Dienstag, Februar 17, 2009

Gucci Capitalism, Cliches and Reality...

This is one of the more absurd articles I've seen recently, and I seriously question the thesis that underlies it. Unfortunately, it's only in German, but I'll give it the college try here to make it understandable. The author, one Noreena Hertz, is considered a "leading expert on economic globalisation", according to Wikipedia, but all I see here are cliches and wishful thinking, and no serious analysis. It appears in today's Handelsblatt, the German equivalent of the Wall Street Journal (very rough equivalent).

I'm not going to translate everything - lord, that'd be tedious - but rather just a few bits here and there. I won't take anything out of context (I hope), but rather I'd like to show how this kind of wooly-headed thinking is just plain wrong. The article is titled "Leaving Gucci-Capitalism" (Abschied vom Gucci-Kapitalismus). Consider this a semi-fisking: I'm not going to point out everything, just exactly how naive, cliche-ridden and how distant from reality this article is, reflecting, if anything, a kind of "new" pseudo-criticism of capitalism.

A warning: this is long. I had to make it long so that you can see what sort of absurdities are really being talked about by a "leading expert".

First the German, then my translation, both in italics, then my comments thereto. Ellipsis (...) point to where I left text out because it wasn't, in my opinion, important.

Manch einer behauptet, dass die akute globale Finanzkrise, diese Depression, die London und New York gleichermaßen trifft, keinen Einfluss auf die Natur des Kapitalismus haben wird. Dass wir uns unseren Weg durch die Höhen und Tiefen der Wirtschaftsentwicklung schon immer gebahnt haben und dass der Kapitalismus auch aus dieser Krise unversehrt hervorgehen wird. Und dass der Kapitalismus in fünf Jahren im Grunde ebenso aussehen wird wie vor sechs Monaten.

Ich verstehe diese Vorsicht, etwas Neues zu prognostizieren, dieses Zögern, einen Abgesang auf den Kapitalismus anzustimmen. Aber ich stimme dem nicht zu. Ich glaube, jetzt sind alle Bedingungen für ein merklich anderes Wirtschaftsmodell vorhanden, das aus dem Blutbad entstehen könnte, welches diese Krise angerichtet hat.

Some maintain that the acute global financial crisis, this depression that has hit London and New York equally, has no effect on the nature of capitalsm, that we have been through ups and downs of economic development and will continue to do so,, and that capitalism as such will emerge from this crisis unaffected, looking in five years the same way it looked six months ago.

I understand the caution to forecast something new, the reluctance to agree that capitalism has had its day. But I cannot agree. I think that all the necessary prerequisites for a significantly different economic model are present and this new model will emerge from the bloodbath of the current crisis.

Well, first off: there's no bloodbath, literally or even to a large extent figuratively, that is the result of some sort of fundamental fault of capitalism: rather, as we should have understood by now (but I fear that this may not have trickled down into academia), the problem was and is the deliberate distortion of markets that made the crisis inevitable.


In dieser ersten Krise der Globalisierung zählt jedermann zu den Verlierern: Sie trifft die Angestellten, sie trifft die einfachen wie auch die qualifizierten Arbeiter. Sie geht in ihren Auswirkungen sehr tief, wird viele Menschen überall auf der Welt negativ beeinflussen. Sie ist zugleich so offensichtlich ein Ausdruck dessen, was passiert, wenn private Institutionen ihr Profitstreben über alles andere stellen, und ist dermaßen verknüpft mit den fehlerhaften Doktrinen der vergangenen 30 Jahre, dass ich glaube: Sie hat das Zeug dazu, einen radikalen Wandel des Kapitalismus auszulösen, einen radikalen Wandel der Beziehungen zwischen Regierungen, Geschäftswelt und der Gesellschaft. Und das ist eine Gelegenheit, die wir beim Schopfe packen müssen.

In this first crisis of globalization, everyone is a loser: employees, both skilled and unskilled. The effects are very deep and have negative effects everywhere. At the same time it is obvious that it is the result when private institutions raise their profit interests above everything else and is so directly tied to the errors of the doctrines of the last 30 years that I believe that this crisis has the potential to release a radical change in capitalism, a radical change in the relationships between government, business and society. And that it is an opportunity that we should grasp.

First and foremost: this is not the first crisis of "globalization". I put that word in quotes because it's not new, not unusal, not even in the volume and economic impact that foreign trade has. Globalization has been going on since the early days of trade as the Silken Road bound Europe and Asia together and the early American natives traded shells from the Pacifc for turquiose from what would become Colorado and New Mexico. The impact of "globalization" drove the Dutch to dominate Asian trade for many decades, drove the British to ban Indian cotton goods in the 17th century and wage war against the Indian kingdoms; it drove the Spanish to export 1 mn gallons of wine from New Mexico to Spain per year in the 18th century until they were driven out by the encroaching Anglo-Saxons. Fortunes have been made and lost galore in the history of foreign trade, and the skilled watchmakers of Germany fought against the "American" method of making watches with interchangeable parts in the 19th century; history is filled with examples of how trade breaks and makes fortunes and livelihoods. There is even a branch of history that concerns itself with quantitative change: cliometry (and yes, there is a journal dedicated to this: Cliometrica).

Second: the obsession with the idea that private companies put their profits above everything else. This is, at best, a straw man argument that is based on a fundamental lack of experience with actually working for any kind of for-profit company. None that I have ever worked for have profits as their main goal: rather, profits enable them (the owners of such companies) to do what they want to do. I've seen lucrative offers for buy-outs turned down because they knew that the potential buyers wanted to acquire them to put them out of business (to remove a competitor); I've seen less-profitable activities preferred because it led to long-term sustained growth. To attribute "profits above all" to private companies is a cliche, and a poor one at that.

Ich habe die vergangene Epoche des Kapitalismus den Gucci-Kapitalismus genannt. Gucci-Kapitalismus war eine Ideologie, die Mitte der 80er-Jahre entstand. Ein Wunschkind von Ronald Reagan und Margaret Thatcher. Milton Friedman war der Pate und Bernhard Madoff der Junge auf dem Plakat. Eine Ära, deren fundamentale Annahmen waren, dass Märkte sich selber regulieren sollten, die Regierungen sie sich selbst überlassen sollten und die Menschen nicht mehr und nicht weniger seien als rationale Nutzenmaximierer.

I have called the past epoch of capitalism "Gucci-Capitalism". Gucci-Capitalism is an ideology that developed in the 1980s, the love child of Ronald Reagan and Margaret Thatcher. Milton Friedman was the godfather and Bernhard Madoff the poster-child. An era whose fundamental expectation was that markets regulate themselves, that governments should let them do that, and that people are nothing more and nothing less than rational maximizers of utility.

First of all: the polemics. Gucci, of course, are rather expensive luxury goods that tend to be rather obvious and represents the nouveau-riche rather than appealing to established money, the epitome of conspicious consumption. While Friedman definitely would play the role of Godfather here gladly, Bernie Madoff is tossed in there to deliberatly distort what both Reagan and Thatcher recognized.

Second: facts do not make an ideology. The fundamental fact, the one that Friedman recognized and who both Reagan and Thatcher realized, is that markets are the most efficient way of distributing scarce goods. Nothing more, nothing less: the implication is that markets which are distorted and manipulated by government are inefficient, as history has long shown. People do maximize their utility when making purchases on markets: this has been the function of markets from day one.

Es war eine Ära, in der sich die Machtbalance zwischen Unternehmen und Gesellschaft zunehmend zugunsten der Wirtschaft verschob. Zum Teil lag das daran, dass die Unternehmen so groß geworden waren. Vor dem Ausbruch der Krise stellten Unternehmen ein Drittel der weltweit 100 größten Wirtschaftseinheiten, also nationale Volkswirtschaften eingeschlossen.

It was an era in which the balance of power between corporations and society was tilted towards business. This was partially because businesses were so large. Before the start of the crisis, corporations were one-third of the 100 largest business units, i.e. including national economies.

First of all, the differentiation of sectors of society into some sort of balance of power between them is specious: it assumes that corporations must be under societal control - for their power to be somehow "balanced" so that the corporations may not do as they wish - quelle horreur - but rather submit to some sort of corporate governance that requires them to become political (by requiring them to fulfill roles best left to the body politic: sponsoring left-wing think tanks, for instance, to avoid an often rather crude blackmailing of corporations by vocal minority leaders with a penchance to political grandstanding. Yes, Revered Jackson, I mean you).

Zum Teil lag es daran, dass die These, Wirtschaft sei gut und der Einfluss des Staates sei schlecht, immer mehr Anhänger fand. Und zu einem Teil ging es auch darauf zurück, dass in diesem bequemen Netzwerk von typischerweise weißen, älteren Herrschaften die Rollen in den Regierungen, in Unternehmen und Aufsichtsgremien munter rotierten. Diese Art des Umgangs war eher dazu angetan, miteinander Golf zu spielen, als sich gegenseitig auf die Finger zu schauen.

This was also partially so because the thesis that business is good and the influence of the state is bad continued to find believers. It was also partially so because the comfortable network of typically white, older managers shared office in government, corporations and oversight offices. This way of dealing with each other was appropriate for the golf course, but not for oversight.

And her counterpointing thesis is that business is bad and the state is somehow inherently good? Her claim of racial purity in management is laughable at best and pathetically ignorant at worst.

Diese Periode bestärkte den fast religiös anmutenden Glauben in die Kraft der Märkte nicht nur als effizienten Verteilungsmechanismus für Güter und Ressourcen, sondern auch als Garant von Gleichheit, Gerechtigkeit und sogar Freiheit. Und das, obwohl sich der Eindruck verdichtete, dass die Realität dem nicht standhielt und dass sich in all jenen Ländern, die dem Gucci-Kapitalismus frönten, eine immer tiefere Kluft zwischen der Wirtschaft und der sozialen Gerechtigkeit auftat.

This period amplified the almost religious belief in the power of markets, not only as efficient distribution mechanisms for goods and resources, but also as guarantee for equality, justice and even freedom, despite the increasing impression that this construct did not co-exist with reality and that all countries that subscribed to Gucci-Capitalism saw an increasing chasm between business and social justice.

Here is a recently recurring meme from the left, designed to reduce and belittle the functioning of markets: that anyone who sees the power of markets does so religiously. The corrolary arguments - that markets act as a guarantee for equality, justice and freedom - are used as if that is what markets do: instead, she is trying to show how markets cannot reach her goals - not capitalism's goals - of equality, justice and freedom - whatever those words may mean (and believe me, they mean, for the left, nothing what you might think, but tend towards the opposite meaning instead). 


In dieser Zeit, über die wir hier reden, wurde nicht nur die Gesellschaft, sondern auch die Umwelt verwüstet. In den vergangenen drei Jahrzehnten haben wir mehr Stürme, mehr sintflutartige Regenfälle, mehr Hitzeperioden als je zuvor erlebt. Der Klimawandel hat das Leben vieler gekostet, er hat Wanderungsbewegungen von Hunderttausenden erzwungen, Hungerkatastrophen ebenso verursacht wie Kriege um Ressourcen.

During this time it was not only society ravaged, but the environment also pillaged. In the last three decades we've had more storms, more torrential downpours, more heat periods than ever before. Climate change has killed many, had led to mass exodus numbered in the hundreds of thousands, created catastrophic famines, as well as wars about resources.

This is what prodded me to write here. This is how the left views global warming: not as a problem to solve, but rather as a bludgeon to be used to denigrate capitalism. Please ignore the fact that she's completely and totally wrong on all of her points, as she has conveniently ignored the fact that if you go a tad further back, you find more extreme weather; further, you'd be hard-pressed to find a direct, causal link to climate change killing and leading to mass exodus, since these occur due to failed economies and political oppression (the Sudanese genocide isn't about global warming); famines today are invariably political, as we now see in Zimbabwe, and wars have always been fought over population pressures, not resources.

This is the typical wooly-headed thinking that takes a political enemy - in this case, capitalism - and blames all of the woes of the would upon it. Nice try: reality is a tad different.

Wenn wir nichts dagegen unternehmen, wird er noch viel mehr Unheil in weitaus größerem Ausmaß erzeugen. Dennoch dauerte es dank der Unternehmenslobby und der Bush-Administration an der Spitze des Gucci-Kapitalismus bis zum vergangenen Jahr, bevor es ein breites Eingeständnis dafür gab, dass der Klimawandel in vollem Gange ist und dass Mensch und Industrie dafür verantwortlich sind.

If we do not do anything against this, more catastrophes will come. However, thanks to the business lobbyists and the Bush administration at the head of Gucci-Capitalism it was only last year before a broad consensus war reached that climate change was in full gear and that humans and industry are responsible for that.

Oh my goodness gracious. The election of Obama "means" that everyone is now on board and that the ecological gravy train can start moving? How simplistic and naive: Obama was elected because he outspent the other guy seriously and enough people drank the Kool-Aid that Obama would actually do things differently. The election of Obama doesn't mean that there is a broad consensus on climate change: it merely means that Obama was elected. I see someone setting themselves up for major, major disappointment on this theme.


Es ist kein Wunder, dass in einer Zeit mit einem solchen Ethos die Regulatoren zu schwach und die Banker zu mächtig waren und die gegenseitige Kontrolle nicht funktionierte. Es ist auch kein Wunder, dass die herrschende Meinung aktiv vor allem von Bankern genährt wurde, von Hypothekenbrokern, von Kreditkartengesellschaften und von Werbetreibenden. Danach war nur derjenige erfolgreich, der ein größeres Haus besitzen oder die neueste Mode einkaufen konnte. Bei solchen Triebkräften in einer Gesellschaft war es nicht die Frage ob, sondern wann das ganze Kartenhaus einstürzt.

It's no wonder, then, that in a time with such ethics that regulators were too weak and bankers too powerful and that mutual control didn't work. It is also not a wonder that public opinion was fed primarily by the banks, by the mortgage brokers, by the credit card companies and advertisers. Accordingly, only successful people had a bigger house or could buy the newest clothes. Given such societal drivers, it was only a question of when the house of cards would collapse.

Again: what a cliche. The problem with the banks wasn't that the regulators were to weak: rather it was that the regulators - hi, Barney and Chris - had their own agenda and laws were passed that tied the hands of the bankers and forced them into risky loans: that's what the CRA did, and those loans were called subprimes. It's also a hoot to blame US consumer behavior not on the consumers, but rather banks and mortgage brokers: looking at it from an ethical standpoint, it is the consumer who is responsible for having taken on such debt.

Of course, that would go against the leftists meme of the consumer as being a malleable simpleton who is incapable of taking care of themselves. Apparently all the sinners have only the devil to blame.

Als das passierte, wurde auf einen Schlag für uns alle sichtbar, wie hohl das Gebilde war, wie wenig Fundament es besaß. Der Gucci-Kapitalismus beruht nicht auf realen Werten, er konzentrierte sich auf bedeutungslosen Konsum, seine Absicht war, das Geschäft zur wichtigsten Triebkraft der Gesellschaft zu machen - er blieb daher so oberflächlich wie sein Name.

As that happened, we could all then see how hollow the building was and how weak the foundations were. Gucci-Capitalism rested not on real values, it was limited to meaningless consumption, designed to make business the most important driving power behind society, but remained as superficial as its name.

Now we see the true colors coming out: capitalism doesn't have "real" values, and the luxury of western economies - inexpensive and high quality food, affordable housing - is meaningless consumption. What the left cannot stand is the idea that people consume what they want to, and if they can choose their Nintendo games over attending a revolutionary theatre play, that they will stay away from those "cultural" goods of the left in droves. The left cannot abide even the idea that their ideologies are, for the common man, bankrupt and completely uninteresting.

Sorry, too, that business is the driving force behind societal development: that's always the way it has been, and it's the reason that socialist society is such a dull and insipid place.


Ich glaube, dass die Voraussetzungen für einen neuen Kapitalismus da sind, der aus den Trümmern des alten hervorgehen wird: ein kooperativer Kapitalismus, mit den Werten von Kooperation, Zusammenarbeit und kollektiven Interessen in seinem Zentrum. Aus fünf Gründen halte ich dies für möglich.

I think that the prerequisites for a new capitalism are there, which can create, out of the ruins of the old capitalism, a new, cooperative capitalism, that combines the values of cooperation, working together and collective interests as its core values. There are five reasons why I see this possibility:

Cooperative capitalism?

Cooperative capitalism??????

What the hell does she think exists out there? No company works on its own, like some obnoxious robber baron, but rather is embedded in an entire network of cooperation and working together, with common goals. These are called business partners. Ye gods, the ignorance of how the real world works!

Erstens: Die Öffentlichkeit ist zornig über das, was vorgefallen ist im Zuge der Finanzkrise, und die Medien sind auf ihrer Seite. Anfangs richtete sich der Zorn allein gegen die Banker, gegen ihre Bezahlung, ihre Boni, ihre Verantwortungslosigkeit und die Haltung nach Ausbruch der Krise, die sehr dem Motto "Was zum Teufel schert mich das!" ähnelte.

First: the public is angry about what has happened in the financial crisis, and the media are on their side. First their anger was directed only against the bankers, their income, their bonuses, their irresponsibility and their behavior after the crisis started, which resembled "Why should I care".

Well, the public is angry, and will get even angrier when they realize it was wooly-headed fools like Chris Dodd and Barney Frank who got them into the clusterfuck we are currently in: however, the media is the last place to go to find that sort of story. Our dear lady here also apparently thinks that it'd be perfectly okay for highly qualified and trained folks not to earn much money - try managing a multi-billion dollar company on a small salary - and not expect them to then become corrupt: there is a reason why salaries are high. It reduces the incentive to start stealing, either directly or indirectly, since if you're caught, you lose forever the chance of continuing to earn large amounts of money. The people making the trades and making the deals are also not simply replaceable by someone off the street: the inexorable law of supply and demand controls that. 

And the bankers were as gobsmacked as everyone when the markets came tumbling down: no one saw this coming. That's not being irresponsible. No bankers said "why should I care" when they saw big chunks of their liabilities coming home directly to roost on their balances: if anything, the opposite. Again, reality intrudes: this is nothing more than a cliche.

Aber nun kehrt sich die Stimmung mehr gegen große Unternehmen allgemein, auch außerhalb des Finanzsektors. Sie richtet sich gegen Unternehmen, die ihren Managern Millionengehälter zahlen, während sie Mitarbeiter entlassen. Gegen Unternehmen, die immer noch signifikante Gewinne einfahren, aber unwillig sind, einen Teil davon an ihre Kunden weiterzugeben, denen es schlechtgeht. Gegen Investoren, die Unternehmen mit minimalem eigenem Kapitaleinsatz übernehmen, indem sie die betrieblichen Pensionsfonds zur Finanzierung ausschlachten. Wir sehen bereits zunehmende Proteste, auf den Straßen und im Internet, und in den nächsten Wochen werden sie anwachsen, wenn Unternehmensführer und Politiker nicht klar sagen, wo sie stehen.

Now sentiment is tunring against large corporations in general, even those outside of the financial sector. They are angry with companies who pay their managers millions while firing others; angry with companies who continue to make large profits but are unwilling to to give anything to their customers who aren't doing so well; angry at investors who buy companies with minimal equity in order to use pension funds to finance the acquisition. We are already seeing increasing protests on the street and on the internet, which will grow in the coming weeks, if companies and politicans do not say where they stand.

The only protests out on the street are from the professional anarchists and otherwise useless chattering classes, the parasites who can actually afford to be professional activists without actually creating any value to society.

Die naive Annahme des Gucci-Kapitalismus, Unternehmen seien inhärent gut oder es gebe notwendigerweise einen positiven Zusammenhang zwischen ihrer Profitabilität und dem, was gut ist für die Gesellschaft, hat sich als übermäßig simpel herausgestellt. Es war kein Zufall, dass Adam Smith neben seiner berühmten Abhandlung über den "Wohlstand der Nationen" auch eine über "Die Theorie der moralischen Empfindungen" geschrieben hat. Er, der Begründer einer Theorie der freien Marktwirtschaft, verstand ihre Grenzen und die Notwendigkeit, sie nicht sich selbst zu überlassen, sondern sie durch einen Schutzmechanismus, einen "Nachtwächter", zu ergänzen. Was bereits Adam Smith erkannt hat, wird der kooperative Kapitalismus ausformulieren und verwirklichen.

The naive assumption of Gucci-Capitalism, that companies are inherently good or there is some necessary positive relationship between their profitability and what is good for society, has now been shown to be overly simplistic. It was not an accident that Adam Smith, besides his famous essay on the Wealth of Nations, also wrote about the Theory of Moral Sentiment. Smith, the creator of the theory of free markets, understood their limits and the necessity of not leaving them to themselves, but rather providing a protective mechanism, a "night watchman". What Adam Smith recognized is what cooperative capitalism will formulate and make into reality.

Sigh. Where to begin?

First, the usual pseudomarxist theme of generating anger in lieu of arguments, of creating crises where there are none: not that we're not facing a crisis, it's just that the crisis we're facing is the result of abusing the system, and not the systematic crisis that the author is convinced the crisis is all about. Street protests? Again, GMAFB: the only ones that exist are ones manufactured by those who want to hijack the crisis for their own aims.

Second: the idea that capitalism views companies as inherently good is a cliche at best and a caricature of reality otherwise. Profits enable societies the luxury of things like state-sponsored universities and arts, it forms the basis for endowments and trust fund kiddies, yet here the idea that profits are good for society is denigrated. Typical.

And bringing in Adam Smith is a hoot: it's intellectual whitewashing, to try and claim the "founder" of capitalism for their own. It's so intellectually dishonest that it's almost surprising.

Der zweite Grund ist: Die Regierungen haben ein neues Mandat erhalten, um in die Wirtschaft einzugreifen, eines, wie es in den vergangenen drei Jahrzehnten nicht bestanden hat. In einer aktuellen Umfrage in den USA, dem Land, das traditionell jeder Art von Regierungseingriffen in Märkte und Unternehmen besonders feindlich gegenübersteht, war mehr als die Hälfte der Befragten der Ansicht, der freie Markt solle nicht sich selbst überlassen werden.

The second reason is: governments have received a new mandate to intervene in business, one that hasn't been around for the last three decades. In a current survey in the US, the country that traditionally rejects government intervention, more than 50% of those surveyed said that free markets shouldn't be left alone.

This is particularly absurd: the idea of a mandate based on public sentiment surveys. This has got to be one of the shallowest arguments that I have seen for a long time:  anyone remotely familiar with surveys knows how they can be manipulated to achieve whatever result is being paid for.

Das ist geradezu ein politisches Erdbeben. Wieder sind es die Banken, die seine Folgen zuerst zu spüren bekommen. Das geschieht in Form von Interventionen, die von direkten Verstaatlichungen bis zur Begrenzung der Managergehälter reichen. Ich erwarte allerdings kein Mikromanagement des Privatsektors durch die Regierung. Das würde ich auch nicht wünschen oder befürworten. Doch jedes Unternehmen, dessen Handeln so aufgefasst wird, als sei es gegen das Allgemeinwohl gerichtet, kann nun in die Schusslinie geraten.

That is a political earthquake. Again it is the banks that have felt this first. This is in the form of interventions that range from direct state control to the limitations being placed on manager incomes. I expect, however, that the government will not micromanage the private sector, which is something I would neither desire nor approve. However, any company whose actions are aimed against the general welfare can now be targeted.

If this is a political earthquake, it's around 0.1 on the Richter scale. The expectation that government control won't end in micromanagement is naive at best and foolish at worst: unless there is a clear and direct path to the removal of government intervention, all governments will intervene: it's how bureaucrats create career jumps and it's where they learn how corrupt they can become without being discovered.

Besonders gefährdet sind die Fast-Food-Industrie und die großen Pharmakonzerne. Da die Kosten des Gesundheitssystems steigen und die Staatsausgaben eingeschränkt werden müssen, wird der Druck auf Unternehmen aus diesen Branchen zunehmen. Sie werden dazu gedrängt werden, einerseits gegen den Trend zum Übergewicht und andererseits für erschwingliche Medikamente einzutreten. Im Gucci-Kapitalismus war es selten, dass Unternehmen zu sozialverantwortlichem Verhalten gedrängt wurden. Nun wird das zunehmen. Kein Wunder, dass die klügsten Unternehmen diese Tendenz vorwegnehmen und unaufgefordert versprechen, ihr Verhalten zu ändern.

The fast-food industry and the pharmaceutical sectros are in danger here. Since health systems cost are increasing and state expenses must be limited, pressure here is due to increase. They will be forced to do something against the trend to obesity on the one hand and to provide for inexpensive medications on the other hand. In Gucci-Capitalism it was rare that companies could be forced to have a social conscience. This will now increase. No wonder that the cleverest companies have recognized this and have offered to change their behavior without being forced to.

Sigh. The consumer again is the innocent victim of the mean nasty fast-food places that make food that makes people fat, and we all know that the evil pharmaceutical companies get their kicks out of making sick people pay through the nose for medications that we all know don't cost much to make.

GMAFB. Fast food doesn't cause obesity: modern life styles, lives of leisure, the ability to purchase massive amonts of calories for a pittance is what makes people fat. Fat used to be considered the true sign of wealth, but today those with the greatest weight problems are the lower classes, economically speaking. And do you really think that new medicines to treat diseases magically appear? Someone has to finance the literally thousands of dead ends researched before the right combinations are found that help: remove the profit motive, and meanigful pharmaceutical research will cease, leaving untold thousands to suffer instead of allowing companies to make enough money to finance their research.

These arguments blaming the fast food industry and the pharmaceutical industry for such problems are the sign of economic illiteracy, of someone who has no idea of where value is actually generated and that demand drives business, not the other way around.

Der dritte Grund: Die Zeit ist reif für einen neuen, auf Zusammenarbeit aufbauenden Kapitalismus, weil die Schattenseite der Globalisierung sichtbar geworden ist. Die Schnelligkeit und Heftigkeit, mit der die Finanzkrise ein Land nach dem anderen infiziert hat - Taiwan beispielsweise erwartet einen Fall seiner Wirtschaftsleistung um elf Prozent -, zeigt nur zu deutlich, dass wir in einer verbundenen Welt leben, in der wir gemeinsam stehen oder fallen.

The third reason: the time is ripe for a new capitalism, based on cooperation, because the shadow side of globalism is visible. The speed and impact that the financial crisis has hit country after country - Taiwan is now expecting a decline in economic performance of 11% - shows that we live in joined world, one in which we stand or fall together.

Again: cooperative capitalism, whatever that is supposed to mean. Interdepencies on world markets is new? Not to me, not to anyone trained formally in economics that actually paid attention to their international trade studies. Again, substandard.

Im Gucci-Kapitalismus hatte ich immer den Eindruck, dass der gemeinsame Absturz wahrscheinlicher war als der Aufstieg, weil nur Unternehmen international beschützt wurden. Die Welthandelsorganisation (WTO) sorgte für freien Warenverkehr, es gab Regeln und Vorschriften, Schiedsgerichte und Strafen, wenn ein Land dagegen verstieß. Doch es gab keinen vergleichbaren Mechanismus für globale Probleme: den Klimawandel, Verstöße gegen Arbeitnehmer- und Menschenrechte, gegen Gesundheits- und Sicherheitsvorschriften, oder als Reaktion auf die negativen Konsequenzen von Unternehmensverlagerungen.

In Gucci-Capitalism I always had the impression that a common fall was more likely than a common stand, because only companies were protected internationally. The World Trade Organization (WTO) took care of free trade, there were rules and regulations, courts and penalties when a country violated those rules. There were no similar organizations or mechanisms in place for global problems like climate change, violations of worker and human rights, against health and safety considerations, or as reaction to the negative consequences of corporate fusions.

Here we see a glimpse of the only acceptable future for the antiglobalists: world government where the unions of the industrialized West will determine what is best for the Indian or Chinese worker, but where in reality the only thing of importance is to prevent the rise of an Indian or Chinese middle class, bourgeois and probably only interested in buying a house, a nice place in the country for the weekends, a couple of cars, the dolce vita.


Der vierte Grund: Neue geopolitische Kräfte nehmen Gestalt an als Folge des Aufstiegs von China, Brasilien, Indien und der G20. Ich erwarte eine Phase des Aushandelns, in der politischer Einfluss gegen Zusammenarbeit getauscht wird. Beispielsweise wird es eine Begrenzung der CO2-Emissionen geben im Gegenzug zu einer stärkeren Vertretung der Schwellenländer in Institutionen wie dem Internationalen Währungsfonds (IWF) und der Weltbank.

The fourth reason: new geopolitical powers are forming as China, Brazil, India and the G20 increase their presence. I expect a new phase of trade in which political influence is exchanged for cooperation. For example, developing countries wil agree to a reduction in Co2 emissions in exchange for stronger presence in institutions like the IMF and the World Bank.

Interesting idea: blackmail as political tool. This will become a meme amongst the watermelon left to justify their policies: we have to do this to ensure that the others will even talk to us!

Aber es ist nicht alleine der neue Machtblock, der die intellektuelle Hegemonie des Gucci-Kapitalismus herausfordert. Man muss es im Zusammenhang mit einer neuen US-Regierung sehen, die eine breitere Vermögensverteilung will und dem Ideal des Multilateralismus verpflichtet ist, und mit der Tatsache, dass Kontinentaleuropa besonders hart von der globalen Rezession getroffen wird. Europa ist deshalb hoch motiviert, sich von einer Ideologie zu distanzieren, die nie so ganz zu seinen eigenen Werten passte. Nimmt man all das zusammen, sieht man: Alle Voraussetzungen für einen bedeutsamen ideologischen Wandel sind vorhanden.

This new power block alone will not challenge the intellectual hegemony of Gucci-Capitalism. One needs to see it in connection with a new US administration that wants a wider distribution of wealth and feels duty-bound to the ideals of multilateralism, along with the fact that continental Europe has been particularly hard hit by the recession. Europe is therefore particularly motivated to distance itself from an ideology that no longer conforms to its values. Take all of this together and you can see that all prerequisites are there for a meaningful ideological change.

There are no prerequisites in place for anything but a naked power grab.

Fünftens und letztens: Wir sehen nicht nur auf Regierungsebene Anzeichen einer stärkeren Zusammenarbeit. Die Annahme des Gucci-Kapitalismus, alle Menschen seien egoistisch, super-individualistisch und nur damit beschäftigt, ihren eigenen Reichtum zu maximieren, stellt sich mehr und mehr als eine fehlerhafte Hypothese der Mainstream-Ökonomen heraus. Es ist wahr, in den letzten beiden Jahrzehnten gab es eine wachsende Fixierung auf materielle Werte. Aber das war wohl mehr eine Frage der Einstellung als eine der menschlichen Natur. Soziologische Studien zeigen, dass Angehörige armer Gesellschaften eher miteinander teilen.

Fifth and last: we see indications of increasing cooperation on non-government levels. The assumption of Gucci-Capitalism, that all people are egoists, super-individualists and only interested in increasing their personal wealth is increasingly a mistaken hypothesis of main-stream economists. It is true that in the last two decades there has been an increasing fixation on materual values. But this is more a quesiton of attitude than a reflection of human nature. Sociological studies show, that members of a poor society are more likely to share things.

In other words, a world governed by NGOs. Another straw man is also presented here: the caricture of how "Gucci-Capitalism" see the individual. Sorry, this is a straw man argument, one that grows out of believing that businesses manipulate the poor masses and if only people saw how much better our cooperative ideas are instead of playing their Nintendos.

And sociological studies also show that nature abhors a vaccum, especially power vacuums, and that members of a poor society, when made rich, act the same as other newly rich people, usually badly.

Deswegen sind wir keineswegs alle reine Individualisten, auch wenn der Gucci-Kapitalismus die Tendenz zum Eigennutz befördert hat. Es ist sehr viel wahrscheinlicher, dass wir in den kommenden Jahren enger zusammenrücken wie in der Zeit der großen Weltwirtschaftskrise nach 1929 und im Zweiten Weltkrieg. Das dürfte eines der wichtigsten Kennzeichen dieser Ära werden. Dafür gibt es erste Anzeichen: etwa den kometenhaften Aufstieg der "Free Cycle"-Bewegung, deren Mitglieder lieber Dinge verschenken, als sie bei Ebay zu versteigern, oder die wachsende Bedeutung des Job-Sharings in Japan, mit dem die Beschäftigten auf eigene Initiative hin Massenentlassungen verhindern oder abmildern.

Hence we are in no way pure individualists, even when Gucci-Capitalism has promoted this tendency to egoism. It is very likely that in the coming days we will have to share more than during the days of the Great Depression after 1929 and during the Second World War. This will be the major sign of the new era. There are already signs of this, such as the rapid increase in the "Free Cycle" movement, where members prefer to give things away rather than sell them on eBay, or the increasing importance of job-sharing in Japan, where workers volunteer in order to prevent mass layoffs or reduce their effects.

Ignoring, of course, the fact that Japan is a higly homogenous society with great emphasis on social status and harmony, even to its detriment. Ignoring as well that giving things away instead of selling them, while an act of altruism, also points to a very high level of wealth. You don't give away things unless you can afford to: this is not the basis for functioning economy, unless you are unsucessfully trying to be funny.


Manager und Politiker müssen sich entscheiden. Entweder sie setzen sich ein für eine Agenda der Kooperation, die multilateral ausgelegt ist, mit globalen Institutionen, die unsere Umwelt und unsere Bürger schützen. Eine Agenda, die die Idee einer Politik erneuert, die auf die Menschheit insgesamt abzielt, auf Reiche und Arme gleichermaßen.

Managers and politicians must make decisions. They can chose an agenda of cooperation, multilateral, with global institutions to protect our citizens and the environment, an agenda that renews the idea of politics that are aimed at improving mankind as a whole, both rich and poor.

The alternative being: anothe straw man argument (see below). There is no reason to assume that there are only two ways out of our financial crisis, unless, of course, there is "your way" and then a caricature of anything else.

Dazu gehört, dass auch die Wirtschaft sich als eine Kraft begreift, die Innovationen und Fortschritt für die Welt schafft. Die sich zurückhält, wenn geschäftliche Ziele allgemeinen Interessen widersprechen, und sich einbringt, wenn kurzfristig das Geld zur Finanzierung von Innovationen fehlt.

This includes business that recognizes that it is a power for innovation and improvements for the world. Those that give way when societal interests take precedence over business interests and help out when short-term money for financing of innovations isn't available.

Hmmmm: and who makes the decisons? The only way that business will "make" such enlightned decisions is if those in control decide to do so, and that will only happen if laws require this and management is filled with do-gooders. That such businesses will increasingly be used for pet projects and not to earn money is incidental, but bears with it the core of destruction: at some point you go broke. In any case, it is a bad use of capital, a bad use of a scarce resource: here I thought greens and watermelons didn't want resources wasted. Right.

Die Alternative dazu wäre der Weg des nackten Selbstinteresses, des Kampfes jeder gegen jeden. Die Trader der Londoner City haben das auf lokaler Ebene vorgeführt. International war das Paradebeispiel dafür die Politik der 30er-Jahre: Statt in der Weltwirtschaftskrise zusammenzuarbeiten, haben die einzelnen Nationen versucht, jeweils dem anderen ihre Probleme zuzuschieben, und haben sich damit im Endeffekt selber geschwächt. Jeder, der heute Schutz für die heimischen Märkte fordert, sollte wissen, wohin das führt. Wenn China spürt, dass seine Exporte behindert werden, wird sich die Regierung dort beim gemeinsamen Klimaschutz zurückhalten. Wenn Großbritannien versucht, Jobs für Briten zu reservieren, dann wird die ohnehin leidende Exportindustrie keine Absatzmärkte mehr finden. Außerdem gibt es, wie die Geschichte lehrt, nur einen schmalen Grat zwischen wirtschaftlichem Nationalismus und Fremdenfeindlichkeit.

The alternative is the way of naked self-interest, the fight of each against every. The trade in London City have brought this around locally. Internationally the policies of the 1930s are a perfect example of these policies: instead of cooperating during the Great Depression, countries tried to make their problems someone else's problems, with the result that everyone was weakned. Anyone demanding protection of domestic markets knows where that ends. If China sees that its exports are being delayed, it will refuse to enact climate protection measures. If the UK tries to reserve jobs for Brits, then the export industries will find no markets for these companies. Further, there is, as we know from history, a thin line between economic nationalism and xenophobia.

Wow. Talk about straw men and cliches: vote for me and I'll set you free, if you don't do what I tell you, we'll all end up mercantalist, protectionist, and probabyl fascist to boot.

Wir stehen also vor einer kritischen, gefährlichen Grundsatzentscheidung. Es lohnt sich, für die richtige Richtung zu kämpfen, denn es hängt sehr viel daran. Meine Hoffnung ist, dass unsere Politiker genügend Einsicht haben - und wir, die Bevölkerung, genügend Elan -, um die drohende Katastrophe in eine Chance zu verwandeln: die Chance, gemeinsam ein besser überwachtes, ausgeglicheneres Wirtschaftssystem zu schaffen. Ein System, das an Fairness, sozialer Gerechtigkeit und Nachhaltigkeit ausgerichtet ist und die Moral zurückbringt in die Wirtschaft. Meine Hoffnung ist, dass wir zusammenarbeiten für eine bessere Zukunft, dass wir es ernst meinen, wenn wir sagen "Yes we can", und dass wir dabei das "Wir" betonen. Wir sollten die Open-Source-Version des Kapitalismus wählen, in der jeder Einzelne nur gewinnt, wenn alle zusammenarbeiten. Wir sollten uns an Coop orientieren, nicht an Gucci.

We stand in front of a critical, dangerous break. It is worthwhile to fight for the right direction, since so much depends on this. My hope is that our politicians have enough insight - and that we, the population, have enough elan - to change the catastrophe into opportunity: the opportunity to create a better controlled and more balanced economic system. A system that is oriented towards fairness, social justice and sustainability, one that brings morals back into business. My hope is that we can cooperate for a better future, that we really mean it when we say "Yes We Can", with emphasis on the "We". We should choose the open-source version of capitalism, in which everyone first wins when all cooperate. We need to orient ourselves on Coop, not on Gucci.

What really strikes me about this is the incipient fascism implicit here. You have the clear subjugation of business interests to the interests of the state, the elimination of autonomy in private business. The system proposed here would ignore the realities of business and expects economics to take care of themselves after the spirital re-awakening of the masses to their true calling; corporatism and class cooperation - cooperative economics! - are the key. This "new" economy is one where the government exerts strong directive influence, effectively controlling both allocation of resources and therefore the means of production; private property and initiative are allowed only when these are subservient to the state...

Articles like this - it was a full page in the Handelsblatt - drive me up a wall because there is no way to thoroughly fisk them in public. I've spent way too much time on this one already: suffice to say that the greatest danger of the current crisis is the resurrection of ideologies that deeply deserved to die and be tossed on the rubbish heap of history. This is one of them.

Keine Kommentare: