Global Positional Competition: World Economy Headed for Crash

Global Positional Competition: World Economy Headed for Crash

Interview with Horst Afheldt

[Junge Welt spoke with Horst Afheldt, economist and author of the book “The Parasitic Economy: From the Welfare State to the Divided Society”. This interview originally published in: junge Welt 3/2/2004 is translated from the German on the World Wide Web, http://www.jungewelt.de/2004/03-02/014.php.]

JW: The German welfare state is being dismantled with the promise of new jobs. Unemployment actually stagnates on a high level. The number of employees declines. Will politicians notice this absurdity at some time or other?

Horst Afheldt: Whether they notice is one question. Whether they will change the course is a very different question. After this is recognized as the wrong course, a new policy will only be defined after a long time.

JW: In the meantime, net incomes have fallen and further wage cuts are urged.

Afheldt: Through technical progress, the center of gravity shifts from labor to capital. The faster the technical progress, the more quickly is labor devalued. The so-called globalization makes itself felt. When the world market is freed from tariffs, a balance of wages appears. In other words, wages for a certain work cannot be higher in Germany than India or China.

JW: Will the worldwide wage adjustment occur on the lowest level?

Afheldt: This depends on the relation of supply and demand. We have billions of job seekers worldwide with millions of newly created jobs. The over-supply devalues the dependent employment.

JW: Thus labor is sold off dirt-cheap. Is this unavoidable?

Afheldt: In an earlier book I wrote, “Labor is as cheap as dirt.”

JW: State governments underbid one another in rivalry for the most favorable positional conditions.

Afheldt: The states must court businesses since capital becomes more important and labor more unimportant. In the past economic ministers could set conditions. Today economic departments help corporations in the competition by paying them subsidies and waiving taxes. An expert opinion of the International Monetary Fund concludes that no taxes will be demanded one day from businesses.

JW: When the state treasuries are emptied one “beautiful” day and purchasing power hits the bottom through wage exploitation, doesn’t a sad rude awakening threaten?
Afheldt: We have a system that leads us into poverty even though all participants act rights from their own perspectives. The businessman replaces the worker with a machine where the worker could cost three times as much. Otherwise his business would go bankrupt. The mayor or head of state who courts a business acts rightly from his viewpoint. When and how this will end cannot be predicted.

JW: Will a collapse occur?

Afheldt: That would be dreadful. When functioning breaks down in society, the collapse has enormous consequences.

JW: There are no differences any more between the parties. Everyone champions neoliberalism. What is the purpose of politics? Why should people vote?

Afheldt: The state has lost its influence in the current system. The state is not a regulator any more but has become a player in the market or member of the supporting cast subject to the rules of the market. This is true for all the parties. Some try to delay the crash and others like the FDP want to step on the accelerator. Arguments focus on what leads faster to the abyss – breaking or accelerating.

JW: What possibilities still exist?

Afheldt: We must reflect what should happen to the people who have nothing to offer but their labor power. When the free world market doesn’t offer a solution, then we must return to regional markets, a market of Europe, a market of North America, a market of South America and a market of East Asia. When comparable conditions prevail in these regions, we can reconsider an opening of the markets.