Krisis? Germany at the centre of economic turbulence
The latest German unemployment figures, the lowest in 20 years, prompt us to consider the attributes of an accumulation model that has allowed the country to so far avoid the worst impact of the crisis.
Isidro López, member of Madrid´s Metropolitan Observatory
Translated by Esther Ortiz Vázquez & Juan Martin Rodriguez
Translated by Esther Ortiz Vázquez & Juan Martin Rodriguez
Many aspects of the Euro crisis have their roots in deep political changes in the post-unified Germany. The traditional structures of the corporatist capitalism in the Rhineland consisted of both domestic industrial and financial schemes. These schemes, although controlled by the German industrial elite, also incorporated the very-powerful German Fordist unions. However, this establishment no longer exists.
The German industrial capitalists had been trying since the early ´60s to "bypass" the financial-industrial credit networks by seeking finance from the eurodollar markets in London. For these industrial elites, the Fordist social pact allowed them to contain the working class struggle at manageable levels but was also widely seen as an obstacle to maximizing profits.
The key political move was the 2010 Agenda from the Socialdemocracy of Shroder and, look out, the Green Party. Between them they have gone about breaking up these Fordist holdings through fiscal reforms and capital deregulations. The process involves transnational financial institutions pressurising to create "open" financial structures that they are then able to enter, generate profits and exit. These kind of structures diametrically oppose those that connected the network of middle-men and elites with productive territories and economic sectors in a stable and organized manner.
From the destruction of this second type of financial structure come two kinds of interrelated results. On the one hand, a large mass of capital linked to local manufacturing cycles is released, estimated at one billion euros
–approximately the Spanish GDP-, to be invested in financial markets.
Thereby an elite consisting of globalized financial yuppies is born with a social typology which is quite different to the “Rhineland”
capitalist, an industrial captain who takes positions within the
political system. On the other hand, and less well-known, in this very movement, Germany loses control of its more strategic productive hubs while transnational financial capital, American “hedge funds” in particular, take over 50% of the more important DAX companies (the Spanish IBEX counterpart) imposing a strict income discipline; the so-called “shareholder value”. In brief, if you have to fire 40,000 workers to save your dividend you do it. That is to say, during this process Germany loses control of its higher quality assets as well as its ability to rule over its labor-capital relationship.
–approximately the Spanish GDP-, to be invested in financial markets.
Thereby an elite consisting of globalized financial yuppies is born with a social typology which is quite different to the “Rhineland”
capitalist, an industrial captain who takes positions within the
political system. On the other hand, and less well-known, in this very movement, Germany loses control of its more strategic productive hubs while transnational financial capital, American “hedge funds” in particular, take over 50% of the more important DAX companies (the Spanish IBEX counterpart) imposing a strict income discipline; the so-called “shareholder value”. In brief, if you have to fire 40,000 workers to save your dividend you do it. That is to say, during this process Germany loses control of its higher quality assets as well as its ability to rule over its labor-capital relationship.
The gross amount released during this process will end up in two places. Firstly, it is going to be invested en masse in property market bubbles both in Spain and in the USA, especially in subprime-lending, which is the root cause of the huge banking crisis Germany is currently passing through (currently in stand-by mode). And secondly, it goes towards acceleration of the outsourcing process to Eastern countries, taking advantage of investment channels and exploiting the cheap labour created by the brutal shock-therapy policies carried out by the European Union and the IMF in the 90s. From now on, assisted by the traditional State policy support given by the major unions, a savage assault on the German workforce is going to be launched. Germany is the only OECD country where real wages have been going down for seven consecutive years (2000-07) while its customary productivity has plummeted due to, amongst other things, the establishment of longer working days, at the same salary levels (with union consent), without a corresponding increase in technological power. As was to be expected, the result has been the loss of three million from union membership in a decade.
The banking crisis alongside the budding social crisis are two good explanations for the strategic alliance forged between Germany and the financial powers which is designed to politically manage the euro crisis in exchange for the opportunity for Germany to fund itself at a low price in the markets. The aftermath is obvious, postponing the banking adjustment and holding back, through public expenditure, the collapse of the colossal fordist German middle-class.
In conclusion, we are not talking about exonerating Germany of blame for its European policies, whose goal have always been to avoid taking charge of any responsibility related to wealth redistribution at a continental level (a level at which they have sought to control the accumulation of capital), but rather the rebuilding of the chain of command imposed by the financial powers to better combat them.
