Credit and Power. Germany and the ECB: Monetary Stability über alles

Credit and Power

Germany and the European Central Bank: Monetary Stability über alles

By Anna Blume and Nick Sinakusch

(article originally published in the January 20th, 2012 issue of the newspaper analyse & kritik)

Europe’s elite is divided. The increased purchase of the state bonds of the euro countries by the European Central Bank (ECB) could stop the crisis, claims the Dutch economist Paul de Grauwe. DZ Bank even sees in such purchases “the sole possibility of breaking the vicious cycle”. The German government, on the other hand, is struggling with all its might against the purchase of state bonds by the ECB. What appears to be a conflict between finance experts is rather a struggle for power in Europe and concerning the status of the euro as a world currency. The material is complicated, so we’ll deal with things one at a time. First, what’s the underlying problem?

The financial markets – the lenders of credit to governments – have lost “trust” in some of the eurozone countries. They doubt whether their money is still well parked in euro state bonds. These doubts have led in the last few months to a decline in the market value of the bonds from some of these countries. Inversely, the interest rates on these bonds have increased. With that, new loans for governments become increasingly expensive, which further stokes the distrust of investors. The market value of the bonds declines further, interest rates continue to rise, and so on. 1 Increasingly larger rescue packages and euro rescue funds have not been able to restore the “trust” of the markets.

Some maintain that only the ECB can break this vicious cycle, for example Holger Schmieding, chief economist of Berenberg Bank. The central bank would have to declare its willingness to purchase falling bonds in an emergency. This would once again give investors a sense of security. “The ECB can print money. It can therefore spend any amount that appears necessary. Since investors know that the ECB can never run out of money, an ECB guarantee would be credible and would prevent a panic. To put it another way: since investors know that the ECB would intervene in a panic, they would have no reason anymore to panic, and the ECB would not have to intervene at all” explains Schmieding.2

In fact, the central bank is already purchasing bonds from Greece, Portugal, Spain, and Italy. Since May 2010, it has spent over 212 billion euro doing so. However, the bank continues to assert that these purchases are limited – in terms of both time and amount. Nobody knows when the ECB will stop propping up the market. As a consequence, its program of purchasing state bonds does not give investors the sense of security that would be necessary to stop the crisis. “We need a statement that there will not be a default on Italian bonds” said Oliver Bäte, chief financial officer of Alllianz SE, in November.

To calm the markets, the ECB would therefore have to make a promise to make unlimited purchases in case of an emergency. The German government in particular is fighting to prevent that, because first of all, by purchasing bonds, the ECB would sink the interest rate on bonds for crisis countries, lightening their debt load and thus lifting the pressure on them to save. And second of all, more generally, the massive printing of money by central banks is a stability risk. On this point at the latest, laymen lose interest and professional experts argue with each other.

Let’s take a step back: what is the European Central Bank, and what does it do? It is the only entity that can “print” money. What the central bank issues is an exquisite piece of printed matter: slips of paper that function as capitalist wealth. These slips of paper can do so, because the force of the state has declared them to be a means of payment. Euro notes represent the credit of the European state community.

The ECB “provides” – as it is so beautifully put – the commercial banks with these slips of paper. That occurs by means of so-called tender transactions: commercial banks give securities to the ECB – for example bonds – and in return receive from the ECB freshly printed money, which serves the commercial bank as the basis for loans to businesses, governments, or households.

So in tender transactions, the central bank forks out real money in exchange for securities, which are merely promises to pay. The central bank thus accredits these promises to pay as being as good as money – however, only for a specific period of time. After that time is up, the transaction is reversed, the commercial bank takes the security and gives the money back to the central bank.

So with its loan transactions, the central bank credits the profitable business of the commercial banks. Its credit should serve as an advance on future economic growth. If this works, and the new money created by the ECB actually stimulates increased lending by the banks and this in turn increases accumulation, then this increased accumulation basically legitimizes the increase in money supply. The quantity of money increases, but so does economic performance. That’s the goal.

Germany’s Interests with regard to the ECB

However, the German government claims that if the ECB purchases state bonds, it finances governments with printed money. It therefore eases the pressure on crisis states to pursue an iron savings course and win back the trust of the financial markets. Also, through bond purchases by the ECB, the crisis states would be less dependent upon rescue loans from the EU and consequently upon the agreement of the German government. That is exactly what the governments of the crisis countries want, but it is Germany’s desire that this should not happen.

The German government has made it clear: the power of the ECB to print slips of paper that function as money and enjoy the confidence of the world rests upon Germany’s economic power. Without Germany behind it, the euro is nothing. With its dosed rejection of Eurobonds, an increase to the euro rescue fund EFSF3, or bond purchases by the ECB, the German government is demonstrating that it does not vouch for the credit worthiness of other states with its own credit worthiness, or rather, that the other states have to pay for support in return.

As compensation, the German government is demanding austerity packages, cutting the salaries of public employees, raising the retirement age, and in general more capital-friendly policies in Europe. It is using the need of other euro state for ECB support, euro rescue packages, or emergency credits as a lever for its own interests: shifting the costs of stabilizing the eurozone onto the crisis countries. This extortion is actually working: governments are saving, impoverishing their populations, and bludgeoning any resistance. Democratic procedures are being canceled out, non-elected “technocratic” governments are imposing austerity measures without regard for the voice of the electorate or the domestic economy. This is how Germany autocratically rules Europe, and shows that its power has less to do with its military than with its credit, which the other states need in order to avoid bankruptcy.

This growth in power is not an end in itself for the German government. It serves a goal – and it is this goal which the German government insists upon when it argues that the purchase of bonds by the ECB is a “stability risk”.

With its warnings about the loss of “monetary stability”, the German government is referring to the purpose of establishing the euro: by combining the economic and financial power of the European countries, a global currency was supposed to be launched – greater and more powerful than the Deutsche Mark, an unbeatable offer to the financial markets for investing their money securely. In return, the markets were to offer governments and therefore businesses credit at low interest rates.

The euro was intended as a means in the global competition between states for the credit of the financial markets, a competition which is currently intensifying: in 2012, the euro countries will have to borrow 870 billion euro from the financial markets. They are thus in a “tough contest for investor money, since the large industrial countries will have to borrow a total of 6,000 billion euro in order to extend expiring loans” according to the financial agency Bloomberg at the beginning of January 2012.

The model and the competitor for the euro is the US dollar: despite rapidly increasing federal debt, the financial markets have faith in US money, are pulling out of Europe and are instead providing the United States with credit at low interest rates.

A Stable Currency Only at the Price of More Poverty

In this competition for credit, the euro could suffer if the ECB starts to print money on a massive scale, warns the German government. According to this argument, if the central bank buys state bonds of dubious value, it does not credit – as is usually the case – profitable business by the banks, that is to say successful accumulation. Instead, it merely assumes the liability for increasingly bad state debt. To put it another way: the freshly printed euros with which the ECB purchases collapsing bonds no longer represent the credit power of the European states, but rather acts as a substitute for it. This scenario is usually formulated with the warning that with the purchase of bonds, the ECB would become a sort of bad bank: “Whoever covers himself in rotten securities at some point receives a toxic shock”, claims CSU general secretary Alexander Dobrindt. 4

The increased creation of credit could thus sow doubt among investors concerning the solidity of the means of credit – the euro. “It might stick in the minds of the markets that in the course of the crisis, the ECB financed state expenditures by printing money” says the Commerzbank. The German government wants to prevent such doubt.

With its insistence upon “stability” and debt reduction and its rejection of the purchase of state bonds by the ECB, the German government is risking a recession, an escalation of the crisis and consequently the end of the euro. At the same time, it insists that the euro be either a coequal rival of the US dollar or it will lose its justification for existing, from the German perspective.

What the German side is attempting to impose by means of austerity dictates, deficit rules, and debt brakes are the dictates of a stabile currency which does not allow any indebtedness that does not serve the accumulation of capital. With its warnings against the ECB “printing money” and its demand for reducing state debt, the German government is making clear that all money is allowed to exist as a result of successful capitalist enterprise and may only be used to promote such enterprise. Anything else is a risk for the stability of the euro.

The other euro governments are not attempting to seal themselves off from such demands: they are lowering the costs of their rule by means of “austerity packages” in order to minimize the unproductive use of the euro. In addition, they are increasing their “competitiveness” by lowering wages in order to guarantee the productive use of the euro. A stable currency can only be had at the price of more poverty.

  1. With an increase in interest rates, new loans are not just expensive for governments, but also for all borrowers in a country. For example, the rate of interest paid by an Italian business or an Italian household is calculated as a markup on the rate of interest paid by the safest debtor of the country – the Italian government []
  2. Berenberg Bank: Euro crisis: The role of the ECB. Translator’s note: having been unable to locate the English original of this document, I have translated back to English from the German. []
  3. With a share of 28 percent, Germany is the largest guarantor of the EFSF []
  4. The problem here would be doubt in the solidity of the euro – and not possible asset losses the securities might bring the ECB. Such losses could be dealt with by the ECB – as with every large bank. On this, see: Commerzbank: “Kann die EZB den Euroraum retten?”, []

Michael Heinrich: An Introduction to the Three Volumes of Karl Marx’s Capital

From Monthly Review Press

Micha­el Hein­rich: An In­tro­duc­tion to the Three Vo­lu­mes of Karl Marx’s Ca­pi­tal
Pa­per­back, 220 pages
IS­BN-​13: 978-​1-​58367-​288-​4
Cloth (IS­BN-​13: 978-​1-​58367-​289-​1)
Forth­co­ming in June 2012

The global economic crisis and recession that began in 2008 had at least one unexpected outcome: a surge in sales of Karl Marx’s Capital. Although mainstream economists and commentators once dismissed Marx’s work as outmoded and flawed, some are begrudgingly acknowledging an analysis that sees capitalism as inherently unstable. And of course, there are those, like Michael Heinrich, who have seen the value of Marx all along, and are in a unique position to explain the intricacies of Marx’s thought.

Heinrich’s modern interpretation of Capital is now available to English-speaking readers for the first time. It has gone through nine editions in Germany, is the standard work for Marxist study groups, and is used widely in German universities. The author systematically covers all three volumes of Capital and explains all the basic aspects of Marx’s critique of capitalism in a way that is clear and concise. He provides background information on the intellectual and political milieu in which Marx worked, and looks at crucial issues beyond the scope of Capital, such as class struggle, the relationship between capital and the state, accusations of historical determinism, and Marx’s understanding of communism. Uniquely, Heinrich emphasizes the monetary character of Marx’s work, in addition to the traditional emphasis on the labor theory of value, thus highlighting the relevance of Capital to the age of financial explosions and implosions.

„In only 220 pages the author achieves a summary of the three volumes of Capital: explaining the connection between labor, commodities, and money, how surplus value arises, what capital is, the role of banks and stock exchanges, and from where crises arise. Alongside this he manages to fit in the history of Marxism, demystify the ambiguous term dialectic, and throw in a final chapter on the role of the state in capitalism, all the while refuting common mistakes about the Marxian corpus.“

—Stephan Kaufmann, Berliner Zeitung

Operation Piggy Bank

Operation Piggy Bank

Escalating Conflicts are causing the European House to Falter

By Tomasz Konicz

(article originally published in German in the October 21st, 2011 issue of the newspaper analyse & kritik)

The conflicts within the German government coalition and the increasing tensions at the European level are closely intertwined. The conflicts are escalating on the one hand due to an abundance of intensifying, mutually opposed interests: what is central is Berlin’s refusal – resulting from domestic political pressure – to introduce further reaching measures in order to stabilize the eurozone.

The New York Times (September 12th, 2011) notes a “cacophony” in Berlin, which sows “fresh doubt […] about the nation’s commitment to the euro.” The announced resignation of German ECB chief economist Jürgen Stark is a sign of growing “frustration” in Berlin. In the American newspaper of record, an economist is granted the opportunity to outline the rising aggressive nationalism in Germany as follows: “The German electorate is not in the mind-set to undertake actions it sees as subsidizing less worthy nations. As a result, the government is moving in a very isolationist way to try to establish a fortress Germany that’s economically secure despite the risks in its European Union partners.”

The Limits of Debt-Financed Growth

It’s safe to assume that German chauvinism has been the greatest winner of the crisis in Europe so far. By now, even the old German predilection for the public humiliation of dissident groups is flaring up: European Commissioner for Energy Günther Oettinger recently demanded that the flags of European debtor countries should be flown at half-mast in front of EU institutions. And the president of the CDU economic council, Kurt Lauk, demanded the resignation of EU President Barroso for committing the “mortal sin” of starting an initiative for Eurobonds.

There are also tough disputes concerning the controversial question of the ECB purchasing state bonds of heavily indebted EU countries. This has also been strongly criticized by Germany and contributed decisively to the resignation of ECB executive board member Jürgen Stark.

Furthermore, there are intensified conflicts within the EU concerning a forced integration. France above all hopes that the crisis can be overcome by means of a further-reaching European integration, for example by the implementation of a common budget or tax policy. The Prime Minister of Luxemburg and President of the Euro Group Jean-Claude Juncker makes similar arguments. On this front, German policy also acts as a brake.

There are also further battle lines, such as the critique of numerous Central Eastern European countries of German-French hegemony within the EU, or the conflict between the Euro Group and the USA concerning further stimulus packages, vehemently demanded by Washington. China has also come forward with the proposal of supporting the eurozone with billions in loans. And finally, domestic political conflicts are increasing in other Euro countries, where – unlike Germany or Austria – national chauvinism is not on the rise, but rather protests against the austerity terror and crisis policies of governments.

This barely manageable multiplication and intensification of conflicts is a result of the most recent exacerbation of the objective systemic crisis of capitalism. The structures of the EU system are dissolving, since all important actors at the moment are making an increased effort to impose their own interests without engaging in the compromises that were previously customary. Through this distributive struggle between individual states, institutions, or social groups, the previously petrified structures of the EU have fallen into an instable or “fluid” state. It’s clear that the EU as we know it will not survive the crisis.

The EU has always been characterized by conflicting interests between individual states. But why are tendencies toward dissolution becoming predominant during the present crisis? Why isn’t the “European House” crisis-proof, so that a compromise now appears impossible? Europe’s integration into a single currency area was made possible by the fact that the various governments believed that the advantages of this integration project would far outweigh the disadvantages. Germany – or more precisely, the German export industry – has reaped the most benefits from the eurozone, as is generally known. Since the introduction of the euro, Germany’s current account surplus with the eurozone adds up to 750 billion euro, which equals a flow of wealth to Germany in the same amount.

So the EU is already a transfer union – a transfer union benefiting German export industry, made possible not least by declining wages and the casualization of wage laborers within Germany. The southern countries of the eurozone seemed to profit from it as net recipients due to financial allocations from Brussels and low-interest rates on bond issues from the eurozone. For a while, the southern European euro countries were able to finance the indebtedness of their economies – which rapidly increased due to the German trade surplus – at extremely favorable terms. This southern European indebtedness had a stimulating effect on the economy. In many heavily indebted countries, regular deficit cycles developed in which the dynamic of indebtedness advanced to the status of the most important economic motor. For example, before the outbreak of the crisis Ireland and Spain exhibited a much higher rate of economic growth than Germany for years due to the real estate bubbles in those countries. The periphery as well as the core of the EU appeared to profit from “European integration” due to continuous borrowing.

As is well known, this constellation no longer exists. Due to excess indebtedness in the eurozone, the eurozone will no longer play such a prominent role, which is why skepticism towards Europe is running rampant among the German public and efforts to dispose of the indebted countries in the cheapest way possible are getting stronger. Confronted with rising costs and European markets melting away, Berlin is making an effort to reduce Germany’s entanglement with the EU to a minimum.

The EU between Disintegration and Integration

Furthermore, Berlin is also attempting to rearrange the eurozone according to its own interests, by preaching strict budget policy and introducing debt limits. In most EU institutions, in France (whose banks are rather strongly exposed in the Southern half of the Eurozone), and in the Southern Euro-countries, a contrary tendency dominates. Here efforts are made to rearrange European structures in order to involve Germany in the costs of the crisis: whether by means of Eurobonds, or a strong expansion of the crisis mechanism European Financial Stability Facility (EFSF), which according to the most recent proposals should be able to transfer money directly to banks. Thus, antagonistic interest coalitions within the EU clash, ultimately aiming at a disintegration (Germany) or further integration (France, Southern Europe).

Unfazed by the intra-European conflicts, the crisis of the capitalist system is gaining momentum. Due to the very probable bankruptcy of Greece, the eurozone is threatened by a renewed financial market crisis which is already making itself felt by rising interest rates in inter-bank trading and which can only be delayed in the short-term by liquidity injections from the ECB. A bankruptcy of the Greek state might still be manageable for the European financial sector if further heavily indebted countries – like Italy – aren’t seized by the subsequent shock waves on the financial markets. But such a scenario is very probable, since a bankruptcy in Athens would automatically lead to higher interest burdens for Italy and Spain. Such a “domino effect” in the European debt crisis, however, would definitely blow away the EU and its financial system. The crisis of European state debt is at the same time a crisis of the European financial system that made this running up of deficits possible.

At the same time, the impending recession in the EU and in Germany is announcing its arrival, precisely due to the austerity programs throughout Europe imposed under Berlin’s decisive influence. With the ebbing of the credit-financed impulses of the stimulus packages, the world economy is once again entering a recession. This actually existing “dependency” of the world economic system upon credit-financed demand also constitutes the background for the apparently absurd initiative by US Treasury Secretary Timothy Geithner and Defense Secretary Leon Panetta to convince Europe, at the highpoint of a debt crisis, to adopt further credit-financed stimulus packages.

The German Strategy of Public Humiliation

Thus the “crisis trap” also closes its jaws In the EU: politicians would actually have to implement stimulus programs in order to stimulate a sagging economy, and at the same time impose harsh austerity measures in order to stabilize the budget situation. The common European currency actually functions as a catalyst of crisis processes, contributing to a situation in the EU where the debt crisis is threatening to enter a catastrophic stage: the euro robbed the inferior Southern European economies of the possibility of buying their own state bonds and using an independent low-interest rate policy in order to dampen the effects of the crisis, like Great Britain is doing. Instead, months ago Berlin imposed a turnaround in interest rates in the eurozone which has contributed to a further cooling of the economy in Southern Europe. The lack of sovereignty in matters of monetary policy for the European debtor nations has thus robbed them of important possibilities for postponing the current aggravation of the crisis.

The political class can attempt to maintain debt-financed mass demand for as long as possible in order to postpone an economic collapse. Treasury Secretary Geithner implicitly admitted as much during his initiative in the Polish city of Wroclaw on the occasion of a meeting of European central bankers and financial ministers. Meanwhile, a Europe led by Berlin has been rejecting these insights and is instead deepening the crisis by means of draconian austerity programs. In the EU, this conflict between proponents of further debt and brutal budget balancers is intensified by the diverging interests of individual countries and the concomitant opposing tendencies of strengthening or loosening European integration.

In the crisis, as a result of the collapse of this deficit cycle, there is a looming threat of a relapse into chauvinism, nationalism, barbarism. The left is thus confronted with the task of opposing these reactionary tendencies, organizing and coordinating the struggle against the capitalist crisis on a global level – and fighting for an alternative system, in which – along with capital and the state – artificial national borders belong to the dustbin of history. The construction of transnational or global organizational and social structures – a task at which capitalism can only fail – has to be placed on the agenda by the left, in light of the numerous global problems confronting humanity. Future struggles must also be conducted globally. Some approaches are already becoming manifest in the Occupy Wall Street movement, which is aiming precisely for such a global coordination and organization of the struggle.

Lucas Zeise – The Bloated Financial Sector

The Bloated Financial Sector

How to Save the Banks and This Time Maybe Even Get Rid of Some

By Lucas Zeise

(article originally published in German in the October 18th, 2011 issue of the daily newspaper junge Welt)

In the last few weeks there were a number of cute scenes; for example, the thundering applause for Giorgios Papandreou during his speech before the BDI (Federation of German Industries). In excellent English with an American accent, the Greek Prime Minister promised the assembled German business leaders: “I can guarantee that Greece will live up to all its commitments.” The business bosses were as pleased as punch. Everything will be fine, promised the Social Democratic Greek Prime Minister with an American past. Formulated a bit differently, Papandreou’s message was: the EU market area will be preserved in its entirety, including Greece; the money invested by the German state for this purpose will be repaid.

As boss of the construction company Hochtief, BDI President Hans-Peter Keitel has had some good experiences in Greece. The construction of Athens International Airport was conducted by the German corporation as a general contractor. And the license to operate the airport also yielded some extra income within the framework of a classic “Private Public Partnership”. One could say that Keitel experienced up close and personal how enriching a Euro partnership can be, even with the Greeks, economically weak and denounced as lazy and untrustworthy by the tabloid Bild. Keitel and the other capitalists and head managers organized in the BDI know the advantages they have from the currency union. The event with Papandreou occurred at the same time as the Chancellor and her parliamentary ankle biter Roland Pofalla made an effort to organize a majority vote by the coalition parties for an extension of the rescue package for Greece. They succeeded – among other reasons, because the industry federation made it clear to the representatives of the FDP, CDU, and CSU how they were supposed to vote in this situation. In case of emergency, according to the clear message, the German state would have to pony up even more money, even if that would contradict its long practiced iron principles of political conservatism. The important thing in any case was that the euro, the precious currency union would be maintained.

Just Like Three Years Ago

At the BDI event, the Greek Prime Minister also positioned himself firmly on the side of the German bosses. He promised to represent their interests, while putting the interests of his Greek fellow citizens on the backburner. This is not because Papandreou is afflicted by a lack of courage. He openly advocates this position in Athens and Thessaloniki. His government dutifully fulfils the requirements dictated to it by the Troika (a wonderfully old-fashioned expression from monarchist Russia) consisting of the International Monetary Fund, the European Central Bank, and the European Commission. This trinity checked the conditions, prescribed firing public sector employees, reducing the sovereignty of collective bargaining agreements, the sale of all state property not yet privatized, and made judgments and varied its message concerning the ability of the Greek state to service its increasingly growing debt. Sometimes it looked good, sometimes not so good. In the first case, the next tranche of credit from lenders beckoned. In case of the latter, the bankruptcy of the state was imminent. In any case, Papandreou and his enormous and for purposes of PR unsuitably fat financial minister Evangelos Venizelos stood firmly on the side of the Troika, creditor banks, and the BDI.

The “cost-cutting measures” and “reforms” dictated within the framework of the first bailout fund for Greece in May 2010 have plunged the country deeper into recession, as could have been expected. And it’s not the only one. Confidence in other European countries has also vanished. In the middle of a universally acclaimed upturn, the second quarter of 2011 only brought stagnation to Germany, while the third quarter is expected to bring light contraction. The world economy has ended its interim high and is returning to a state of affairs characterized by general weak consumption and demand. A further straining factor in Europe is that some countries like Great Britain and Spain are rigorously and brutally cutting state expenditures by their own free will. Others such as Greece, Portugal, Ireland, and Italy are doing so under pressure from Berlin and Brussels. The general result is fatal.

Thanks to the impending return of recession and thanks to the crisis of state debt which has not even been solved in the slightest, we’re back to where we were three years ago. Banks once again have to be rescued from downfall with a lot of state money. Our chancellor, otherwise bent on “saving”, casually said as much after a visit with European Commission President José Manuel Barroso. At the same time, the European heads of state prepared for debtors having to take a bigger haircut in the case of the main problem country Greece (or risk a state bankruptcy). Both things have quite a bit to do with each other. Some European banks might not be able to deal with a greater devaluation of Greek state bonds – certainly not the Greek ones. Incidentally, we learn from this that the big bailout funds were only constructed with great effort in order to bailout domestic banks.

It’s still unclear how exactly the bank bailout will look. But the basic idea is as follows: first of all, the German bank bailout program “SoFFin” – hastily thrown together in autumn 2008 at the modest amount of 480 billion euro and which expired at the end of 2010 – will probably be switched on again through a resolution of the Bundestag. All other euro countries will proceed in a similar manner. In order to support those countries that can’t come up with the necessary sums to bail out “their” banks, the authority and scope of the European Financial Stability Facility (EFSF) will be extended by further resolutions of parliament. When all that is arranged, Greece will be allowed to go bankrupt. Then – such is the political calculation of our leaders – such a bankruptcy will no longer devastate any banks.

The prospect that the governments of the euro territory are contemplating once again using taxpayer money to prop up the banks has stimulated the financial markets. That was good news for investors, since over the course of the summer it became increasingly clear that some banks would not be able to deal with taking a haircut on the debt of even a small country. The banks started distrusting each other. The “money market between banks”, where credit institutes usually procure without much fanfare the necessary liquidity for each other in order to meet payment obligations and get rid of spare money, stopped functioning. Just as in the summer of 2007, when the great financial crisis had just begun, the European Central Bank (ECB) sprang to the rescue. It once again provided the banks with all the money they needed. Without this aid, some banks would have had to close due to a shortage of liquidity.

A “Watering Down Effect”

The joy on the financial markets over the rescue operation for the banks contemplated by Merkel, Barroso, and French President Nicolas Sarkozy was strangely enough not shared by some of the boards of those very banks. There arose the suspicion that the banks were to be force-fed capital. But for once, the bank rescuing politicians were actually right. What’s the use of the most beautiful bailout fund if the institutes won’t take the money, while at the same time a state bankruptcy occurs that topples one or two banks and thus knocks out the entire financial system? The bankers for their part don’t want the additional capital, since it reduces their returns. Lots of capital in relation to transaction volume, a high capital ratio, reduces profitability for two reasons. First, the leverage by means of which banks make a lot of money out of a little borrowed money becomes smaller. Second, accumulated profit then has to be distributed amongst a greater volume of capital – or as funds managers say, the “watering down effect” pushes down the return on equity. In times of crisis, it becomes more apparent than ever how the interests of bankers contradict the general interest, including the general interest of capital, in the most frictionless possible flow of economic activity. It will be interesting to see how and to what extent the European heads of state will be able to impose this forced capitalization.

As is often the case, presumably a fake solution will be conceived. Since the last highpoint of the still current financial crisis, the EU countries have achieved enormously important regulatory progress. They have created numerous coordinating bodies for the previously nationally circumscribed financial regulatory agencies. The committee for the European Banking Authority (EBA) was established in London, where the density of banks is extremely high, and thus the bankers don’t have to travel very far in order to advise their regulators as to how they’d like to be monitored. That’s how the comprehensive bank testing action came about a half a year ago which was propagated as a comprehensive stress test – a PR action thought up by the banking associations. This PR action was not aimed at the public, but rather at the banking profession itself. The banks had begun to mutually distrust one another and not lend each other any more money. Only a few unimportant small institutes did not pass the test. The rest were evaluated as primed for the coming crisis. It’s at least pleasing to know that the bankers themselves did not believe in this bogus event.

Now the EU governments have resolved to approach things more seriously. The London-based EBA is supposed to once again test the same banks and determine if they have enough capital to withstand the stress of a Greek bankruptcy. Whoever does not possess enough capital will have a few weeks’ time in order to procure it on the financial markets. Whoever is unable to do that will receive state money by force. In order to prevent that, a few power breakfasts with the gentlemen and handful of ladies of the national and European supervisory agencies will be necessary. You can bet a good package of derivatives that the support program for the banks will be arbitrary and ineffective. That means furthermore that the planned bankruptcy of Greece will be postponed until all of Greece’s bonds are in the hands of the rescue fund or the ECB.

The second phase of the bank bailout thus presents itself as a truly complex rescue apparatus. It can’t and won’t work, for the simple reason that in a Europe with a common currency, it’s absurd to leave the rescue of the banks to the respective national governments. Furthermore, the bank rescue plan won’t change anything about the fact that a haircut for a country’s debt will set a precedent for other countries. Behind that is not just the danger of infection or the herd instinct of the markets, but the rational calculation of investors. At the moment, the ECB’s diligent purchase of state bonds is maintaining the illusion that Italian and Spanish bonds can still be brought to market.

First as Tragedy, then as Farce

In fact, both Spain and Italy – already since the last Council of the European Summit declarations of July 21 – can no longer borrow money on the open market at acceptable conditions without the support of the ECB. That has less to do with the policies of the Zapatero and Berlusconi governments, which are on their last legs, than with the fact that the euro governments have openly shown that they are no longer willing and capable of avoiding a haircut for a member country. Ever since, the markets have been awaiting decisions from the euro countries and their unofficial leader, Chancellor Merkel, concerning how the big operation will proceed. Since then, the crisis of the European banks has entered a new, acute stage. In any case, it is clear that even in the case of a haircut limited to the Greek state, the debt crisis will expand to other Southern euro countries and possibly even France.

Nicolas Sarkozy and Angela Merkel frequently and eagerly emphasize that they are completely united concerning the bank bailout. The opposite is the case. The French President wants a concerted European bank rescue, while Mrs. Merkel desires – as was the case in 2008 – a competition between the euro countries as to which one can most amply supports its banks. Mrs. Merkel presumably believes what the German banking associations are whispering in her ear, that this time around German banks will be less affected than last time. Disregarding the fact that both Germany and France are driven by their own respective interests, the German attitude is somewhat crazier than the French.

Actually, the euro debt crisis should have made clear to all the German nationalists in the government and parliament that every competitive advantage enjoyed by German banks and the German state budget due to the flight of investors to Germany will soon be used up, since the “partner countries” from which capital is fleeing will have to be supported even more. That is not a zero sum game. No, the negative effects far outweigh the nice little advantages that Germany enjoys as an investment location. A little bit of “solidarity” between states bound together by a common currency would be useful even for the strong ones.

However, the actual perversion consists in even conducting a state bailout of banks. The first time it was a tragedy, and the second time, to borrow a phrase from Karl Marx, it will be a farce. A tragedy, because the states massively rewarded those who brought the global economy to crisis, thus putting them in the position to repeat their harmful behavior, while the states put themselves in the position of hopeless debtors. We will soon experience the rude farce, when the flabbergasted bankers and politicians notice that their words and declarations are misunderstood by both the public and financial markets, and the painstakingly constructed rescue apparatus collapses without a sound like in an early silent movie.

The Outlandish Lehman Thesis

One could ask whether the rescue operations for the financial system conducted worldwide in 2008 were a good idea. This question can be answered in the affirmative if for no other reason than that the bankruptcy of a bank and the consequent run on financial institutions would have led to a dramatic deepening of the crisis. In 2008, politicians from all the main capitalist countries explicitly referred to the experience of the Great Depression of the 1930s. The bankruptcy of the Austrian Creditanstalt and the German Danatbank in 1931 decisively contributed to a dramatic aggravation of the crisis.

Similar arguments are made today when the claim is made that the US government allowing Lehman Brothers to go bankrupt in autumn 2008 and the resulting shock on the financial markets was the cause of the global recession in the real economy.

However, this thesis is unfounded. The downfall of Lehman Brothers was a consequence, not the cause, of the raging global financial crisis. In September of 2008, the global economy had already entered a recession, and not because one bank or a group of banks were having a hard time, but because the crisis-ridden end of the financial boom in summer 2007 abruptly ended the debt-fuelled effective consumer demand of average Americans. The world economic crisis 80 years ago was also not caused by the collapse of the banks named above. What was terrible about these bankruptcies was not so much the collapse of the banks themselves, but the reaction by economic policy makers, who intensified their restrictive course, with particularly fatal consequences in Germany. The case of Lehman Brothers, on the other hand, was completely different. It led to hectic activity on the part of economic policy makers in all important states, who on balance went in the right direction.

All the money that was pumped into the financial sector stabilized the banks. All the money pumped into stimulus packages stabilized effective demand. And this was decisive. It helped to avoid the disastrous downward spiral (declining demand – declining profits – declining investment – unemployment – declining demand) which in the world economic crisis of the 1930s led to depression. As a provisional result, it should be noted that the point is not so much whether the collapse of a bank can be avoided, but rather how a bankruptcy takes place and what kind of economic policy is conducted around it.

As can be seen today, the bank rescue actions of 2008 have their drawbacks. For one thing, they led to a plundering of state budgets. That dramatically increased the already high indebtedness of the states and contributed to the current state debt crisis in the euro area. The burden of unsustainably high levels of debt of private capital was shifted onto state budgets. The bailout of the banks in 2008 prevented high asset claims that would have become unserviceable in the long term from being maintained. The financial and economic crisis has not consummated its purifying effect. The financial sector is still far too big in relation to the real economy, is a burden upon the real economy, and is an impediment to economic growth.

Relatively Painless Shrinkage

Without massive shrinkage of the financial sector, there is no way out of the crisis. The current aggravation of the crisis offers a chance to shrink the financial sector in a way relatively painless for the citizenry. The point of departure could be not just a rolling over of Greece’s debt, but that of all states in the euro area. All existing debt of these states would be converted to new securities with a markdown of maybe 30 to 50 percent. The level of the markdown is less important. What is essential is to trade in debt instruments that have the same conditions for all states, the conditions being set not by the market, but unilaterally by the governments, for example at one percentage point above the rate of inflation.

Such a haircut would allow the financial system to implode immediately. In the long term, it would lose one of its most important sources of financing. In the short term, the states would have to bolster the banks and insurance companies, and take responsibility for their debt. However, they would also actually have to take over control and ownership of the institutions, audit their business models, and if necessary wind them down or recapitalize them.

Analog to the neoliberal shibboleth of the lean state, citizens would be served by a “lean financial sector”. It could simply and modestly organize credit and savings like it did in the square 1950s and 1960s.

Lucas Zeise is a financial columnist for the Financial Times Deutschland. His most recent book is Geld – der vertrackte Kern des Kapitalismus. Versuch über die politische Ökonomie des Finanzsektors (Cologne, 2010), published by PapyRossa Verlag.

The EU After the Euro Crisis

(Translator’s note: the original German version of this article appeared in the September 16th, 2011 issue of analyse & kritik – zeitung für linke debatte und praxis)

The EU After the Euro Crisis

From the Death of Neoliberalism to Authoritarian Stabilization

by Ingo Stützle

For many leftists, the most recent global economic crisis brought with it a certain gratification. Even if emancipatory forces were not able to effect much in the last few years, one thing remained certain: we were right! However, it soon became evident that an economic crisis does not necessarily imply a political crisis. Slavoj Žižek hit the nail on the head in an interview: „Authoritarian capitalism is the victor in this crisis.” (, August 25th, 2011) That was particularly evident in the EU.

Strife has broken out in the European house. With the crisis of European integration under neoliberal auspices, the political bond also seems to have been broken. Nobody will take responsibility for Europe as a whole, but everyone wants to take control at the same time. Above all, Germany is on a collision course. But why? Even the founding fathers of the Europe of the euro, Hans-Dietrich Genscher and Helmut Kohl, have let loose with admonishments concerning Angela Merkel’s policies. Is Merkel’s government simply lacking a clear direction, as has been asserted in the opinion pages of daily newspapers? Or is she incompetent, as the parliamentary opposition alleges? To answer these questions, a glance at the history of Germany’s European policy is helpful.

Since the founding of the European Economic Community (EEC), a common currency has always been a goal of integration. The aim was always to stabilize trade relationships and advance the integration of the domestic market. Already in the mid-1970s, the EEC countries conducted half of their foreign trade with each other. In 1979, the European Monetary System was founded – under Germany’s conditions of stability. Despite cooperation, the EMS was characterized by the competition between different currencies. This was not a construction error; rather, there was no other possibility. It is in the nature of the hierarchy of currencies that the functions of money are distributed unequally.

Authoritarian Capitalism is the Victor of the Crisis

The Deutsche Mark was the leading currency and all other currencies were subordinate to it. Trade and credit relationships were conducted primarily in Deutsche Marks. But the central banks of EMS countries were also forced to orient to the model of the Bundesbank. As a consequence of the stability and strength of the Deutsche Mark, the EMS countries had to stabilize their currencies in relation to the Deutsche Mark. That led among other things to high interest rates, since that was the only way for other currencies to assert themselves against the Deutsche Mark.

However, that also meant that central banks had to deploy monetary and interest rate policy decisively in order to stabilize exchange rates. There was therefore a decreased room for maneuver for using monetary policy in the interest of domestic economic goals and boosting the economy through cheap money in order to raise the level of employment. That led to an increased competitive advantage for Germany. France’s unit labor costs worsened between 1978 and 1987 by 5 to 7 percent and in Italy by around 34 to 41 percent. This rift was also expressed in the increasing inequalities of trade balances. This dynamic intensified with the Single European Act, which in 1985 initiated the neoliberal course of European integration. The aim was to create a unified domestic market and to completely deregulate the flow of capital.

At the end of the 1980s, France made its approval of the completion of the domestic market conditional upon acceptance of its demand for the transfer of authority over monetary policy to the European level. At the end of February 1988, against the resistance of the German Ministry of Finance and the Bundesbank, The Federal Ministry of Foreign Affairs under Hans-Dietrich Genscher (FDP) advocated a European currency zone and the creation of a European Central Bank. With the “Wende” of 1989, these foreign policy considerations acquired greater importance: France would only agree to the annexation of the German Democratic Republic if Germany was prepared to give up the Deutsche Mark.

However, Germany accepted the project of a currency union only under certain conditions: the European monetary zone was to be a union of stability, the European currency as strong as the Deutsche Mark. The political conditions for this needed to be created. The Maastricht criteria and the Stability and Growth Pact negotiated later introduced limits to state debt that were intended to secure solidity for the new currency. Germany lent additional force to its notion of financial self-discipline by having a no-bail-out-clause included: European states should not help each other out of a jam. By contrast, France’s attempt to incorporate two convergence criteria concerning unemployment in the agreement was shot down.

This stabilization policy is still being pursued under German pressure. Once again, the EU reveals itself as a vehicle for the “implementation of that which could not otherwise be readily implemented” (Wolf-Dieter Narr). This can be seen in the exemplary cases of the so-called European Semester and the Euro-Plus Pact. The European Central Bank welcomes this in its monthly report from March of this year: countries must use the “historic opportunity”; in view of the Euro crisis, “the setting up of effective institutions and the exercise of
peer pressure” is required. The goal must be “broadening and strengthening the existing framework for fiscal and macroeconomic surveillance in the EU.”

Everybody Wants to Take the Reins at the Same Time

This is precisely what is being executed within the framework of the European Semester. With the European Rescue Package, the European Commission resolved to intervene in national budget planning. At the beginning of each year, the European Commission presents a growth report to the Council of the European Union and the European Parliament, and later issues economic policy recommendations for individual countries. These guidelines, which are aimed at increasing competition and “sustainable finances”, are supposed to be taken into account by member states during budget preparations. Thus, even without a European financial policy, budget debates have a European dimension. However, the point here is not so much the harmonization of economic policy. Competitiveness is to be supported and the Stability Pact strengthened, which has one goal above all else: the prevention of state debt.

The Euro-Plus Pact pitted Germany against France. It is an attempt to supplement the concessions made for the stabilization of the Euro with a tightening of competition and stability policy. The official goal of the pact is the promotion of competitiveness and employment, contributing to the long-term sustainability of state finances, and strengthening financial stability. To achieve this, the EU is supposed to intervene in the wage formation process: “To assess whether wages are evolving in line with productivity, unit labour costs (ULC) will be monitored over a period of time, by comparing with developments in other euro area countries and in the main comparable trading partners. For each country, ULCs will be assessed for the economy as a whole and for each major sector”. Wages should not endanger the competitiveness of each country, which amounts to a de facto wage reduction.

But the welfare state is also a target: the “sustainability of public finances” is to be guaranteed and improved through the long-term “sustainability of pensions, health care, and benefits”. The participating states are to make proposals and assume concrete national obligations every year. Measures remain the responsibility of each individual country; however the pact provides a catalogue of criteria – the benchmark being the most high-performance country. It seems likely that this will be Germany. Hans-Jürgen Urban of the metal trades union IG Metall described this “new institutional arrangement” as “a regime of authoritarian stability”.

This tightening of stability policy can be traced back to Germany’s initiative. Until the end of 2009, the German government played down the problem and embarked upon a collision course within Europe. Merkel lectured that Greece was not the only country with a deficit and that one should “not overstate” the problem. The economic affairs and finance ministers constantly pointed out that Germany would not pay the costs for the mismanagement of other states – and all this at a time where it was already obviously that Greece was de facto bankrupt. Even at the end of March, not even a month before the first rescue package, Merkel insisted upon postponing the decision until after the elections in the state of North Rhine-Westphalia.

Germany Loses Interest in the EU

Germany could not keep holding out. But even after the first rescue package was passed, Germany threatened with a stop to all aid and demanded punitive interest payments instead of credit at reduced interest rates as proposed by the ECB. Merkel even advocated revoking the voting rights within Europe for countries exceeding deficit limits. In the case of rescuing the euro, Germany sought escalation rather than compromise. At the moment, Germany is blocking all demands for the introduction of Eurobonds. The question remains as to why Germany is pursuing this course. During the introduction of the euro, the situation was different. Out of its own self-interest, Germany took on an increased responsibility for Europe – in order to profit economically in the future.

The thesis that all this can be traced back to economic causes is rather plausible. Thus, the New York Times of July 18th, 2011 notes that as a result of the debt crisis and austerity programs, many EU countries are stagnating in recession or plunging deeper into crisis. As a result, “Germany is increasingly deploying its money and energy outside the euro zone to fuel its robust growth.” The economic relevance of the euro zone is declining for Germany – with important political consequences for Germany’s European policy: “As Germany becomes less dependent on euro zone markets, there are signs that it is becoming stricter with its ailing partners, like Greece, Italy and Portugal, adding to the pressures already straining European unity.”

It is still the case that 40.9% of Germany’s exports are to other euro zone countries, but of greater interest are the growing exports to countries outside of the euro zone since the introduction of the euro (Süddeutsche Zeitung, September 9th, 2011). Between the introduction of the euro in 1999 and the year 2010, the export to euro countries rose by 5%. However, during the same period of time, Germany’s global exports rose by 6.5%. The importance of the euro zone for German exports thus sank from 46% to 41%. By comparison, the importance of trade with countries outside of the euro zone rose from 54% to 59% (heute journal, September 8th, 2011). This trend will continue as a result of the course of austerity and recession in Europe.

Is that sufficient as a reason for Germany’s political course? No, definitely not. Ultimately, capital itself is split. Whereas the head of the Confederation of German Employers’ Associations (BDA), Dieter Hundt, vociferously opposed Eurobonds (Die Welt, August 29th, 2011) and the former Federation of German Industries (BDI) head Hans-Olaf Henkel even strongly advocates a splitting up of the euro zone (analyse und kritik number 556), the current BDI President Hans-Peter Keitel knows that Germany has to make sacrifices to save the Euro: “The BDI is a vehement advocate of European integration. We need a stable community. For this, the euro is indispensable…we want to move forward and invest in Europe, in the euro – even if it causes us pain”. (Berliner Zeitung, August 29th, 2011)

In addition to these conflicts within capital, there are further points which lead to governmental policy being contradictory. At the latest since the failure of the EU Constitution due to its rejection by the referenda in France and the Netherlands, Europe lacks a political project. The economic integration process cannot be placed alongside a positive political project. The goal of a political union still vaguely exists, but there is no conception of what this might look like. What remains is the well-trodden path of stabilization policy.

Furthermore, crises are always phases in which two processes occur in parallel. On the one hand, every country attempts to emerge as unscathed as possible from the crisis – even at the cost of other countries or the dominant rules of the game such as the stability pact. On the other hand, crises are also phases in which the opportunity is used to impose national interests. That can be seen above all in the examples of Germany and France. Whereas Germany attempts to press ahead with the policy of stabilization, France is attempting to establish its long-standing cause of a European system of economic governance – until now with only moderate success.

The EU is Lacking a Positive Political Project

What also cannot be neglected is the populist aspect that also contributes to the contradictory activity of the German government. Governmental policy always aims to conceal the class character of politics – especially during a crisis. That is why an appeal is issued to the national collective: “We Germans have been living above our means”. By the same token, a large part of the German population feels like it has been shafted by “Greece”. But this racist resentment is not solely caused by German political elites; it is deeply rooted in the population. Because the CDU does not want to lose the next election, on the one hand it plays to the racist discourse about “bankrupt countries” while at the same time defending rescue measures as being without alternative.

This complicated situation constitutes the background for the debate around European policy. The political elite is not clear on the question of whether increased responsibility for Europe or a confrontational strategy is better for Germany. This constellation is also present in the conflict concerning Eurobonds. If one assumes that European bonds – like the euro – will be introduced against German resistance, there remains solely the question of how Germany will impose its interests in the concrete implementation. Then it will also be revealed which political forces have managed to win the upper hand.

Ingo Elbe. Between Marx, Marxism, and Marxisms – Ways of Reading Marx’s Theory: II. Western Marxism

II. Western Marxism

The formation of a Western Marxism1 arises from the crisis of the socialist workers movement in the wake of the First World War (the collapse of the Second International as a result of the policy of defense of the fatherland, the defeat of revolutions in Central and Southern Europe, the emergence of fascist forces, etc.). Here it is Georg Lukács‘ and Karl Korsch’s texts published in 1923 which assume a paradigmatic character. Above all Lukács is considered the first Marxist theorist who at the level of social theory and methodology called into question the hitherto self-evident assumption of the complete identity of Marx’s and Engels‘ theories. At the center of his critique stood Engels‘ neglect of the subject-object dialectic as well as his concept of a dialectic of nature, to which the fatalism of Second International Marxism was oriented. Against this ontologization of historical materialization into a contemplative worldview, Lukács, like Western Marxism as a whole, understands Marx’s approach to be a critical revolutionary theory of social praxis. Against the scientistic talk of “objective laws of development” of social progress, Lukács posits the critique of ideology of reified consciousness, deciphering the capitalist mode of production as a historically specific form of social praxis ossified into a “second nature”, and the emphasis upon revolution as a critical act of practical subjectivity. Self-descriptions such as “philosophy of praxis” (Gramsci) or “critical theory of society” (Horkheimer) therefore do not constitute code words or conceptual equivalents for official party doctrine, but rather emphasize a learning process from which “arises a critical, action-oriented current of thought of Marxist heritage”.2 Although Western Marxism at first positively took up the activist impulses of the October Revolution, early on its leading representatives would come to reject the doctrine of Leninism, above all its continuation of a naturalistic social theory and its false universalization of the experience of the Russian Revolution. Georg Lukács‘ critique of Bukharin’s “Theory of Historical Materialism” serves as an example of the former. In his critique, Lukács charges that Bukharin’s theory, with its concepts of the primacy of the development of the forces of production and the seamless application of the methods of natural science to the study of society, is fetishistic and obliterates the “qualitative difference” between the two subject areas of natural and social sciences, thus acquiring “the accent of a false ‚objectivity‘ and mistaking the core idea of Marx’s method, namely the ascription of “all economic phenomena to the social relationships of human beings to one another.”

In his Prison Notebooks, Gramsci provided the exemplary critique of the fixation of revolutionary strategy upon the model of the October Revolution. Initially, he had greeted the October Revolution as a “revolution against Karl Marx’s Capital”,3 that is to say as a refutation of the allegedly proven impossibility of socialist revolution in industrially backwards countries. In an almost revolutionary manner, he cited the voluntaristic “socialist annunciation” as a source of a collective socialist “popular will” against a class consciousness mechanically derived from the economy and the level of its forces of production. Later, Gramsci would confront the Marxism of the Third International with his theory of hegemony, which rejects the “war of maneuver” of a frontal attack upon the repressive state apparatus as being a useless revolutionary strategy for modern Western capitalist societies. According to Gramsci, within these social formations “civil society” is comprised of a labyrinthine structure of apparatuses in which patterns of thought and behavior are generated which exhibit an inertia that cannot be shaken by grandiose political deeds. The Russian revolutionary model is also condemned to failure in the West because the belief in the universal nature of experience of the Bolsheviks with a centralist-despotic czarism leads to a disregard for the relevance of ideological socialization by means of the apparatuses of civil society and their effect: subjection in the form of autonomous agency. However, both Lukács and Gramsci remain loyal to the “exclusively proletarian” conception of revolution to the extent that the former, despite his reflections upon reified consciousness, still attributes an epistemological privilege to the proletariat guaranteed by its economic position, while Gramsci’s strategically motivated theory of civil society is fixated upon the room for maneuver of the working class.

With the attempt at a social-psychological exploration of the drive/structural foundations of the reproduction of an “irrational society”, above all in the form of authoritarian and antisemitic attitudes, the Frankfurt Institute for Social Research since Max Horkheimer’s assumption of the directorship in the year 1931 achieved a level of reflection that other representatives and currents of Western Marxism could not catch up with,4 and which gives up on the reassuring support of an imagined class consciousness of the proletariat. Finally, the empirical class consciousness of the proletariat as the only existing class consciousness is subjected to analysis and “irrational”, emotional dimensions of social praxis ignored by other theorists, such as the social dimensions of the libidinal, are considered. This theoretical insight into the uncompromising nature of critical theory is at the same time an admission of the historical process of an increasing rift between emancipatory theory and the perspective of revolutionary praxis: with the propagation of socialism in one country, the Bolshevization of the Western Communist Parties and the establishment of Marxism-Leninism as the official ideology of the Third International since the middle of the 1920s, there begins the characteristic isolation of the representatives of Western Marxism: there exists neither political influence, nor (with the possible exception of the Frankfurt Institute for Social Research) the institutional foundations for a normal scholarly praxis. That which characterizes this formation of Marxism as an intellectual learning process – its sense for the Hegelian legacy and the critical-humanist potential of Marx’s theory, the incorporation of contemporary “bourgeois” approaches to elucidate the great crisis of the workers movement, the methodological orientation, the sensitization to social-psychological and cultural phenomena in connection with the question concerning the reasons for the failure of revolution in “the west”5 – becomes within the framework of this constellation the source for a new type of restricted Marx exegesis. This is essentially characterized by the neglect of problems of politics and state theory, a selective reception of Marx’s theory of value, and the predominance of a “silent orthodoxy” concerning the critique of political economy. In the “founding document” of Western Marxism, Lukács‘ “History and Class Consciousness” – which at least for the first time refers to the character of capitalist rule as understood by Marx: anonymous, objectively mediated, and having a life of its own – a reconstruction of Marx’s theory of capitalism is avoided. Instead of an analysis of Marx’s dialectic of the form of value up to the form of capital, which in the theory of real subsumption offers an explanation of the connection – so decisive for Lukács – between commodification and the alienated structure of the labor process, one finds merely an analogizing combination of a value theory reduced to the “quantifying” value-form (due to an orientation towards Simmel’s cultural critique of money) and a diagnosis, oriented towards Max Weber, of the formal-rational tendency of the objectification of the labor process and modern law. Until the mid-1960s, there appeared to be no Western Marxists who extended their debate with traditional understandings of Marx to the realm of value theory. Some positions go even further than this silent orthodoxy, and – without having seriously engaged with the critique of political economy – contrast the “humanist cultural critic Marx” with the “economist Marx” or even regard a “Marxism” without a critique of political economy as being possible.6

  1. The term was probably first used in a Leninist polemic against Lukács‘ History and Class Consciousness (see Walther 1982, 968), but did not achieve greater significance, as a polemical formulation nor as a self-description by the theorists commonly subsumed under the name (such as Lukács, Korsch, Bloch, the Frankfurt School, Gramsci, Lefebvre, etc.). Here, I follow Perry Anderson’s (1976) usage of the term. As fruitful as the concept of Western Marxism might be as a heuristic model, its limits must be clearly shown (see the critique of Anderson by Haug (1987) and Krätke (1996, 77) []
  2. Haug, 1996, 8. For a critique of the “code word thesis” with regard to Gramsci’s work, see Haug 1995, 1195-1209 []
  3. []
  4. A scientific psychology cannot be found in the thought of most representatives of Marxism, apart from positive references to Pavlov’s behaviorism. Psychoanalysis was mostly rejected, if not demonized as “bourgeois-decadent”. Helmut Dahmer (1982, pp. 241-277) offers a critical overview of such reactions; within the framework of Western Marxism, it was primarily Lukács who distinguished himself in the condemnation of Freud. Gramsci by his own admission “was not able to study Freud’s theories”. []
  5. As further characteristics of Western Marxism, Anderson names the recourse to pre-Marxian philosophy in order to clarify the method of a critical social theory; the incorporation of contemporary “bourgeois” theories: an esoteric writing style; a rather pessimistic appraisal of historical development markedly divergent from the triumphalist diction of classical Marxism and Marxism-Leninism; a preference for problems of aesthetics. []
  6. For example, Erich Fromm’s Marx’s Concept of Man or Jürgen Habermas‘ “Reconstruction of Historical Materialism” []

How Germany Profits from Greece’s Crisis

(Translator’s note: The original German version of this article appeared in the June 17, 2011 issue of analyse & kritik – zeitung für linke debatte und praxis)

How Germany Profits from Greece’s Crisis

By Ingo Stützle

At the beginning of April 2011, Hans-Jürgen Arlt and Wolfgang Storz presented a study of the German daily tabloid Bild. In it, the media scholars analyzed the Bild series “Geheimakte Griechenland” (“Secret Dossier: Greece”), and came to the conclusion that Bild works with (racist) stereotypes and worldviews. The series lacks all journalistic standards; Bild constantly takes on “the role of the right-wing populist party missing in Germany’s political landscape.” ( Hard accusations, but Bild’s “system” works. A mere month later, Chancellor Angela Merkel made use of the racist figure of the “lazy Greek”: whoever wants German help should please go work and not take an early retirement pension or constantly take vacations.

The target of this baiting, alongside Greece, was Portugal. That these accusations are baseless is shown by all comparative studies on the topic. The actual hours worked per week in Greece, according to Eurostat, are 44.3 hours. In Germany, in contrast, the amount is only 41 hours (The EU average is 41.7 hours). The French bank Natixis estimates an average annual working time for Germany of 1,390 hours, in Greece the average is 2,119 hours. According to the EU agency Eurofound, Greek workers are entitled to 23 days of vacation per year. The Germans, in contrast, have 30 days. That is the highest in Europe. The Germans “lead even when holidays are counted.” (Spiegel Online, May 18th, 2011)

Furthermore, German businesses (and the Federal Ministry of Finance) profit from the “help” granted thus far to Greece and the wave of privatizations ordered by the EU, the European Central Bank, and the International Monetary Fund.

Thus, Deutsche Telekom has expanded its share of the Greek telephone company OTE by 10 percent. For that, it paid 400 million Euros. In 2008, the German company joined in with a share of 30 percent. At the time, there was heavy resistance against the share package with a value of 3.8 billion Euros. In the meantime, the Greek government would prefer to relinquish ownership of the company completely to Deutsche Telekom. That should contribute to achieving the expected yields from privatization of 50 billion Euros by the year 2015.

Athens International Airport is also supposed to be sold. The airport operator Fraport from Frankfurt am Main was interested in purchasing it. Fraport is already “engaged” in Delhi, Cairo, and St. Petersburg and is therefore on its way to becoming one of the largest airport operators in the world. Part of Athens International Airport is already “in German hands”: the construction company Hochtief has a 40 percent share.

Also up for sale are the two largest harbors in the country (Thessaloniki, Piraeus), further airports, the state gambling monopoly (OPAP), the gasworks (DEPA), the Greek weapons industry as well as natural gas deposits in the sea near the harbor city Kavala, the toll rights of the Greek highway system, parts of the public power corporation (DEI) as well as an aluminum factory, a casino near Athens, and real estate owned by the state. The Greek government was also obligated in the latest round of agreements among other things to sell the rest of its equity in TT Hellenic Postbank (34 percent) as well as more than half of its equity in the Thessaloniki Water Supply and Sewage Company (74 percent).

But Greece is not to be left alone during the clearance sale: the head of Eurogroup, Jean-Claude Juncker, openly threatens: the European Union will monitor Greece’s privatization program “as tightly as if we were conducting it ourselves.” In the meantime, a receivership has been proposed after the model of the German Treuhandanstalt.

But Germany also profits in other ways from the crisis – and to the tune of 10 billion Euros. That is the figure worked out by Thomas Fricke of Financial Times Deutschland (May 20, 2011). In 2010, a credit rescue package in the amount of 110 billion Euros was put together for Greece. Germany’s share was 22 billion, and it will receive in return a tidy amount in interest. Germany’s Reconstruction Credit Institute (KfW) is carrying out the business on behalf of the government, and has brought in around 500 million Euros in the first year. Germany also pocketed around 250 million Euros for the Greek government bonds bought up by the European Central Bank. The ECB purchased unsaleable Greek government bonds, but did not relinquish its claims on the interest.

Greece’s looming state bankruptcy is driving finance capital to seek safer investments – among others in US Treasury Securities and German Federal Securities. That further drives down the interest rates that the German Ministry of Finance has to pay on its loans. Lower interest rates save Wolfgang Schäuble 3,5 billion Euros. Also, there’s the relatively low prime rate, which would definitely be higher without the crisis – Holger Schmieding of Berenberg Bank estimates at least ¾ of a point higher. Lower interest rates lead to a better “investment climate”, above all in Germany, which leads to higher tax revenue. All of this together, says Fricke, yields around 10 billion Euros, which does not flow southward, but rather benefits Germany.

ATTAC, The Critique of Globalization, and „Structural Antisemitism“

ATTAC, the Critique of Globalization, and “Structural Antisemitism”

By Gerhard Hanloser

(Translator’s note: this article originally appeared in German in the Spring 2005 issue of the journal Grundrisse.)

At the end of the 1990s, there emerged a new movement that aimed its crosshairs at “capitalist globalization” and sought out and blockaded the meeting places of the world’s powerful (G7, World Economic Forum, WTO, etc.). This movement was colorful, diverse, and difficult to tie down to a political program. From Christian associations to ecologists to traditional Communist parties to militant anarchist groups, the most diverse opponents of capitalist globalization came together. The group ATTAC, founded in France, was the most organized and high-profile formation and attempted to give the movement a program: contemporary capitalism was understood as the unleashed dictatorship of the financial markets, which had to be tamed by means of taxes upon financial transactions. In the German-speaking countries, this critique of finance capital was swiftly attested a proximity to Antisemitism by critics from the “value-critique” spectrum (for example, the journal Krisis), from the rather broad and influential media spectrum of the “Anti-Germans”, and by Neo-liberals. The Nazis, so the allegation went, also raised the program of breaking the rule of “interest slavery”, and Antisemitism supposedly expressed a “truncated anti-capitalism” focused upon finance capital, money, and the “intangible”. Every critique of financial capital thus amounted to a “Structural Antisemitism”, and there was supposedly a “structural similarity between truncated critiques of capitalism and Antisemitism.” (Schmidinger, 2001)

Back to Postone

At the beginning of the notion of “Structural Antisemitism” there stood a real revolution in the explanation of Antisemitism. Moishe Postone assumed the task of deriving Antisemitism from its intrinsic connection with the structures of perception in capitalism (Postone 1988). The New Left theoretician relied upon the category of the fetish, which had its foundation in the real inversion of society. As a result of the singular nature of labor in capitalist society, the products of labor take on a life of their own, natural qualities appear to adhere to them; they constitute social necessities and compulsions. Fetishism is the dance around these things that causes their status as products of human labor to be forgotten.

For Adorno and Horkheimer, the centuries-long confinement of Jews to the sphere of circulation was a decisive reason for Antisemitism, but they also took into account that social-psychological explanations were also needed to understand Antisemitism. Postone takes leave of the sphere of circulation and psychological processes and directs his attention to the commodity. According to Postone, the social interrelation is hidden in the fetish character of the commodity itself, since it presents itself in a reified form as a contradiction between the concrete and the abstract. Fetishistic perception splits the capital relation into a material nature of labor and production on the one hand, and money and interest, perceived as abstract, on the other hand. Fetishistic “truncated anti-capitalism” thinks it can fight and transcend capitalism in a one-sided attack on the abstract (reason, law, money, interest).

But Postone himself argues here in a truncated, ahistorical, and structuralist way. He wants to go beyond the analysis of Antisemitism by critical theory, which sees the foundations of Antisemitism in the centuries-long confinement of Jews to the sphere of circulation, the “concealment of domination in production”, and in false projections. But Postone too hastily discards a historical-genetic explanation of Antisemitism in favor of a structural commodity-critique Marxism. On the other hand, Postone extricates himself on multiple occasions from his own structuralist logic of derivation: he writes succinctly of the biologization of the abstract through its identification with “the Jew”. Although Postone claims to derive Antisemitism purely by reference to the fetish character of the commodity – the general determination of all capitalist societies – in fact he constantly resorts to explanations such as biologization, racism, and the concept of the “citizen”, in order to meaningfully explain National Socialist Antisemitism.

Precisely the examination of attacks upon groups connected to or associated with the sphere of circulation reveals a structural similarity to classical Antisemitism. Over and over again in history there were examples of groups being attacked because they held a position in society similar to that of Jews, for example Chinese immigrants in Indonesia, who migrated to Indonesia centuries ago and whole filled a middleman merchant position between colonial large capital and domestic producers and consumers. Attacks on these groups – such as recently during the Asian financial crisis – exhibit certain similarities to European Antisemitism, however, it makes absolutely no sense to describe the attacked Chinese as victims of a “Structural Antisemitism”. One would have to examine as the decisive moment the personalization of an isolated aspect of the capital relation in “the Jew”, through which the possibility of Antisemitism turns into actual Antisemitism.

Especially irritating is the fact that Postone attests to antisemites a seriously intended revolt against capitalism. Here, Postone’s text offers some points of contact with the jargon of the “Anti-Germans”, who in the meantime have come to accuse every revolt occurring within fetishistic channels of Antisemitism, by means of the equation of “structural Antisemitism”. But in doing so, the procedural character of fetishization and de-fetishization is essentially denied. The retreat to the “elementary form of the commodity” proves in Postone’s hands to be a simplified derivation theory, purified of every social conflict. There are multiple constitutive conditions of Antisemitism: the collaboration with domination, the affirmation of one’s own existence as labor-power, the splitting-off and condemnation of merely one isolated phenomenon of capitalist totality. The labeling of National Socialist Antisemitism as a “truncated anticapitalism” or as a “revolt”, as Postone does, already points in the wrong direction: rather than a “revolution” or a “revolt”, what was expressed in the Antisemitism of many Germans was their willingness to collaborate in counter-revolution. (See Enderwitz, 1991)

The Disappearance of Exploitation

Beyond that, Postone’s theory has decisive gaps: he engages in a critique of the ideology of the fetishistic forms of capitalism, but exactly what social relationships are fetishized remains rather underdeveloped. According to Marx, the point is to see through capitalism to the effect that the appropriation of alienated labor occurs within the forms of freedom and equality and by means of a “just” payment of a wage for the commodity labor-power, which characterizes the specific character of capitalist exploitation. This essence of capitalist society is not self-evident, but requires rather a scientific/ideology-critical effort, in order to destroy the “real appearance” of these relations which is manifest in all kinds of fetishistic notions about society. But in “National Socialism and Antisemitism”, rather different fetish forms – the commodity fetish and the capital fetish – get all mixed up with one another. In Marx’s work, these fetish forms appear at different levels of his presentation, only the analysis of the capital fetish in Volume III of Capital has incorporated all forms and determinations of the capital relation. Here we no longer encounter the single subject, that of the “commodity owner” in capitalism – as it appears at the level of competition and the circulation sphere: rather, subjects are assigned to class positions, even if fetishism still dominates as a “real appearance” and individuals still have ideological notions about society. The capital fetish is the direct inversion of Subject and Object, Capital is imagined to be the agent of production. In M-M‘, interest-bearing capital, there exists the most fetishistic form of the capital-relation, in which Subject and Object are not only inverted, but also the Subject – labor – appears to have disappeared completely.

Precisely the emergence of interest must, according to Marx, be explained in terms of the surplus-value gained from living labor. The antisemite who condemns money and “interest slavery”, like the vulgar economist, does not see this connection (Hanloser 2003). In order to enlighten this false consciousness, it is imperative according to Marx to criticize the notion of the autonomous power of social relationships: one’s own power appears as an alien, exploitative power. However, for Postone the concepts of surplus-value and exploitation – as he admits in his magnum opus Time, Labor, and Social Domination – are merely derivative categories. Such an interpretation is even outdone by the representatives of so-called “value critique” in Germany (the journals Krisis and Exit), who do not even wish to allow surplus-value and exploitation the status of analytical categories, and who instead seek to reprimand them as “moralistic”. For Marx, however, these concepts are critical-analytical; in order to gain an unobstructed view of the specific appropriation of alienated labor in capitalism. The Krisis group, building upon Postone, obstructs this possibility. It no longer wants to hear anything about the specific mediation of the capitalist social relation, even though Marx emphatically maintained the decisive importance of surplus-value, for example in “The Results of the Direct Production Process”.

The German “value-critique” school prefers to speak of the character of capital as an “end in itself” and of surplus-value and classes as “merely derivative forms”, as if surplus-value, profit, and classes were not – to use the jargon of Krisis – decisive “fundamental categories” for Marx, but rather obsolete Marxist-Leninist concepts. Robert Kurz, for example, writes: “As Marxism understood ‘surplus-value’ merely as ‘unpaid labor’, which (such is the implicit or explicit conclusion) by rights must be paid, it remains just as much as Proudhon or Gessellians trapped within the notion of a mere distributive justice, and leaves untouched the fundamental fetish forms of the modern commodity-producing system, which are actually the ‘condition of possibility’ that reproduction can actually take the form of money income.” (Kurz 1995) But the point of Marx’s concept of surplus-value is not to stake a claim for the compensation of unpaid labor, but rather to show that the specific use-value of the commodity labor-power is that it creates more value than necessary for its own reproduction – and it does so while being compensated justly and in full. What would be truly critical would be an examination of the veiled forms of squeezing out surplus-value, the depiction of the connection between M-M’, and the exploitation of the specific commodity labor-power.

On this point, it becomes apparent how both representatives and critics of “truncated anti-capitalism” resemble one another. It is no longer possible for “value critique” (in its Anti-German and non-Anti-German variants) to gain a view of capitalism in its form as a production process, as “an instrument for acquiring the labour of others” (Marx). The case is similar for critics of money capital and financial institutions as apparently independent powers: all of them – from Andre Gorz to Michael Chossudovsky to ATTAC – ignore the fact that productive and speculative capital cannot be neatly separated from one another. Both ways of reasoning about capitalism are consequentially not “truncated” but rather – if one follows Marx – incorrect critiques of capitalism.

Years ago, Robert Kurz had already diagnosed a “Political Economy of Antisemitism”. Large swathes of this text are an illustration of the insights yielded by Postone concerning modern Antisemitism and its condemnation of speculative capital. But Kurz places the cart before the horse: for him, the political economy of Antisemitism is the antecedent, and not a specific aggressive form, of vulgar-economic reasoning. Whereas Marx criticizes two forms of ideology – vulgar economy and classical political economy – whereby it is primarily the first that offers attachment points for Antisemitism (not further analyzed by Marx) – for Kurz, the immediately existing, primary form of ideology is anti-Semitic. Here as well, the important moment of anti-Semitic personalization is suspended.

Where Kurz wishes to take to task an ominous “subjectivization and sociologization of the fetish relation”, and therefore has to address the not unimportant question of the relationship between abstract domination and individual subjects, suddenly classical Marxism itself is suspected of Antisemitism. Marxism supposedly “merely” took the political economy of Antisemitism’s “demonization of the interest-taking money capitalist” and “extended” it to include the figure of the “productive capitalist”, Kurz writes. (Kurz 1995) One could dismiss this as merely being anti-communism and anti-totalitarianism on the part of value-critique, but behind it is a momentous confusion. The capitalist is namely the personification of profit, and according to Marx, profit is a form of surplus-value which “to some extent recalls its origins”, but which nonetheless conceals the true connections. In truth, the workers movement, with its notion of a “just wage”, of “self-management”, and the “expropriation of the capitalists”, was indeed taken in by a fixation on surplus-value. But – in contrast to the Antisemitic movement – still recalled the origins of domination, exploitation, and suffering, if incorrectly.

The value critique fraction around Krisis and its successor projects, in their hasty attempts to distance themselves from „workers movement Marxism“, conduct a critique of form and fetish without wanting to, or being able to, address content. But what’s the use of a fetish-critique that can no longer specify what exactly is being fetishized? Marx’s entire critique of the fetish character of capital aims to unveil the exploitative core of capitalism and to criticize the inversion of Subject and Object. In fetishistic perceptions, according to Marx, non-producers who appropriate surplus-value appear as producers. Capital appears to create labor; it appears that labor does not create capital. Adorno and Horkheimer build entirely correctly upon Marx’s fetish-critique in their text „Elements of Anti-Semitism.“ Adorno and Horkheimer speak of the capitalist, as the manufacturer, as „the real shylock“. In contrast to the merchant and banker “he seized all he could, not only on the market but at the very source: as a representative of his class he made sure that his workers did not sell him short with their labor. The workers had to supply the maximum amount of goods. Like Shylock, the bosses demanded their pound of flesh. They owned the machines and materials and therefore compelled others to produce for them. They called themselves producers, but secretly everyone knew the truth”, and for that reason the capitalists had to create a distraction from their exploitative activity. “The Jews” are “the scapegoats not only for individual maneuvers and machinations but in a broader sense, inasmuch as the economic injustice of the whole class is attributed to them. (Horkheimer/Adorno, 1969)

Now, one might stumble over the formulation “injustice”, but at least here the connection is made clear between exploitation, oppression, and Antisemitism as an unprecedented act of displacement by means of which “The Jews” are offered to those “mutilated by domination” as a quid pro quo of the suspended class struggle. But according to Kurz’s definition, Adorno and Horkheimer would have merely “extended” the political economy of Antisemitism – a conclusion that would be sheer nonsense. Adorno and Horkheimer still knew that “capitalists” actually exist, the period of subject-less Marxism-Luhmannism a la Stefan Breuer had not yet arrived, and ultimately it’s obvious that a social relationship also needs flesh-and-blood bearers. But Adorno and Horkheimer knew, like Marx, that “capitalists” aren’t the main problem, but rather social relationships which have petrified into a “second nature” that people – whether capitalist or worker – do not self-consciously master. Rather, people are themselves ensnared in the “real appearance” produced by these relations. Adorno and Horkheimer – rightly so – would’ve never had the crazy idea of raising the allegation of anti-Semitism against every criticism of the bearers of surplus-value.

A Politics of Suspicion

The critique of “structural Antisemitism” and “truncated anticapitalism”, which has congealed into jargon, lays a protective hand over the “character masks” of capitalism and its institutions – although this favor hasn’t even been requested. It trivializes Antisemitism by claiming to see it in every fetishistic expression of discontent with capitalism. Its representatives themselves have so internalized Antisemitic connotations, that they sometimes project them on the object: condemnation of the a-national, criticism of financial capital, moralizing criticism of money – all of that is essentially reactionary and has nothing to do with communism, but whoever thinks that it automatically implies Antisemitism and that “the Jews” are the intended target is playing a dangerous game: “If followed to its logical conclusions, every critique of Antisemitism which dwells upon proving that a truncated, ‘fetishistic’ concept of capital is evidence of structural Antisemitism must face the accusation of de-scandalizing the personalization of the unknown, which means nothing other than recognizing as ‘true’ the characteristics that are attributed to Jews.” (Schatz 2004) This theory opens the door to a politics of suspicion and accusation, a Stalinist tradition of politics is revived among those who tinker with the assertion of an “objective Antisemite”. Whoever is subject to such an accusation first has to see how to get rid of it again. Thus the citizens’ movement ATTAC, which began in France and also emerged as an organized part of the critique of globalization in Germany and Austria, was soon faced with the accusation of Antisemitism from various sides. On the one hand, voices were raised by those who considered themselves “radical leftists” and – following Anti-German political correctness – not only criticized the obvious reformism of the organization, expressed in its attempts at re-regulation via a Tobin-tax, but also attempted to morally discredit the new movement with the accusation of Antisemitism. On the other hand, interestingly enough, ideologues of capitalist globalization with their own interests, such as the authors of the German right-wing liberal journal Merkur, had been arguing similarly for some years.

ATTAC and Critique

In the last year, the scholarly advisory committee of ATTAC Germany issued a brochure addressing the accusations and making public the discussions about Antisemitism within ATTAC (ATTAC 2004). Peter Wahl declares that ATTAC sees itself committed to an “education after Auschwitz” in the tradition of Adorno. The individual contributions in the brochure deal with the accusations against ATTAC, and make the critics look rather silly. The hastily written reply from Norbert Trenkle of Krisis (Trenkle 2004) remains superficial, where he once again attempts to substantiate the thesis of “structural Antisemitism” by redundantly writing of a “collective unconscious” (the term itself is not further explained by Trenkle) that expresses itself through ATTAC’s critique of financial markets.

Contributions in the brochure plausibly point out what fallacies, syllogisms, and projections the critics are consumed by, or respectively how the prejudiced demagogical structure of the accusation is arranged: “Whoever makes use of the conceptual wildcard ‘structural Antisemitism’ behaves like the master of a suspicion that requires no evidence” (Wolfgang Fritz Haug, in ATTAC 2004). After reading the brochure, one notices how similar and compatible with one another Anti-German and Neoliberal arguments have become.

But of some importance are also the observations that go beyond the accusation of Antisemitism, that plead for a shift in terrain in the Antisemitism debate and that attempt to distill the correct aspects of the critique. Often, ATTAC is accused of a nostalgic recourse to Keynesianism. Critics of a regressive critique of capitalism emphasize – with reference to Marx and Engels’ Communist Manifesto – the historically progressive role of capitalism and praise capital’s shattering of boundaries. The communist position is thus defined as progressive and advanced, and not as romantic and anti-progressive. Wolfgang Fritz Haug of all people attempts to confront the rampant ignorance in ATTAC with such positions and calls attention to the fact that “amidst its (capitalism’s) barbarous traits, its ‘civilizing influence’ has nonetheless not been exhausted’. If one loses sight of this, there emerges an open flank for all kinds of reactionary treatments. Haug refers to the Marx of the Grundrisse, who writes of an increased intellectualization of labor and of a “surplus” of freely disposable time as a result of technologization. But this position can also be confronted with the fact that rural movements in the Tricont are defending themselves against “new enclosures”, a never ending process of “primitive accumulation”, and concomitant land expropriation. Marx himself concerned himself at the end of his life with populist-social revolutionary arguments in Russia, according to which one did not have to pass through the yoke of capitalism in order to construct a communist community (see Rubel, 1972). To describe such a position as “reactionary” would amount to a similar ban on discussion as that called for by the Anti-Germans.

But despite all the exactness and incisiveness of content of the ATTAC brochure, there remain some reservations. The rather hierarchical form of politics of ATTAC, above all the rampant culture of specialism, which every libertarian communist movement opposes, is extended by an outsourcing of a substantive problem to a scholarly advisory committee. Not only does this attempt to confront moralistic accusations by means of scholarly authority; a classic outsourcing of problems – typical for traditional politics – occurs, the sole purpose of which is to allow the organization to continue functioning as usual. The brochure itself and the considerations made within also do not appear to have emerged from an internal discussion process among the anti- or alter-globalistas. When Thomas Sablowski, in one of the most worthy contributions, correctly points out the class character of capitalist society and points out the connection between surplus-value and interest, then the question raises itself as to how far this insight has managed to gain a foothold in ATTAC. While Sablowski accuses the Anti-German and “value-critical” critics of taking a position from outside the movement, one fears that his own Marxian determinations similarly reside outside of the consciousness of the movement. The capitalist division between intellectual and manual labor – in praxis groups and theoretical producers – is maintained in the form of this brochure.

All in all, after reading the brochure, ATTAC seems more Marxist than the citizens’ movement it actually is; one finds at the level of ATTAC’s forms of action positions and everyday ideologies that Marx would have scolded as pre-critical and adhering to “true socialism”. The moralistic left-Christian legacy in ATTAC, which is expressed in the “dance around the golden calf” and similar symbolic politics, should have been examined for its open flank to Antisemitism. The enthusiasm of prominent ATTAC spokespeople for authoritarian Keynesian policies – for example in Malaysia – was criticized early on (see Hanloser 2001). The brochure also makes things too easy with its interpretation of the Israel-Palestine conflict. A quotation like the following cannot simply be dismissed by pointing out who says it and for what reason, but rather should be an incitement to thought: The altermondialistas, according to Alain Finkelkraut, “accept a form of Antisemitism which thinks it defends the wretched of the earth.” The movement should have dealt with “the Anti-Imperialism of fools” (Isaac Deutscher), with the liberation nationalism that one encounters at all the large events of the anti-globalization movement, and which fall far behind the libertarian theories of globalization and capitalism of Negri/Hardt and Holloway.

Particularly irritating is the occasional attempt to instrumentalize the confrontation with Antisemitism in order to justify one’s own politics.

If some leftist critics of ATTAC wanted to criticize reformism in a particularly caustic way by reaching for the accusation of Antisemitism, some authors of the brochure attempt to pass the buck: not their own reformist policies, but rather the radical leftists are Antisemitic. For the lawyer Heinz Düx, the entire New Left after 1967, above all else the militant left, succumbed to “secondary Antisemitism” and historical amnesia. Because radical leftists did not leave the prosecution of Nazis to the West German state and neglected the significance of the legal system, through a “defensive posture within the framework of secondary Antisemitism they ensnared themselves in eliminatory Antisemitism”. Furthermore, Düx makes the unproven accusation that the anti-authoritarian squatters’ movement originally followed an Antisemitic motivation (Düx, in ATTAC 2004). Such slanderous remarks without basis could not have been better formulated by the Anti-Germans themselves. But while the Anti-Germans wish to preserve their merely commentarial approach to the world as “critical critics” (Marx), those from the ATTAC advisory committee either aspire in an elaborated way to a politics of reform and hegemony (as Sablowski proposes), or simply speak out in favor of “appropriate economic policy measures at a national and global level” (as Altvater formulates it). How good that in following this concern, they can settle accounts with both the radical left as well as the blatant stupidity of the Anti-Germans.


Attac-Reader Nr.3 des wissenschaftlichen Beirats von Attac Deutschland (2004), Globalisierungskritik und Antisemitismus. Zur Antisemitismusdiskussion in Attac, Frankfurt a. Main
Enderwitz, Ulrich (1991), Antisemitismus und Volksstaat. Zur Pathologie kapitalistischer Krisenbewältigung, Freiburg
Hanloser, Gerhard (2001), Repressive Toleranz. Lässt der IWF seine Gegner künftig mitreden?, in: iz3w251
Hanloser, Gerhard (2003), Krise und Antisemitismus. Eine Geschichte in drei Stationen von der Gründerzeit über die Weltwirtschaftskrise bis heute, Münster
Horkheimer, Max / Adorno, Theodor W. (1969), Elemente des Antisemitismus, in: Dialektik der Aufklärung, Frankfurt
Kurz, Robert (1995), Politische Ökonomie des Antisemitismus, in: Krisis. beiträge zur kritik der warengesellschaft 16/17
Naetar, Franz (2003), Welche politische Bedeutung hat der Antisemitismus heute, in: grundrisse.zeitschrift für linke theorie und debatte, Nr.7
Postone, Moishe (1988), Nationalsozialismus und Antisemitismus. Ein theoretischer Versuch, in: Dan Diner (Hg.), Zivilisationsbruch. Denken nach Auschwitz, Frankfurt a. Main
Rubel, Maximilien (1972) Hg., Marx, Engels: Die russische Kommune. Kritik eines Mythos. München
Schatz, Holger (2004), „Die Welt aushalten lernen“. Neoliberale Formierung des Selbst und linke Marktapologetik, in: Gerhard Hanloser (Hg.), „Sie warn die Antideutschesten der deutschen Linken. Zu Geschichte, Kritik und Zukunft antideutscher Politik, Münster
Schmidinger, Thomas (2001), Struktureller Antisemitismus und verkürzter Kapitalismuskritik, in:
Trenkle, Norbert (2004), Entsorgung nach Art des Hauses. Zur Verharmlosung antisemitischer Tendenzen durch den wissenschaftlichen Beirat von Attac-Deutschland, in: Streifzüge Nr.32

Ingo Elbe. Between Marx, Marxism, and Marxisms – Ways of Reading Marx’s Theory: I.3 The Critique of the Content of the State

I.3 The Critique of the Content of the State

Engel’s theoretical statements concerning the state in ‘The Origin of the Family’, ‘Ludwig Feuerbach’, ‘Anti-Dühring’, as well as in his critique of the Erfurt draft program of the SPD from 1891 constitute the source of the traditional Marxist conception of the state: In ‘Ludwig Feuerbach’, Engels states that the fact that all needs in class societies are articulated through the will of the state is “the formal aspect of the matter — the one which is self-evident”1. The main question of a materialist theory of the state, however, is “what is the content of this merely formal will — of the individual as well as of the state — and whence is this content derived? Why is just this willed and not something else?”2 The result of this purely content-based question concerning the will of the state is for Engels the recognition “that in modern history the will of the state is, on the whole, determined by the changing needs of civil society, but the supremacy of this or that class, in the last resort, by the development of the productive forces and relations of exchange.”3 Furthermore, in his deliberations in ‘The Origin of the Family’ Engels works with universal-historical categories into which modern designations like “public authority” are projected, and constantly assumes “direct relations of domination, immediate forms of class rule”4 in order to explain “the” state, which is consequentially understood as a mere instrument of the ruling class. From this content-fixated and universal-historical way of considering the state, it can be deduced that Engels loses sight of the actually interesting question, namely as to why the class content in capitalism takes on the specific form of public authority.5 The personal definition of class rule extracted from pre-capitalist social formations ultimately leads to reducing the anonymous form of class rule institutionalized in the state to a mere ideological illusion, which, in the manner of the theory of priestly deception, is interpreted as a product of state tactics of deception. Engels in any case attempts to make the class character of the state plausible by referring to “plain corruption of officials” and “an alliance between the government and the stock exchange”. 6 Nonetheless, in Engels’ work there still exists, despite the predominance of the instrumentalist/content-fixated perspective, an unmediated coexistence between the determination of the state as the “state of the capitalists” and of the state as “ideal total capitalist”.7 The last definition conceives of the state “not as a tool of the bourgeoisie (…) but rather as an entity of bourgeois society”,8 an “organisation that bourgeois society takes on in order to support the general external conditions of the capitalist mode of production against the encroachments as well of the workers as of individual capitalists.”9 But the specific formal aspect of modern statehood is not yet explained by this reference to functional mechanisms. Engels also paved the way for the theory of state-monopoly capitalism.10 In the Critique of the Draft Social-Democratic Program of 1891 he writes: “I am familiar with capitalist production as a social form, or an economic phase; capitalist private production being a phenomenon which in one form or another is encountered in that phase. What is capitalist private production? Production by separate entrepreneurs, which is increasingly becoming an exception. Capitalist production by joint-stock companies is no longer private production but production on behalf of many associated people. And when we pass on from joint-stock companies to trusts, which dominate and monopolise whole branches of industry, this puts an end not only to private production but also to planlessness.”11 Finally, in Anti-Dührung Engels writes of the state as real total capitalist: “The more it proceeds to the taking over of productive forces, the more does it actually become the national capitalist, the more citizens does it exploit.”12 Here Engels reveals a limited understanding of private production and a tendency to equate state planning and monopoly power with direct socialization,13 reinforced by Engels’ construction of the fundamental contradiction and his tendency to identity the division of labor within a factory and the division of labor in society. Engels does note that “the transformation, either into joint-stock companies, or into state ownership, does not do away with the capitalistic nature of the productive forces,”14 but nonetheless sees an immediate transition to socialism setting in as a result, whereas the concepts of monopoly and state intervention remain “economically completely undetermined.”15 Engels thus suggests that the workers movement merely has to take over the forms of corporate bookkeeping in joint stock companies and the comprehensive planning by monopolies developed in capitalism. For Engels, the bourgeoisie has already become obsolete through the separation of ownership and management functions.16 The “transformation of the great establishments for production and distribution into joint-stock companies and state property” demonstrates according to Engels “how unnecessary the bourgeoisie are for that purpose”, i.e. for managing “modern productive forces”. “All the social functions of the capitalist are now performed by salaried employees. The capitalist has no further social function than that of pocketing dividends, tearing off coupons, and gambling on the Stock Exchange, where the different capitalists despoil one another of their capital. At first the capitalist mode of production forces out the workers. Now it forces out the capitalists, and reduces them, just as it reduced the workers, to the ranks of the surplus population, although not immediately into those of the industrial reserve army.”17

In consideration of this reception history (only roughly outlined here), one could claim that Marxism in the form presented here was a rumor about Marx’s theory, a rumor that was gratefully taken up by most critics of “Marx” and merely supplemented with a minus sign. In fact such an assertion – as accurate as it may be overall – makes things too easy, in that it disregards certain deviations from the dominant doctrine that also understood themselves to be Marxisms, as well as regarding the above misinterpretations as being completely external to Marx’s own theory, thus excluding the possibility of any inconsistencies or theoretical-ideological ambiguities in Marx’s work. To clarify this question, a glance at the differentiated reading of Marx’s texts worked out in the so-called “reconstruction debates” will be useful.

In this respect, traditional Marxism should be understood here rather as an elaboration, systematization and assumption of dominance of the ideological content of Marx’s work – within the framework of a reception by Engels and his epigones. Practical influence was almost exclusively allotted to these restricted and ideologized interpretations of Marx’s theory, as historical determinism or proletarian political economy.

  1. []
  2. Ibid. []
  3. Ibid. []
  4. Schäfer 1974, XCVII []
  5. Compare Pashukanis: „why is the apparatus of state coercion created not as a private apparatus of the ruling class, but distinct from the latter in the form of an impersonal apparatus of public power distinct from society?” []
  6. No wonder, then, that Lenin refers affirmatively to this “explanation”, with its theory of agents and influence. []
  7. [Translator’s Note: The official translation of “ideeller Gesamtkapitalist” in the Marx-Engels Collected Works renders this unsatisfactorily as “the ideal personification of the total national capital”, when in fact “ideal total capitalist” is more accurate. The latter English term can be found for example here: ] []
  8. Busch-Weßlau 1990, 84. []
  9. []
  10. See Paul 1978, 51-54 []
  11. []
  12. []
  13. Schäfer 1974, CXXXI []
  14. []
  15. Schäfer 1974, CXXXIV []
  16. This old chestnut will later be presented by Wolfgang Pohrt and others as a deep insight about “late capitalism”. []
  17. []

Ingo Elbe. Between Marx, Marxism, and Marxisms – Ways of Reading Marx’s Theory: I.2 The Historicist Interpretation of the Form-Genetic Method

I.2 The Historicist Interpretation of the Form-Genetic Method

If Lenin’s statement that “none of the Marxists for the past half century have understood Marx” – a dictum that in this case however also applies to Lenin himself – has any validity at all, then certainly with regard to the interpretation of the critique of political economy. Even 100 years after the publication of the first volume of Capital, Engels’ commentary was widely regarded as the sole legitimate and adequate assessment of Marx’s critique of economy. No reading in the Marxist tradition was as uncontroversial as the one casually developed by Engels in texts such as the review of Marx’s Contribution to the Critique of Political Economy (1859) or the supplement to Volume III of Capital (1894). Here, considerably more explicitly than in the objectivist conception of historical materialism, Marxism is Engelsism:
Against the background of his conception of reflection, Engels interprets the first chapter of Capital as a simultaneously logical and historical presentation of a ‘simple commodity production’ developing toward the relations of capitalist wage labor, “only stripped of the historical form and diverting chance occurrences.”1 The term ‘logical’ in this context basically means nothing more than ‘simplified’. The method of presentation, the sequence of categories (commodity, the elementary, expanded, and general forms of value, money, capital) in the critique of political economy is accordingly “simply the reflection, in abstract and theoretically consistent form, of the historical course.”2 The examination of the genesis of the money form is understood as the description of “an actual event which really took place at some time or other” and not as “an abstract mental process that takes place solely in our mind”. 3 In no other passage of his work does Engels so drastically reduce historical materialism to a vulgar empiricism and historicism, as is made evident by his associative chain ‘materialism-empirically verifiable facts-real process’ vs. ‘idealism-abstract thought process-purely abstract territory’.

With the ‘logical-historical’ method Engels provides a catchphrase that will be recited and stressed ad nauseum in the Marxist orthodoxy. Karl Kautsky, in his enormously influential presentations, understood Capital to be an “essentially historical work.” 4 “Marx was charged with recognizing capital to be a historical category and to prove its emergence in history, rather than mentally constructing it.” 5 Rudolf Hilferding also claims that “in accordance with the dialectic method, conceptual evolution runs parallel throughout with historical evolution.” 6 Both Marxism-Leninism7 and western Marxism8 follow Hilferding in this assessment. But if the critique of political economy is interpreted as historiography, then consequentially the categories at the beginning must correspond directly to empirical objects, for example a dubious pre-capitalist commodity not determined by price,9 and the analysis of the form of value must begin with the depiction of a coincidental, moneyless interaction of two commodity owners – with Engels’ so-called “simple production of commodities”,10 an economic epoch he dates from 6000 B.C. to the 15th century AD. According to this conception, Marx’s law of value11 operates at times in this epoch in a pure form ‘unadulterated’ by the category of price, which Engels illustrates with the feigned example of a moneyless ‘exchange’ between medieval peasants and artisans:
Here we are dealing with a transparent social interrelationship between immediate producers who are at the same time the owners of their means of production, in which one producer labors under the watchful eye of the other, and therefore “the peasant of the Middle Ages knew fairly accurately the labor-time required for the manufacture of the articles obtained by him in barter.”12 Under the conditions of this ‘natural exchange’, it is not some normative criterion that is for him “the only suitable measure for the quantitative determination of the values to be exchanged”13, but rather the abstraction of a labour-time consciously and directly measured by the actors. Neither the peasant nor the artisan is so stupid as to exchange unequal quantities of labor:14 “No other exchange is possible in the whole period of peasant natural economy than that in which the exchanged quantities of commodities tend to be measured more and more according to the amounts of labor embodied in them.”15 According to Engels, the value of a commodity is determined consciously by the labor, measured in time, of individual producers. In this theory of value, money does not play a constitutive role. One the one hand, it is an expedient and lubricant to trade that is external to value, but on the other hand it serves to obscure the substance of value: suddenly, instead of exchanging according to hours of labor, at some point exchange is conducted by means of cows and then pieces of gold. The question of how this notion of every commodity being its own labor-money16 can be reconciled with the conditions of private production based upon the division of labor is not posed by Engels. Engels – as will be elaborated by the Neue Marx-Lektüre – practices exactly what Marx criticizes in the case of the classical economists, above all Adam Smith: a projection into the past of the illusory notion of appropriation through one’s own labor, which in fact only exists in capitalism; neglect of the necessary connection between value and form of value17; a transformation of the ‘objective equalization’ of unequal acts of labor consummated by the objective social relationship itself into a merely subjective consideration of social actors18

Up until the 1960s, Engels’ theorems continued to be passed on undisputed and, along with his formula (once again taken from Hegel) of freedom being the insight into necessity and the drawing of parallels between natural laws and social processes, gave sustenance to a social-technological ‘concept of emancipation’, the gist of which is that ‘the social necessity (above all the law of value) operating anarchically and uncontrolled in capitalism will be, by means of Marxism as a science of the objective laws of nature and society, managed and applied according to plan.’ Not the disappearance of capitalist form-determinations, but rather their alternative use characterizes this ‘socialism of adjectives’ (this term comes from Robert Kurz) and ‘socialist political economy’. 19 There is a significant disproportion between on the one hand the emphasis upon the ‘historical’ on the one hand, and the absence of a historically specific and socio-theoretically reflected concept of economic objectivity on the other. This is made evident by the irrelevance of the concept of social form in the discussions of traditional Marxism, in which it at most is considered to be s a category for ideal or marginal circumstances, but not as a constitutive characteristic of Marx’s scientific revolution.20

  1. []
  2. ibid. []
  3. ibid. []
  4. Kautsky 1922, p. VIII []
  5. Kautsky quoted by Hecker 1997 []
  6. []
  7. see Rosental 1973 []
  8. see Mandel 1968 []
  9. “This makes clear, of course, why in the beginning of his first book Marx proceeds from the simple production of commodities as the historical premise, ultimately to arrive from this basis to capital — why he proceeds from the simple commodity instead of a logically and historically secondary form — from an already capitalistically modified commodity.” []
  10. ibid. This interpretation of the analysis of the form of value is also adopted by Kautsky []
  11. that is to say, the law of value discussed by Marx. See []
  12. []
  13. ibid. []
  14. Or is it believed that the peasant and the artisan were so stupid as to give up the product of 10 hours‘ labor of one person for that of a single hours‘ labor of another? (ibid.) And whoever does so learns “only through mistakes.“ (ibid.) []
  15. ibid. []
  16. In contrast, See Marx’s critique of the notion of labor-money or respectively the notion of a pre-monetary commodity exchange in the Contribution to the Critique of Political Economy and in the Grundrisse []
  17. See []
  18. For Marx’s view, see for example: “Adam Smith constantly confuses the determination of the value of commodities by the labour-time contained in them with the determination of their value by the value of labour; he is often inconsistent in the details of his exposition and he mistakes the objective equalisation of unequal quantities of labour forcibly brought about by the social process for the subjective equality of the labours of individuals.” []
  19. According to Marxism-Leninism, “value functions as an instrument of the planned administration of the socialist processes of production and reproduction, according to the principles of bookkeeping and control of the mass of labor and of consumption. Correspondingly, the relation of value is consciously implemented.” (Eichhorn 1985, p. 1291) Within this framework, socialism consists “merely in the revolutionized way of calculating the same social determination of the products of human labor as exists in the capitalist commodity economy.” (as Grigat (1997, p.20) critically notes.) Thus, allegedly Marxian communism degenerates into a sort of Proudhonian system of labor notes, as Behrens/Hafner also observe: “all hitherto existing conceptions of the transition to socialism resort to models of immediate calculation of labor-value and utility.” (Behrens/Hafner, p. 226) See here also Heinrich (1999, p. 385-392); Kittsteiner (1974, p. 410-415); Kittsteiner (1977, p. 40-47); and Rakowitz (2000). On the socialism of adjectives in the theory of law and the state, see Elbe 2002b. []
  20. For example, []