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After the Bankruptcy (Jurgen Habermas)

The privatization mania has ended. Politics is necessary for the public interest, not the market. The collapse of the Soviet Union produced a fatal triumphalism. A tension always exists between capitalism and democracy because the market and politics are based on opposite principles.

The privatization mania has ended. Politics is necessary for the public interest, not the market. Conservation with the philosopher Jurgen Habermas on the necessity of an international world order

[This interview published 11/6/2008 in: DIE ZEIT Nr. 46 is translated from the German on the World Wide Web,  http://images.zeit.de/text/2008/46/Habermas.]

DIE ZEIT: Mr. Habermas, the international financial system has collapsed. A worldwide economic crisis threatens. What alarms you most?

Jurgen Habermas: What worries me most is the outrageous social injustice. The socialized costs of system breakdown hit the most vulnerable groups the hardest. Those not among the globalization winners are asked to pay for the concrete economic consequences of a foreseeable malfunction of the financial system. This malfunction is in the hard currency of their daily existence, not in the money value of the shareholder. On the global scale, this punishing fate is executed on the economically weakest countries. That is a political scandal. Pointing at scapegoats is hypocrisy. In the framework of the law, speculators also act consistently according to the socially accepted logic of profit maximization. Politics makes a fool of itself when it moralizes instead of relying on the law of the democratic legislature. Politics, not capitalism, is competent for the public interest orientation.

ZEIT: You have given lectures at Yale University. What were the most impressive pictures of this crisis for you?

Habermas: The melancholy flickered over the TV screen of the endless long lines of abandoned houses in Florida and elsewhere - with the foreclosure sign in the front garden. The bus was filled with curious shoppers from Europe and the rich from Latin America. Then the brokers showed them the bedrooms with the built-in cupboards destroyed out of rage and despair. All this was striking. After my return, I was surprised how different is the excited mood in the US compared to the impenetrable business-as-usual mindset in Germany. In the US the very real economic fears joined with the passionate end phase of one of its most momentous election campaigns. The crisis has also made broad sectors of voters more conscious of their personal situation. Now people are forced to more rational decisions. In the previous presidential election, people were stirred up ideologically by nine-eleven. Americans owe this accidental meeting to the first black president, as I dared to assume right before the election, and to a deep historical turning point in the history of its political culture. In addition, the crisis could also presage a change of the general political situation in Europe.

ZEIT: What do you mean?

Habermas: Such changing tides alter the parameters of public discussion and shift the spectrum of political alternatives held to be possible. With the Korean War, the period of the New Deal came to an end. The time of welfare state programs ended with Reagan and Thatcher and the waning of the Cold War. Today the programmatic of Clinton and New Labor has also run out with the end of the Bush era and the bursting of the last neoliberal bubbles. What will happen now? I hope the neoliberal agenda will be up for disposition and not accepted automatically as gospel truth. The whole program of an unscrupulous subjection of the life world under the imperative of the market must be reexamined.

ZEIT: For neoliberals, the state is only a member of the supporting case in the economic terrain. The state should minimize itself. Is this thinking discredited now?

Habermas: That depends on the course of the crisis, the perceptiveness of the political parties and the public themes. A peculiar calm still prevails in Germany. The agenda granting a reckless dominance to investor interests is blamed for the growing social inequality, the genesis of a precariousness, child poverty, low wages and so on that undermine core functions of the state with privatization mania. In privatization, the democratic demands of the political public are sold off cheaply to financial investors. Culture and education are made dependent on the economic interests and moods of sponsors.

ZEIT: Are the results of privatization mania manifest now in the financial crisis?

Habermas: In the US, the crisis intensifies the material, moral, social and culture damage of a policy of deregulation of health care and care for the elderly, public transportation, the penal system, energy supply, military security spending, school education and universities. The cultural infrastructure of cities and communities is handed over to the engagement and generosity of private donors. All this is part of a design of society that in its risks and effects does not fit will with the egalitarian principles of a social and democratic constitutional state.

ZEIT: State bureaucracies cannot economize profitably.

Habermas: Still vulnerable areas of life may not be exposed to the risks of stock market speculation. The changeover of old age provisions to stocks should be resisted. In the democratic constitutional state, there are also public goods like transparent undistorted political communication that cannot be colonized or instrumentalized for the profit expectations of financial investors. The information need of citizens cannot be satisfied by the non-stop consumer snack culture of nationwide private television.

ZEIT: To quote one of your controversial books, do we face a "legitimation crisis of capitalism"?

Habermas: Since 1989/90, there is no escape any more from the universe of capitalism. A civilizing and taming of the capitalist dynamic can only happen from within. During the postwar time, the Soviet Union was not an alternative for the western European left. Therefore I spoke in 1973 of legitimation problems in capitalism. These problems are still more or less urgently on the agenda according to the national context. The demands for limiting manager salaries or abolishing golden parachutes, the unspeakable golden handshakes and bonus payments are symptoms.

ZEIT: Criticism of manager salaries is part of a theatrical show. Elections (in Germany) are in 2009.

Habermas: Yes. This policy is obviously symbolic and diverts attention from the failures of politicians and their economic advisors. For a long time, the elite decision-makers knew all about the need for regulating the financial markets. I reread Helmut Schmidt's crystal-clear article "Monitor the New Big Speculators!" from February 2007 (ZEIT Nr. 6/07). Everyone knew this. But the political elites in America and Great Britain regarded unbridled speculation as useful. People on the European continent bowed to the Washington Consensus. There was a broad coalition of the willing here that Mr. Rumsfeld did not need to recruit.

ZEIT: The Washington Consensus was the famous-notorious economic concept of the IMF and the World Bank from 1990 by which first Latin America and then half the world should be reformed. Its central message was trickle down. If the rich become richer, the prosperity would then trickle down to the poor.

Habermas: For many years, the mounting empirical evidence showed this prognosis was wrong. The effects of increased prosperity are asymmetrical nationally and worldwide. The poverty zones have spread before our eyes.

ZEIT: Overcoming the past is imperative. Why is prosperity distributed so unequally? Did the end of the communist threat disinhibit western capitalism?

Habermas: Western capitalism was already at an end much earlier- after the abandonment of the system of fixed rates of exchange and the oil shock. Nation-state capitalism fenced in by Keynesian economic policies gave a historically incomparable prosperity to OECD countries. The economic doctrine of the Chicago school already became a practical authority under Reagan and Thatcher and continued under Clinton and New Labor - and during the ministerial time of our latest hero Gordon Brown. The collapse of the Soviet Union triggered a fatal triumphalism in the West. The feeling of dominating world history has a seductive effect. In this case, triumphalism inflated an economic doctrine into a worldview penetrating all areas of life.

ZEIT: Neoliberalism is a life form. All citizens should become entrepreneurs and customers.

Habermas: ... and rivals. The stronger who prevails in the free hunting ground of the competitive society may take credit for this success as a personal merit. This ballooned into cryptic comedy when economic managers in the elite gossip of our talk shows seriously celebrated themselves as a model and mentally colonized the rest of society - as though functional and feudal elites were not different any more. What should be exemplary in the character of people in leadership positions who do their work in a halfway respectable way? The Bush doctrine of the fall of 2002 that prepared the Iraq invasion was another danger signal. Since then the social Darwinist potential of market fundamentalism has appeared in foreign policy, not only in social policy.

ZEIT: Bush was not alone. An astonishing band of influential intellectuals was at his side.

Habermas: Many learned nothing. Thinking in Carl Schmidt's wolf categories emerged even clearer after the Iraq disaster in intellectuals like Robert Kagan. He comments today on the regressive fall of international politics into an explosive nuclear-armed scramble for power as follows: "The world has become normal again."

ZEIT: What went wrong after 1989? Has capital simply become too powerful in relation to politics?

Habermas: In the course of the 1990s, it was clear to me that political initiatives were vital to counter markets on the supranational plane. That was also manifest in the early 1990s. George Bush senior spoke programmatically of a new world order and wanted to replace the United Nations blocked - and run down! - for a long time. Humanitarian interventions resolved by the Security Council increased by leaps and bounds. The politically willed economic globalization should follow a worldwide political coordination with the codification of international relations. But the first ambivalent beginnings came to a standstill under Clinton. The current crisis makes us aware of this deficit again.

Since the beginnings of the modern age, the market and politics have been balanced time and again so the net of solidarity between members of a political community did not tear. A tension always exists between capitalism and democracy because the market and politics are based on opposite principles. After the last globalization push, the flood of decentralized voter decisions made in incredibly complex networks require an expansion of the political processes of the generalization of interests.

ZEIT: What does that mean? You champion Kant's cosmopolitism and Carl Friedrich von Weizsacker's idea of a world domestic policy. With all due respect, this sounds rather illusionary. You only have to look at the state of the United Nations.

Habermas: A thorough reform of the core institutions of the United Nations is not enough. Certainly, the Security Council, the secretariat, tribunals, powers and procedures of these institutions must be reorganized for global enforcement of human rights and prohibition of violence. In itself this is an immense challenge. But even if the UN Charter can develop into a kind of constitution of the international community, a forum is still necessary to change the armed power politics of the super-powers into institutionalized negotiations on the problems of the world economy, climate- and environmental policy, distribution of contested energy resources, scarce drinking water supplies and so on. All these problems need regulation. On this transnational plane, distribution problems arise that must be politically negotiated and cannot be decided in the same way as human rights violations or violations of international security - which are ultimately statutory offenses.

ZEIT: The G8 is already a proven institution for that.

Habermas: The G8 is an exclusive club in which some of these questions are discussed informally. A striking discrepancy exists between the exaggerated expectations around these sessions and the meager results of the media spectacles. The illusionary pressure of expectation shows that people see very well the unsolved problems of a future world domestic policy - and feel them more intensely than their governments.

ZEIT: The phrase "world domestic policy" sounds like the dream of a spiritualist.

Habermas: Yesterday most would have seen what happens today as unrealistic. The European and Asian governments respond to the non-existent institutionalization of financial markets with proposed regulations. The SPD and the CDU (German political parties) make proposals on balance sheet duties and internal capital resources, personal liability of managers, improvement of transparency, stock exchange oversight and so on. The emphasis is occasionally on a stock-turnover tax that could be part of a global tax policy. The new "architecture of the financial system" will face resistance from the US. Will this architecture be enough in view of the complexity of these markets and the worldwide interdependence of the most important systems? International law agreements can be cancelled at any time. No weatherproof regime arises from these agreements.

ZEIT: Transferring new powers to the International Monetary Fund would not be a world domestic policy.

Habermas: I will not make any predictions. Given the pressing problems, we can at best make constructive reflections. In their own interest, nation states must increasingly understand themselves as members of the international community. That is the great challenge in the next decades. When we speak of "politics," we often mean the actions of governments that have inherited the self-image of sovereign collective actors. This self-image of a Leviathan that has developed together with the European state system since the 17th century is no longer unfailing today. What we called "politics" yesterday changes its physical state daily.

ZEIT: How does that relate to the social Darwinism that, as you say, has spread again in international politics since nine-eleven?

Habermas: Perhaps one should take a step back and look at a larger context. Since the late 18th century, the nation-state term "political" has been in a state of flux. Within the European Union, member states still have a monopoly on the use of force and enforce the law resolved on the supra-national plane without complaining. This change in the form of law and politics is also connected with a capitalist dynamic or interplay of functional opening and social-integrative closing on a higher level.

ZEIT: Does the market open society while the welfare state closes it?

Habermas: The welfare state is a late fragile achievement. We are now experiencing this. The expanding markets and communication networks always had a blasting, individualizing and liberating force for individual citizens. A reorganization of the old solidarity conditions always results in an expanded institutional framework. This process began in the early modern age when the medieval feudal estates gradually became parliamentarized in the new territorial states - e.g. England - or mediatized by absolutist kings - e.g. France. The process continued in the wake of the constitutional revolutions of the 18th and 19th century. This legal taming of Leviathan and class antagonism was not simple. Still the successful constitutionalization of state and society parallel another push of economic globalization toward a constitutionalization of international law and the torn world society.

ZEIT: What role does Europe play in this optimistic scenario?

Habermas: A different role than Europe actually played in the crisis. I do not entirely understand why the crisis management is so praised. With his memorable decision, Gordon Brown could move the American Treasury secretary Paulson to a changed interpretation of the bailout because he brought on board the most important powers of the Euro-zone like the French president. Look closely at this negotiation process and its result. The three most powerful nation states in the European Union negotiating as sovereign actors coordinated their different but parallel measures. Achieving this international agreement hardly demonstrated a common political will of the EU. With a certain malicious glee, the New York Times underscored the European incapacity for a common economic policy.

ZEIT: How do you explain this incapacity?

Habermas: The further course of the crisis showed the defects of the European construction. Every country reacted with its own economic measures. Because the powers in the Union are distributed so that Brussels and the European tribunal enforce the economic freedoms while the arising external costs will be shifted to the members states, there is a shared economic will. The most important member states disagree on how much state and how much market is desirable. Every country including Germany pursues its own foreign policy. With its mild diplomacy, the Berlin republic forgets the lessons that the old Germany should have learned from history. With satisfaction, the government strains its foreign policy possibilities expanded since 1989/90 and falls back in the well-known pattern of national power games between states that long shriveled to the format of feudal fiefdoms.

ZEIT: What should these princelings do?

Habermas: Are you asking me about my wish list? Since I regard staged integration as the only possible way to an active efficient European Union, Sarkozy's proposal for an economic government of the Euro zone could be a starting point. This does not mean adjusting to the budgetary measures and protectionist intentions of its initiators. Procedures and political results are two completely different things. "Closer cooperation" in the economic area has to occur in foreign policy. Both can no longer be concocted over the heads of the populations.

ZEIT: You must be deeply disappointed by the US. For you, the US was the big attraction of the new world order.

Habermas: What can we do other than trust this big attraction? The US will emerge weakened from this double crisis. Still it remains the liberal super-power. The neo-conservative self-image of the paternalistic world benefactor must be radically revised. The worldwide export of its own form of life came out of the false centered universalism of the old empires. The modern age lives from the de-centered universalism of equal respect for everyone. It is in the interest of the US to put itself at the top of the reform movement. Seen historically, the coincidence of four factors - super-power, oldest democracy on earth, assumption of office of a liberal visionary president and a political culture with normative orientations - offers an improbable constellation. America today is deeply worried by the failure of the universalist adventure, the self-destruction of neoliberalism and the misuse of its exceptionalist consciousness. Why shouldn't this nation get back on its feet again as it did so often and bind the rival super-powers of today - the world powers of tomorrow - into an international order so no super-power will be needed any more? Why should a president energized from a fateful election - with only minimal domestic possibilities not want to seize this rational chance, this chance of reason, at least in foreign policy?

ZEIT: You would only elicit a weary smile from so-called realists.

Habermas: I know many speak against this. The new American president must prevail against an elite in his own party dependent on Wall Street. He must keep away from the obvious reflexes of a new protectionism. For a radical change of course, the US could use the friendly encouragement of a loyal self-assured alliance partner. There can only be a "bipolar" West in the creative sense when the EU learns to speak outwardly with one voice and use its internationally stored trust capital to act far-sightedly. "Yes, but... " is manifest. In crisis times, one needs a more expansive perspective than the advice of the mainstream and the trivialization of mere muddling through.

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