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A Divided Society

by Heinz J. Bontrop Monday, Apr. 27, 2015 at 11:55 AM

Average wages in the US are lower than 30 years ago. Profits and income inequality explode, not investments. The austerity policy that has always worsened unemployment and economic growth is promoted as without alternative by German chancellor Merkel.


By Heinz-J. Bontrop

[This article published in: Frankfurter Rundschau, February 6, 2015 is translated from the German on the Internet. Heinz-J. Bontrop is an economist with the Alternative Economic Policy study group in Bremen.]

The neoliberal paradigm increasingly furious since the middle of the 1970s basically only wanted one thing: redistribution from labor- to capital-income (profit, interest and ground rent). The ruling elites succeeded in this in an alliance of the economy and politics. The income of dependent employees relies on the development of productivity and prices. As a result, the distribution of the surplus produced by employees was not neutral. The wage share fell.

From 2000 to 2014, the wage- and salary-dependent in Germany lost 1.2 trillion Euros in income while receivers of capital income were enriched to the same extent. In addition, there is an unequal distribution of work income. The reason is Agenda 2010 initiated by Red-Green and deregulation and division of the labor markets with and without collective bargaining.

Jobs in the businesses were segmented in full-time and part-time employees and in regular and marginal personnel. A gigantic low-wage sector intentionally arose with poverty wages. Every fourth dependent employee works under precarious conditions and is filled with deep anxiety.

Gross earned income is below 8.50 Euro an hour. People cannot live a dignified life in Germany from that. The minimum wage that is now legally established only brings marginal relief. Millions of employees are forced into abnormal lifestyles. Because of the surplus on the labor markets and the low wage rates, they must expend more and more of their labor power to realize a life-sustaining income on the lowest level. They are not offered higher wages for their labor which would be normal according to the neoclassical way of looking at things. The wage-rate falls even more. What a vicious circle!

Even worse, whoever has to eke out a socially hard existence as a dependent employee or unemployed can expect old age poverty. All this in one of the richest countries of the earth.


By Heinz-J. Bontrop

[This article published in: Frankfurter Rundschau January 14, 2015 is translated from the German on the Internet.}

The wealthy have a fundamental problem. They must invest their accumulated capital again and again for multiplication – driven by megalomania and greed for maximum profit. But this cannot happen without debtors asking for assets on credit. Therefore the most important economic equation is assets=

Debts or riches=poverty. If assets increase, the debts must increase exactly the same. If debts should fall, wealth is automatically reduced. The balance of debts and assets is always zero. Unlike many economists and politicians, Bertold Brecht understood this and formulated in a poem. A rich man and a poor man stood there and compared. The poor man said white as a sheet: “If I were not poor, you would not be rich.”

How do the rich gain their wealth? Very simply, other people who have no assets (means of production) work for a wage that is less than the value created by dependent employees. Financial and/or tangible assets arise when the surplus value from interest, ground rent and profit from assets is saved and not consumed. Then an additional income with a compound-interest effect results. At the end the wealthy become ever richer and claim more and more from the economic value-creation at the expense of work income. The French economist Thomas Piketty traced this empirically back to the 18th century in a retrospective way.

The debtors who are not only millions of Greeks could no longer bear their debts – that benefited the rich in the past – after the grievous financial- and economic crisis of 2008/2009. The “moral principle” of debt re-payment invented by the dominant rich forces them into slavery. “I have the impression,” the US economist David Graebner said in his excellent book “Debts. The First 5,000 Years,” “a Jubilee year according to the biblical model is overdue for state debts and consumer debts,” not a “black zero” in the national budget brought about by a crisis-intensifying austerity policy.



[This article published on 3/20/2015 is translated from the German on the Internet,]

Erich Fromm was born on March 23, 1900 in Frankfurt/Main and died on March 18, 1980 in Switzerland. The psychoanalyst, philosopher and social psychologist advocated a humanist democratic socialism.

He desired a society where the person recovers mentally and emotionally. “The mentally healthy person is a productive and not estranged person – who joins lovingly with the world and uses his reason to objectively grasp reality, experiences him/herself as a unique individual and feels at once with his fellow-persons, is not subject to any irrational authority but is ready to follow the maxims of conscience and reason, is in a lifelong process of being born and considers the gift of life as the most precious chance.”

How must a society be changed so a mental health of people is possible?

Erich Fromm: “The only constructive solution is humanist democratic socialism that strives for a fundamental reorganization of our economic and social system toward the liberation of people from being used as a means for external goals and for the creation of a social order where human solidarity, reason and creative action are promoted and not inhibited.”

Erich Fromm saw the correct political way in far-reaching changes in several areas of society. “Reorganization cannot be brought about forcefully. Redesigning must occur simultaneously in economic, political and cultural areas. Changes limited to one sphere can repress a radical change in all other areas.”

The following radical changes are the goals of many social movements today according to Erich Fromm:

1. Gain rule over technology and over irrational social forces and institutions, not over nature

A society that submits to neither technical progress nor irrational social developments rejects unlimited economic growth and an economic form that makes people physically and mentally sick. The right of shareholders and corporate executives to decide over production must be drastically restricted and the decision-making power of consumers strengthened. Appropriating the means and conditions of production is not a question of ownership or possession in the legal sense. “The power to determine the direction of production is crucial, not capital holdings as such.”

2. Demand democracy

Democracy means everyone can jointly determine the economy and politics. It also means everyone has a say or has influence instead of being represented. Therefore the economy and politics must be organized in a decentralized way for a radical democratization of all public areas.

3. Prohibit propaganda and advertising

All forms of commercial and political “brainwashing” (propaganda for goods and politicians) should be prohibited.

4. Be objectively informed, win intellectuals as advisors

A cultural council should advise politics and citizens where their understanding and knowledge are not enough. An effective public system for spreading objective information should be established.

5. Close the gap between poor and rich countries

If the gap between poor and rich countries is not closed, the result could be terrorist acts in the rich countries and the spread of epidemics. The relief of industrial nations for poor countries should be organized “without regard for profits and political advantages.” This also means the industrial nations “must be kept from the notion of transferring the economic and political principles of capitalism to Africa and Asia.”

6. Introduce a basic income, carry out reduced working hours and develop the public infrastructure

A basic income should be guaranteed every person along with substantially shorter working hours. The guaranteed annual minimum income means genuine freedom and independence. Therefore it is unacceptable for every system based on exploitation and control, particularly the different forms of dictatorship. […] Granting everyone an annual minimum income would be less costly than the costs of a complex income support bureaucracy combined with the costs of treating mental psychosomatic sicknesses and fighting criminality and drug addiction.

This idea will appear unfeasible or dangerous to all those convinced that “people are lazy by nature.” This cliché actually has no basis. It is simply a battle-cry that rationalizes the refusal to renounce consciousness of power over the weak and helpless. Fromm also pleads for accessible public infrastructure and services free of charge as well as vital necessities free of cost.

7. Put an end to all forms of patriarchal rule over women

“The growing movement for liberation of women has vast importance because it threatens the power principle on which today’s society is built (both the capitalist and the communist).

8. Disarm militarily

Armaments must be drastically curtailed. Basic research should be separated from practical application in industry and the military.

For Erich Fromm, a humanist democratic socialism was a foundation of the freedom of individuals and at the same time of solidarity of people together – a radical criticism of the pre-capitalist society and of capitalism and Stalinism. “That the freedom of individuals could be decisively expanded in this way speaks for a guaranteed income for everyone. In the past, the person was limited in freedom of action by two factors during his whole history: by the use of force by the rulers (particularly when they were able to kill deviationists) and – what was more important – that everyone was threatened by death from starvation conditions imposed on them regarding their work and social existence when they did not adjust. Everyone who was not ready to accept these conditions was exposed to the danger of starving to death even when no other violent measures were applied. The principle (in capitalism and in the Soviet Union) “Whoever does not want to work should not eat” was dominant during most of the past and present history of humanity. This threat forced people not only to act as demanded but also to think and feel they should not be tempted to act differently.”

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