TCS Daily

The War on Capitalism

By Nico Wirtz - May 9, 2005 12:00 AM

During the week of May 1 - Germany's Labor Day - it was clear that the recent "capitalism debate" in Germany has spun out of control. The chairman of Germany's Social Democratic Party (SPD), Franz Müntefering, by comparing foreign investors with locusts exploiting German companies, started an avalanche. Following Müntefering's tirade against foreign investments and markets, the chairman of the "Young Socialists", the SPD's youth organization, dipped straight into the pool of Marxist rhetoric. He called the director of Deutsche Bank AG "a willing servant of unrestrained capital", who "is nothing but a puppet in the shark pool of neoliberal globalization".

Nonetheless, what has not been addressed since May 1 are the political implications of those positions. One wonders what happened to the times when, even in Germany, capitalism was not only a synonym for the most efficient economic system known to humankind, but also stood for a way of life - the only one compatible with personal and political freedom.

Unfortunately, in Germany's social reality, hardly anybody seems to agree with such a definition of capitalism. At least the public discourse in opposition to what Müntefering called "market radicalism" is louder than the voices of those in defense of markets. Beyond this, Müntefering's general attack on capitalism and his belief in a "socialization of capital" is based on a German political consensus that spans most of the political spectrum: from the post-communist Party of German Socialism (PDS), the SPD, as well as the conservative Christian Democratic Union (CDU). Germany's Free Democratic Party (FDP) is the lone wolf in the defense of market capitalism.

The apparent lack of support for market capitalism should not come as a shock. The raison d'être of post World War II Germany has always been embedded and flanked by a harmonized economy based on general political/social consensus and the government-defined "common good". The fact that 75 percent of Germany's general public agree with Müntefering's assessment further proves the point.

Now that capitalism has come under political attack, Germany's labor unions demand a share of the loot, demanding political consequences and a general turnaround regarding the country's economic policy. On May 1, 530,000 people demonstrated under the DGB banner "You are more. More than a number. More than a cost factor. You have dignity. Show it." Demands ranged from the introduction of minimum wages, higher taxes for companies, a European investment program to government-run employment schemes and an end to government budget cuts. From the unions' perspective, the long overdue debate about the country's economic orientation has finally begun.

Recalling the country's darker years of the not too distant past, a planning group of the SPD's parliamentary group created a list of those whose behavior is deemed unacceptable. Titled "Market radicalism instead of social market economy", it alleges that private equity has been subverting companies on the back of the common worker and lists almost a dozen companies that have already been compromised by private equity associations. The objective is clear: demonizing privatization and creating conditions for a policy of extending the reach of government even further into the economic realm.

Even Germany's leading conservative party, the CDU, has been humming the same tune. CDU party leaders are proposing a minimum wage law for the country, as well as legislative steps to prohibit the coupling of CEO salaries to a company's performance on the stock market. Quite remarkable for the party of Konrad Adenauer that was once staunchly anti-socialist.

The unholy anti-free market alliance between labor unions, the SPD and large segments of the CDU fits well within the emotional state of affairs of contemporary Germany. With Germany's economy, its welfare programs and the job market in a serious crisis, people are beginning to loose their entrepreneurial spirit. Optimism about one's personal future is at a historic low point. The perceived and actual outlook for the country's economy is bleak. Depression as a mental issue has been rising steadily. To many, the current mood among the population in Germany resembles the late 1929-30 period. Now as back then, with overall conditions like these, it is not surprising that rosy, warm, get-something-for-nothing rhetoric of anti-capitalism rears its ugly head.

Forgotten is the empirically proven fact that no other form of economic order in the history of mankind has lifted so many people out of poverty. Forgotten also is the fact that capitalism enabled Germans to lead the lifestyle they so enjoy.

The effectiveness of the market and its self-healing mechanism even after severe shocks or overheated stock markets has been shown time and again. The bursting of the artificially created high-tech bubble, or the months after 9/11 come to mind. Even when it comes to punishing those oh so evil CEOs and other crooks in the business world, the market works. In the U.S., the Enron scam was not "discovered" by the government, but by private investors who felt something was not kosher.

Despite evidence to the contrary when it comes to the effectiveness of government in the realm of economic growth and job creation, the German people and most of their elected representatives are willing to march to the socialist drumbeat. So far, it is nothing but rhetoric; however, given the broad-based support for Müntefering's intellectually void critique of capitalism, it would not surprise if actual steps towards socialization were taken.

While Germany will not turn into a purely socialist enclave in the heart of Europe, it might very well continue to stand in its own way by further trying to blend a mix of Socialism into Germany's economic model.

Much of the current debate is surely influenced by the upcoming elections to North-Rhine-Westphalia's state legislature on May 22. The SPD, which has governed the state for 39 consecutive years, is widely expected to lose this year. If this happens, the coalition of SPD and Greens which governs at the national level would no longer represent a single state government. This could theoretically imply parliamentary elections for the national legislative body, the Bundestag, sooner than 2006. The soon-to-be-held elections are the prime-motivating factor for the SPD's frontal attack on Germany's economic order. The objective is clear: preservation of political power.

With such a short-sighted strategy, however, the SPD only serves itself but not the people. The attack on capitalism it has mounted may deliver a short-term victory given the current mood in Germany. Yet, Pandora's box has been opened, and the debate will not all of a sudden subside after May 22. Having struck a sensitive nerve among a majority of Germany's population which is gaining ground inside the body politic, the debate may develop a life of its own and go far beyond what its instigators had in mind. Depending on which way the pendulum will swing, Germans may have to pay a high price for the SPD's desperate attempt to cling to power. One of Germany's most formidable poets inevitably comes to mind here: Goethe, when his "Sorcerer's Apprentice" says: "Wrong I was in calling Spirits, I avow, For I find them galling, Cannot rule them now."


TCS Daily Archives