Alternatives to Predatory Capitalism

By the editors of Sozialismus

[This editorial originally published in: Sozialismus Nr. 2 (February 2004) is translated from the German on the World Wide Web, www.linksnet.de/artikel.php.]

The former German chancellor and co-editor of the weekly “Die Zeit”, Helmut Schmidt, published a criticism of the law of the jungle in predatory capitalism at the end of 2003. “We live at the edge of ruin where speculation and carelessness endanger businesses and banks and where the temptation to conceal and cover up, to deception and deceit, spread. We are already deep in the quagmire where capitalism and moral standards exclude one another.”

Intrigues around the corporations Kirch, Mannesmann-Vodafone and Enron or the New York stock exchange reflect this endangering of democratically structured capitalism…

Without doubt we are in a quagmire in today’s capitalism far below the “normal form”. Capitalism is always based on the exploitation of paid labor. This veiled form of wage slavery is organized through exchange of equivalents. A corresponding legal superstructure also depends on hegemonial consensus structures. The diminishing authority of the central factors of equality of benefits and return favors, voluntary agreement and legality is an unmistakable sign for the degeneracy of this society. We enter in capitalism’s state of collapse when top managers are no longer oriented in the idea of the “honest shopkeeper” and when corporate governance only emulates robber barons.

When the legalism of middle class society is not enforced and respected through exchange (freedom, equality and property), coercive legal measures are hardly useful. “Some of the abuses can be limited through legal changes. Both American and German legislators have begun this effort. Still the root of evil is not in insufficient laws and regulations… The root of evil is in the fast decline of morality and decency of some managers… If this social Darwinism spreads, the inner continuity and solidarity could crumble.’ (Helmut Schmidt)

Special premiums and supplementary pensions of 111 million DM (German marks) after the successful takeover of Mannesmann raise the question about control of management decisions. This company was sold, immediately divided in parts and sold again so the name Mannesmann would disappear from the industrial landscape of the Berlin republic. The only mourners of this development were the employees.

The threat of capitalism does not result from the operational structures of value-creation and exploitation processes. The balance of power and the control of shareholders, management and the board of directors are corrupted. Their interests were long balanced out until a manager generation oriented in shareholder value maneuvered into a bubble economy. Enrich yourself! Greed is dashing!

Mammoth corporations acting as modern robber barons are not the normal case but represent a fundamental structural change in property relations. While managers – with boards and investors (shareholders) – pursue short-lived, capital market-oriented business strategies, owners in the ruling class press for return to long-term and productive value creation and exploitation on the basis of the equivalence principle. Nearly all the CEOs devoted to the shareholder value philosophy realized profits for the shareholders at the expense of other legitimate claimant groups. These groups take to the barricades and demand a larger share in the profits.

The expectation that a renaissance of productive enterprise is now imminent after the collapse of the dreams of the new economy is erroneous. The dominance of the shareholder-value orientation is not a malformation or undesirable trend that could be replaced by an improved business culture or strategy. This orientation is itself an expression of a deeper crisis of capitalist exploitation. The inversion of the relation of real- and financial capital is reflected in the aggressive defense of the culprits. Germany is “the only country where those who successfully record profits are on trial”, the head of the Deutsche Bank Josef Ackermann declared.

Top managers enriching themselves enormously from business accounts without any performance stir up bad feelings. “According to Fortune magazine, the top 100 managers in the US at the end of the 1990s received on average 1000-times as much money as an average American worker. In Germany, some top managers gained two hundred- and three hundred times the annual earnings of an average union employee.” (Schmidt). That a chairperson of the IG-metal union watched this transition to the law of the jungle without protesting is very embarrassing. Unions become untrustworthy. Unions must explain the structures of shareholder-value capitalism. Counter-pressure for a democratic alternative in organizing the economy and society in the age of globalization and shareholder value is imperative.

The movement of critics has a new political credibility. The majority of the media recognize that the World Social Forum – occurring this year in Bombay, India after three meetings in Porto Alegre, Brazil – has developed into the largest international political event. Even the conservative rightwing Frankfurter Allgemein Zeitung (FAZ) cannot deny “that globalization critics have accomplished something in the past years. In the World Bank, the International Monetary Fund, the World Trade Organization and large corporations, experts and whole departments have long been occupied with ideas, arguments and criticisms presented at the World Social Forums.” (January 20, 2004)

From Seattle and Porto Alegre to Bombay, the anti-globalization movement has grown and gained depth with the continental forums. The 2004 World Social Forum (WSF) showed that the other globality is more than a mere claim. The demands of a mammoth protest movement were proclaimed publically in over 1000 events. Identifying conceptual weaknesses and contradictions does not vitiate the optimism of the Indian author Arundhati Roy: “In Brazil I said another world is possible and is underway. In Bombay I say: Look around, the other world seems already here.”