"Total mistrust prevails on the financial market. How can the state restore trust when trust in the state was decried for years? When all public affairs are changed into private affairs, citizens only see themselves as private citizens and the state becomes a business.."
THE CULTURE OF MISTRUST
By Richard Munch
[This article published in: Blatter fur deutsche und internationale Politik 1/2009 is translated from the German on the World Wide Web, http://www.blaetter.de/artikel.php?pr=2980]
The collapse of the global financial market has shifted the whole world in fear and trembling. Total mistrust prevails on the financial market that will inevitably lead to a recession or even depression. In the meantime, even the most ardent defenders of the free market eluding all state control are calling for the state as rescuer in distress.
The state should restore the lost trust so readiness for investment, awarding credits and buying stocks returns. So the recession will not last too long – the world economy can continue its growth course.
But how can the state restore trust when trust in the state was systematically decried for years: by economic experts who argued – as Friedrich von Hayek’s docile students – the state can never attain the wisdom of the market as an instrument of so9lving problems and by citizens who simply turn away from a state that privatizes everything and leaves everything to markets to devote themselves to their private things?
When all public affairs are changed into private affairs, it is not surprising that citizens only see themselves as private citizens and the state becomes a business plunging from one crisis to the next on a political market ruled by general mistrust, is exposed to the most vehement mood swings and is helplessly handed over to the raging populism.
As a result, the state itself and the community of states are in a deep crisis of trust. Creating lasting trust in the future will not be simple with state guarantees, nationalized banks and inter-state agreements on regulating the financial market. Beyond the economy and politics, the fragility of the social order is obvious and all pervasive. We do not deny that earlier generations experienced terrible things – widespread famine, economic depression and wars. However compared to the first decades after the Second World War, the susceptibility to crisis of the social order has grown considerably. The end of the Cold War advanced this tendency.
SOCIETY AS A COLLECTION OF MARKETS
The causes for this development are complex and multi-layered. In a systematic regard, one essential cause can be identified. The social order has changed from trust to mistrust. This goes along with the replacement of hierarchies by markets, public responsibility by private offers, professional ethics and artisan honor by competition for customers, bureaucracy by new public management, divisions in enterprises by profit centers and employees by “entrepreneurs of enterprises.” All these social rearrangements replace trust, firmly outlined tasks and responsible relations with the basic mistrust that public authorities do not know what measures promote the public welfare or that there is a public interest but only many individual private interests. Building on a multitude of interlocking markets is said to be better than building on the public definition and advancement of the public interest.
In this political climate, the state is no longer deeply rooted in a political community in which “citizens” reach agreement about the public welfare and cooperate in its realization.
The bond of citizens to their community could produce so much trust that even bad times can be weathered well. The transformation of the political community into a multi-plane system of governance, the splintering into many arenas and battlegrounds set a basic mistrust in place of the relation of trust-taker and trust-giver. This basic mistrust only allows a readiness for cooperation when sufficient controls and counterbalances prevent the general abuse of power, influence and conferred responsibility.
This way only leads deeper into a culture of mistrust in which stable relations are only a deceptive appearance and invite misunderstandings. This way does not lead back to the old relation of trust. A society that transports everything into markets only knows general mistrust, not stable relations of trust. Therefore it is very susceptible for crises with deepening spirals and only short-lived mastery – until the next crisis.
The unstable financial market is only the most crass current expression of this precarious situation of society. “Precariousness” belongs to this society just like speculators and war profiteers of all kinds. The real markets could function very differently if they corresponded to the ideal. Competition is frequently distorted in an oligopolist way. Competitive advantages of all kinds are transformed into monopoly annuities. Private profit maximization triumphs over public responsibility. Contract management with good agreements and code number control establish a system of total control that removes creativity and personal responsibility. The privatization of public services drives communities into a swamp of corruption in awarding announced public contracts. Employees made into “entrepreneurs” exhaust their labor power in mobbing activities.
DOMINANCE OF THE MARKET PARADIGM
How could this fundamental change occur from relations of trust to relations of mistrust? One essential cause is that the global interlocking of the economy, politics, civil society and culture took the bottom out of the order of society through the political community. The developing multi-plane system is organized pluralistically and much more a master of lobbyism than an affair of citizens or a matter of corporatist collaboration of government, parties and associations. In other words, the more the society crosses national borders and assumes European or even global dimensions, the more it is a conglomerate of interest groups and private citizens. If the struggle of all against all over the acceptance of their own interests becomes the dominant picture of society, the plea for the public and the restriction of the private runs into empty space.
In this way, the neoliberal conception of society claims to be universal truth banishing all other ideas of order to the realm of outdated ideologies. To be taken seriously, social democratic, conservative and green programs must stand the test of market compatibility. Many populist counter-currents arose and are a political fact that cannot be ignored any more. These “spirits” cannot be easily expelled by merely appealing to democratic virtues.
The absoluteness claim of the market paradigm ignores the massive costs arising from transformation of society into a conglomerate of markets. It overlooks the fact that the economization of all functional areas of society leads to drastic functional deficits.
ELITE OF HALF-KNOWLEDGE
The defenders of across-the-board acceptance of the market paradigm bore a crucial responsibility for this situation when they forced the conversion of all functional social areas to markets that function very differently than real markets, even if only quasi- or pseudo-markets arose. However society is a much more complex structure than a mere collection of markets and agreements. Ignoring this is the contribution of neoclassical economies to the current crisis of society.
The cause of the crisis lies in the dominance of the neoclassical paradigm that attained the pureness of a theoretical model at the expense of the most extreme foreignness to reality. The correction of this paradigm now occurring has not led to the expansion of economic thinking necessary to do justice to the complex reality of society.
The purity of the theoretical model purchased at a great price had the glow of an exact science and Nobel Prize award. Ennobled with this dignity, the economy worldwide has denied the seriousness of the other socio-economic disciplines. The media society has given a powerful push to this development by staging the Nobel Prize winner as a guru of the knowledge society. In this way, social science half-knowledge gained a global dominance and issued prescriptions that had very different effects in society than in the pure models of the economy. McKinsey and Co converted this rule of half-knowledge into praxis on a broad scale. The crisis of society extending far beyond the financial markets is due to an advisory elite that governs the world with half-knowledge.
The obvious solution to this problem is withdrawal of trust, the change to mistrust in consultant knowledge and open competition between the social science disciplines over the definition of the situation and the interpretation of social difficulties that is the consistent application of the market paradigm to its defenders themselves. Society does not enter secure terrain. But it is no longer so strikingly misled as under the regency of the neoliberal market paradigm.
Original: The Culture of Mistrust