Cynical Capitalism

Cynical Capitalism

By Franz J. Hinkelammert

[This ideology-critical text of the liberation theologian and economist Franz Hinkelammert living in Costa Rica is translated from the German in: Neue Wege 92, September 1998. The last stage of a capitalism that no longer believes in its original utopia of universal provision of goods through market forces is analyzed. After the vain hope in the blessings of the “invisible hand”, the ideologists of this capitalism conscious of their own malice fall to a cynicism and nevertheless refuse any alternative. This isn’t light reading but substantial nutrition for all who argue with the “indispensable” neoliberal market economy.]

[Franz J. Hinkelammert offered the following text at a seminar “Globalization – Real Process, Slogan or Political Strategy” on March 6-8, 1998 in the Evangelical academy of Iserlohn. The author, one of the most profound critics of neoliberalism, intensifies his argument with the ideology of the global and total market. This ideology no longer comes with a claim of reason but with a claim of reality and decays to sheer cynicism. Hinkelammert shows three stages in the modern system: 1. Utopian capitalism that believed in realizing the common good through the automatism of the market, 2. Critical theory that judges and refutes utopian capitalism with the claim of reason and 3. Nihilist or cynical capitalism that refuses a “human face” and understands its malice as a natural reality to which there is no alternative. Hinkelammert groups these three stages as enlightenment, criticism of enllightenment in the continuity of enlightenment and anti-enlightenment around Adam Smith, Marx and Nietzsche. If Ideology criticism of the enlightenment is ironic (Marx), the anti-enlightenment is sarcastic (Nietzsche). The cynical system is undoubtedly dominant today as in the fascism of the 30s and 40s.]

The “Sinister Guest” of Nihilism after the “Specter” of Communism

Marx and Engels began the Communist Manifesto with the words: “A specter goes about in Europe – the specter of communism. All the powers of old Europe have united into a holy pursuit against this specter, the pope and the czar, Metternich and Guizot, French radicals and German police.”

This text emphasizes the opposition to this specter, the powers of ancient Europe. A specter was seen in those united in the alliance of communists demanding their human rights and the conditions of all human life against a system that destroys these conditions. In the eyes of the powers, they were a specter that went about in Europe and later in the whole world. They race behind the specter to make it disappear.

Nietzsche responded to these sentences of Marx and Engels with words that have also become famous. They appear in the edition of his writings titled “The Will to Power” at the beginning of the first book:

“Nihilism is just around the corner. What is the origin of this sinister guest? – First, it is an error to refer to `social emergencies’, `psysiological degenerations’ or even corruption as a cause of nihilism. Psychic, physical and intellectual distresses cannot produce nihilism (the most radical rejection of value and meaning). These distresses can be interpreted very differently. Nihilism is planted in a very specific interpretation, the Christian-moral interpretation.”

Now a sinister guest appears as a specter. Nietzsche calls this specter nihilism, the radical rejection of value and meaning. As its cause, Nietzsche sees the “Christian-moral interpretation” given to the miseries of time. The ideas that led Nietzsche to this conclusion are simple. He emphasized the hypocrisy and lying which permeates all morality but, according to Nietzsche, reaches its summit in Christianity. The virtue of truthfulness ends every morality since hypocrisy belongs essentially to all moral standards.

In Nietzsche’s words, the specter of communism is rebellion in the name of values. However the defeat of this specter of communism allows another specter to appear, that sinister guest, nihilism, as the radical rejection of all value and all meaning. For whom is this guest sinister? What is central is a point of view from which nihilism now appears as a specter. Under the aspect of “psychic, physical and intellectual distress”, nihilism appears as a sinister guest although it cannot be explained from this distress. Under the point of view of the crushed, nihilism appears as the sinister guest, a specter. Those who appear under the aspect of power as the specter of communism as soon as they revolt against power in defending their lives now experience nihilism after their defeat as the sinister guest that as a specter overwhelms Europe and the world.

The sinister guest is no longer just around the corner but has already arrived. To demonstrate this nihilism, I’d like to begin with the earlier position of an ideological world and ideology criticism. The rise of nihilism dissolves the possibilities of ideological positions.

Utopian Capitalism

Two paradigmatic texts can introduce our theme. The first is an ideological text in the tradition of utopian capitalism:

“A dignified existence presupposes the conquest of economic and social misery and distress and implies control over the necessary goods of life and secure jobs. The free enterprise system achieves all this thanks to its high efficiency. The motor of the market economy is competition. However competition’s function is not limited to generating economic dynamism. Competition as the `most genial instrument of disempowerment’ as Franz Bohm said `tames private property’. The free enterprise system relies on selfishness or the desire for personal advancement. However the cunning of the system leads self-interest coming up against competition to the well-being of the community. As Otto Schlecht said, competition doesn’t require `moral supermen’. Average morality is enough.’

This quotation comes from Lambsdorff, a liberal politician in Germany, for whom the market economy is the most moral form of the economy. The text has three characteristics. First, it is false. That self-interest which meets with competition leads to public welfare is false as a universal rule. Second, it is ideological. The assertion that self-interest coming up against competition realizes the public welfare is a sacralization of production relations, a secularized sacralization. This kind of sacralization characterizes utopian capitalism. Third, it is hypocritical. Presumably Lambsdorff knows that the statement is false but upholds it to sacralize relations of production. Thus the text is false, ideological and hypocritical.

Nevertheless the text has a “reason potential”, as one could say with Habermas, in referring competition to a concept of the public interest. Competition can be criticized immanently by activating this concept of the public interest and showing the limits and destructive tendencies of competition. Despite the criticism, a certain rational consensus persists.

“Horkheimer and Adorno remind us of Marxist ideology criticism which started from the notion that the reason potential in `middle class ideals and in the objective meaning of institutions’ has a double face. On one side, it gives the deceptive appearance of conclusive theories to the ideologies of the ruling class. On the other side, it offers the possibility for an immanent criticism of these structures which stylize themselves into the public interest while actually serving the dominant part of society.”

For Lambsdorff, the “reason potential” lies in the relationship between competition and the public interest that he describes as the “well-being of the community”. An immanent criticism is possible in that this public interest demonstrates that there are limits to the integrative power of competition whose disregard leads to the destructive tendencies in the logic of competition itself. This ideology criticism occurs in a framework common to both positions through reference to a public interest. Ideology criticism presupposes a definite rational consensus between the criticized positions.

In the middle class intellectual tradition, ideology criticism is set out in the term public interest which extends beyond the individual interest and isn’t a priori identical with individual interest. An automatism is asserted in the middle class tradition that binds and ultimately identifies the market automatism with its “invisible hand” and the “cunning of reason”. This is conceived as a Jacob’s ladder on which one climbs directly from earth to heaven. As a result, this capitalism could be described as utopian capitalism.

Soviet socialism built a very similar Jacob’s ladder. It claimed an automatic transition from socialism to communism through the maximization of economic growth rates. Communism was the parallel term for the public interest. The same ideology criticism that Marx directed against capitalism could be lodged analogously against the ideology of Soviet socialism.


Nihilist Capitalism

Alongside the quotation from Lambsdorff, a second paradigmatic text comes from a book by Alan Toffler. This text isn’t ideological in the same sense as utopian capitalism but cynical:

“In the turbo-economy of tomorrow, the accelerating value creation machine (the new wealth machine) is the source of economic progress. Whoever has no connection to this source is excluded from the future. This is the fate of many developing countries today. As the main system for producing the wealth of the world is now in gear, countries that want to sell something must keep step with buying patters. Slow political economies must either speed up their reactions or lose many orders and investments and be put entirely out of the running.”

“The new economic imperative is clear: either developing countries build their technology to keep up with the world pace or they lose their markets very brutally, casualties of the acceleration effect.”

Toffler says almost the opposite of Lambsdorff. According to Toffler, competition creates a “wealth machine” which excludes through its acceleration effect and puts out of the running without a chance of finding a place again those who cannot survive in the competition. They are the casualties, the accident victims of the accelerating acceleration. Toffler doesn’t refer to public interest and ascribes no tendency to the welfare of the community or the common good to the market.

This text has three characteristics. First, it is true while the text by Lambsdorff is false. Second, it sacralizes the dominant relations of production without referring to the well-being of the community or the public interest. Sacralization occurs very simply through the celebration of acceleration. Acceleration as a categorical imperative recalls Nietzsche’s “To the ships, you philosophers!” Third, the text isn’t hypocritical but honest. It describes what happens.

Still the text by Toffler is cynical and cannot be encountered in an ideology-critical way. There is no “reason potential” giving the deceptive appearance of convincing theories to the ideologies of the ruling class.” No possibility is offered “for an immanent criticism of structures which stylize themselves as the public interest while only serving the dominant part of society”. What Toffler says is not an ideology in the sense of Habermas. Nothing is raised to a “public interest” in the tradition of rationalism. What really occurs is described.

There is something surprising in the text. What Toffler says is largely what the dependency theory argued in the 60s and 70s. Both agree on principle as to the judgment on the merits. However the dependency theory isn’t cynical. Unlike Toffler, this theory did not emerge from ideology criticism. Against assertions like those quoted in Lambsdorff, dependency theory insisted in the 60s and 70s that the calculus of self-interest when it meets with competition doesn’t realize but damages the public interest.

Dependency theory was critical since it refuted the dominant identification of self- and public interest. It did this through a judgment on the merits. However within the claim of reason, according to which the economy has to realize a public interest, the judgment on the merits changed into criticism without ceasing to be a judgment on the merits.

The ideology of utopian capitalism must reject this judgment on the merits if it wants to survive. But when this judgment on the merits is asserted so convincingly that one cannot refuse it any more, can capitalism be regarded as the ultimate? Then the utopia of capitalism according to which capitalism realizes a public interest or common good must be dropped. That happened in the 80s and 90s. Objective statements like those of dependency theory do not contradict any claim of reason in capitalism simply because no claim of reason is raised…The objective statements themselves become norms and imperatives. When capitalism marginalizes and destroys, an imperative is inferred according to which capitalism should marginalize and destroy. This is celebrated as “creative destruction” since no alternative exists…

Utopian capitalism is transformed into cynical capitalism. Capitalism renounces on its “human face” so no kind of judgment on the merits can criticize it…The re-valuation of values is executed. The result is sacralization through accelerating acceleration, the apparent adventure of human knowledge. Even if this development turns out to be a march of undying loyalty into death, this march must be carried out. The heroism of collective suicide of humanity replaces the utopia. Death becomes the utopia. So that no one can create hell in the name of paradise on earth any more, one marches realistically with open eyes into hell.

In contrast, classic ideology criticism is completely helpless… The system makes itself a tautology and doesn’t allow any possibility of an immanent criticism.


Destructive Truthfulness

What emerges is a new language. In “The Last Days of Humanity”, Karl Kraus showed this at the beginning of this century. With this language, one says what is and derives from that what one should do. One no longer is a hypocrite. One celebrates the malice which one visualizes.

This way of saying what one does appeared for the first time on a massive scale with nazism. Hitler said openly and honestly everything that he planned to do. He meant it. That was completely surprising for politicians at that time. Consequently they didn’t believe him and sought his true intention behind what he said. Nevertheless he said what he wanted. He was “honest”.

Classic ideology criticism cannot offer a solution here any more. The underlying consensus about public interest has dissolved. This dissolution of the enlightenment seems to exist in the enlightenment itself and in its humanism of the abstract persons. This leads to the necessity of conceiving reality as a concrete human condition for life preceding every formulation of the abstract public interest (ideal market situation etc.). This reality can then reveal the dominant tautologizing of the cynical system. The system is only unmasked, not refuted. Tautologies cannot be refuted.

What Toffler does with the judgments on the merits underlying dependency theory, others do with different theses of critical theory. In the theory of international trade prevailing today, the ideological theory of comparative cost advantages is abandoned. This theory of Ricardo attempted to prove that the advantage of all participants lies in the logic of international trade. No one loses when one enters into international trade irrespective of the initial cost situation. The worst possible alternative for participants is that they have no advantage while others amass all the advantages. Still no one can lose.

Rosa Luxemburg criticized this theory by pointing out that international trade is based on competitive advantages, not on mutual advantages. Therefore she interpreted international trade as an economic war connected with the war of weapons. In the context of a consensus on the public interest, this represented a critique of capitalism which was rejected by the middle class side. The theory of international trade dominant today largely agrees with the criticism of Rosa Luxemburg. The current theory is grounded on the generally accepted thesis that the market economy is an economic war… What is central is having competitive advantages. Reflection on comparative advantages becomes unnecessary.

Economists today are accustomed to see themselves as military advisors in an economic war. Porter’s theory is a war handbook. The fundamental judgments on the merits of Rosa Luxemburg and Michel Porter are the same. Nevertheless a criticism of capitalism appears with Rosa Luxemburg while Porter develops a theory of cynical capitalism. Rosa Luxemburg concluded the necessity of a transformation of the “war economy” into a “peace economy”. On the other hand, Porter says that a market economy is war and this must be. He excludes the possibility of alternatives. His position is cynical.

Other authors expand on the fetish theory of Marx as Toffler expanded on dependency theory and Porter the theory of international trade. In a book by Boltz and Bosshart, this is accepted as a practical statement and a cynical theory. Marx spoke of the commodity as a fetish and the market as idolatry. These statements by Marx were judgments on the merits. The fetishism theory was presented as metaphysics.

With Marx, these practical statements have a critical meaning since the public interest was emphasized. For Marx, public interest was the concrete reality of the concrete person endangered by the market. Here Boltz and Bosshart make their re-valuation of values. They appropriate the fetishism theory as a practical statement but turn it around. Since the market is a fetish, it also should be a fetish… As a result, fetish theory continues as cynical capitalism. The same thing can happen to other Marxist theories on exploitation and destructive capitalism.

This cynical system is tautological and cannot be criticized in its essence. Tautologies can be unmasked but not refuted. The system makes itself tautological by adopting and cynically interpreting critical practical statements. This assumes that reality is outplayed as an authority of criticism. Reality cannot be criticized in the name of the system since it has eliminated all values of this kind as utopian. As a result, criticism isn’t ideology criticism. It is system criticism, tautology criticism and cynicism criticism, criticism of death mysticism.


Utopian Capitalism undermined by Neoliberal Populism

The most important method for tautologizing the system is the negation of reality as a possibility for concrete human life. Utopian capitalism acknowledged this reality at least indirectly. Between system and reality, utopian capitalism set the automatism of the market with its tendency to equilibrium thanks to an “invisible hand”. One didn’t need to worry about reality since the automatism of the market produces a harmony of self-interest and general interest. The self-healing powers of the market must not be annulled. Historical socialism had an analogous effect through its automatic tendency to communism.

Cynical capitalism undermines this equilibrium tendency so that no criticism can follow any more. This happens by means of a very definite method clearly distinguishing neoclassical thought from neoliberal thought.

The equilibrium utopia is maintained by neoliberal populism. This is especially true for Hayek and Friedman and his Chicago school. The reasons that the market doesn’t show this equilibrium tendency in reality are now defined differently. In the neoliberal tradition, the market itself could not overcome the imperfections of the market. Therefore certain interventions of the state in the market were regarded as necessary for these equilibrium tendencies. In Germany and Switzerland, law-and-order liberals assumed this position and set the theoretical framework for economic policy of the post-war era. In these theories, the equilibrium utopia of the liberal tradition became the justification of interventions in the market. Utopia has a “reason potential” which can be and was the starting-point of criticism.

On the other hand, neoliberalism tautologizes and perfects this equilibrium utopia. Imbalances of the market are no longer explained as imperfections of the market to be corrected. The theory of imperfect markets which was previously decisive is now dropped or marginalized. Neoliberalism represents the market as “societas perfecta”. No imperfection of the market occurs, only imperfections of people acting on the market. A complete inversion of relations to the market appears. In the view of neoclassicists, the imperfections of the people who disturb the market as “societas perfecta” are imperfections offset through intervention in the market. From the neoliberal perspective, interventions in the market are the reason that the market doesn’t function perfectly.

Here the market becomes the total market and capitalism “total capitalism” (Milton Friedman). The market becomes perfect in repressing all interventions in the market. The market can only be the “societas perfecta” by removing all interventions. This was different for the neoclassicists. There the market became perfect or more perfect through interventions. The market utopia of the neoclassicists had a reference to reality that could be described as reform capitalism. Neoliberalism trims this reality reference and replaces it with an aggressive totalizing of the market. The emerging utopia of neoliberal populism has no “reason potential” any more since it lacks a rational core.

A kind of “cursed” dialectic arises. What the liberal utopia always promised is still promised as the result of renunciation on all concrete steps toward this utopia. The interventions in the market previously interpreted as steps making possible the market utopia amid imperfect markets are now presented as the cause of disturbances of a market depicted as "societas perfecta"”

This construction of the market as “societas perfecta” utopianizes the market. This utopia is now completely tautologized. For example, regarding unemployment, perfect competition is assumed. If there is perfect competition, then there is also full employment. Thus the causes of market disturbances producing unemployment are seen in the prevention of a totalized market. The causes of under-employment are the full employment policy of the 50s and 60s, minimum wage, payment of unemployment benefits, the existence of unions and states which legalize this “monopoly” of the unions. Thus full employment is assured by abolishing all full employment policies, minimum wage, payment of unemployment benefits and the legalization of unions.

This argument is repeated in relation to poverty. If the market is perfect, there can be no poverty. One deduces that there are market disturbances whose outcomes are impoverishment or pauperization processes. Neoliberals quickly find these market disturbances, progressive taxes and the general policy of income redistribution. If one doesn’t want poverty, the policy of redistribution of income must be abolished and high incomes promoted. A dynamicizing of the economy occurs where unemployment and poverty become minimal.

Not surprisingly environmental problems are frequently explained as consequences of the policy of conservation. If all nature is completely privatized, the markets’ powers of recovery would make destruction of the environment unprofitable. These arguments of the “cursed” dialectic are repeated in other areas. During the rebellion in the ghetto of Los Angeles in 1992, a representative of the US government declared that the cause of this rebellion was the state welfare policy of the 60s and 70s. Population growth is explained as a consequence of state interventions through the Public Health system.

In this way, utopia is promised as the result of the abolition of all systems for the protection of human life and nature. With open eyes, these neoliberals march into hell while promising heaven. The argument of every extremism also prevails here: the worse, the better. Where neoliberal policy falls apart, politics is accused since the neoliberal program was not carried out in the extreme outlined in the textbooks. Neoliberalism is still regarded as the proper solution.

This neoliberal populism plays a role today for propaganda in favor of globalization policy. The IMF and the World Bank represent this globalization policy in their public announcements. In times of election campaigns, nearly all governments follow along. One master of this facade propaganda is the current president of Brazil, Cardosa. Previously it was Ronald Reagan. In Switzerland, it is Gerhard Schwarz as economics’ editor of the Neue Zuricher Zeitung who is a believer in this populism. The nihilism of cynical capitalism, the sinister guest, emerges behind the populist façade. Nihilism renounces on all equilibrium tendencies and simply declares economic war.

The Virtual Reality

Nihilist capitalism achieves its open negation of reality by purely and simply denying reality’s relevance. The sinister guest reappears. Reality is no longer a criterion for the system. Rather this system seemingly produces reality itself as a virtual reality. There is no point of reference any more outside the system as criticism. Thus the system tautologizes and totalizes itself. The system is everything, even reality itself and becomes what Nietzsche called “active nihilism”.

A critique of the system is only possible through reference to the advanced destruction of human living conditions. This criticism can only be the unmasking of the tautologization of the system. The ore evident this destructive process becomes, the more the system continues the tautologization process. However it cannot be justified by arguments. The system is deadly and can hardly allow its opposite. As a result, it supports the tautologization process in a mysticism of death so that the argument of living conditions is dismissed as unrealistic. Death replaces utopia. If one previously said that whoever wants heaven on earth creates hell on earth, one now marches with open eyes into hell as the Nazis did. The virtual reality has a very analogous function to the thousand-year empire of the Nazis.

Ideology criticism cannot give an answer any more in this situation. Ideology criticism assumes a consensus about a public interest that has dissolved. The humanism of the abstract person emerging from the enlightenment has also dissolved. However with the arrival of the nihilist system, ideology criticism and the enlightenment end since they are only possible starting from the utopian system. The system logic that insisted that the system was obliged to a public interest also ends. Since the automatism of the system, market automatism or plan automatism do not simply lead to the realization of the public interest, the utopian promise acts as a rational reference point for resistance against the system. On the other hand, the nihilist system has no limit in itself for its totalization. This system simply promises accelerated acceleration and nothing else. This promise maintains that whatever may happen will happen. If this acceleration leads to the death of humanity, that must be. Death mysticism itself can legitimate the worst.

In this way, the nihilist position effectively establishes a policy of exclusion of large parts of the population and the destruction of nature. In its conception of reality, the nihilist system doesn’t and cannot include the population as a whole or nature as a condition of life. A policy of inclusion of the whole population cannot be formulated or even conceived. From the point of view of the nihilist system, there is no meaning in a policy of inclusion. What cannot be conceived cannot be realized.

Criticism of nihilism is only possible from an analysis of the conditions of human life. The enlightenment did not make such an analysis; this analysis first began with Marxist thought. Marx cannot be simply understood as ideology criticism without adding that he under-girded ideology criticism with such an analysis. This analysis must be continued and precedes every formulation of abstract public interest (which starts from the idea of ideal situations like the idea of the ideal market situation in the theory of perfect competition or the ideal planned situation in the theory of perfect planning).

Since an analysis of the conditions of human life can only reveal but not refute the tautologization of the nihilist system, the hope that humanity will ultimately refuse the death mysticism is assumed. Without this hope, nihilism criticism as system criticism is not possible and allows no security. Humanity can decide for the march of undying loyalty to die in king Etzel’s court. An option results which belongs to the conditions for human life, the option for human life opposing the option for death that is often very attractive.

The Reality of the Real

A new problem arises that wasn’t important in the last decades, the question about the reality of the real. The tautologization of the system and the replacement of reality by a virtual reality reveal a process of thinking in which reality actually disappears. The question then is how one can be assured of the reality of the real. The ancient problem of the distinction of dream and reality now occurs as a question of the distinction of virtual reality and reality.

The specter of the defeat of communism goes about in Europe today. In its persecution, the sinister guest who stood before the gate in Nietzsche’s time has now arrived. This sinister guest must destroy reality itself so that its definitive disappearance follows from the defeat of the specter of communism. The sinister guest will then discover that the specter of communism is not a specter but the concrete reality itself which appears incredible for those who deny it.