“THE CATASTROPHE HAS ALREADY BEGUN”

Capitalist growth has become the problem, promotes famines and strangles full employment.

Karl Georg Zinn warns of a depressing future.

[This interview published May 27, 2014 is translated from the German on the Internet, http://derstandard.at.]

[Can the world be rescued? Mass unemployment has never lasted as long as today; global problems increase. Admonitions like those of John Maynard Keynes die away unheard.]

[Dr. Karl Georg Zinn (74) is an emeritus professor of economics at the Aachen Technical Academy and son of the former Hesse prime minister George-August Zinn.]

Der Standard.at: Income and inequality are distributed unequally today but discussing redistribution is still taboo. Or are appearances deceiving?

Zinn: Capitalist growth has constantly increased distribution inequality. 17 percent of the world population appropriates more than half of global value creation. But does quality of life really increase with greater consumption for someone with a reasonable income? I agree with the enlightened Frenchman Jean-Jacques Rousseau: “Distribution means no one is so rich he can buy others and no one is so poor he has to sell himself.”

Der Standard.at: How can quality of life be raised?

Zinn: We cannot solve our contemporary problems through growth. Distribution equality obviously does not mean complete leveling. Rather the question is what a humanly acceptable differentiation is. The highest top incomes are paid in the most unproductive sphere – the realm of finance capital. A change of consciousness is necessary so the population strives energetically for distribution justice and puts politicians under pressure. Whether this succeeds is doubtful as we saw in the example of the bank bailout. Politics has become largely extorted by finance capital. The public is persuaded there are n o alternatives.

Der Standard.at: Is there“growth fetishism” in our democracies?

Zinn: Fetishism is something metaphorical. Despite all uncertainty, the majority still thinks jobs will vanish without growth. The notion that nearly all socio-economic problems can be solved by starting up the growth machine is fatal.

In the 1930s and 1940s the famous English economist John Maynard Keynes predicted that the highly developed countries would inevitably experience falling growth rates. This forecast is confirmed by the real economic development. For 30 years, growth remained weak – much too weak to return to the growth path toward full employment. Previously the industrialized countries never had to survive such a long phase – a generation – with mass unemployment. Even during the great worldwide economic crisis of the 1930s, mass unemployment “only” lasted ten years before it then ended abruptly with the Second World War.

Der Standard.at: Tragically mass unemployment strikes the youth above all in many countries.

Zinn: The young generation of today is socialized under conditions in which mass unemployment is seen as something normal. Three decades of mass unemployment are unique. That forceful mass protests did not occur and are not occurring is due to ideological propaganda that there can be no alternative to neoliberal ruthlessness. The population seems reduced to subservient citizens who are hardly politically active. Enlightenment about political-economic alternatives is also lacking.

Der Standard.at: In this context, you like to quote Keynes.

Zinn: Completely narrowed and distorted ideas of Keynesianism were spread. That Keynes proposed much more than only anti-cyclical economic policy against unemployment is actually unknown. As was the rule for three decades, far-reaching distribution – and working hours measures are indispensable with constantly low growth. “Long-term” Keynesianism occupied with the problem how full employment can be achieved without growth was a book with seven seals to many Keynesians in the past.

In 1030, Keynes already anticipated many findings that were recently rediscovered by economic happiness research as news. For example, increased satisfaction and quality of life is hardly experienced above a critical income level or critical consumption level. Endless economic growth and endless population growth are not possible on a planet that cannot be multiplied or is not exponential. This may be obvious to everyone with common sense. Keynes recognized all this decades ago but many Keynesians still cling to the growth paradigm.

Der Standard.at: What is your explanation for this?

Zinn: Keynes’ reflections were so visionary he was dismissed as a “crackpot” in many places. In 1943 in the middle of the war, the recommendation to carry out reduced working hours amid constantly low growth rates and mass unemployment is found in the brief Keynes text about “The Long-Term Problem with Full Employment.”

Whoever takes note of Keynes’ 1943 long-term prognosis will have his eyes opened and his mind will have a joyful aha-experience. However there is no inclination among status-quo defenders or growth-fetishists to seriously grapple with the “revolutionary” Keynes on account of this enlightenment potential. Therefore that 1943 text was almost only known to insider circles in the past and was too explosive for politics.

Der Standard.at: Is that why we are accelerating our global problems ourselves?

Zinn: Each of the problems becomes more pressing when we continue business as usual and grow. Collective failure is involved. The catastrophe has already begun. One only needs to look to Africa, at the famines and the conflicts accompanying the famines. Resource conflicts are often sold to us as ethnic or religious conflicts. A constant shortfall of life possibilities persists.

The perversion appears in the subdued music at the Mediterranean while people simultaneously drown in the same region. The poor population presses in the richer regions. A brutal social Darwinism will erupt if this development assumes quantitatively greater dimensions. We already see the beginnings that are taking effect very differently. The climatic changes will be more clearly visible in ten to 15 years. Great catastrophes will occur by the middle of the century if better counter-measures are not introduced. The antiquated is unfortunately not useful any more.

Der Standard.at: Many disasters are already visible today.

Zinn: Because of population density, natural catastrophes will be increasingly disastrous in highly developed countries. We only need to think of the tsunami in Japan. 30 million people, the population in the Tokyo area, cannot simply evacuate. One only lies in saying everything is not so bad. The technically feasible was not done because of corruption and capitalist lobby politics of the government.

Der Standard.at: The world population is growing tremendously alongside the capitalist growth.

Zinn: World population has increased almost tenfold in the last 250 years – from 750 million to more than seven billion. However the demographic world problem is a taboo – even for many of the more progressive contemporaries. Hardly anyone dares to point to the nearly unavoidable catastrophe as the Englishman Stephen Emmott explains in his recent book “Ten Billion.” The “left” think warnings about over-population can be rebuffed as a long antiquated anti-Malthusianism. The “right” is not inclined to recognize population-oriented interventions as necessary.

Regarding the viability of the global food question for eight, nine or ten billion people, I am a pessimistic optimist. A better world can be created. Everything in harmony with the natural laws is possible but people must resolve this and force politics to make the necessary reforms. I am optimistic and confident as to the technical-economic solubility of the queued-up problems. However the political inertia and the capitalist enrichment greed of a small oligarchy with great political influence oppose all optimism. Presumably this will change somewhat when avoidable catastrophes trigger quasi-revolutionary shocks.





FAREWELL TO HOMO ECONOMICUS

By Gunter Dueck

[This reading sample of Gunter Dueck’s 2008 book “Abschied vom Homo Oeconomicus. Why We Need a New Economic Reason,” Eichborn Verlag publishers published in Berliner Literaturkritik 2/29/2008 is translated from the German on the Internet.]

[Prof. Gunter Dueck, born in 1951, is a chief engineer at IBM. He studied mathematics and business management and was a professor of mathematics in Bielefield for five years. The author of many books lives in Heidelberg.]

In the upswing, we are confident, fair and creative. In the crisis, Darwin and economic war rule and anxiety, stress and caution dominate heads. Taking people seriously means taking these emotions seriously. What we think about the economy depends on our stomach feeling. According to the stress level, we hold different things to be right. Nevertheless persons in the economy operate with the model of a Homo Economicus who always acts rationally and is always motivated in the same way by money and advantages. Gunter Dueck says this is wrong and calls for an economic reason that focuses on the person and teaches us to be moderate in the fat years and calm in the lean years,

What is a stable economy?

Everything should be in balance according to the theories: prices and markets, supply and demand. Is that the case?

No, the economy rides a roller coaster. It records pig cycles and teacher gluts, austerity rage and innovation deficiencies. The swings of the market have become more vehement recently. “Volatility increases,” we say. “The world is in continuous and ever faster change.” You can’t rely on anything; everything changes. Everyone must adjust in order not to die out. Will we get the pensions we hope for? Everything is uncertain. We often fear everything will not survive. We feel the stress more intensely today in all pores. How will our children fare? Can we afford children? The aging population shrivels. There is no longer a place or work for many persons.

ECONOMIC THEORIES AND EVERYDAY REALITY

Let us take a journey back in time. My working life began in the 1970s. At that time wages and salaries rose six or seven percent every year and even over ten percent after a long strike. The word “profit” was a swearword. Even businesses shamefully avoided it and secretly concealed their profits through ridiculous depreciation allowances. Every city built a great new university as an investment in the future. Basic research was much in demand. I recall natural scientists answering the question about the application of the results of their research after their lectures: “I hope never!” or “I am sure I will not be criticized!” Whoever investigated something useful was suspected of being a pawn or lackey of big industry and betraying science. Science should never supply blueprints for nuclear bombs or oppression of the working class. Sociologists and political scientists of the 68-movement babbled about the abolition of the establishment. I remember my horror when abuse was hurled at me because I had a trade journal under my arm on the Gottingen University campus.

Think about these moods! Worry about tomorrow, jobs and education of children plagues us today. In the past the struggle around the utopia of the best-possible future given by the infinite growth through technology occupied us.

I raise the question for your contemplation: What will happen if we all think today as everyone thought then? Why did we think so positively and revel in utopias at that time? Why do we moan today and become so despondent that optimism almost needs to be prescribed by the doctor?

The idea of a social market economy arose in the 1960s and 1970s. Today we expect more from neo-capitalism. Earlier the world famous diligent German was at the center of our world view. Today it is the spoilt bone-idle German with his 30-day annual vacation who documents his otherworldliness toward work worldwide.

What is happening in our heads or stomachs? Why do we think about the same things differently every time? Are things the same? Are we the same? Do we have beautiful economic theories in good times and harsh draconian theories in bad times? Is it economically sensible to adjust our thinking to our indigestion?

According to economic theories, we humans are supposedly Homo economicus, persons only guided by considerations of economic instrumentality. A strictly rational person looks to his own advantage and maximizes his benefits. Our economic theories regularly assume every person has exact preferences or practical functions that are somewhat stable over time. However these are fairytales serving as simple theories for neat lectures. Guts are not stable.

I call it “phasic instinct” that dictates our thinking from the stomach. According to our situation, we live outside God’s optimum best-possible world or in a world seemingly created by Darwin. God had a world building plan while Darwin relied on the actual accident principle. We believe differently every time according to how our gut feels.

FINANCE-DRIVEN CAPITALISM

By Joachim Bischoff

[This summary of Joachim Bischoff’s new book “Finance-driven Capitalism” is translated from the German on the Internet. The reading sample is translated from the German, www.vsa-verlag.de-bischoff-finanzgetriebener-kapitalimus.pdf. Joachim Bischoff is an economist and editor of the journal Sozialismus.]

The current form of capitalism that fell into crisis worldwide in 2007/2008 is termed finance-driven. Unlike past crises, we see today an enormous bailout activity of the state. The “bank crisis” was transformed into a “state debt” crisis.

Breaking the compromise between paid labor and capital gained through struggle in the postwar time is one of the characteristics of finance-driven capitalism. The consequences are a strong decline in union-organized paid labor and growing precariousness.

The actions of property owners and other financial market actors mark the development of society and no longer technical-industrial innovations – in the form of expanded concrete international investment possibilities, new financial instruments and inclusion of employees (pensions and pension funds etc). Thus financialization refers to the increased significance of financial markets for society altogether and not only to business profits.

Financialization includes different changes: deregulation and opening of the financial markets, marketing of financial relations, explosive expansion of new financial instruments and the rise of institutional investors. The consequences are shareholder value orientation for management of businesses and expansion of the credit- and investment business for private clients in mortgages, consumer credits and private old age insurance.

Controlling banks and financial markets alone is not enough to avoid crises. A social regulation of the economy and a re-calibration of the European system of states are among the necessary alternatives.