Politicians and the media manufacture consent for the state's crisis policies ...
How the people are to think about the crisis
that they are paying for
[Some arguments taken from GegenStandpunkt 4-11]
The crisis in the financial markets has grown into a sovereign debt crisis. The huge amounts of state debt taken on for the purpose of bailing out the banks, preventing the collapse of the financial sector and the hard struck real economy have caused nations' debts to swell to an extent that is prompting investors to increasingly withdraw their trust in the quality of this debt. They demand higher interest rates for most government bonds and are threatening to deny credit to more than a few states. The next stage of the crisis has thus announced its arrival, reproducing its starting point at a new level. Depreciated government securities, “haircuts” like in Greece, ultimately the complete default of a country – all this conjures up a new banking crisis, because this sector's big players are the most important investors in government bonds that are rapidly losing value. A new, far bigger recession looms, and ultimately the downfall of the money in which business is done. Everything is at stake. The ultimate question on the trading floors and at the political summits is: who will rescue the increasingly insolvent state rescuers, who are losing their credit with the financial actors they once rescued?
The people only have one role to play in this question: they are the pawns who have to answer for all the measures that the leaders of commerce and politics deem necessary. As for the effects of these measures, the majority of working people have been experiencing the devaluation of their labor power in one way or another for a long time now. In the wake of the crisis, people have had to give up wages or have suddenly lost their jobs. Whoever can't service their loans loses their home and is left saddled with debt. Whoever invested their savings in the wrong bank, like Lehman, loses them. And in passing we learn that there are an additional 40 million people who are suffering from hunger, because in the absence of investment alternatives the major financial investors have increased their speculation on raw materials and agricultural markets, making food more and more unaffordable to entire populations.
These are the demands the human pawns have to cope with – not just in practice, but also theoretically. So that they willingly do what they will have to do anyway, these demands need to be made palatable in order to encourage their understanding and approval. In any case, the politicians and the media do their best to give the citizens the mental guidance they need so that the state can implement its crisis policy.
“There is no alternative!”
This is the first argument, carved in stone, which the authorities present to the people. The message is clear: When it comes to austerity measures, there can be no pleading for leniency or mercy for retirees or the socially disadvantaged, because the alternatives campaigned for by some interest groups or leftist politicians simply do not exist. Here the government does not claim that it has a better argument for its actions or that other alternatives are poorly founded – their existence is simply denied. Any appeal is condemned to irrelevance without any argument. The people should see the government as merely enforcing an objective necessity that leave no other option.
The people should take the politicians at their word. This sort of economy, which is presented to them as an indispensable means for their own livelihood, can only recover if the people are impoverished, and not only temporarily, but permanently – through an orgy of cutbacks in pensions, health care and other areas. This is not done out of malice, but because the laws of our economy require it. If the people were to take this seriously, this would be a damning indictment of this economic system. But instead, they are supposed to take it as evidence for the necessity of the cuts.
The necessity of impoverishment has nothing to do with a material shortage that would force people to cut back on their standards of living. Financial crisis or not, no natural disaster has destroyed the crops, not an acre of arable land has been lost, factories and machines for the production of edible and useful things are as abundant as the hands that could work them. All the objective conditions for supplying the people with sufficient and quality goods are there. But because in this economy the employment of all these production factors is subjected to the calculation of making money, workers' living standards have to be cut so that this calculation works out again to the satisfaction of those who benefit from it. The financial sector has lost its confidence in government bonds because of the levels of accumulated national debt, and it requires new evidence of their solidity if it is to loan more money to governments. The latter deliver as best they can and do whatever is necessary. They attempt to reduce debt by boosting revenues and cutting spending, mainly on expenditures for the masses in their capacity as pensioners, students or consumers. After all, that is less harmful – maybe even beneficial – to the growth that is also needed. That, after all, is the second battlefield: the state needs lots of growth from the cheapest labor possible in order to regain the confidence of financial investors, and that is something that companies always need anyway. Finance capital, real economy, and the state – three authorities, one calculation: the impoverishment of the masses is simply necessary in order to balance the books again, in the crisis more than ever!
It really is true that, in this system, there is no alternative to treating working people badly; but it is not true that there is no alternative to this system. The objective constraint heralded by the state stems not from nature, but from the regime of money that the state, with its sovereign power, makes binding for the kind of economy it wants. It is therefore only logical that in numerous countries, massive social cuts are being enforced with police violence against popular opposition, because the “objective necessity” is not a natural law that is automatically in force, but only takes effect to the extent that the state imposes it with its force.
“The crisis has many culprits!”
The crisis has screwed up this delightful agenda. And so it must be made clear to the working population how things could go so wrong in the best of all worlds, threatening the livelihood of many people and forcing them to pay the consequences in every sense.
The financial crisis is global, as are the overwhelming national debts that states took on by drastically expanding credit in order to bail out the financial industry. Investors have withdrawn their confidence in government securities and brought entire nations to the brink of insolvency. It all got started with the relatively small peripheral countries in the South, and for the time being, Greece marks the high point. However, the solvency of Spain and Italy has now been seriously called into doubt. And even France is threatened by the prospect of a downgraded credit rating or worse. If a financial crisis has such a global effect that it leaves hardly any country untouched; if one government’s distressed budget can unleash a “domino effect” that threatens to drag government solvency worldwide and the entire financial world into the abyss, then the matter is apparently systemic. Indeed, in a system that sets up the many dominoes and connects them economically so that this connection will tend to make the crisis go off like a general and ultimately global disaster. Politicians themselves even briefly described their economic machinery as “systemic,” especially the big banks, in order to legitimize the expensive debt-financed bailouts of the ailing financial institutions. Anything that is “systemic” thus can't be allowed to fail, because otherwise the whole system will be ruined. Of course, in their official explanations of the crisis, politicians don't want to know anything of this objectively functioning principle of their economy, its systematic character, which was meant to serve as a viable reason for the bailouts. Instead the aim is to separate the crisis from its cause, in order to absolve the famous system called market economy from being in any way the cause of the disaster that it has brought over humanity. This fosters good faith in its fundamental suitability.
The substitute for criticism of the economy and its crisis lies in a search for the culprits, who are supposed to have violated moral, if not legal, standards. Irresponsible accounting and greed are among their major sins. This makes crisis understandable without putting people's high opinion of the economy at risk. After all, this kind of criticism is not aimed at the economy itself, but at the actors' comportment within the economy, accusing them of violating the rules and breaching their duties. A crisis is thereby made into a malfunction that could have been avoided if everyone had performed their respective duties and obligations. And with this cheerful message, the politicians show themselves in a favorable light, because mere errors or violations of duty by individuals make the remedies certain. They must take up their responsibilities with new regulations and rules, so that a way is found out of the crisis and the same thing will not be repeated in the future.
Sitting in the dock in the front row are the players of casino capitalism.
Gamblers in the financial sector
Their offense is their excess, driven by greed. The premise is that there is nothing wrong with finance capital itself, but with the excesses of certain speculators who can never be satisfied. Pundits and the media arrive at this finding without any longwinded study of the financial industry. They proceed the other way around. Before they make any study of the industry, they are certain that misconduct is the reason for the disaster. Their only task is then to construct the material and the standards that were trespassed against.
That's how those who have never seen a trading floor in their lives are introduced to some details about speculation. Short selling of ultimately unsecured assets suddenly becomes notorious. A business scheme in which the investors do not even have to own the stock they are trading with sell the stock at today's price to a third party in order to buy it later for a cheaper price after its anticipated price change. The investor pockets the price difference, if there is any. And what should this teach us? First, that such a business is highly immoral because it speculates on falling prices, the decline of a market. But how should an investor approach the fact that prices are falling? What would be the right moral attitude to the fact that prices are going down? Should one buy downwardly spiraling papers to stop their depreciation and therefore use one's assets just to stop it? And risk throwing one's assets in the trash, writing them off because the downward spiral might not be able to be stopped? That would go against all economic rationality as it is normally celebrated in our society. And which wealthy participant in the market economy has something else in mind than his profit? How he achieves his profit, either with falling or rising prices for the products of his investments, is therefore and has always been of no concern and no interest. The main thing is whether the yield is acceptable. It isn't the job of any competitor in the competition for money to support the overall market so that it doesn't contract or go into recession, and that would be entirely incompatible with the purpose of competition. Accusing investors who get rich on short-selling of immoral behavior is supposed to help explain the crisis, or at least the fact that it keeps getting worse, because it drives share prices down, on the fall of which these investors make more money. As if the prices didn't already have to be falling in order to profit from their fall.
The point of such effusions is to interpret the crisis to everyday people as a moral misstep by their greedy contemporaries who use a technique of stock market speculation which, until recently, was considered a stroke of genius of the “markets,” making headlines. Ingenious, how slick these guys manage to generate increasing returns even in the face of falling markets. Bravo! After the onset of the crisis, and only then, the same procedure is ranked between objectionable and dangerous, and there is no other criterion than that a flop took place, although it is suggested as if there were one.
What is to be done? A financial transaction tax has been recommended, for example, as if a fee on the exposed evil deed could undo it. The hope is that this would at least put the brakes on such speculation. But the tax must not be too high either, otherwise it would send financial investors overseas, and they are absolutely needed here at home. Everybody wants to put the gamblers in the pillory, but no one wants to throw them out of the game. After all, they fulfill a dual function. As culprits on a perp walk, they may satisfy the righteous anger of the people who now know at last who has gotten them into the crisis. And as investors who have been chastened and tamed by political regulation, they should promote the financial sector and the nation's economy. That is how the state reins in the fury it has encouraged at the gamblers in the casino and makes them conform to the state's policies. Because that's exactly the lesson the government wants everybody to learn from the crisis. It wants to restore the usefulness of the financial system for the state by granting credit to the banks and imposing new regulations on them.
And so the criticism almost automatically finds its second addressee. If the politicians now maintain the necessity of increasing the regulation of the financial markets, then they admit that this is precisely what they failed to do before the crisis. They thus have not performed their duties in terms of financial policy and, even worse, they have granted the reviled gamblers license to recklessly speculate and have even helped finance this recklessness with a “policy of easy money.”
Irresponsible state budget managers
Ever since government debts have reached into the billions and finance capital has announced its distrust in government bonds, everyone knows what went wrong thanks to the expert instruction of the media: “You simply can't spend more than you take in!” Quite obviously, the state can spend much more than it earns, even in the long run. This is shown by the steadily rising mountain of debt made up of the mass of credit it borrows from the financial sector. It would be interesting to know why this is so, why it works and who benefits from it. But no one wants to know any of that.
Rather, the state budget gets compared with an office pool or a private household in order to denounce a breach of fiduciary duty by the political treasurers. So the economic obligation of the state also becomes a moral one: The state budget directors have frivolously managed our ideal communal fund! In this way, fiscal policy sits morally as well as economically on the sinner's bench, because they have allegedly violated economic reason as understood by every housewife. This is not a critique of the state budget, but that frivolous budget politics has bad consequences. The hard and finally valid proof of economic irrationality on the part of the treasury department does not come from houswives, but from the finance capitalists themselves. The markets show with their distrust in the tower of government debt how frivolously it has been mismanaged, the press whispers to its readers. Of all people, the just reprimanded gamblers of the financial industry who bought and marketed this tower of debt are appointed the judges of how an economically sensible budget policy should look!
It is quite interesting how the pieces of criticism instructed from above interlock. The scolding of the financial industry does not really apply to itself, but to its retrospectively discovered lack of government regulation. The government finance policy is not charged with its work, but its subsequently purported lack of economic rationality. No sphere is subjected to criticism for itself, but each is measured by the standard of the other. The wish to restore the mutually beneficial cooperation that has been lost in the crisis is conspicuous, and it forms the basis of the entire way in which the state addresses the crisis. It puts the program imposed from above into the mouths of those below, who are to express it as a demand on the state. A state regulated financial sector and a policy designed according to economic criteria, including budget, that would be something!
It is also clear that the scolding vis-à-vis politicians serve not only the public's sense of justice, to which a new culprit for the current debt crisis is presented. This criticism is also quite to the taste of the political leaders. Not least because its simple diagnosis points the way to a treatment that is on the agenda anyway. What has driven the politicians to a policy of economic irrationality? Hasn't the state been kowtowing for too long to an “all risks insured mentality” by “voters” and their notorious “living beyond their means”?
All of us with our too high expectations
As if the average wage earner had been given the opportunity to apply for – let alone decide on – an increase in government debt for his livelihood, he is now addressed like the ultimately responsible building block of the political financial disaster, down whose throat the democratic political overseers have shoved everything in order to buy the good behavior of their electoral base. The high expectations of the people, courted by the selfish character of politicians who fear for their re-election and sinecures, has led to disaster. Now the democracies sit on their pile of debt that proves their undoing, thanks to the financial markets. That is a clarification about the nature of democracy, able to undermine its good reputation: the last thing a democracy can stoop to is being a means of livelihood for the people!
Those addressed are made to take note that in rule by the people – democracy! – it simply must not be about providing voters with benefits or a decent living so that they might at least have one good reason to vote. Not only is this not in the program, it counts as a fatal mistake that takes its revenge. Look at the state debt crisis! With this, the agitators in the public arena have created the perfect construct, at which they are now courageously hammering away: the relentlessly high expectations of the ordinary people and voters. As if every election campaign wouldn’t prove the exact opposite. Then parties court the favor of voters by pointing out that they are free of any kind of populism, an accusation they make against their rivals. Not serving but rejecting any kind of expectations of the people is offered to them as the best reason for approving a responsible government policy. Not even without success, as evidenced by election results.
Hence the people, on the one hand, stand in a row with the other culprits of the financial disaster, the finance capitalist gamblers and the political failures. But only on one hand. On the other hand, their prominent position is all too clear. With regard to the state debt crisis, they are not only complicit in the crisis because of their their high expectations, but they are the root of the evil for which the overindebted state budgets are meant to represent only the derivative, the derived quantity. And that's why the public is quite rightly seen by the crisis experts, again in contrast to quite different actors, as the source whose labor and money must hand over what the other “fuckups” need in order to get back their footing. The experts are not in any case the ones who have to pay the bill which the ordinary people are responsible for. In their second noble capacity as “taxpayers” who have to accept responsibility for the debt-ridden state budget, which should be restored with new growth, the ordinary people have to pay as workers for the growth that “the markets” need and to count this as their welfare.