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Medrciless Samaritans and 10 Causes of the Crisis

by Barbara Suff and Ingo Schulze Wednesday, Mar. 07, 2012 at 6:24 AM

"There is no society. There are only individual men and women," said Margaret Thatcher. Margaret Thatcher, the former British Prime Minister, had a great share in the crisis in which Europe, capitalism and democracy find themselves.


How Margaret Thatcher and her German Pupils Created Market-Conforming Democracy

By Barbara Supp

[This article is translated from the German in: Der Spiegel 6/2012.]

She lives but presumably doesn’t know how much Europe and Germany have changed. She said: “There is no society. There are only individual men and women.’ She spoke much about personal responsibility, the chains that had to b e broken and was serious.

Now she is honored in the cinema as an aged, once Iron Lady who is now demented. There are already discussions in Great Britain about her burial. Should it be a state burial? Does she deserve a state burial?

Margaret Thatcher, the former British Prime Minister, has a great share in that crisis in which Europe, capitalism and democracy find themselves. Hardly anyone discusses this, perhaps out of piety or because her contribution is still underrated.

Many cringe humbly before the power of the markets as though the markets were a force of nature. It is helpful to remember that this rule of the markets was man-made.

Margaret Thatcher was involved in this. The bitter consequences can still be felt today.

These are consequences of that October day 25 years ago when Thatcher’s package of laws took effect. New, more modern times arrived in London City, it seemed. End the separation between foreign- and retail trade on the stock exchange. End the concrete fees for financial transactions. Extend unconditional approval of foreign firms. London was the most important financial center of the world.

A little later the event was called the “Big Bang.” The crazy acceleration that computer trading brought into the economy was amazing at that time along with the new caste of young, greedy financial men as seen a year later in the US film “Wall Street. People did not understand that this “Big Bang” was political, a crucial step to the stripping of power from the state.

There were people who welcomed this, a weakened state.

Unswerving in faith and divisive in tone, Margaret Thatcher accomplished this. “People must look after themselves,” she said. Radical market freedom was her mission. Her zeal went beyond deregulating, lowering taxes and privatizing. “The economy is only a means. Changing thinking is vital,” she said. That made her happy.

This thinking sounds Anglo-American as embodied by Thatcher and Ronald Reagan at that time and the Tea Party today but has also seeped into Germany and become government policy in a complicated way.

The market-liberal prophet Friedrich von Hayek was her orientation. “That is what we believe,” Thatcher said.

This perspective penetrated Germany more quietly and discreetly and now permeates Europe. It was not openly proclaimed as a state goal. It came into politics through advisors from businesses, associations, universities and experts. "Experts" sounds independent and wise.

Some of these experts are well-known. Others are often more important than those who are constantly heard on talk shows. In the nineties, experts known in economic circles wrote that the state must lose power. Resistance against this was expected. The problem could be solved by lowering taxes. “The dictate of empty treasuries” was needed, “an offensive deficit,” so the state could be trimmed. The state should become powerless and poorer out of principle, not out of necessity.

The one who wrote this wasn’t a stranger from a distant country. It was Herbert Giersch, a scholar who died in old age one-and--a-half years ago and was regarded for decades as the “dean of German economics. He was a government advisor, an original member of the “five economic wise men,” director of the Kiel Institute for World Economics, influential textbook writer and educator of several generations of economists who can be found today in banks, associations and businesses, one of the leading neoliberal economists, like Thatcher a Hayek follower to whom every classical market-liberal and every classical business-friendly policy refers.

In the past, there were others, the Keynesians who focused on employed persons and their purchasing power, argued for decent wages and if necessary for the intervention of the state. They can hardly be found any more. There was a silent revolution in the lecture halls. It started form the US in the eighties and penetrated Germany. Hans-Werner Sinn who belongs to the opposite side estimated the share of this minority at five percent. The diversity does not exist any more, says one of the economic wise men, Peter Bofinger, one of the last Keynesians. “Analysis and therapy,” Bofinger says, “are dominated by one school. Reducing taxes, driving down wages, economizing, privatizing and deregulating: the markets will sort everything out.” Whoever questions the discipline is given these “current recommendations” as though there are no alternatives.

Belief in these experts is nourished from the hope that unlike politicians they are not driven by lust for power and party logic, from the illusion that those appearing as experts have no positions, no interests, no worldviews and no biography as if pure knowledge existed on two legs, without human interpretation and without the human dimension.

The expert Mario Monti, the economics professor made into the head of state, should now rescue Italy and ultimately the euro and Europe. He was greeted with high praise by the head of the employers’ association: “He has known the markets for a long while and is familiar with liberalization, privatization and reduction of public spending.” A minister from the employers’ association and two former bankers sit on his cabinet of technocrats. He himself was an advisor to Goldman Sachs for a long time. Because he doesn’t belong to any party, he is celebrated as “independent,” as one “removed from the trench battles.” But he is not independent. An expert is never independent.

“Why must bankers decide Europe’s future?” Josef Ackermann asks. “Shouldn’t they be reserved with their political suggestions and manage their own future?” Ackermann, the departing head of Deutsche Bank and the face of greed and crisis for the people outside, the Occupy people, quickly answers. He meddles as an economic leader because it is “commanded” and not only “allowed.” What does he want? More privatization, deregulation and flexibility. The failure or breakdown of the market should be combated with more market.

The crisis is also his crisis, the crisis of the banks. Bankers massively contributed to the financial- and debt crisis. However that doesn’t matter. It seems the others inflated their responsibility. Ackermann speaks and the hall is silent and wants to hear him. He speaks as a world-traveler. He has heard critical questions and shocking things about Europe from his conversation-partners in the Asian-Pacific zone.” He speaks as a powerful decision-maker, a knowledgeable one and an insider.

Occasionally he admits there were “excesses.” But his speech is always supported by faith in the markets.

The market will sort all things out if one lets it. The humanities scholar Joseph Vogl (“The Specter of Capital”) speaks of an “Oikodice” – a doctrine of justification of market believers similar to God’s justification in theology. Since the wicked after-effects of the unbridled market have become so visible, doubts are raised by people who previously lived in satisfied complacency with this market economy. Believers in the market trivialize these after-effects as nothing or unimportant. Vogt decries this “disastrous conviction of the liberal economy that market activity is an exemplary showplace of order, integration mechanisms, balance and social reason.”

This reason of the market is a strange reason. Bankrupt states are like starving persons waiting for Samaritans. This is the logic of the market for state loans. “You are nearly dead,” the Samaritan says to the first hunger-sufferer. If I now give you bread, you return it to me tenfold if you should survive. You are weak but you will recover, he says to the second. If I give you a loaf of bread, you give me three later. You forgot your vesper, he says to a third. I give you a loaf of bread. Give me back something greater tomorrow.

So much for the markets. But the helpers of the IMF, the EU and the European Central Bank are not much more merciful. They give bread but in the past demanded the strictest diet from the hungry.

The usual experts explain why submitting to this logic is imperative. They interpret the market as priests interpret the will of the Lord. They praise the debt brake borne out of the dictate of empty treasuries and recommend the German example across Europe. They praise Agenda 2010, the economic reforms of the social-democratic chancellor Gerhard Schroeder stylized as a model for Europe. A reform agenda based on privatization, deregulation of the labor- and financial markets, tax cuts is amazingly close to the recommendations of the market-liberal economic expert Giersch in the eighties, the “agenda for German economic policy.”

The concepts of the heretics are repressed. They say: “levy more taxes on assets, inheritances and capital income.” Private riches grow as money is lacking in the public treasuries or they plead to help Greece to its feet economically with a kind of Marshall Plan.

“There is no alternative” was a favorite saying of Margaret Thatcher. “Without alternative” is a phrase Angela Merkel likes to use when she makes decisions. She is for “market-conforming democracy” [the alternative is “democracy-disciplining the market” as propounded by Ingo Schulze in “Capitalism Doesn’t Need Democracy.” December 2011, ]

Outside on the street, in the Occupy-camps and at the Occupy demonstrations, those are heard who believe the state could have turned back the economic crisis of 2008 and rediscovered its role but did not. They are told Germany came through the crisis well in the past. That is true if export-figures are the standard. It has never been less true if the gap between poverty and riches is the standard.

“There is no society,” Margaret Thatcher said.

Maybe it is time to hear the heretics and those outside who refuse to abandon their belief in democracy.


Mosler, Volkhard, “The Error is in the System, January 2012

Schulze, Ingo, “Capitalism Doesn’t Need Democracy,” December 2011

Schulze, Ingo, “Ten Theses on the Crisis,” January 2012
Ingo Schulze – 10 theses about the crisis
27 January 2012
Süddeutsche Zeitung Munich

It is the madness that has become self-evident: for years, the public sphere has been plundered and democracy ruined. The German writer Ingo Schulze has had enough. Here he sets out ten reasons to take himself seriously again.
Ingo Schulze January 2012 http://www.presseurop.eu/en/content/article/1451011-ingo-schulze-10-theses-about-crisis
For about three years I haven’t written any articles, because I no longer know what I should be writing about. It's all so obvious: the elimination of democracy, the increasing social and economic polarization between rich and poor, the ruin of the welfare state, privatization and commercialization of all spheres of life and so on, and so on, and so on...
If the madness is served up to one every day as a matter of routine, it's just a matter of time until one considers oneself to be sick, abnormal. In the following I will try to summaries some thoughts that seem important to me:
1. To speak of an ‘attack’ on democracy is to speak euphemistically. A situation in which a minority of a minority is allowed – i.e., it is legal – to seriously harm the public good for their own enrichment is post-democratic. The public sphere itself is guilty, because it is unable to elect representatives that perceive its interests.
2. Every day one hears that governments must “win back the confidence of the markets." By ‘markets’ it is primarily the stock exchanges and financial markets that are meant: that is, those speculators who, in pursuit of their own interests or the interests of others, are raking in as much profit as they can. Are they not those who have relieved the public sphere of unimaginable billions? They are the ones whose “confidence” our top elected officials should be struggling to win back?
3. We are right to be outraged by Vladimir Putin's concept of "guided democracy". But when Angela Merkel spoke of "market-based democracy”, why did she not have to retreat?
4. The collapse of the Soviet bloc helped some ideologies turn into a hegemony so unchallenged that it has come to be accepted as a natural state. One example of that would be privatization, which was seen as something boundlessly positive. All that remained in the possession of the public sphere was deemed ineffective and consumer-unfriendly. Thus there spread throughout society an atmosphere that, sooner or later, had to force that public sphere to relinquish its own power.
5. Another ideology that enjoyed a great blossoming is the ideology of growth: “Growth isn’t everything – but without growth, nothing amounts to anything," as the Chancellor decreed some years ago (2004). The euro crisis cannot be discussed without reference to these two ideologies.
6. The language of the politicians who should be representing us can no longer grasp the reality (something I already lived through in the GDR). Their language is one of self-assurance that no longer receives any checks and balances from across the negotiating table. Politics has degenerated into a mere vehicle, a bellows for rekindling the fires of growth. The Citizen has been cut down to the status of Consumer. Growth in itself means nothing. Society’s ideal would be the playboy who consumes as much as possible as fast as possible. And what would cause a tremendous spurt in growth? A war.
7. The simple questions: "Who benefits from it?” and "Who makes money off it?" have become crude, gross, unrefined. “Are we not all in the same boat?” Anyone who doubts this must be “stuck in class struggle”. The social and economic polarization of society has taken place accompanied by loud incantations to the effect that we all share the same interests. A walk through Berlin is enough to illustrate the error of that contention. In the better neighborhoods the few unrenovated houses are by and large schools, kindergartens, retirement homes, swimming pools and hospitals. In the so-called problem areas the unrenovated public buildings are less conspicuous, and poverty can be glimpsed in the gaps between the teeth of passers-by. Today, as the demagoguery would have it: “Sure, we have all lived beyond our means, but everyone has been greedy.”
8. In being deprived of its income, our public sphere has been and is being systematically driven up against the wall by our democratically elected representatives. Under the Schroeder government the top tax rate in Germany dropped from 53 to 42 percent, while corporate tax rates between 1997 and 2009 almost halved, namely to 29.4 percent. Nobody should be surprised that the coffers are empty, even though our gross domestic product has grown year after year.
9. A tale: what was once peddled to us as an antagonism between East and West Germany is now being peddled as an antagonism between countries. In March I held a reading in Portugal, in the city of Porto, from one of my books in translation. The atmosphere of friendly interest was from one moment to the next chilled by a single question from the audience. All of a sudden, we were merely Germans and Portuguese, who sat facing each other as enemies. The question was unpleasant. Were we – meaning myself, a German – now taking over with the euro what we had failed to take over with our tanks? Nobody in the audience disagreed with the sentiment. And suddenly I responded as desired – namely, as a German: “No one is forced to buy a Mercedes,” I said, offended, “and they should be happy to be getting credit that would be cheaper than credit on the financial markets.” I thought back to all the German newspaper stories heaping abuse on the PIGS countries, and it made my molars grind.
In the uproar that followed, my head cleared. And since I had the microphone in hand, I stammered in my imperfect English that I would have responded just as stupidly as they had, that we would all be falling into the same trap, if we, as Portuguese and Germans, sided reflexively with our own national colors as we would at a football game. As if it were now about Germans versus Portuguese, and not the upper versus the lower classes – that is, those who in Portugal as in Germany brought this situation about, and who profited and continue to profit from it more than they deserve to.
10. It would be democracy if the politicians intervened in the existing economic structure through taxes, laws and controls, and forced the players in the markets to play by rules that were compatible with the interests of the public sphere. It's about the simple questions: Who benefits from it? Who profits from it? Is this good for our public sphere? Ultimately, it would be the question: what kind of society do we want? That would be democracy for me.
At this point I must break off. I would still like to talk about a professor who said that he had reverted to seeing the world the way he had as a fifteen-year-old, about a study from ETH Zurich that looked into the interdependence of corporations and came up with a tally of 147 of them that have divided up the world among them, the fifty most powerful being banks and insurance companies. I would like to talk about what an important thing it is to take oneself seriously again and to find other like-minded people, because one cannot speak a different language on one’s own. And about getting back into the mood to open my mouth again.
Translated from the German by Anton Baer

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