The Neoliberal Revolution Devours Its Children

THE NEOLIBERAL REVOLUTION DEVOURS ITS CHILDREN

The financial geniuses pretend to be the new gods of globalization. The builders of the Tower of Babel were modest compared with the new financial masters of the world. A short pointed history of the crisis

By Norbert Blum

[This article published in: Die Tagesspiegel, 3/20/2009 is translated from the German on the World Wide Web, http://www.tagesspiegel.de. Norbert Blum is a former CDU minister of the interior.]



Of all the fairy tales told by my mother, the “Emperor’s New Clothes” gave me the most joy. I always had a good laugh about the disgrace or embarrassment of the vain emperor who spent all his money for magnificent clothes although in truth he was naked. “The Emperor’s New Clothes” is the fantastic anticipation of the 2008 financial crisis. The emperor probably dispatched analysts, bank experts, rating agencies and even clever professors to the stock exchanges of the world to marvel at the universal wealth and the global economy. “The prospects are super,” all of them would have announced. At the beginning of 2008, the state rulers of the G7 praised the robust world economy. In the middle of July 2008, the German Institute for the Economy declared: “The upswing continues.” After the collapse of Lehman Brothers, the Hamburg World Economic Institute gave the all-clear signal for all fear. None of the “clever people” saw the disaster coming. Never has a guild claiming the label “science” made itself such a fool as the guild of economists. It has landed in the serious status of astrology. The conjectures of finance capitalism were confused with the reality of goods and services. Expectations were held to be reality. Illusion, hope and expectation swindled each other.

Credits are expectations for repayment. Expectations not tied to any real probabilities are like money not supported by any labor. Both resemble hollow spaces filled with hot air. These hollow spaces are called “soap-bubbles” in the circus and “financial bubbles” in the banking world. Bubbles rise in the air, are accompanied by astonished Ohs and Ahs – and burst.

Money is the material from which the illusions of finance capitalism are sown. How far the deception is driven appears with the promise that “money works.” I have never seen even one cent working. Money does not lift a finger. Money does not create any assets. By its nature, money is only an economic means. It is a useful vehicle when used as a means of exchange, a mathematical unit or only for safekeeping of assets – nothing more!

The big finance capitalists and their intellectual receivers of stolen goods vested money with a quintessence illusion. An illegitimate role came to money with the same trick with which the emperor’s tailors worked. Money has emancipated itself from its instrumental character. Means has become an end. Qualities that traditionally belonged to substances and subjects are ascribed to money. However money is neither a cause nor a goal. Money masks as a product and worms itself in the form of “finance products.” The world is flooded with money. Where is the child who uncovers the nakedness of the money economy?

The social state also falls under the thumb of finance capitalism. Worldwide the transfer system should be replaced by capital covering. After privatization scoured all areas of life, the penal system, police and soldiers were seized by the privatization hunger. The social state only remained as a pasture. The experiment was first hidden; then it manifested at the wrong moment. Gradually the word got out: capital covering is not cheaper than transfer financing and contrary to different reports is neither immune nor more secure regarding demographic changes.

The privatization of social security has not been a success story and will not be a success story. The privatized capital-covered system of the United States of America is the most expensive and most terrible health system. Capital covering is not fit as a general prescription of social security because the capital necessary for this does not exist.

What is true in general for the economy is also true in particular for social policy. The “source of human prosperity” is labor. Adam Smith already knew this. Unfortunately his neoliberal great-grandsons are not as bright as he was.

According to the proverb, pride comes before the fall. The financial geniuses pretend to be the new gods of globalization. The builders of the Tower of Babel were really modest compared with the new financial masters of the world. The arrogance of ignorance knows no limits any more. Now the bankers cry to the state for help since they otherwise would be put out of action. Those who pull out as deregulators and privatizers return with torn trouser legs as nationalizers.

The neoliberal revolution devours its children.