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The ABCs of Meaningless Economic Phrases

The most common myths start from the "tax state" that burdens the economy, the housework ordered by the state (save, save, save) to the Schwabian housewife prescribing the austerity creed. Politics will tend to every need of capital as a scared doe and therefore lower taxes... The term reform has been twisted around completely and is used to reduce the social responsibility of the state.

By Rudolf Hickel

[This article published in October 2016 is translated from the German on the Internet, www.blaetter.de. Rudolf Hickel is an economist and member of the Alternative Economic Policy study group in Bremen, Germany.]

A glance at today's media landscape is often frustrating. The facts and the currently prescribed phraseology regarding the economy are very complex and often hard to understand. Many of the propagated measures are trimmed with the same meaningless phrases: "The German economy must become more competitive," "Reforms are indispensable" or the very popular "Measure x, y, z is the only alternative." While these meaningless phrases seem banal, the power of words should not be underrated. They proclaim alleged truths but, seen more closely, are merely economic myths.

A systematic presentation of economic myths has not been published up to now. People had to fight through the language-jungle to comprehend the meaning behind the empty words. This "etymological gap" is now closed by the impressive book "Gute-Macht-Geschichte" (Good-Power Stories) of the two economic journalists Daniel Baumann and Stephan Hebel. Both want to bring enlightenment into the world of lingual myths.

After a brief foreword in which the significance of crucial terms is explained, the "justification formulae" of influential economic actors is taken up in alphabetical order and deconstructed step by step - from A and "alternativlos" (the only alternative) to Z and "Zinsenteignung" (interest expropriation). These concise analyses bristling with references and notes that are very readable and understandable form the core and special quality of this enlightenment.

The goal of nearly all meaningless economic phrases is the justification of political programs to pave the way of political and economic elites to their neoliberal "solutions." All the myths decoded in this book are based on the notion that real existing capitalism described as a market economy is the best guarantor of the propagated "prosperity for everyone." This is Germany's most powerful myth that proves to be an illusion for more and more people.

Both authors skillfully climb into the world of neoliberal prejudices with the central political-economic slogan: "the only alternative." The propaganda of lack of alternatives burdens the democracy dependent on discourse and controversy because the "search for the best solution" threatens to be annulled. The real existing power relations are cemented when people are persuaded of the lack of alternatives instead of social development toward social justice and ecological sustainability. The keywords "markets," "entrepreneurial freedom," "free trade" and "flexibility" form the creed in the market economy that supposedly successfully controls itself. Even the producers of these positive myths cannot escape the fact that the highly-praised "market economy" is extremely unstable, crisis-prone, and triggers malformations again and again. In this way, the market economy undermines itself through a misguided concentration of power and capital. However, this criticism emerging from the failure of markets leads to its own set of know-it-all attitudes out of touch with reality. The undeniable malformations of the capitalist economic system were caused by "non-market forces" and are not results of market failure according to its propagandists. These forces include the interventionist state and unions on the basis of the damned collective bargaining system that is supposedly completely outdated.

The controversial terms "deregulation," the dismantling of state regulations, worldwide "free trade" and "safeguarding the location" through the commanded "wage reserve" are in the center of the neoliberal offensive. However, these keywords lead people astray. The society as a whole and employees should be the beneficiaries of "wage reserve" according to neoliberal theory because entrepreneurial gains would increase and investments in jobs would be forced. But reality proves the exact opposite. The supposed causality painted here really does not exist. For years, there was no increase of productive investments in the real economy. Instead, the speculative activity on the global financial markets grew immensely - with dramatic risks for entire political economies and their citizens. In short, wage reserve actually leads to massive advantages for the profiteers and to burdens of wage-earners. The myth on wage reserve described here is only one prominent example for the battle with catchwords and slogans for propagating real existing capitalism as the allegedly only source of "prosperity for everyone." Therefore enlightenment in creating a political counter-public is urgently necessary. Breaking the monopoly of the predominant economics as the myth-supplier in favor of a pluralist economic openness is vital.

Another goal of the authors is to illuminate the role of the state as the supposed crisis-driver. The most common myths start from the "tax state" that burdens the economy, the "housework" ordered by the state (as a rule "save, save, save") to the "Schwabian housewife" often invoked by German chancellor Angela Merkel prescribing the austerity creed. Politics must tend to every need of capital as a "scared doe" - and therefore lower taxes. The economy can only grow this way. The classical fallacy about the economic role of the state can be studied under the myths "housewife, Schwabian" and "not spending more than one gains." The everyday experience that the private household in the long-run can only spend what it takes in is transferred to the state without any understanding of the state's macroeconomic role.

What is true for private households is not true for a state that is bound to a global economic system. If the state saves, the macroeconomic demand and production decline many times the realized savings. At the end, savings or austerity means revenue shortfalls, expanding crisis costs and rising state debts. The effects of neoliberal myths can be studied concretely in the example of Greece which is representative for European crisis lands. There we witness the tragedy of the prescribed austerity policy that accelerates the economic collapse - at the expense of the citizens and the Greek economy.

In conclusion, all these neoliberal myths demand the subordination of politics under the dictation of market supremacy. The consequence is "market-conforming democracy" (Merkel) and an economy conforming to politics that is not directed to social goals. The redefinition of the term "reform" also fits here. Over centuries, reform stood for progress. However, in the last decades, the term has been twisted around completely. The myth of the "pension burden (cost-expansion)" is an example of that. As the authors underline, the term reform is used to reduce the social responsibility of the state in a dramatically populist way - to the benefit of an individualized partial capitalization. In this way, the
term reform that was once leftist was made a rightwing weapon.

After reading the book, the title "Good Power Stories" is opened up as a play on words. The run-of-the-mill neoliberal myths rely on maintaining the existing rule relations and justification of today's global finance capitalism. They are also "bedtime stories" - namely the swan song to a more just society.


by Heinz-J. Bontrup

[The critical German economist Heinz-J. Bontrup, a prominent member of the Alternative Economic Policy study group, speaks on the advice of the economic wise men and alternatives. This October 2016 interview is translated from the German on the Internet.]

Mr. Bontrup, the council of experts presented its annual opinion as it does every year. Did they bring any new discoveries?

The positions of the council of experts are calculable. One basic conception is more market and more competition. The second is against state interventions and against a demand-oriented economic policy.

How can you say this is wrong? Its falsity cannot be proven in the political economy.

Obviously, there is no generally accepted theory in economics. Therefore we in the Alternative Economic Policy study group champion a plural economics. There is nothing plural about the one-sided supply-oriented alignment of the council of experts. Our position is left-Keynesian and raises the distribution question alongside a state economic control.

What do you mean by one-sided supply-oriented?

The attitude of the council of experts could be described as one-sidedly capital-oriented. Three points are emphasized: firstly, lower wages and higher profits, secondly, hold down taxes on profits and wealth and thirdly, dismantle the social state. This benefits the owners of capital.

The five economic wise men are a team of five professors with different alignments. For example, professor Bofinger was appointed on the recommendation of the unions.

I am very grateful that Peter Bofinger is a member of the council. But he is only one of five. Again and again, he casts his minority vote under the heading "another opinion."

Still, the council of experts has to face public debate and criticism.

Look at the advisors to the council of experts. They represent a neoclassical or neoliberal cartel of advisors and only speak with each other. No one from the outside is let in. The colleague Bofinger is the only exception and alone has a hard time of it.

Is one-sided orientation a German phenomenon?

This is also true in other countries. But it is not handled elsewhere as extremely as in Germany. The council of experts could invite the Alternative Economic Policy study group to its hearings. A really scholarly discussion could occur. But that is obviously not desired.

What themes should the so-called economic wise men take up more intensely?

That the council completely ignores the distribution question annoys us. That question is part of its legal purpose. We of the Alternative Economic Policy study group insist the distribution question is the crucial question of the economy.

But Germany is doing well. Employment increases. Wages and pensions are rising. Isn't that a proof that this economic policy is effective?

No, it is not effective. A decline in the number of unemployed appears in the statistics. But the quality of work deteriorates. We have a high share of subcontracted labor and part-time work. People with short working hours want longer hours and those with long working hours want to work less. If we want to remove the existing mass unemployment, we need reduced working hours with full wage compensation and exchanging roles.

The criticism of the council on the minimum wage attracts attention. Job losses occurred before the minimum wage was introduced. German chancellor Merkel as a physicist found that strange. Wasn't she right to make fun of her advisors?

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