Translated from Gegenstandpunkt: Politische Vierteljahreszeitschrift 3-2003, Gegenstandpunkt Verlag, Munich

Social policy as a throwaway campaign — or: There must be an end to the troubles state and capital are having with their national sites
Europe Needs “Structural Reforms”

At least as far as the domestic agenda is concerned, the program for good governance has been settled all over Europe. All the nations that have become rich and important through their market economy, and want to remain so, need reforms. The necessity of these reforms is beyond doubt. The respective government leaders, otherwise committed to conserving their community in the face of disturbing changes, have themselves let it be known that there can be “no alternative” to the “trenchant,” “fundamental,” “extensive,” “permanent,” et cetera, reforms that they are planning. A state of emergency has come to the fore: the state’s budget is ailing, “the economy” is stagnating, and Europe’s important sites for capital investment aren’t what they used to be. All this demands state decrees that do away with disastrous hindrances to the nation’s business life. The damage done to the public good, which — as national budget, economic growth, and success in global competition — is supposed to be guaranteed by proper governmental action, has been found to be the undoubted result of expenses ponied up for the livelihood of people who either work, or else do not carry out this service due to their established uselessness.

With this diagnosis of theirs, European politicians leave no room for any guessing games about the substance of their reforms. They arrange for the sparing use of money so long as it is used, not as a means of business, but of subsistence. This is first of all the case with respect to wage labor, which as everybody knows causes expenses that have always detracted from labor’s true purpose: its profitable use. Secondly, it applies to the wide world of social programs, where many a need is financed without a service in return, or at least without a sufficient one. Thirdly, when politicians start distinctly expressing “additional wage costs” as a percentage, then a connection has been established between the battered authorities of the public good and the various portions of the population that have degenerated into a mere burden. Then no talk-show host and no economic pundit can deny any longer that those in power are just being realistic, and everyone turns to the exciting question regarding all the things “we” must and mustn’t do, and whether the government, the opposition, or a joint coalition will be able to pull “it” off.

Democrats are not arguing for capitalism — instead they use capitalism as their argument

With that, the first, sweeping lie is on the table. Politicians, who praise their realism in having broken with old ideologies, do not waste much time with the Old Left’s dogma that the business of economy & nation is incompatible with secure prosperity for the beloved masses. Modern advocates of the common good take up a different stance: only the conclusions they so energetically draw from these difficulties are compatible with reality. If “the economy,” the national budget and the social security system are ailing, then it is indisputable that the interests of all private households in having halfway-balanced budgets must give way to “the way things are,” this being how the dominant interests present themselves nowadays. In the meantime calculations have been provided as evidence, which are taken to be undoubtedly objective and demonstrate in easily comprehensible figures and diagrams how “untenable” is the ratio of old age pensioners to contributors, the relation of wage level and working time to profitability of labor, the ratio of wages to “additional wage costs.” And there are other calculations relating, for instance, to people who live on wage earnings or wage-compensating benefits, which the champions of bold reforms easily expose as expressing an interest in “protecting vested rights” that must now — “at last!” — give way to insight into the irrefutable “constraints” that make it impossible “in practice” for “things” to simply “keep going on as before ” Clear-cut partisanship for the interests of state and capital thus poses as an appeal to common sense, which has never been anything else but a dictate of reality. And such partisans, incorruptible as they are, are not content to make it known that the welfare of state and capital is unfortunately incompatible with the needs of the masses. They immediately add which section of the economy is living beyond its means and thus at the expense of the others. Politicians understand right away, and start preparing cost proposals itemizing the sacrifices to be made by the beneficiaries of the national social system and economic wage system so as to give the common good a boost.

This partisanship for the one interest against the other can pass unchallenged as “realism” because it points to the relationship of dependency linking capital and the working population as the well known and unalterable foundation for capitalist business. Those is charge simply remind everyone that in a market economy, the distribution of anything and everything is, after all, based wholly on economic growth; therefore, the work and income of all those who do not deal in capital and profit must be subordinated under its requirements. Since without growth, nothing will come of all these people’s interests anyway, these interests must be kept proportionate to their usefulness as a service and contribution to growth. A few million unemployed and other types of misery that come about when there is growth do not give rise to doubts concerning the new brand of reform mania — after all, the useless people have already been written off as a burden on the economy anyway. Seeing them as the actual result of the economy and its growth would be pretty unrealistic.

In making such a extortionate reference to this dependency as the argument for organizing it so that it costs less, advocates of reform cite a necessity of the system and do not tolerate any refusal on the grounds of interests. When wage earners are consigned to the role of a mere variable for the success of capital and state power, there are no big promises needed. Only one thing is for sure: since the reason for all failures in managing the economy and the welfare state has been ultimately found to stem from the high price of labor, the resulting “problems” can certainly not be solved without resolute price cuts in this sector. Maybe then new jobs might come about on European sites — but only on the condition that employees make sure to refrain from raising any bothersome demands that might hinder the comparison of “productivity” — this being a modern term for profitability used by those eager to display a bit of a “scientific” touch — which companies constantly make between European wage earners and all the others around the world. Whereby it quite obviously belongs to the nature of this comparison that the prospect of jobs profitable for capital is only conditionally valid; that is, only as long as the comparison turns out well for the active capitalists’ profit calculations.

The asserted necessity of this fine new dimension of poverty is followed by a second lie promising that these reforms will ultimately prove to be beneficial. For all the impartial and inescapable realism they display, democrats never forget to sell the sacrifices they demand from the people as a service they are providing to the people. In declaring the livelihood of all the poorly paid workers to be absolutely unaffordable, they plan and execute a reorganization of labor and life that they say maintains and secures the public welfare. Every restriction and burden on income that the reforms entail is even supposed to create jobs, so the financial integrity of the social system, which these people need, after all, is guaranteed. Certainly, pensions and health insurance are to continue to exist; there will just be less of everything that has definitely turned out to be “too expensive.”

Thus the extensive demolition project achieved by these reforms in the sphere of customary poverty equipped with claims on social services is presented as a rescue operation in the service of “the core of the welfare state”[1] — and not only in Germany. If you want to save the public health system, you have to pay for your dentures out of your own pocket; if you are going to need an old-age pension, you must provide for it out of your own wages; and if you are for protection against dismissal, a notorious “job killer,” you must be for its restriction, so that there are more jobs, which won’t need this protection any longer apply. Fanatics of the reforms claim that the European states’ social system is the major hindrance to national success, treating it as the decisive reason for the current economic crisis, which must be combated successfully if Europe is to have any chance of getting ahead in the competition among nations. These fanatics end up dealing with the allocated costs and their effects with rather wild abandon. In the process, they don’t shy away from comical or cynical segues: suddenly the success of a small business with five employees depends in all seriousness on whether or not the sixth one can be fired more easily, and a serious debate begins about an age limit for expensive medical care, since this limit so obviously determines whether or not the youth will have a future. Nobody claims to be sure that all this will actually boost growth, but just as little does anybody dispute the necessity of finally doing “something,” as quickly and as radically as possible, to make cuts in wage costs and social spending.

A specter is haunting Europe —
The specter of the unaffordability of the working class

This is the way the system is questioned nowadays: not in the manner of the old social reformers who debated about whether there were any other alternatives that capitalism might actually have to offer apart from the pauperization of the beloved masses, but in a debate about which alternatives capitalism definitely rules out. No longer is the system challenged with the illusion that the effects of the distribution of wealth typical of this capitalist mode of production could be undone by social reforms; the current debate is instead based on the verdict that any corrective interventions into the “natural” allocation of poverty and wealth are to be forbidden as unnatural, harmful, and as a disservice to the “beneficiaries” themselves. According to this standpoint, all ideas for reform that do not include cuts in the price of labor and reduced public spending for maintaining the national labor force are “from another planet.” This updated critique of the system from on high involves the discovery of a new specter haunting Europe: the specter of the unaffordability of customary social claims. This is the formula that capitalists critical of the social system use when meaning they don’t want to continue paying wages that finance not only their own workers’ everyday survival needs, but also the livelihood of the inactive sections of the working population. The way they see it, such wages are first of all unjust, since employers get no labor from their workers for such “additional” wages, and have no labor contracts with people who are retired, sick or unemployed. Secondly, they are economically irrational, as excessively high wage costs harm the competitiveness of the nation’s economy. That is why they are actually no longer being paid, all in all, and are consequently simply impossiblequod erat demonstrandum.[2] In short, the existing system of wages and social programs is fundamentally flawed and therefore in need of “structural” reform. It is left to the affected public to consider the “choice” between, on the one hand, the nation’s progressive economic decline due to excessive wage and social costs, “therefore” unemployment and the collapse of the no longer affordable social system — or, on the other hand, cuts in wages and claims on social security in order to “save the core of the welfare state.” From this perspective that admits no alternatives, politicians, by virtue of their democratic responsibility, decide in favor of “reforms” on behalf of their people. The latter continue to behave as a people, and take their dependency on the system of wages and social programs as reason enough to accept the system’s alteration, including its partial annulment, and to respond by asking what they will still be entitled to. So new standards for the degree of the planned impoverishment are due.

The ideal accompanying the realism of reform:
Yes to impoverishment, but please keep it gentle and fair!

The third lie is contributed by minorities who raise their hands in political parties and unions. If they do not just posture to meet public expectations, then they talk themselves and others into believing in the possibility of gentler alternatives. And they do this while completely acknowledging the definition provided from above for all the various crises in the economy, the national budget, social funds, populations patterns, and so on. They are even quite taken with the belief that growth has a positive effect on employment, and with the doctrine that wageworkers in old-European-style welfare states shouldn’t be too expensive or lazy. These alternative arithmeticians go along with the calculations made by state and capital, while presenting the livelihood of private households as a point to be considered in these very same calculations, i.e., without attacking the principle of the raging reform mania. They do not refuse to answer questions of conscience such as whether they are really against growth, balanced public budgets and trimmed-down income support given that everybody and everything depends on it. Nor do they want to criticize the assertion that there is no alternative to the dependency of the victims of capitalist business life on its success, let alone the dependency that actually exists. That’s why they agree to go along with the reforms, display much creative involvement when allowed to, refrain from causing disturbances, speak out for leniency and fairness, and must again and again see their requests for mercy on behalf of those already hard-pressed countered by the reference to the necessities of reform realism. Judging society’s dominant interests, which have piled up to an entire system of necessities, is completely alien to compassionate labor unionists, attac[3] followers and Lula[4] fan clubs. Instead, they are disturbed by too much “social inequality” and dream up childish alternative arrangements. They insist that the wealthy, alongside the tax relief their job-creating companies receive, should at least “symbolically” cough up a bit more from their personal assets for the common kitty — as a sign that fairness is alive within the community, and for improving morale in general. The majority of the reformers agree that such recommendations may be well meant, but are simply misguided. First of all, wealth taxes are reminiscent of a difference — if not an antagonism! — between rich and poor, whereas the order of the day is the paving of a non-partisan, impartial road to the betterment of the common good by fostering private property and reducing the livelihood of the propertyless. And secondly, such burdens would most certainly spoil morale among the wealthy, who are supposed to lead us out of the crisis with their positive investment mood.

Turning lies into action

The lies about the benefit and the effects of the reforms have been put into circulation, and become a driving force in shaping public opinion and political intentions. They have also resisted all feeble attempts to refute them. The authors of these lies do not attach too much importance to providing evidence that the various corrections being made to the price of labor and to the parts of it deducted and managed by the welfare state will actually create jobs, nor that new taxes will immediately generate an economic upturn. They have no trouble taking back their assertions regarding such effects, which they by no means want to be regarded as promises. They are all the more insistent on the necessity of their measures. For these measures are only the beginning, and not nearly thorough enough, so no wonder there is no sign of any beneficial effects on the horizon — this very fact proves how vital it is to mercilessly stay the course. In any case, their lies must be followed up with action; otherwise, there will be no end to the troubles with Europe’s national sites — primarily the troubles of those whose job it is to control these sites. But secondly, without sweeping reforms, there will be no end to the troubles of all those who number among the dependent variables of these national sites and feel the full force of their business cycles. They, under the guidance of their political leaders, are working out the definition of the crisis that serves to support state interests: a crisis is at hand when, and because, nothing but obstacles to the growth of capital have piled up on the national business site. These will now be eliminated.

Of course, this task is not yet completed with the eager presentation of figures and calculations supposed to verify the huge savings potential concealed within the income and living standards of the governed masses. Hardly have political parties, ministers, and commissions projected the restrictions they are planning in the area of social spending to significantly relieve the national budget, does the problem of their implementation come up. Hardly have the burdens that an elite, determined to “act,” is placing on the incomes of the many who earn so little been numbered and announced, are the supporters of the reforms filled with doubts: can one really rely on the willingness and capability of politicians to go through with it? Will the necessary success actually come about? And so forth. This uncertainty accompanies the epoch-making project not only in those nations where dissatisfaction with government actions is expressed in marches and demonstrations. Even in countries where it merely lurks in pub conversations, and in the requests of dissenting opinion makers to make some critical remarks, a big show is made of the warnings that the project might fail. The message is that the politicians must remain firm and stay the course, despite the fact that no one really has any fear of resistance on the part of those at the receiving end. And, indeed, the professionals of the new social arithmetic need not reckon with any organized opposition from the numerous victims of their initiative for “an affordable people.” When they call for “a big effort,” “a launch” or things of that sort, they have discovered that fixing a new price of labor and social welfare can’t be done with the mere use of a calculator. Even if no class struggle is under way, it involves many a fight with the institutional structure of the outdated, constitutional welfare state.

No more foot-dragging! Reforms need strong leaders!

The reforms of the old kind, which over the decades brought about the standards for organizing useful poverty that are nowadays rejected, always consisted in bodies of laws that did not merely allocate and redistribute sums of money, but also authority, i.e., jurisdiction in matters of “finding” what was desirable and doable. A system of (customary) rights was thereby established in which all sorts of authorities were conceded recognized participation. They were empowered by legislation to assume “responsibility” as bodies representing specific interests and to negotiate among each other and with the particular government in power as to how the broad field of social services was to be administered. The interests of wage earners in their pockets and purses, the interests of the insured in their care and its cost, etc., were thus granted publicly recognized representation. These interests were not uncommonly — and not always to their advantage — handed over to the calculation of public agencies, which would then search and find in their balance sheets the suitable standard for what was fair at the moment. This empowerment by the constitutional social state to cooperate conscientiously and as an interested party in managing the national wage system in the most profitable way possible befell groups as disparate as unions and employers’ associations, associations of doctors and pharmacists, insurance companies of all sorts, charities, associations of public officials and of war victims, as well as the pharmaceutical industry. And older citizens, for instance in Germany, will recall that it was precisely this procedure that provided the conclusive argument for rebuffing both domestic and foreign critics of the free-market system: the constitutional social state was said to be the living refutation of the Left’s dogma that capital and labor are irreconcilable. The way democrats saw it in those days, bringing about a balance between the two was supposed to be the great mission fulfilled by the system of shared power and jurisdiction. State-conceded participation and the commissioning of a whole lot of interest groups was regarded as the stamp of quality of the “social market economy,” in which there was hardly any more sign of conflict between business and everyone else. Above all, one could no longer find a wage earner who had fallen through the cracks.

Today, when some millions have fallen on hard times — the welfare state must have failed somehow — the fanatics of the new brand of reforms not only regard the income of the “needy” as unjustified “vested rights” that the “economy” simply cannot endure. They also believe that the concessions encountered by a “political class” bent on setting off a great launch — in the form of a heap of agencies insisting with seat and vote on their powers and traditional influence — are just one big nuisance that needs to be eliminated. When German Chancellor Schröder shouts, “enough with consensus!” the national economic pundits loudly back him up by demanding that disruptive special interests groups be ignored, their concessions withdrawn, and that especially the unions be finished off once and for all. These fanatics are most in their element when exposing the achievements of their democratic polity, which until yesterday had been regarded as proof that capitalism’s brutalities in dealing with all the many poor people had been overcome, as the crucial obstacle for capitalist growth today. Some have even made out the federal constitution of the German nation and the customary wrangling between government and opposition to be a deeply harmful hindrance to the only proper policy, namely the radical use of state power. The fact that this mixed choir thereby follows an old practice popular in times of crisis, and at one time in evil repute, doesn’t trouble any one of them in the least: what else could the country possibly need but leadership and firm leaders?!

It is not surprising that some of the leaders in office want to do away with the old labor movement’s labels, such as “social,” “democratic,” “just,” and so forth. Why should parties in governments that have to rescue the nation’s capitalism from the expensive rank and file provide their electorate, of all people, with standards of judgment that are nothing but an invitation to criticize and reject? It’s better they learn how right old Marx was when he said that justice is always whatever suits the prevailing mode of production! And that they respect what another führer of German workers once anticipated with the slogan: “Social is what creates work!”

Translators’ Notes

[1] German Chancellor Schröder.

[2] Latin phrase: which was to be proved. Used as a conclusion to mathematical proofs.

[3] Association pour la Taxation des Transactions pour l'Aide aux Citoyens (Association for the Taxation of Financial Transactions for the Aid of Citizens). A self-proclaimed “international movement for democratic control of financial markets and their institutions…”

[4] Luiz Inácio Lula da Silva, President of Brazil since Jan 1, 2003.

© GegenStandpunkt 2005