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Everyone Becomes an Entrepeneur

Old wine appears in new wineskins; primitive capitalism is disguised as the new business philosophy. Everyone is encouraged to see him/herself as a "profit center" with increasing competitiveness and ruthlessness the goal of life. This article is translated from the German.
Everyone Becomes an Entrepeneur

30 Years of Rhine Capitalism were Enough
Redistribution upwards has a new quality in the red-green government in Berlin

By Michael Heinrich

[This article originally published in: Jungle World, Nr.15/ April 4, 2001 is translated from the German on the World Wide Web, www.jungle-world.com/_2001/15-08a.htm.]

In 1998 the CDU/FDP government was voted out of office out of displeasure over its redistribution policy in favor of the higher income classes. In the election campaign, the opposition parties spoke of "social decline" and "gaps in justice".

However after entering in office, the red-green continued this redistribution policy, even if trimmed with cosmetic changes like increased child benefits. Thus the top income classes and big businesses are relieved with the tax reform passed last year as under the previous government. The Greens allied with the FDP urged an even greater reduction of the top tax rate. This wisdom that the rich must become even richer so every one will be improved some time or other is no longer foreign to the Greens.

While this kind of redistribution met with a certain public interest, another aspect was hardly recognized. Lowering direct taxes involves state austerity pressures increasing indirect taxes. Despite the campaigns of the Union, red-green insisted on continuing the newly introduced eco-tax. An increase of the sales tax may also soon occur in the European standardization of tax policy.

Unlike the direct taxes deducted from incomes which partly show a progression - receivers of higher incomes pay more taxes as a percentage even though more depreciation possibilities are available to them -, the indirect taxes like the sales or gasoline tax are the same for everyone. However the progression is actually lost here. The higher incomes are even favored by indirect taxes.

While a lower income is usually spent entirely for sustenance, much can be saved or invested from a higher income without taxes levied. Since the higher incomes need not spend their whole income for consumer goods, the indirect taxes are less important as a percentage, a reverse or inverse progression occurs.

Private insurance

Red-green insists on redistribution in social security insurance, not only in tax policy. If the contributions were financed in parity under Helmut Kohl before the introduction of nursing care insurance, with equal shares from employees and employers, red-green continues the black-yellow system breach. With the cancellation of a holiday to finance the nursing care insurance, a model was ultimately created that answered the constant criticism of increasing non-wage labor costs with further pragmatic measures,

Red-green considers increased pension insurance contributions - the largest chunk of social security contributions - as unreasonable for employees, not only for businesses. At present, this contribution amounts to 19.1 percent of the net wage, received by half of the employees and businesses. In no case may it increase to more than 20 percent or 22 percent by 2020. An old age provision cannot be financed with these contributions. As a result, a clear lowering of the pension level is planned. Employees should be privately insured so old age income does not fall below the social support level. Up to four percent savings could be expected from employees according to the logic of red-green. Businesses contribute a maximum eleven percent share in pension contributions.

"We will not do everything different but many things better", the 1998 SPD posters exclaimed. The unions believed it would do some things better. If they vigorously rejected the pension reform plans of the CDU/FDP government, they are now firmly bound to the government in the alliance for work.

The Welfare State

To many leftists, the welfare state is still regarded as an achievement of the working class movement in the struggle against capital. The distribution of roles was clear in the debates around the welfare state. The conservatives wanted its dismantling; social democrats and Greens wanted to maintain it in principle. A brief glance at history should arouse everyone's suspicion. Social insurance in Germany was introduced by the arch-reactionary Bismarck to pull the rug from under the feet of revolutionary social democracy. In the fifties and sixties in Germany, CDU governments considerably expanded the welfare state during the so-called economic wonder. Up to today, the most vehement social cuts occurred under the SPD chancellor Helmut Schmidt as a consequence of the 1974/75 economic crisis.

Welfare state securities for individuals who become sick or unemployed are very positive. Still the welfare state is not a bulwark against capital but secures existence as long as one submits to the pressure of paid work. A series of benefits - unemployment benefits, sickness benefits, pensions - depend directly on earlier wage incomes. Unemployment benefits and income support are bound directly with the pressure to offer one's labor on the labor market and accept increasingly miserable conditions.

Receivers of income support are even subject to an immediate work pressure. They can be recruited for so-called charitable or non-profit work compensated with three marks per hour. Funds will be cut or entirely stopped occasionally for whoever refuses such work or rejects supposedly reasonable paid labor. This repressive side of the welfare state is ideologically undergirded by "modern" social democracy. In their 1999 paper Tony Blair and Gerhard Schorder urged an "activating state". The social net may not be a "hammock" but must become a "trampoline".

The welfare state helps in assuring an industrial reserve army for capital. In addition, it is an important stabilizing element of the business cycle. Welfare state benefits prevent mass purchasing power from weakening all too intensely in crisis phases which would aggravate the crisis. On top of that, many welfare state areas have become alternative investment spheres of capital like pharmaceuticals or medical technology.

The vast dismantling of the welfare state often conjured by the left would be dysfunctional for developed capitalist countries. In the many crises, what is involved is not simply dismantling but the question how welfare state benefits can be brought into line with the current conditions of capital accumulation. The quantity of these benefits is not decisive but the qualitative questions what benefits are generally necessary and how are they financed. At the moment, there is a fundamental qualitative change of the welfare state.

New Capitalism, New Welfare State

After the Second World War, the fordist phase of capitalism provided for a long lasting economic boom in the capitalist metropolises. Rising real wages and the development of welfare state benefits characterized the west German "economic wonder". New structures in the world economy were enforced with the crisis of this model in the seventies. The international financial system was largely deregulated. Afterwards the internationalized financial markets were the foundation for the globalization processes of the eighties and nineties. A capitalist world system arose which is not only integrated to a higher degree in many aspects but is also far more dependent on the international financial markets. Politically protected areas typical for the decades after the Second World War are hardly still available to sponsors. Competition has intensified considerably in the last 20 years through the increase of mergers or hostile takeovers.

These processes have led to increased pressure on employees. More flexibility is demanded from wage earners while benefits in excess of the agreed scale are reduced and wage or collective agreements rearranged. This development also has a qualitative dimension, not only a quantitative dimension where businesses want more output for less money. Businesses understand themselves more and more as organizational headquarters which hand over their immediate command over work to work groups, competence centers, subcontractors or former wage-earners who are not formally independent. Since all these actors depend on selling their works or products to the central business, control over work still follows the capitalist exploitation logic.

Businesses save many inspection costs and shift part of their business risk. Not only flexibility and lifelong learning are now demanded from individual workers but also entrepeneurial thinking which is supported or even celebrated as new come-of-ageness in red-green policy. That so many fall by the wayside or drop out of the race is consciously accepted. In his reflections on the new SPD program of principles, Westphalia prime minister Wolfgang Clement explicitly warned of too much equality. Justice is reached through inequality.

Conclusion: Popular Capitalism

The qualitative changes of the welfare state which red-green wants to enforce in the pension scheme reflect the tendency to make entrepeneurs of their own labor power out of wage earners. Finally, supplementing equally financed pensions through private insurance represents a shift of the costs in favor of businesses and to the burden of employees.

Since private insurance occurs on the capital market, a profitable investment field opens up here for the insurance and investment branches. The welfare state is privatized. At the same time old age pension schemes of wage earners are made dependent on the development of the financial markets. "Entrepeneurial thinking" is also urged with old age pensions, not only with the exploitation of one's labor power.

In the sixties, conservatives and liberals could only dream of the introduction of a popular capitalism that helps employees to a little stock ownership and tries to get them to believe in an identity of interest of labor and capital. This beautiful new world in which there are only capitalists and no exploited any more --some bankrupt and incapable persons who are responsible themselves for their fate - is created in Germany by the red-green.

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