Why The Search For Purchasing Power Comes To Nothing
What does capitalism need now like a man dying of thirst in the desert needs a watering hole? Solvent demand! But its own mechanisms of operation have dried up this demand. It is the old song of internal contradiction, intoned in increasingly shrill tones: People who are subject to the laws of the logic of valorization should work for God’s wages until they are exhausted, save like world champions to secure their old age and their future, and at the same time spend money as consumers with their hands full.
Neoliberal supply policies dealt with this contradiction in their own way, by demanding cost reductions no matter what. The cheapening of supply was supposed to lead to growth in accordance with the laws of the market. This was to apply not least to the supply of the commodity labor power on the labor markets, whose deregulation everywhere lowered real wages and forced the expansion of the low-wage sector. The problem of demand was seemingly solved by creating insubstantial purchasing power through financial bubbles in the U.S. and elsewhere (for example, through the infamous mortgage loans), despite the long-term erosion of real wages for the broad middle class. The result was a global deficit economy with a one-sided export orientation, with the U.S. being the largest recipient of these exports.
As this construct begins to give up the ghost after the global financial crash, Keynesian demand policy seems to be being rediscovered. The state is supposed to revive the collapsing purchasing power of consumers by means of economic policy. But far away are the times when, under much more comfortable conditions in the old FRG, the “concerted action” of government, business associations and trade unions produced a Keynesian surge in demand that was eventually eaten up by inflation. Today, there is no trace of “concertation”; the opposing theories are mixed up like turnips and cabbage.
With the scrapping bonus, the government directly subsidized an important consumer sector for the part of the middle class that was still able to accept the gift. It is common knowledge that this emergency measure was just a flash in the pan. The other economic stimulus packages remain too weak because the bailouts of the financial sector alone are already threatening to bring public finances to the brink of ruin; a problematic blow to the entire banking system that was unthinkable in Keynesian times. The mirage of the black-yellow promise of tax cuts to create purchasing power has little to do with Keynesian demand policy, but is nothing more than neoliberal nostalgia. The tax cut, especially for the upper middle class, was one of the flanking measures of supply-side policy that no longer works. First, it cannot be financed, and second, it would fizzle out because, given the crisis situation, it could not be used for investment or consumption. That is why the glorious coalition partners are having a family row after only three weeks in government.
The desperate search for demand with purchasing power is all the more contradicted by the situation in the factories. The workers of companies threatened with insolvency are outbidding each other in concessions to management, driven by fear for their jobs. It is not only at Opel and Arcandor that forgoing wages, vacation and Christmas bonuses is the order of the day. At Quelle, it has already been to no avail. And the wave of bankruptcies has only just begun. The wage cuts negotiated by the works committees to save the company are likely to spread further. It fits into this picture that the trade unions, with their usual sense of responsibility for everything bad that happens during the crisis, are starting to prepare for a wage freeze in the 2010 collective bargaining negotiations. When this voluntary supply policy for labor, born out of necessity, is praised in a honeyed way, it is a blatant contradiction of a demand orientation, but that is just the way things are.
In this situation, the demand for a general, sufficiently high legal minimum wage has receded into the background; and there can be even less talk of increasing welfare payments that have fallen below the subsistence level. On the contrary, low wages are beginning to spread to the core workforce through wage sacrifice, and the lower middle class is melting away. The flash in the pan of government demand policy is being supplemented by a continuation of supply policy by other means on the labor markets. This trump card in the game of global competition should not be relinquished. The caravan of cheaper and cheaper labor should continue to move forward even without a watering hole. That is why the elites are staring at China like a rabbit at a snake, although it is more than doubtful that a new global deficit economy can be started from there as a reversal of the previous one-sided export flows. When belief in miracles replaces demand concepts that are no longer viable, the next economic slump is predestined. Then the downward spiral will continue with nothing but emergency rations.
Originally published in the print edition of the weekly newspaper Freitag on 11/19/2009
EXIT! in English 