappearance of anti-capitalistic movements in line with a waning attractiveness of the Eastern European Socialism let the demands of capital owners celebrate a revival.
The aggressive approach of shareholders got founded by the potential of major corporations which hade been grown into an international dimension to be able to blackmail elected governments and parliaments to subordinate their economic policy to the only goal of increasing returns of investment.
Useful in this strategy have been weakening unions, the cut of social benefits as well as a deregulation and privatisation wave making any facet of public subsistence and life subject to financial feasibility along with wide ranging deregulations of international financial markets.
A renewed worldwide polarisation of income created a gigantic speculation-boom on financial markets while the growth rates of the real economy stagnated or grew at best modestly. Private wealth exploded pretty much at same pace rate than public and later also private indebtedness increased.
Unimaginable amounts of money, a multiple of the world’s social product, are vagabonding day by day on the global financial markets. These funds are moved by banks, financial investors as well as ultra rich privateers whose wealth – multiplication are usually managed by high yield investment funds which determine by their strategies the value of stocks and shares, bonds and currency exchange rates and by this investments, trade and last but not least the financial abilities of public households, governments and the European Union as a whole. The ‘deadly foam’ created by those funds is responsible for instability and an ever new crisis which can ruin entire economies. This situation has been created politically.
It is always put down to a so called “Globalisation” but in reality it has been political decisions that paved the way for an ever more ruthless profit maximisation and concentration that leads to destruction and de-industrialisation. Like it has been a unilateral decision of our leaders to roll out the red carpet for financial conglomerates that too often behave like parasites one could also unilaterally roll back.
It doesn’t matter whether there are still some global players standing on the red carpet while it is rolled-in again as those who come too late always get punished by life’s reality.
This is how hedge-funds, private-equity firms, bubble-creators and snow ball – financiers treat the general public anyway.
After the introduction of flexible exchange rates at first currency markets but later also financial and money markets got liberalised. Possibilities for states to intervene have been drastically reduced by deregulation worldwide. This process had kicked off in the industrialised countries in the 1970ies and continued to spread in so called “Third World” countries in the 1980ies when states with developing economies were forced by the harsh regime of the IMF to open their markets and simultaneously reduce capital transfer restrictions. It culminated in the collapse of the Eastern European Socialism in 1989 after which Capitalism spread in every single corner of formerly somewhat protected niches of state controlled Utopia.
Right after the Berlin Wall had come down boards of major corporations pushed for restructuring, modernisation, liberalisation as well as an utmost level of flexibility resulting in declining wages and lay-offs for the workforce as well as shutting down of industries. A de-industrialisation-Tsunami swept through Eastern Europe while Western European conglomerates conquered a market of hundreds of millions of new customers without a single shot being fired.
Formerly Socialist Elites under the auspices of freedom and democracy filled their own pockets with every privatisation the new democratic governments oversaw while ruthless oligarchs bribed and blackmailed elected parliaments and sovereign governments stripping he state bare with every deregulation that became mandatory for being allowed membership in the European Union.
Said deregulations have also created highly advanced possibilities for tax-avoidance and evasion. The offshore tax havens are the black holes of the world economy which also provide for convenient infrastructure for organised crime. Approximately a twentieth of the global social product is laundered in those financial centres.
In lieu of the skyrocketing profit margins that can be realised on financial markets and in their virtual reality casinos, investments into the real economy became less and less attractive. Major stock market listed corporations reduce investments and minimise their innovation in order to increase profits and shareholder value or in order to buy back stocks and shares. There is a clear tendency to plunder the economy’s substance for one-time effects of an increased shareholder value.
This is extremely short-sighted and a huge burden for future generations. In order to hide these facts, national governments and various EU institutions manipulate statistics, engage in creative accounting and aren’t even shy of using incoherent mathematical formulas supporting an ineffective, unjust and in many cases simply mathematically false economic model.
Despite its promises the Neo-Liberal policy has not lived up to any of its declared goals. Instead of more income justice it stands for brutal re-distribution of wealth by taking from the working and giving to those whose only exercise is to cut coupons. Instead of leading to more self determination and responsibility it created poverty and social exclusion. Instead of equal chances it means social segregation when it comes to education and chances in the labour market.
Whereas Socialism got crippled by Centralisation, Capitalism didn’t lead to more competition but an unprecedented Concentration of economic power as the result of deregulation.
The Neo-Liberals proclaim less state influence but turn the state of civil rights into a big-brother regime spreading violence, distrust and repression.
They talk about Human Rights but wage wars in an open breach of international agreements and fundamental rights leaving tens of thousands of civilians’ dead while major corporations gain access to resources, raw materials and new investment opportunities.
It becomes obvious once more that we do live in a class-society. Only a few benefit from the continuously increasing shareholder value. Half of the billion fold global capital is owned by less than 93,800 multi-millionaires. One per cent of Germany’s private households own more than 2/3 of all stocks while the majority of Germans does not own anything. Many people aren’t even granted access to a bank account.
Today’s Capitalism let’s the majority become poorer in order to make ultra rich individuals richer. The average net wage in Germany has fallen to the level of 1980. In the US net wages of employees have fallen even further to the level of 1973 while the number of prison inmates had quadrupled between 1977 and 2002.
Two, respectively three decades of economic growth have bypassed the vast majorities in EU and US but even more so on a worldwide level as the IMF admits. The Standard of Living of uneducated workers and unemployed has sharply declined. Many of the aforementioned do not know how they shall finance theirs and the life of their children anymore. More and more young people start their life lacking any perspective.
On global level entire continents are given up. The average income of Africans today amounts to little more than a 20th of that of people in industrialised nations. In many regions it is even lower than when becoming independent some 50 years ago. The debt crisis of the 1980ies threw back Latin America for more than a decade.
A formerly high developed country like Argentina suffered from neo-liberal reforms and currency devaluation to such an extent that for the first time ever Argentineans were confronted with hunger. Only recently some relief could be noticed.
The global Capitalism not only has led to social and economically disastrous consequences but also terrible ecological problems. Economic growth of the past 250 years has been based on the use of fossil energy, first on coal and than from the beginning of the 20th century on oil and gas.
Oil and gas reserves are limited.
The exploitation of such will have peaked in a short while meaning that production will decline while demand is increasing, also and foremost because of the introduction of western life style in East and South East Asia.
Under capitalistic conditions profits of oil and gas consortia will explode and manifest their grip on our democracies and continue to use their powerful position to further hinder and obstruct the exploration of and the transition to renewable and clean energy-solutions. Of the World’s ten largest corporations 6 are energy conglomerates.
A major challenge is Climate Change. Deserts spread, glaciers are crying icebergs into the oceans, polar bears are drowning, penguins sweating and starving. Sea levels are rising and will force millions to migrate. In order to prevent temperature to raise further the use of fossil fuel must be limited and a radical turn towards alternative energy executed.
The outgoing EU Commission topped its usual hypocrisy by pretending to have understood and committing itself to fight Climate Change by allowing for a revival of nuclear energy as well as another financial bubble, the alternative energy hype, to lift off, just in time to absorb liquidity set free by the new technology bubble and real-estate bubble.
The fight against Climate Change does not need financial bubbles, it needs a solid, coherent and sustainable energy policy apart from financial interests and speculation which in the end destroys everything.
And, Earth doesn’t deserve that cynicism of the pro-nuclear energy camp that uses the EU Commission’s Climate Change – hype as an excuse for demanding one reactor per week to be built while storage of the waste can not even be secured for more than a few decades. According to their logic our grandchildren would have to deal with it, so one could as well dump the nuclear waste right in the playground of our children.
At the same time the capitalistic logic of excessive growth must be replaced by reasonable resource management, durability and multiple usages of products.
This requires a fundamentally changed way of producing and consuming. Ecology is also a matter of social and economic priorities. The approach of the present EU Commission, European Parliament and Energy conglomerates who understood that much money can be made from bio-fuel is fatally wrong as it causes inflation of food prices, creates hunger and destroys natural habitats.
At a time when the financial capitalism has ultimately replaced the profit-oriented creative destruction by the destruction of creativity, productivity and wealth alternatives have to be explored.
The collapse of the financial system is not a random development. It is rather the logic of a system creating financial bubbles standing in no relation with production, aren’t in line with productivity and growth other than having a grip on the wealth produced by others.
Only motor of such an economic system is the privately accumulated wealth which sees wages, social contributions and corporate taxes only as ‘cost factor’ although in reality it is the level of wages, social benefits as well as the quality and quantity of public investments which determine the lives of the vast majority of people and by this the real economy’s relation of demand and production output.
Human beings aren’t a cost factor. They don’t live for the economy, but the economy has to serve them. Some in our European Institutions seem to have forgotten that Adam Smith and Immanuel Kant had lived.