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by Friedhelm Hengsbach
Wednesday, Mar. 03, 2010 at 3:18 PM
Businesses are capital investments in the hands of shareholders. Consequently managers only serve the interests of shareholders.
FINANCE CAPITALISM DEVALUES HUMAN LABOR
By Friedhelm Hengsbach
[This article published on: SZ-online/Sachsische Zeitung, January 29, 2010 is translated from the German on the Internet, http://www.sz-online.de/.]
The current financial- and economic crisis is unparalleled. Firstly, it is bound with a radical change of dominant thought patterns. The market-radical economic-liberal slogans, trust the self-healing powers of the market and the sleek state as the best of all possible states, vanished overnight from the minds and hearts of the economic elite. Secondly, three dimensions of the crisis are obvious: the monetary, ecological and social dimensions. Finance capitalism produces enormous ecological and social damage.
The attractiveness of Anglo-American finance capitalism causes the transformation of “Rhine capitalism,” so-called “Germany Inc.” The historical compromise between labor and capital was cancelled, employees evaded collective bargaining agreements, the personnel and financial linkage between businesses and their banks was loosened and the solidarity transfer-financed security-systems were deformed.
Finance capitalism leads to devaluing and degrading human labor. The economy is dominated by the capital markets for securities and stocks. These markets are markets under business control. The value of a business is reflected in a purely financial number, the “shareholder value,” the future financial streams referred to the present. Since future payment streams are involved, they are subject to subjective expectations. These can be read in the stock price. Thus managers seek to raise stock prices to evade the danger of a hostile takeover.
Businesses are capital investments in the hands of shareholders. Consequently managers only serve the interests of shareholders. The interests of personnel, dependent employees, customers and public treasuries and the interest in preserving the natural environment play no role or only a secondary role. Financial markets exert pressure on businesses so few taxes, lowest possible wages and the most trifling social- and environmental fees are paid. Labor law should be loosened, the industry-wide collective bargaining agreement made flexible in favor of company-friendly regulations and personnel forced to wage cuts. The institutional investors on the financial markets – big banks, insurance companies and investment funds – have short-term exaggerated profit expectations to which businessmen and women react with quarterly reports. Thus long-term business plans are thwarted and ennoblement and cultivation of work skills, preservation of environmental assets and cultivation of social skills are neglected.
The state has been claimed as a cooperative hostage by the financial elites. The state bows to the pressure of middle class elites by deforming the solidarity transfer-financed security systems coupled to paid work and reducing the security level while simultaneously appealing to private provisions. The state deregulated the labor markets so the number of precarious working conditions grew, a low wage sector arose, poverty wages were paid and the rate of poverty risks rose. Financial elites propagated the global capital markets as the fifth branch in democracy. The owners of capital will signal to national governments more sensitively than the parliamentary elections every four years what “reasonable policy” is, namely keeping unions in check, allowing wages to rise moderately, cutting social benefits, suspending rights of joint-determination and allowing as little redistribution as possible.
The summit conferences of the G20 have ended the hegemony of the US dollar and the episode of the unilateral world regime defined by Wall Street, the US Treasury Department and the IMF and also the hegemony of the club of the powerful and rich countries of the G8. They agreed only on declarations of intent for the new financial architecture. The G20 named the causes of the financial crisis as system errors, not individual misconduct – the existence of outsized financial businesses that can annul competition and shift private risks to the general public. However the rules of a new financial architecture should take effect when the critical phase of the world economy is past.
The national governments open bailout umbrellas to preserve the “distressed” banks from ruin. The Black-Yellow coalition government in Germany passed a growth-acceleration law to animate the domestic demand for goods and services through tax cuts and social benefits. Whether such measures are appropriate is controversial. The experiences of the last decades in different countries speak against attempting to increase revenues of public budgets through tax cuts.
The government is anxious to avoid great breakdowns and uses a toolbox of instruments to systematically repress the question of the goals of political action and what society people want. However their political convictions are clear in its use of the instrument box. The coalition agreement mentions the terms market and competition a hundred times but solidarity and justice only twice.
The promise of a new financial architecture and a real economic revival cannot be faded out in an economic ethics reflection. Most people in Germany live below their means: many vital needs are not satisfied, many public tasks remain unfulfilled while the work capacity of young persons is worn or exhausted. Therefore the key of a way out from the financial- and economic crisis is clear: binding rules guaranteeing greater value creation and more paid work. Ambitious ecological reconstruction of the transportation-, energy and food systems and personal care is job-friendly. Human work capacity must be freed from commodification or commercial exploitation. A just distribution of value creation is possible through an active jobs policy, strengthening free collective bargaining, interpreting labor law in favor of dependent employees, building industrial relations, schemes and joint-entrepreneurial determination and establishing a general citizen security.
Paid work is not the only key of economic connection and social participation. Three forms of work – paid work, private caring work and civil society engagement – should be fairly distributed to both genders, along with labor income, capital income and transfer income. A successful life and social cohesion rest on the restoration of five balances: the balance between public and private budgets, export- and domestic demand, industrial work and personal work, the work of men and women and privacy and paid work. What collective civil society actors will articulate this unrest and anxiety that impels and advances the democratic breakthrough?
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