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by Gisbert Otto
Tuesday, Jul. 19, 2005 at 10:23 AM
"What caused this development? How could an economic system be built where ever-larger parts of the population are excluded from sharing in growth? ..In neoliberalism, the person is not regarded as a person but downgraded to mere labor power.."
DISINFORMATION AS A STRATEGY OF POWER
Critical Analysis of the Economic System and Possible Alternatives (Part I)
By Gisbert Otto, Stuttgart
[This article published in: Zeit-Fragen Nr. 27, 7/4/2005 is translated from the German on the World Wide Web, http://www.zeit-fragen.ch/.]
The so-called capitalism criticism of the SPD chairperson Franz Muntefering cast waves and generated a debate. However the present economic system of neoliberalism was not questioned. Muntefering’s statements were counter-productive, it was said, since prosperity is only produced by countries that accept innovations whose culture supports entrepreneurship and whose public values surplus more than distribution.
In contrast, a few commentators pointed out the economy is already too dominant today and economic goals determine worldwide developments. National governments with the task of setting framing conditions for the economy are often powerless or even one-sidedly fulfill the demands of the economy instead of offering counter-measures. The most impressive example of this one-sidedness is the income development of the last 30 years in the EU (European Union). The profits of businesses have massively increased to the burden of wages and salaries. The gap between poor and rich has expanded in developing countries and also in industrial countries. For example, 7% of the population in Germany have a quarter of the net income (this is very different from the seventies). Unemployment has become a permanent problem with 20 million impacted in the EU. Day after day many employees are directly or indirectly confronted with unemployment. However serious solutions are not in sight.
Instead the so-called “free market” is transfigured. We must pass through this difficult period and the ingrained welfare state must be driven back, it is said. Adjusting to the changes is paramount, not whether one rejects or supports modernization. This argument that doesn’t even allow the question of alternatives to arise is a consequence of the TINA-syndrome (There Is No Alternative) introduced by Margaret Thatcher. With absolute certainty, we should be persuaded there is no alternative to neoliberalism.
What caused this development? How could an economic system be built where ever-larger parts of the population are excluded from sharing in growth? How was it possible that dismantling the social systems in Europe could be represented as a necessary and positive measure? How is it possible that most of us don’t regard the social situation as dramatic? What mechanisms are used to veil a “Fun-society” and conceal the uncertainty, powerlessness and fear felt by many people today? Why aren’t we able to clearly recognize that our nation-state democracies and our protection from absolute rule are endangered more and more?
This article attempts to answer these questions.
The French No to the EU constitution is very important. The European public understands that the French have had enough of an economic policy carried on the backs of employees with sinking purchasing power and increasing unemployment. Neoliberal economics is a main item of the EU constitution. This was and is too much not only for the French. The media in France turned against the totally one-sided constant promotion of the Yes (Oui) and demanded that the No (Non) be stressed in the reporting. Their motive was exemplary. They complained that otherwise the whole profession would be discredited.
POLITICAL REACTIONS TO THE COURAGEOUS NO OF THE FRENCH
The political elites reacted to the No to the EU constitution. Instead of accepting the democratic result, they tried to turn it around. They devised phrases, for example that the European unification process cannot be stopped. The voluntary cooperation of the nations was not central to them. The excitement around the French “No” clearly demonstrated this. Isn’t a vote where only one answer is expected a farce from the beginning? Instead of a democratic cooperation, the EU elite seeks to build a power machine in which the nations should only unconditionally obey its principles without participating. We can only be thankful for the French resistance.
Another Europe is conceivable and possible despite all TINA-pressure. Nothing but the absolute power claims of a worldwide elite is behind this TINA-paralysis. Mindful of the media pressure and the many domestic and foreign politicians massively engaged for acceptance of the EU constitution, France’s No is very life-giving and shows what was regarded as impossible is possible. The public discussion demonstrated that – outside France – many politicians and media representatives had not read essential parts of the EU constitution.
DEVELOPMENTS SHAPING OUR WORLD
In answering the question “How was it possible to build an economic system to the burden of the majority of all people?,” three developments mark our world:
1. With the fall of the Berlin wall in 1989, the Soviet counter-system collapsed. The planned economic system was integrated in the market economy; neoliberalism was introduced worldwide.
2. The enormous technical progress – particularly in communication technology and information technology – makes possible central control for big business and “global players” with production sites all over the world (all production sites are connected to central headquarters through electronic connections). At the same time the “global players” also have strategic power. When a state does not act as desired, production can be shifted to another country. This was and is also true for wages. The lowest wage is paid.
3. Human labor has become almost completely dispensable today for capital. This historically new development is a consequence of technical progress and the globalized market.
THE STRUGGLE FROM TOP TO BOTTOM REPLACES CLASS STRUGGLE
The so-called class struggle was based on the indispensability of labor on one side and capital on the other side. Both sides had power. This balance of power does not exist any more today. The struggle continues without disclosed rules since the true connections should remain veiled, especially through means of modern communication and language research. The majority of the people may not become aware of the one-sidedness of the battle waged today from top to bottom.
As a result of these developments, we have a world today in which the globalized economy has an absolute precedence. Absolute profit maximization is central, not creation of jobs. Investing in new production sites is not economically practical when private and public demand stagnate and the profitable sale of additional goods is not possible. The profits of businesses are invested in the financial sector instead of production.
LANGUAGE DETERMINES THINKING
The worldwide manipulation of the people by the media went along with the dominance of the “free market.” Pictures and language are used to achieve the desired goals. The discovery that our thinking does not determine language but conversely language determines thinking was also applied. New word creations were invented. One example of many is the use of the term “free market.” It is a fact that the market is not free. Rather the market is determined by the “global players” and the big financial actors. The powerful make use of these word creations today to hide or extend their power through disinformation. The “flexibility of the labor market” is another term filled with a positive content. The limitation or suspension of termination protection is actually meant.
MATERIALLY-SUPPORTED IDEAS HAVE CONSEQUENCES
The neoliberals who have definitional power today in the US have understood that language determines thinking and “ideas have consequences.” From the tiny nucleus at the University of Chicago, the economics philosopher Friedrich von Hayek with his student Milton Friedman and very powerful financial backers developed a huge international network with the goal of implementing the neoliberal agenda worldwide. Foundations, institutes, research centers, publications, scholars, authors and public relations writers were joined in this network to develop, package and relentlessly promote the neoliberal ideas. However ideas alone are not enough; their conversion in practice is necessary. Executers of the neoliberal ideas were Margaret Thatcher and Ronald Reagan who as heads of governments introduced neoliberalism “from above.” Thus neoliberalism was a political program and did not prevail through the mechanisms of the “free market” as the neoliberal theory maintains.
THE UNSPOKEN FOUNDATION OF THE ECONOMIC SYSTEM
Darwin is often cited as justification for this kind of economy. Darwin’s central theory of the evolution of life through the “survival of the strongest” was transferred by the social Darwinists to the development of societies. This ideology is quoted today as a justification for the globalization process even though social Darwinism is discredited. In biology, the insight has gained acceptance that evolutionary processes are not accompanied by a higher development and that an objective division of life forms in higher and lower groups is impossible. Besides the term “survival of the fittest” is misleading since the propagation of descendants most capable of survival and reproduction is the basis of biological success, not survival in itself. Darwin insisted that the strength of a population lies in the strong supporting and not oppressing the weak. Darwin’s great scientific achievement is used today above all to attain goals of power politics. Alongside this distortion of Darwin’s theory and the creation of new words without reference to reality, the powerful exploit the human striving for existential security.
THE PRESSURE FOR EXISTENTIAL SECURITY AS A MEANS OF POWER
Anxiety over jobs – existential security – occupies the majority of people today. Although many no longer agree with existing conditions, they still participate because they want to keep their jobs and not be among the losers. In this way the present system is confirmed; the world of the privileged appears as the only true world. In this system, the upstarts and successful politicians do everything to ascend higher. At the least they want to maintain their positions. The critical remark of a bank manager – for example that 8 billion francs annual profit is excessive – would cost him his very well-paid job and he wouldn’t be given any comparable offer. Those “still working” do everything to retain their jobs. In addition, most people still regard unemployment as a personal problem. As already explained, unemployment today is above all a social problem in which the goals of power politics predominate. How these goals are reached – the main goal is still redistribution from bottom to the top – will be shown in the following section. The process is based on the good faith or credulity of people who are usually told that the problems are too complex for them to share in decisions and on their blind faith in authority that – as we know – operates so they join and more or less abandon their own thinking and sense of responsibility.
OPINION-MAKERS AND THE AUTHORITY PROBLEM
At the EU summit in Lisbon in March 2000, the heads of government of the EU declared that the EU would reach full employment by the year 2010 and the gross domestic product GDP (value of the goods and services produced in the country in a year) would grow 3% per year. The opposite has occurred. The number of unemployed has increased since 2001 (in 2000 there were 13.7 million). The gap between poor and rich has expanded. Economic growth decreased in the “EU of 15” year after year since 2001 and lies between 0.4% and 1.5% (compared to the predicted 3%). Shouldn’t this development be enough reason for the politically responsible to rethink their economic policy?
A basic examination is not carried out. Instead a reform deadlock is emphasized or the example of England – a country with good growth and low unemployment – is stressed. The course is right. Changes are not necessary, only a little patience. Therefore the present fears in the population are not taken seriously but brushed off as anxieties, for example the fears around job security, selling off the national economy, the competitive pressure of international corporations and social underbidding competition through an unregulated immigration in the national labor markets. Practical information and actions are vital. Reassurance with words alone – especially words with false content – is elitist and short-sighted since it aims at maintaining power, not at understanding.
IS ENGLAND A CLASSIC EXAMPLE OF NEOLIBERALISM?
When low economic growth and high unemployment are deplored in the EU – particularly in Germany – England is cited as a country with good growth and trifling unemployment. But who would want to live in England if the reasons for English growth were known? Some of the reason can be listed in comparison to Germany (source: Der Spiegel 17/2005):
- Corporate tax rate of 30% (GB) compared to 38.7% in Germany
- Wage costs in manufacturing industries at 18.7 Euros (GB) compared to 27.1 Euros in Germany.
Wage costs are a third lower and social conditions are at an all-time low. Everyone in Europe knows the problem of waiting lists in England for all necessary hospital admissions. Discussions in England about raising the pension age to 70 also go in the same direction.
The frequent reference in the media to England – as a country where neoliberalism functions – is regrettable and misleading since neoliberalism only functions for the upper class, not for the English people. The hidden commission of the media can be seen in this example: passing on the “opinion of the dominant” instead of “dominant opinions.”
Neoliberalism brings great disadvantages to developing countries and industrial countries. Again and again the positive effects from a holistic perspective are stressed. Europe’s eastern countries had great growth rates. But whose growth is it? Part II of this article will pursue these questions.
On the basis of enormous technical progress, the idea of greatly reducing working hours was discussed 30 years ago.
The same living standard could be guaranteed with the increased productivity. The powerful decided differently.
These language distortions have grave effects on democracy. Citizens are falsely informed since the new word creations lack reference to reality. As a result, they lose their positive creative rights in democracy. They make decisions that they would never make – if they had sufficient factual information.
THE FALSE PROMISE
Professor John Gray, former chief theoretician of Prime Minister Margaret Thatcher and promoter of English neoliberalism, turns against these hoaxes or false reports.
In his book “The False Promise,” he points out that neoliberalism – like communism – is a utopia. The history of human communities is ignored. The person is not regarded as a person but downgraded to mere labor power.
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