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by Elmar Altvater
Friday, May. 01, 2009 at 3:38 AM
The unbridled free market was an illusion that gave free rein to greed and speculation and the dominance of the financial markets. Shareholder value made the profits of shareholders absolute and set short-term gain over long-term necessity.
THE VACUUM CLEANER OF WORLD TRADE BREAKS DOWN
The collapse of the export market takes its toll on German labor market in 2009
Interview with Elmar Altvater
[This interview with Elmar Altvater published in: Freitag 3/26/2009 is translated from the German on the World Wide Web, http://www.freitag.de/datenbank/freitag/2009/13/arbeitsmarkt-krise-wachstumsprognose/print.
The political scientist and author Elmar Altvater was a member of the Enquete commission (Globalization of the World Economy-Challenges and Answers, 1999-2002) of the German Bundestag. Today he works for attac and the World Social Forum.]
Is the predicted decline of German economic output of around seven percent to the end of 2009 realistic?
I do not operate any institute that can make econometric calculations. I trust economic researchers who have the necessary instruments. The economic output will decline very intensely; seven percent is possible. If exports collapse 50 percent for Japan and China and if similar dislocations are possible for Germany, it is only consistent if this vehemently strikes back on the whole economy. Considerable social conflicts must be expected.
This is a unique situation in the economic history of Germany.
To the end of the 1960s, this country always had a positive growth. People spoke of an economic miracle and with a time delay also in Latin America, the Asian tiger countries and later in China and India. This period was the exception. This collapse was much deeper than ever before in the history of capitalism after 1945. This is also reflected in a corresponding unemployment.
IS INNER STABILITY ENDANGERED?
Considerable social conflicts must be expected.
Can the striking sales collapse on the export markets be explained by the drying up of many credit streams?
That is certainly a reason but not the only or perhaps most important reason. The collapse can refer back to the change of distribution. The profits increased enormously while mass income remained far behind – everywhere. Thus we have many more billionaires than ever before in history. Billionaires do not consume so much. Millions of employees with low incomes cannot compensate for this so demand falls on a large scale.
Didn’t a changed production method also have effects on demand as with capital goods?
Yes, one must assume enormous profits were gained in financial speculation and simultaneously the profitability of productive investments partly declined. What Marx diagnoses as the fall of the profit rate is still true. With its fall, the demand for investments on markets everywhere in the world also dwindles. Let me refer to another factor. In Heiligendamm, the structural imbalances in the world were a theme at the G8 summit in 2007. At that time when these imbalances, especially the tremendous deficits in the US – both in the budget and in the balance of payments – did not diminish and on the other hand the surpluses in China, Japan and other countries including Germany were not reduced, this led to a serious crisis – a landslide – becoming a regulator. In 2007 it was completely clear: sooner or later the US will fail as the great “vacuum cleaner” of world trade. Germany also profited in its export surpluses from the extreme US import surplus.
Shouldn’t one be more concerned that a demand arises that partly compensates for this breakdown?
Unfortunately, the demand increase will not compensate. The income distribution has favored the profits of capital – and therefore occurred to the burden of wages and salaries. There was no redistribution in the other direction in 2007 when the last chance existed to finally change course. The big question is: what will be the resistance of the capital groups? We are in a situation in which the bank disaster is a very dangerous crisis symptom because the collapse of the financial system threatens and this has systemic significance so that huge bailout packages are crafted.
But these are hardly suited to do anything for the absent demand that you lament.
…Absolutely not. Banks are re-capitalized after they speculated away their own capital. Or “bank banks” are founded to take over toxic securities. Allowing banks to hoard for future takeovers does not help at all. These are not economic programs but programs to stabilize the financial sector so it does not crash. One must fear – and this is not completely wrong – that the overall economic consequences of such a crash will be grave. A classic case of socialization of losses occurs.
Is the German Federal Labor Office prepared if unemployment breaks the four million mark?
Not at all. Agenda 2010 was marked by the principle “Demand and Promote” and by the assumption that there are basically enough jobs. In the crisis, this now proves to be totally wrong. We will now experience that unemployment not only grows – it will bring a further precariousness of labor if something is not done quickly against this by introducing a legal minimum wage and a basic security financed out of tax funds. The basic security must be oriented in a minimum wage. If that does not happen, there will be a social crash, not only a quantitative rise in the unemployed.
What should and what can be done against this? The flexibility of the labor market is very advanced and the conditions for job seekers are worse than ever.
Yes, to the extreme. The flexibility that was carried out for a long time benefited businesses. This will not change in the crisis because the unions are in a rather weak position through the state of the labor market, the ideological development and their own mistakes. As a result, public campaigns like the Europe-wide or worldwide demonstrations on March 28 are so important.
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