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Rhine Capitalism, Anglo-Saxon Capitalism and Redistribution

by Eberhard Richter and Ruth Fuchs Tuesday, Oct. 19, 2004 at 1:40 AM

Anglo-Saxon capitalism is an unbridled capi-talism whose profit logic overrules all social and environmental interests. Rhine capitali-sm has a social net so workers are not redu-ced to cost factors. "The Cold War against the social state leaves..another republic."


By Eberhard Richter

[This excerpt from the November 15, 2003 conference “The Future of Social Security Systems” in Erfurt is translated from the German on the World Wide Web ]

…The pressure exerted on us in Europe is a European or global pressure, the famous Washington Consensus that came about completely undemocratically at the beginning of the 1990s and is now enforced worldwide. Our situation will be rather desperate if we do not oppose this with something global. The nation state can no longer control this. The SPD (Social-Democratic party of Germany) and Schroeder are simply adjusters or opportunists who adapt to these pressures that ultimately start from the world financial markets. That is their whole political skill. We can only oppose something if we act in the European region and beyond. This is obviously difficult. I will not offer any magic formula or ready-made solution.

The European Social Forum is a relatively new phenomenon. There have long been discussions in Attac whether something should not be done on a regional plane since 60 percent of the laws enacted in Germany are only continuations of Brussels’ resolutions. This should be underscored. Social cuts are occurring in France, Italy and all over Europe. Altogether a million people protested. In Florence in 2003, 40,000 people demonstrated. In Paris, there were 20,000 or 30,000. The numbers are snot central though they may be necessary to gain media attention. That is the outward framework.

Let us turn to a substantive theme that could be important for the strategy and orientation of the PDS (Party of Democratic Socialists in Germany). There is an important distinction between Rhine capitalism and Anglo-Saxon capitalism. What we are now experiencing is essentially an absolute dominance of this Anglo-Saxon model. One could say this is all a bloody mess: capitalism vs. capitalism, both are capitalism. Nevertheless this distinction should be emphasized. If Rhine capitalism that still has at least a social tradition is now steamrolled by Anglo-Saxon capitalism, we must take sides since Rhine capitalism is far better. Bismarck’s Rhine capitalism is better than capitalism without a social tradition. This is also a question of strategy. This debate also occurs with Attac. Some say capitalism is capitalism and the others say we make a distinction. What we have here in Europe is worth defending. There are essential differences. One difference is that there are social security nets everywhere in Europe, in all countries of the European Union. These nets do not exist in America. The second difference is that the socially disadvantaged are not stylized as losers in our attitudes but are people who somehow need help. This is anchored in our thinking. The attitude is very different in America where there are simply winners and losers. Theirs is a completely different cultural tradition. Businesses obviously totter in Europe. However business in the European tradition is actually a common undertaking. We still have joint-determination. In Europe, business is not the possession of stockholders but is more a joint enterprise between employers and employees. I have never understood why this Anglo-Saxon model had to be adopted economically. The New Economy in the 1990s should be recalled. The New Economy was a flop, a propaganda success of the Anglo-Saxon model that actually accomplished nothing. The model that includes the social aspect was always better.

My final point concerns the public sector. Why are the public treasuries empty while private wealth grows? This is characteristic of the Anglo-Saxon capitalism model. In Europe, the public sector was always stronger. These are a few characteristics that evoke our engagement. We defend a certain tradition that can be developed further. While some say we are defending conservative traditions, this is a capitalism worth defending against a pure individualist capitalism.


By Ruth Fuchs

[This excerpt from an address at the November 2003 PDS Conference “The Future of Social Security Systems is translated from the German on the World Wide Web.]

“Property obligates. Its use should serve the well-being of the general public.” The 1997 authors set this sentence from Article 14 of the German constitution over their “Erfurt Declaration” for a social democracy.

The Erfurt Declaration continues: “The governing policy in our formally united country has fallen into a state of merciless injustice, planned social obsolescence and non-existing perspectives. The Cold War against the social state leaves behind another republic. The state of emergency of constantly increasing unemployment brings state budgets and social security systems into crisis. The public debt service multiplies the wealth of banks and owners of massive financial assets. Power arises that is not democratically legitimated. A more just distribution of income and goods is the central task of a new policy.”

As the theme and discussions show, five years of Red-Green politics have not increased the actuality of the Erfurt Declaration or the actuality of its criticism of existing conditions. Quite the contrary! Many persons who voted SPD (Social-Democratic party of Germany) ask given the so-called Agenda 2010 reforms what is still social today to social democrats. On November 1, over 100,000 people came to the Berlin demonstration and clearly raised this question. They declared their resistance against the government’s neoliberal policy. In view of years of waiting and silence, this is a danger or caution sign and nourishes the hope of responsibility for social democracy = even if belatedly – that a new social movement will arise at last.

Participation in the November 1 demonstration was a very moving experience for me that has greatly inspired my further political work. However it has not made me blind to a different and unfortunately opposite development in our country.

The ruling class in Germany, the employers in alliance with the media, have succeeded in manipulating public opinion so people are convinced that a reorganization of the social systems is necessary. In reality this reorganization is a dismantling. People believe the massively disseminated argument or manipulation that we can no longer afford the “luxuriant” social state in the course of globalization and in the interest of Germany’s economic competitiveness. Daily in the print-, radio- and television media, liberal scientists, politicians and officials of business-, banking- and insurance corporations proclaim the messages that the economy can only grow when taxes for businesses are lowered, social benefits cut, the rights of employees slashed and state spending rolled back. Speaking in a more brutal way, economic growth at any price is the maxim of political conduct. The way there is called Agenda 2010, a reform concept in which the neoliberal model of a deregulated and socially trimmed capitalism is represented as without alternative.

More than mistrust arises when politicians praise their policy as without alternative. Firstly, criticism and proposals for improvement and change were urged since Agenda 2010 was published. Secondly, the “social agenda concept” of the PDS, the core theme of this conference alongside an alternative concept of the DGB union, was made known.

Our PDS concept is not only a genuine alternative to the government program. A concept of another society including the role of the state as a guarantor of necessary provisions underlies our proposal. We experience daily where the deregulated market of capital leads.

The serious crisis situation in society should not be countered with social cuts, an austerity policy that is nothing but a forced redistribution program from “bottom to the top”. This German government lowers the top tax rate and resists reintroducing the property tax. According to the OECD, Germany with an average tax rate of 21.7% is the lowest in the European Union and nearest the tax paradise. In 1999, the share of profit- and business taxes in all the tax revenue fell to 4.8%. In the US it still amounted to 8.3 % and even 10.4 % in England.

The political class of Germany seeks to bring about the reorganization of the social state by the year 2006. Health reform with its privatization as the core is the beginning of capital-financed reforms. Nursing care insurance will be reformed after legal pension insurance. The goal of the reforms is only to guarantee basic existence and no longer to maintain the achieved living standard.

The introduced reforms and measures, whether the Hartz concept, health- or pension reform, produce massive fears and uncertainty in the East and the West. Fear of the future increasingly defines the life of most people in this rich Federal republic of Germany at least as to private wealth. For decades, the public treasuries have been plundered empty through the tax redistribution policy. One half-percent of the population (377,000 income millionaires) own more than a quarter of German financial assets while seven million people in Germany must manage with less than 460 Euro a month.

The person becomes a factor, a production factor, cost factor and risk factor. The basic consensus of the social market economy in effect in old Germany is dissolved. Today the social state has become a variable of the economy. How far must non-wage labor costs be reduced so an additional nurse, physician or teacher can be hired?

From our perspective, the redistribution of present wealth urgently belongs on the day’s agenda and is one of our central demands. The pure defense of the social security system is not enough. The tax system must be put on trial.

Therefore contributions for unemployment should be paid by entrepreneurs since unemployment is a direct result of the system of private capital exploitation. The situation in life of the unemployed is largely adopted to the employed. Self-government or autonomy in unemployment insurance should be thought through again. Health- and pension insurance must be liberated from the influence of entrepreneurs. Health insurance schemes like pension schemes should be standardized and regionalized. The goal must be ultimately a uniform organization of social security… The contributors and benefit recipients have greater possibilities of cooperation in self-government. These are our reform ideas. The cry “We are the People” has contributed to eliminating a state system.

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