SHAREHOLDER VALUE

Debate: Labor Market and Growth. Will the market economy really perish if it cannot accumulate?

By Daniela Dahn

[This article published in: Freitag 39, 9/30/2005 is translated from the German on the World Wide Web,  http://www.freitag.de/2005/39/05390601.php.]


Opposition in the cause is always desirable. That’s why I thank Albrecht Mueller for triggering this debate. We are united against market radicalism and only disagree about the methods of its mastery.

Since unemployment has reached an unparalleled dimension under the unique combination of enormously increased productivity, global wage dumping, weakened unions and non-existent system-competition, I prefer unparalleled solutions: a radical redistribution of work and income leading to no one being superfluous and everyone being available. Albrecht Mueller trusts the stimulants from the seventies: demand, trade cycle and growth.

He doubts there are majorities for the radical reduction of working hours, international tax harmonization and citizen incomes although he admits that his prescription was followed for 25 years. Growth has not reduced unemployment because “no policy optimally guiding demand was pursued.” Since the economy does not hear us, we cannot prove that we are right. Once again we agree about the awkward situation.

As evidence, Albrecht Mueller clings to the “little exception” at the time of the turn when a boom was temporarily triggered in the West (through the far-reaching liquidation of East German industry) and unemployment was lowered one-third. Strangely enough he did not mention that two million jobs were eliminated in the same period in the new territory. Thus unemployment rose from zero to 30 percent. At best this example proves that the conquest of markets increases labor and productivity – a rather disastrous connection which demonstrates Marx’ claim that aggressiveness is inevitably inherent in capitalism.

I become outraged when with a rigid view of statistics the mother countries of neocolonialism, the US and Great Britain, are represented as models for reforms on the labor market. Shouldn’t we at least ask about growth’s share in the forceful conquest and hostile takeover of markets? What kind of social state exists there?

Finding out why our present economic order depends so much on some kind of growth seems central to me. Does the market economy really die out when it cannot continuously accumulate? The correlation of growth and labor is not demonstrable. For 35 years unemployment in Germany increased – up to the mentioned “little exception.” Growing effectiveness destroys jobs. Conversely the Koln Institute of the German Economy pointed out recently that “jobs” would arise in foreign countries while the economy shrivels. In the Netherlands, people speak of job sharing to avoid the term radical reduction of working hours.

I do not need to be convinced of the usefulness of qualitative growth urged by Albrecht Mueller for ecological and social projects. However this additional activity at best compensates for the loss of working hours caused by increased productivity and migration. We have tried to hold to our high economic output and not skid into the red. Since we consume 20 times more than most people of the world, a further increase is unnecessary and violates solidarity.

If this is true, as Albrecht Mueller rightly asks, how can the unemployed be helped in the foreseeable future? There is a sobering answer to that question. If majorities cannot be found for new solutions, the unemployed cannot be helped in the foreseeable future just as they could not be helped in the past. This cannot be accepted since enormous human, social and constitutional problems intensify. The German constitution declares Germany forever to be a social state, not a social business or enterprise. Politics is a hundred percent responsible for maintaining the social state; the economy holding to the laws is zero percent responsible. The president of the German constitutional court, Hans Juergen Papier, pointed out very convincingly that business need only fulfill the duties imposed by the law. Business cannot be criticized when it observes its basic right to do everything that is not prohibited. When the society sees excesses or negative spin-offs, the sovereign who also includes the unions must bolt the door.

Business only adjusts to social considerations when it sees a long-term chance of increasing profit. In addition, the whole gossip of the corporate social responsibility of managers or the alliance for work is illusory and a strange immoral request of politicians who delegate their social state mandate to businessmen since they want to repress moral pressures. Managers make full use of their rights granted by these politicians. Moral standards belong in laws, not in appeals. Property (in Germany) is obligated to observe the laws.

The much-reviled hedge funds whose profits are often over 40 percent, destroying productive capital through speculation and shaking whole national economies are allowed in Germany under red-green and seconded by black-yellow. Shareholder value destroying jobs could be termed multiplier value.