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The Social State inthe Age of Global Capitalism
by Michael Kratke and Elmar Altvater
Monday Oct 28th, 2019 4:05 AM
Welcome to techno-corporate feudalism-where the richest three Americans have more wealth than 160 million, where the wealthiest 86 have more wealth than 3.6 billion (acc. to Oxfam), where the foul-mouthed authoritarian cancelled free school lunches for 1 million children, where the average US workers only earns 12% more than in 1964 and where market distortions rule.

By Michael Kratke

[This article is translated abridged from the German on the Internet.]

1. Globalization – Fairy Tales and Objections

Whoever dares to sound skeptical in today’s debate about “globalization” and “location competition,” whoever contradicts the flood of unproven assertions about the alleged practical constraints of “globalization” can be certain of being marginalized. He is in the corner of those who don’t want to see the new “realities” or the “true reality” – whether out of stupidity or intellectual laziness and cannot get rid of the old familiar standards for comparison and categories like the “national state” and the “national economy.” Whoever is not ready to take everything at face value is regarded as hopelessly limited or hardened.

Social scientists are paid to criticize, not to believe state or private propaganda whether involving “socialist” or capitalist fairy tales. Spreading unbelief is a strenuous but necessary activity since a few kernels of truth must always be deconstructed in all effective myths… A whole bundle of contested, interpreted and ideologized facts are involved with globalization. Several conventional wisdoms are part of the ideological discourse on globalization: the current fairy tale of the powerlessness of the (nation) state and the fairy tale of the inevitable end of the social state.

Breaking the spell of globalization myths is not enough… What has structurally changed in the economic world system that we call capitalism in the last twenty years since the great turn of 1989? What is the direction of the further development of this system? What are the foreseeable political and social consequences of the latest “structural changes” of capitalism? There are extremes and an essentially new middle in the international community of social scientists. Some claim everything is completely different today. The end of “national economies” and “national states” has occurred. We are in an irrevocable transition to a completely new global economy and politics that cannot be understood with the traditional concepts of “business,” “competition on a world market” and the “world of states.”

Others say no great structural change of the capitalist world system has occurred in the last decades in an historical comparison. The basic structures are still intact and there are no indications of a fundamental change in the near future. Both extreme positions are politically and academically barren or infertile. A global, boundless and timeless economy is inconceivable in the literal sense. Borders are relevant for defining today’s globalization tendencies and their consequences.

2. Capitalism as a World System

From its beginning, modern capitalism has been a “world system” that calls into question “natural” social and political borders…

Through the lens of the “long waves,” people easily overlook how open, uncertain, inscrutable and confused the situation was (and is) for contemporary actors, how the respective development runs in a hardly linear, unequivocal and uncontested way and how great and profound are the breaches separating the dominant production method and lifestyle of one phase of capitalist development from the others. Globalization – the genesis and development of the capitalist world system – is a long process with many leaps and fractures. Even without the assumption of a “long” crisis cycle, several phases of globalization – the genesis, formation and restructuring of the capitalist world system can be identified. Economic historians disagree whether there are five or six cycles…

Globalization means a qualitative difference, another form and structure of the elements… Whoever says “modern capitalism” also says state and the world of states… Whoever says capitalism says world market and whoever says world market says world trade, international financial system, international commodity-, money-, capital- and labor-markets and international corporations… “Globalization tendencies are by no means linear or run in the same direction. They are very uneven in different parts of the earth…

3. Globalization Today

The early phases of “globalization” were very controversial. The debates around mercantilism, free trade and “imperialism” around the turn of the century were passionate. Strangely enough, many of the “empirical facts” that speak for “globalization” seem so obvious that any further discussion is put aside. Debates focus on the supposed “risks” or “chances,” the negative or positive consequences of globalization and not globalization itself… Multi-or transnational companies have increased from 6000 at the beginning of the 1970s to over 318,000 today with 180,000 subsidiaries…

The world economy today has a markedly “international” and “inter-regional” structure… More than 80% of the production in developed and “large” countries go into the respective domestic markets… The structure of the world trade has clearly changed. This new structure is characterized by a rapidly growing share of “intra-industrial” trade and no increase in services that were traditionally regarded as “non- world trade goods” and are increasingly “exported” today…

World trade today is clearly dominated by the rich industrial countries of the “North.” Several “new industrial countries,” above all in Asia, have recently joined that circle… Over 60% of all the export trade of EU countries today consists of intra-EU trade and export to and trade with other EU countries… Intra-Asian trade (export trade between China, Japan, the tiger- and the ASEAN countries) has risen over 50% from 1986 to today…

More than 100 countries of the earth have less than 1% of the total volume of foreign direct investment. As the world trade, there are also great black holes in international capital transactions…

Pure money capital is the “most mobile” form of capital. A functioning worldwide system of money- and capital markets is assumed. There were international financial markets in the 18th and 19th centuries… The “system” of international financial markets has become “polycentric” today although the financial centers within the Triad (London – New York – Tokyo) still dominate. The international financial markets are more interwoven today. However, they are by no means more “open” or “global.”

The “world money” today is national money. World money is plural and not singular today unlike in the heyday of the gold standard and in the times of the dollar standard. After the introduction of the euro, there are many signs that the dominance of the dollar existing in parts of world trade and world capital transactions will be superseded by a system with regional currencies…

4. The End of the Nation State?

5. The Social State – National, Transnational and International


By Elmar Altvater and Nicola Sexler (ed)

[This reading sample of the 2006 reader “Solidarity Economy” is translated abridged from the German on the Internet,]

“Another world is possible!” That is the self-confident, defiant slogan of the worldwide anti-globalization movement. Are there signs that this possible world is becoming reality?

We are witnesses how more and more areas of life and work are subject to market logic and profit maximization. The individualization of our life environment increases and our everyday life is ruled by “practical constraints” that pretend to be decreed by nature… The term solidarity is banished to the history books of the workers’ movement.

Nevertheless, forms of alternative economics, work and life are developing worldwide that oppose a self-determined and solidarity partnership to the misanthropic economic and political conditions. Autonomous enterprises, plant occupations, cooperatives, direct agricultural marketing, housing projects, exchange rings and fair trade are some examples. They all show that economies can be organized in solidarity and without obeying the profit-principle (“non-profit”).

This reader edited by the Advisory Council of Attac Germany shows the way to “another world” and reports about solidarity economics in different countries and regions. Concrete alternatives to the dominant neoliberalism are sketched. Then the discussions about solidarity economics follow.


“Another world is possible!”… This is particularly true for the prevailing theory of the economy and for justifications of economic policy. High unemployment, the skidding of more and more people into poverty and an environmental crisis that threatens the life of future generations – even in “rich,” highly developed industrial societies. The term solidarity is banished to the history books of the workers’ movement. It only occurs in fancy speeches and is often perverted. Solidarity is emphasized for the location Germany. Acceptance of social- and job cuts is solidarity…

The historical, political, cultural and economic context of solidarity economy projects must be considered… The constantly threatening danger is that alternative projects can offer both precarious and emancipating jobs. State policy prioritizing the solidarity economy is important. Whether solidarity economy initiatives have system-stabilizing components and how they are distinguished from anti-emancipating movements should be reflected…

Alongside the deliberate blockade of alternatives, practical constraints are established in which alternative economic- and social policy and attempted circumvention of the logic of the market breakdown. The resistance to alternatives garnished with neoliberal ideology is strengthened by a policy of the irrevocability of neoliberal reforms and by a “lock-in-effect.” This happens very intentionally and in many cases out of opportunism, tribute to the neoliberal spirit of the times and adjustment to the global conditions of political action which seem mad… Utopian thinking indispensable for developing alternatives is stifled… Therefore, it is remarkable that the discussion of alternative forms of socialization is still occurring despite many years of Tina-indoctrination and despite the failure of autonomous experimentation in former Yugoslavia after the Second World War.

Many of the alternatives are practical experiments at the solidarity organization of work and life and are not only theory and utopian thinking. Many people in different world regions interpret Tina differently than the ruling elites. They rely on solidarity and undertake the practical search for alternatives. Attac and the movements in the World Social Forum proclaimed the optimistic and defiant slogan against the historical fatalism of no alternatives: “Another world is possible.” How could they build on other principles than the capitalist market society?

Alternatives of a solidarity economy, small projects and initiatives, are tiny compared to the global mega-corporations and the $2 trillion moving daily on the global financial markets, so tiny they mock Ernst Schumacher’s “Small is beautiful.” However, they can easily keep up with the heavyweights of the economy in the employment effects of the little projects. A competition over the number of destroyed jobs seems to have broken out. Many jobs are destroyed under the pressure of global competition and for the highest possible “shareholder value” for the shareholders of the big companies. New jobs arise mostly in the “third” sector of the informal and solidarity economy. However, the working conditions of informality are often precarious and not a really desirable alternative. Thus, the Tina term is an infamy because the alleged lack of alternatives to neoliberal capitalism forces people into the worst jobs outside the formal economy and makes their existence so precarious that emancipating needs are blocked and a life in dignity is impossible. Rohinton Mistry’s “The Balance of the World” describes the precariousness of itinerant workers in India. The daily press in Germany publishes reports about the “working poor,” persons who do not earn enough to share in social life and feed and clothe their children despite training and intensive work. Something new arises in the solidarity economy, partly tied to old cooperative experiences to find their way out of the dreariness and lack of perspectives of a world without alternatives. This ambivalence influenced the title “Solidarity Economics – Precarious or Emancipating?

Practical Constraints through Privatization

Social movements in all regions of this world fight for alternatives to unemployment and financial speculation, poverty and violence and ecological destruction and the McDonaldization of the globe. The end of history is not reached at all. The “best of all possible worlds” (Voltaire) was never more than a demand to cope with the conditions of the world. The “practical constraints” are different than natural laws that are followed when they are useful. They are a self-manufactured straitjacket…

The debts of the public authority are the financial assets of private parties and guarantee a constant payment stream from the public to the private sector. The “private sector” means owners of financial assets. This monetary stream flows through taxes on the incomes of the less mobile production factors, the receivers of wage- and salary incomes, cutting social spending, the new indebtedness of the state and further privatization of state enterprises and public assets and not through taxes on the income and wealth of the rich. Private businesses must realize profits according to the logic of the capitalist system. That the height of the profit rate is measured by the profits on the global financial markets is obvious in times of globalization and deregulation.

That public institutions should and must operate according to this principle is a politically-created practical constraint and a great error, not a natural law. This is due to a widespread thought pattern where only operational rationality criteria and not aggregate economic standards matter for public institutions. The positive “external effects” of public goods and services are not considered in the company efficiency calculus. The “neoliberal counter-revolution” has been bitter seriousness since the middle of the 1970s and not only a bold saying of Milton Friedman from the early 1960s (Friedman 1962). The success criteria of economics are n arrowed with privatization. Only profit counts. Quality and security of jobs, remuneration and the organization of work are subordinated to this overarching criterion… Redistribution from the public to the private sector occurred since the end of the 1970s…

The private water supplies in Johannesburg, South Africa, Djakarta, Indonesia, Bolivia and England were expensive for the users. The quality is almost always low; the reliability of the supply and decontamination of waste water is dubious. The consequences of privatization are usually negative for employees. Jobs are lost, wages and salaries are reduced and working hours are often extended. The privatizations of public enterprises, public goods and services and social housing in the last two decades were justified to reduce public and free resources for other “future projects.”…

Alternatives are blocked since the state has lost a large share of its intervention capacity to provide apartments for socially weak citizens. Many experience very practically: privatizations are a globally-organized campaign of expropriation. The energy- and water supply become worse and more expensive. The response of social movements is the re-appropriation of the expropriated. That is the background of land and factory occupations, nationalization of national resources (like crude oil and natural gas in Bolivia), repression of vacant buildings and creating public space for everyone. Solidarity forms of working and learning arise (cf. the Argentinean example) that are often precarious and always endangered. The confidence of the new is an indispensable prerequisite.

Alternative Economic Policy and International Statehood

Macro-economic alternatives can only be realized by an active state. This is true for all neo- to leftist-Keynesian concepts of alternative policy that require an active fiscal, labor market and social policy to create jobs and strengthen social balance. Macro-economic alternatives set the framework for the macro- and meso-economic projects of solidarity economy, for production cooperatives for example. State economic policy is important for a solidarity economy consisting of cooperatives and other forms of alternative enterprise. Both are connected: macro-economic alternative economic policy may not be played off against micro-economic cooperatives and vice versa. On account of the lock-in effects, the state is different than in the decades of Keynesianism and Fordism. Consequently, alternative economic policy is a catalogue of proposals and demands…

Financial markets are important for state economic policy and for small alternative projects. Without a global regulation of the financial market6s, mobilizing cheap credit will be impossible in the long run… A local solidarity economy is just as impossible as a macro-economic policy for full employment on the national or European planes. So the question of power is always raised. How can the world be changed without seizing power (Holloway 2002)?

The Principle Solidarity

Social movements aiming at alternatives to the capitalist market society emancipate from the logics set by the market. The economy and society can be coordinated differently in different cultures and historical epochs – as societies relate differently to nature. Private ownership and access to resources by private owners reflect neoliberal economics…

Karl Polanyi (1978) analyzed this process as the “dis-embedding” of the market from society. Markets were embedded in society and by no means independent in nearly the whole pre-capitalist history of humanity. Today, the capitalist market economy and its logic dominate the economy.

Solidarity only arises with broad participation from below. Common efforts to solve a common problem are crucial. Everyone makes a solidarity contribution according to his or her possibilities – under the conditions of fairness. Solidarity presupposes an awareness of common interests and an inner unity in society grounded in a common life experience to overcome a great problem together, for instance unemployment, poverty or life without rights. Thus, solidarity starts from the collective, originates from a common experiential background and rests on a common collective memory. The collective memory mediates a common pre-understanding in political conflicts… The conflicts with the powers of the market and the world market develop out of this collective memory. These conflicts always have a political dimension. In most cases, base movements are forced to confront governments and build countervailing power…

The initiatives of an alternative solidarity economy develop against the predominant neoliberal tendencies of subordinating societies to the laws of the global market. There are many examples of countervailing power in today’s world: cooperatives in Europe’s non-profit sectors in all industrial countries offering more jobs than traditional industry, the solidarity economy in many Latin American countries and India, the organizations in the favelas, the shanty-towns, the barrios and in the countryside and the well-organized Fair Trade movement with its partners in the producing and receiving countries of the products, These examples are not only alternative enterprises in the niches of the world economy.

Cooperatives like the Basque Mondragon with tens of thousands of members operate very competitively on the world market… The expansion of the “non-profit” sector shows the formal economy with its capitalist institutions and principles cannot provide enough jobs for all job-seekers. Instead of resigning to “formal” unemployment, many persons are developing alternative approaches for employment, cooperatives and “alternative enterprises.” Unions have only trifling chances of developing countervailing power to improve working- and living conditions of wage-earners where unemployment is structurally fortified.

Conflicts around improving living- and working conditions will not dissolve in the solidarity economy. The informal sector and the solidarity economy need organizing…

Solidarity and Sustainability

All aspects of social responsibility will change as with the transition to fossil energy more than 200 years ago and to oil a hundred years ago. In a few decades, an inevitable transition to renewable energy will be necessary. When fossil energy comes to an end, only a renewable energy regime beyond fossil and nuclear energy will help. The social organization of capitalism must adjust to this since renewable energy can also support the capitalist accumulation dynamic. The catastrophe of the monoculture and the collapse of evolution on account of the forced transition to an energetically established monoculture must be averted. Connecting the projects of the solidarity economy with the movement for renewable energy is important. They cannot prevail without each other. When combined, they could be a great force for social change.

Related Link:

Richard Wolff, “Democracy at Work: A Cure for Capitalism,” 1 hr 25 min
by Rainer Mausfeld
Tuesday Oct 29th, 2019 1:59 PM
Six from Rainer Mausfeld

Rainer Mausfeld, “Markets as a Fetish,” January 2019

Rainer Mausfeld, “Neoliberal Indoctrination,” February 2016

Rainer Mausfeld, “Propaganda: Making Alternatives Disappear,” July 2016

Rainer Mausfeld, “The Gigantic Chasm between Democratic Rhetoric and Capitalist Reality,” August 2019

Rainer Mausfeld, “The Silence of the Lambs,” February 2019

Rainer Mausfeld, “We Live in a Time of Radical Counter Enlightenment,” December 2018
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