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Richard Detje Overcome the systemic crisis of capitalism What are the social-economical dangers and opportunities? transform!europe Palma de Mallorca, March, 12th - 13th, 2010 www.sozialismus.de www.wissentransfer.info

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Page 1: Overcome the systemic crisis of capitalism What are … · Overcome the systemic crisis of capitalism What are the social-economical dangers and opportunities? ... Fordism Welfare

Richard Detje Overcome the systemic crisis of

capitalism What are the social-economical dangers

and opportunities?

transform!europe Palma de Mallorca, March, 12th - 13th, 2010

www.sozialismus.de

www.wissentransfer.info

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Contents

I. Interpretation of the crisis II. European capitalism in transition III. Perspective: 5 arguments for a long run IV. Crisis and day-to-day consciousness V. Strategic projects for transorm!europe

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Interpretation: systemic crisis – hegemonic crisis The current crisis is a break with the past - constitutes

a new situation in economy, society and politics The reason is not the depth of the economic slump

(figure world industry Eichengreen/O‘Rourke, 3/2010) Release from the logic of a Great Depression:

success of stimulus packages This proofed the flexibility of the convervative bloc:

from neoliberalism to „soft convervatism“ This crisis deals with systemic contradictions:

a crisis of the accumulation regime (financial market driven)

a crisis of the model of regulation (Shareholder value, privatization, market state, US-hegemony)

Crisis of the model of regulation in Europe means crisis of unbalanced competition (Germanys

export oriented model) crisis of the monetary system and the stability

pact (Euro, ECB – coming out with the Greece-crisis)

crisis of social integration (European Social Model)

crisis of EU-enlargement

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Challenges

This crisis has not come to an end – it just has begun. This means: we need politics for a long run

Even the bourgeois bloc does not have a unifying new hegemonic „idea“ of systemic reforms

After World War II this was: Fordism Welfare state (Beveride Plan, Scandinavian Model, „corpratism“) World currency system (US-hegemony) There is no equivalent political programme in these days

Rescue and stimulus pakages are designed only for the short run without new dynamism of a new accumulation regime

Effect: redistribution from the state (i.e. the people) to the banks: speculative „accumulation by dispossession“ (David Harvey)

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II. European capitalism in

transition

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We have to consider different regimes of capitalism

Germany: „corporate negotiated capitalism“ based on high competitiveness and conservative welfare state – shift to fragmented economy (external/internal) – industrial relations now: from social partnership to corporatist crisis management

– challenge: transforming a export oriented capitalism UK: for long flagship of „liberal market economies“ – big financial market +

deindustrialization – inequality/segmentation in labour market – but: public spendings in the framework of „market state“ (NHS, education etc)

- challenge: future beyond finance driven capitalism (City of London) Spain/Italy/Greece: fragile manufacturing sector (E: construction sector – IT:

industrial districts) – family based welfare regime – large informal sector – high fragmentation of labour markets

- challenge: how to cope with competitiveness and public deficits? Scandinavia: high competitiveness + social-democratic welfare state – strong

pressure to exclusive welfare (populist right) – challenge:how to cope with growing unemployment? Central Europe: challenge: delinking after enlargement?

Caution: crisis have never been great levellers

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financial market economies are worst – export oriented economies are not better (Greece better than on financial markets)

perspective: stagnation (GDP less than productivity) Germany will proceed with beggar my neighbour policy – more pressure on

competitiveness Growing ditch between North and South – how to deal within a monetary

union? A shift in hegemony: from constraints plus leadership to a regime of

fragmentation, rivalry and chauvinism?

West European regimes in the crisis (+/-GDP/%)

-10

-8

-6

-4

-2

0

2

4

6

8

Fran

ce

German

y UK

Irelan

dIta

ly

Greec

eSpa

in

Sweden

Finnla

nd

2006 2007 2008 2009 2010 2011

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Eastern europe in the crisis (+/-GDP/%)

-20

-15

-10

-5

0

5

10

15

Poland

Hunga

ryLe

tvia

2006 2007 2008 2009 2010 2011

Poland: preventing recession with internal growth - but: is this a perspective within europe? Hungary: almost unregulated market economy (deregulation/privatization) -

FDI-driven trajectory (eg. car industry) on low road – strong expectations on welfare state

- how to survive as a dependend workbench? Latvia: credit-financed (foreign currency) growth-regime - how to get out of a deflationist spiral?

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III. 5 arguments for a long run

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1. US-hegemony and global imbalances US-economy: 20% of world

GDP – locomotive during the previous business cycles

Financed by three deficits: deficit in balance of payments

(2007: 731 billion $) public deficit credit financed private

consumption (loans, credit cards, car credits etc.)

Neoliberalism: a regime fueled by dept

accumulation by dept: this growth regime is gone (more or less)

BRICs cannot compensate this Perspectives:

turbulences in the world currency system (Dollar – Renminbi)

stagnation chance for Europe with

balanced trade (a big internal market)

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2. Financial risks and credit crunch

up to now: no new regime of regulation destruction of the shadow bank system, socialization or dismantling of financial

institutes relevant for the whole system, public control of the entire financial system, public rating agencies, control on CDS, ban of CDO, regulation of Hedgefunds and Private Equity, etc.

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3.Higher level of unemployment – weakening of internal market

Rise of Unemployment in Western Europe 2007/8-2010

02468

101214161820

Fran

ce

German

yUK

Irelan

dIta

ly

Greece

Spain

Swed

en

Finnla

nd

If stagnation-szenario is plausible

than productivity > growth = higher rate of unemployment

effect 1: pressure on wages effect 2: bad jobs effect 3: less purchasing

power in the internal market effect 4: untermining welfare

state effect 5: shrinking tax

revenues

Deflation can be the result for Europe

Growth of Unemployment in Eastern Europe 2007/8-2010

7,1 7,46

10,2 11,1

19,3

0

5

10

15

20

25

Poland Hungary Letvia

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4. Exit-strategy: from fiscal stimulus to deflation policy shift to austerity in nations

fiscal policy and in europe: after Baltic states, Hungary and Rumania now Greece

de-democratization: governed by financial

market speculation

Budget control by Commission and IMF

„deflationary shock“

deepen the ditch within Europe - new chauvinism

big redistribution of costs of crisis: from the states to the

banks (2 times: to safeguard them and for high interests)

from state to the people

payable gov bonds 2010: PIIGS

33,1

62

47,252,7 50,2

41,2

12,8

35

24,7

45,7

0

10

20

30

40

50

60

70

March April May June July Aug Sept Oct Nov Dec

public dept 2007 and 2010

-20

-15

-10

-5

0

5

Germany

France UK

Ireland

Greece

Spain

Centra

l Europe US

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5. Social inequality

Bringing this together with austerity in Europe: end of the European Social Model?

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IV. Crisis and day-to-day

consciousness

(in Germany, but perhaps similar in other countries?!)

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The reason for the financial and economic crisis is...

89,1

73,2

58,8

52,6

14,5

0 20 40 60 80 100

... banks and speculators

... is the capitalist system

... Is our economic system

... is the exploitation of thewelfare state

... are the foreigners

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"Our society is more or less fair/unfair"

41

25 24

40

26

54

70 71

56

71

01020304050607080

2000 2007 2008 Apr 09 Sep 09

fair not fair

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"The social market economy has proved to be sucessful"

73 69 71 7063

56 54 50 51 52

20 21 19 1826

36 3440 41 38

01020304050607080

1994 1996 1998 2000 2002 2004 2006 2008 Apr 09 Sep09

yes

no

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"For the future of the economy we need ... "

2529

41 43

2724 22 23

48

40 3743

5560

5761

22 24

148

12 914 11

0

10

20

30

40

50

60

70

5 94 10 98 9 02 5 06 9 07 5 08 4 09 9 09

more market more social security don't know

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The polls show: although the economic crisis has been absorbed on the labour market:

there is an understanding of systemic risks („capitalist system“/“our system“) although even conservatives realized the necessity of the „automatic

stabilizers“ of the welfare system: there is a growing criticism of social injustice, social splitting and comeback of class society

therefore: the economic system is called into question by a growing monority

therefore: desire for more social security and active role of state intervention (but a socially reformed state)

But: this criticism does not mean social mobilization for social emancipation the most vulnerable social classes are fragmented and splitted the most vulnerable social classes have a feeling of fatalism: „we do not

have the power for change“ there is the danger of the growing prejudist and resentment against and

„others“ (foreigners etc.) – this is what Rober Castel means talking about the comeback of the „dangerous classes“)

This should make clear the impotance of collective intervention by alliances out of the civil society of trade unions with political mandate the „party question“, i.e. the reform of the concept „party“

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V. Strategic projects „Hegel remarks somewhere that all facts and personages of great importance in world history occur twice. He forgot to add: the first time as tragedy, the second as farce.“ Karl Marx: The Eighteenth Brumaire of Louis Bonaparte (1852)

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tragedy and farce Can a big crisis happen again? John K. Galbraith 1954: No! The political and economic elites have learned: „Without any doubt: a lot of weak spots, which occured 1929 and later, have been wiped out. The distribution of income isn‘t as top-heavy as ist was ... [in 2007:as worse as it was]

The omnipotence of investment-trust was very much cut down in the years following

1929 [in 2007: restored]

Unemployment insurence ... for the workers. Together with the other parts of the social security system – pensions and public aid – this helps to protect the wages and to safeguard the purchasing power of big parts f the population [Reagan said: starve the beast]

The tax-system we have today guarantees more stability than that from 1929.“ [in 2007: distributed from below to the top]

(John Kenneth Galbraith: Der große Crash 1929 (1. edition 1954), pp. 230)

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An old approach – with new thinking

„Our argumentation comes to the conclusion, that in our times the growth of wealth doesn‘t any longer depend on the abstinence of the rich, as it is

normally thought. Indeed, it is delayed by them.“ This means: we aren‘t any longer living in a world of

shortage, but in a world of plenty – hegemony of finance markets is the capitalistic form of this.

What is nessesary (according to Keynes): death of the property manager – low interest rates socialization of the investments progressive taxes for strong public investments and work

programmes radical reduction of working time

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Concepts for today: two transform! initiatives

renewing concepts of economic democracy

reorganizing industry - initiatives for sustainable growth – workers democracy (against the iron rule of competition of all against all) – draining the financial markets

and reshaping the world of labour: a european initiative for good work to stop the precarious

fragmentation of the working classes (against workfare policy – bringing solidarity back in)

and giving a progressive answer to post-democracy

initiatives for a new european social model reshaping the fabric of society: abolition of poverty – social security and social justice – bringing the fights against austerity politics together – preventing the comeback of the „dangerous classes“ (R. Castel)