BANKRUPTCY OF THE LAST UTOPIA

The great stock market crash seems averted. But everyone can see the ruin of the capitalist promise of salvation. Capitalism’s ten myths

By Jens Jessen, Evelyn Finger and Thomas Assheuer

[This article published in: DIE ZEIT Nr. 40, 9/25/2008 is translated from the German on the World Wide Web, http://images.zeit.de/text/2008/40/Kapitalismus.]


THE MARKET HEALS ITSELF. More than only bank empires collapsed with the debacle on Wall Street. A whole worldview crashed whose main thesis was: the market heals itself. Testing the immune reactions of the sick speculating organism in the example of this crisis would certainly have been interesting. But hardened economic liberals and bankers who make their profits with falling prices did not want to wait for a recovery. Recovery would only have occurred at the price of their existence. Only recently they demonized the incursions of the state. Whether self-healing processes are real is a question of definition. How much time should be given to the patient, a year, two years or several decades? Was the mere survival of the market principle under modern exchange conditions evidence of its indestructible health? Such economic medicine cannot promise the well being of humanity or preservation of civilization. Jens Jessen

THE STATE IS THE PROBLEM. However this state is suddenly popular again. A few days ago the state hardly enjoyed any social credit. Contempt for the state was a duty among economic liberals and the fashion among politicians. The state was treated like a poor relative whose petitioning got on one’s nerves. Wasn’t it enough that the state regularly received a piece of the tax cake from the little stock market banquets? Did the pauper want to meddle in family affairs? Condescension is still clear in the way despisers of the state now cash their checks of billions from the state. The little banks were obviously needy. Cinderella should collect the lint from the ashes; Rumpelstilskin spins straw into gold. Clever hedge fund managers gladly leave the impossible to the community. They even speculate on their responsibility for the public interest. “Privatization of profits and socialization of losses” is misguided policy, New York mayor Michael Bloomberg said right after the crash. Since capitalism is based on risk, bankrupt banks may not be permanently cushioned. Otherwise their delight in risk is only encouraged. This has now reached its zenith. The state has joint responsibility through subsidies, partnerships and tolerance. The state is not the counterpart to the financial economy but helps in its fraud. No wonder German and American banks now exploit the state as a cheap crisis manager. But what if the state fails? Then the blame will be put on the state again. Rational market control does not have a lobby. The shrill demand of the last days implies the alternative: total deregulation or regulated totalitarianism. Evelyn Finger

AMERICA IS BETTER. That the American economic model should be preferred to the cooled-off welfare state capitalism was an iron dogma of the Chicago school around the economist Milton Friedman. In Germany, powerful spokespersons leave no doubt that the German cuddle-economy merely distributes poverty. The welfare state consecrated to death hindered living capital in its self-development. Prosperity only grows in countries that are really deregulated. For that reason, the Anglo-American model has proven superior (Mathias Dopfner). In a word, welfare state dreamers have finally arrived in reality. The whole world only needed to copy US capitalism to be happy. This conviction was a firm element of the American soul and its European admirers. The core meltdown on Wall Street now acts like a trust-breaker. It makes drastically clear what could long be seen in outlines, namely in the consequences of the market radical “counter-revolution,” the social dislocations. The fairy-tale way of life of the US was built on credit. The tax-cutting program benefited above all the well to do in their villas. The gulf between poor and rich is staggering. Effective illiteracy amounts to nearly 28 percent; 2.3 million US citizens sit in prison. The “myth of the classless society” has vanished, Richard Sennett says. Trickle-down deceived, the hope that when the rich become richer, enough money would trickle down from the top. The US has arrived in reality and is not a model any more. In the Iraq war, its super-power fantasy exploded. Belief in the worldwide export capacity of its own economic model burst on Wall Street. Who still wants it now? Thomas Assheuer

CAPITALISM HAS BECOME VIRTUAL. That was the dogma of the 1980s and 1990s and defined the attitude toward life of a whole generation. “We don’t produce anything or build anything; we only make money,” says Richard Gere, the speculator of millions in the film “Pretty Women,” in which a magician at the beginning makes many rich with a few coins. Virtual capitalism means multiplying money in endless transactions without the detour with goods and direct investment. There is still the valley of the real economy with its sweating people, dirty factories and hurried assembly lines. But the big money is made in the heaven of the financial economy, in the cool universe of the divine Wall Street. Intellectuals describe virtual capitalism as a “virgin machine” because it produces nothing and is only symbolic exchange. Financial capitalism, as Jean Baudrillard described with shudders, is as abstract as art and as ethereal as angels. Unfortunately Baudrillard erred. The sweet dream of weightless capitalism has burst – the dream of somnambulist drives of digital money streams that multiply again and again along with the wealth of the nation. The virtual does not actually exist without the real. Financial capitalism is not a closed universe. In reality, it creates poverty and misery in abundance. After the latest collapse of the virtual world, people are really unemployed or must really sell their houses. The body is always the most real; the circulation of money begins and ends with it. The soup kitchen keeps bodies alive. The merciful Health Wagon is an outpatient project of American physicians that moves across the land and treats the homeless and needy free of charge in tents or in the open air. There were more needy every day after the collapse of Wall Street, stern writes. Thomas Assheuer

FREE MARKET CREATES FREE CITIZENS. This is a great lie that gained acceptance after the end of state socialism. Many civil rights activists realized this in questioning the moral superiority of the market economy after the fall of the wall. One cannot criticize capitalism without being ostracized as an enemy of democracy. One cannot use the word exploitation without being stylized as a friend of dictatorship. However dictatorship is not the opposite of capitalism and capitalism is not a democracy – as the example of China shows. The freedom of the market consists merely in making unhindered profit. Can we be satisfied with this pathetic concept of freedom based on naked business maxims (with Benjamin Franklin’s saying: “Remember, time is money! As an honest man, you increase your credit!”)? Should all other definitions of freedom (like free expression of opinion and free decisions) be secondary? The freedom of the citizen is an enlightened ideal, not an economic category. Historically it is based less on Franklin than on his contemporary Kant: “Everyone may seek his happiness as he desires as long as he does not harm the freedom of others striving for the same goal.” Kant tied freedom to the reason enabling us to know the good. From this theory of freedom, the French Revolution derived its practical ethic of justice. The formula freedom-equality-fraternity demanded brotherly conduct from one’s own free will. The individual was promised self-determination and also obligated to the well being of everyone. What about today? Have we forgotten what is the foundation of our democratic constitution? Civil freedom always meant the citizen and never only the bourgeois or hedge fund managers. In contrast, market freedom always meant the expansion of capital as an end-in-itself. Evelyn Finger

FAILURE OR SYSTEM PRESSURE? This question is stubbornly evaded by persons involved in the crisis even though the future acceptance of capitalism depends on its answer. Has the individual or the system failed? Economic decision-makers responsible for mass dismissals, hedge fund managers after carving up firms and speculators betting on falling prices always defend themselves by saying the system forced them. In this way they adopt nolens volens the Marxist thesis that capitalism makes everyone even its profiteers into powerless slaves of its logic. If this is true, no one should be surprised about the declining sympathy for capitalism. However capitalism’s systematic character is also very contested. Do we confront human shortcomings or baseness and not system failure? Therefore the advocates of financial capitalism face an uncomfortable decision. They must incriminate either themselves or the system. Jens Jessen

CAPITALISM AS A RELIGION. The philosopher Walter Benjamin was convinced capitalism has a comparable structure to religion and satisfies the same worries, torments, anxieties and hopes. However the capitalist religion has a fundamental weakness, Benjamin wrote in 1921: It burdens people with debts and does not redeem or serve the “reform of existence.” Benjamin correctly describes the market radical dogma. In this dogma, the market is all-powerful; it sees everything and punishes sin. Capital is only gracious to the one who makes sacrifice, lowers taxes and puts chains on the state. Wall Street itself in its “century crisis” (Alan Greenspan) has taken the magic away from the capitalist religion. The invisible hand of the market is invisible because it does not exist. The devil, the state despised since Reagan and Thatcher, preserves the god of capital from its ruin. With tax funds, it buys its worthless securities. Thomas Assheuer

SALVATION PROMISES. In the past, criticism of the excesses of capitalism was answered with the question: Do you want to go back to socialism? This question assumed that capitalism and socialism were alternatives. Actually both social systems have more in common than their hostile political supporters like to admit. They both make a promise of redemption. That socialism could not fulfill its promise was manifest for half a century. Thankfully capitalism has long been reserved about promising more than prosperity (a prosperity that is not necessarily for everyone). Most recently it has claimed to also automatically produce freedom, justice and democracy. Opening of markets and withdrawal of the state should bring lavish political blessings to the third world. Such inner-worldly promises of salvation will probably not be made in the future. A trimmed capitalism could keep its privileges but its blessings for humanity will not be claimed any more. Jens Jessen

CREATIVE DESTRUCTION. One of the promises that capitalism’s spiral of myths set in the world sounded most enticing. It says a secret magic power is inherent in capitalism. What the market destroys today, it will rebuild all the more magnificently tomorrow. Nokia goes but another business will come. The destruction of the old could be the harbinger of a better future. The formula of “creative destruction” came from the economist Joseph Schumpeter and had a critical meaning. However it long lost its skeptical content and was promoted to the central dogma of market liberalism. Whoever did not know this knows it now. There is a destruction that is only destructive and not creative. This sobering does not harm the market, only its myth. Upbeat brokers already chase after coupon-clippers in busses through forcibly evacuated residential sectors while former homeowners camp in their cars alongside them. Their houses are not far away but someone else will soon be living there. Thomas Assheuer

AT THE END EVERYTHING WILL BE GOOD. But we cannot wait that long because change for the future is due now. We cannot postpone inconvenient projects like cleaning up the disheveled cellar. The hope was that the cellar would be cleaned up by itself, that a strong capitalism solves all problems of humanity and at the end even saves our environment. Now capitalism proves destructive. The economy and ecology could collapse at the same time. Our last hope has burst, some commentators say. But did it exist? We say, it went around. It was propaganda for helpless or powerless politicians. Our last hope did not really fit in the post-utopian age. That it lives unencumbered is also a delusion. The “exhaustion of utopian energies,” as Jurgen Habermas called this, leaves us helpless and at a loss. In 1985, the philosopher warned that the horizon of the future could contract and the future become negative where the welfare state falls into crisis while no alternative is apparent. Resignation is already planted in the formula of taming capitalism, the knowledge that something completely new is really necessary. The socially integrative power of solidarity must be asserted against the power and authority of the administrative state. How is this possible? Clearing out the cellar could begin in that we admit the extent of the dislocations and do not minimize the economic misery that is a social misery. We must join the demand for personal freedom to the demand for social justice. When we clear away the market ideology, we may even find an alternative, left far behind in an unopened box. Evelyn Finger