Institute for Critical Social Analysis (IfG), Germany

Preliminary Remark

“Upswing XXL” was recently proclaimed, and now the ruling elites are not getting their well-earned vacation. Every just acquired and announced “solution” of each most recent crisis is always out of date a few days or weeks later. Neither the markets nor the affected citizens “get some peace”. Destabilisation comes both from the economy and from the society. It is no accident that the hectic attempts of the new austerity programmes in Italy and in France and the protests by those abandoned by society in England, the famine in East Africa and the never-ending controversy around Stuttgart 21 are occurring simultaneously. In the current situation diverse, partly conflicting developments have a simultaneous effect. After neoliberalism was widely discredited in 2008 and capitalism fell into disrepute even in bourgeois Sunday supplements, society’s confrontation of the crisis did not weaken the neoliberal contingent but at first strengthened it. The path taken up to now of dealing with the crisis has stabilised neoliberalism, put it, in an authoritarian way, on a different foundation, which for its part is unstable and conflicting. It first excluded other social and ecologically reformist solutions. This places the various groups within the left before a completely new challenge. This summer the IfG of the Rosa Luxemburg Foundation worked out a comprehensive analysis of these developments. The following represents a much abbreviated version of this paper.

Thesis 1: The current crisis is a crisis of the accumulation regime and the mode of regulation of neoliberal financial-market capitalism.

All attempts at doing just more of the same are failing now, despite the sharply honed crisis skills of the ruling elites who demonstrated these skills in 2008 and 2009. The cause lies in the limits of financial-market capitalism itself: its accumulation is largely finance-driven: the search for new valorisation possibilities and the continuous refining of financial instruments could not prevent ever larger sums of capital from being accumulated, driven by a redistribution toward the top, capital for which there are not sufficient valorisation possibilities. Financial investments seemed more profitable and so spurred speculation on, which led to technological, stock, credit and real-estate bubbles.

The long-term strategic situation is characterised by the fact that the left must act within an organic crisis of neoliberal financial-market capitalism. So, for the first time after a very long pause decisions on political direction are again on the agenda - from above as well as from below.

Thesis 2: The recent period of the organic crisis is characterised by the unresolved contradiction between the limits of neoliberal financial-market capitalism, on the one hand, and the enormous attempts at stabilising it, on the other hand.

The basic assumption of the IfG – that the economic and financial crisis of 2007 / 9 is part of the organic crisis of neoliberal financial-market capitalism – has been confirmed. Such a crisis is characterised by the fact that the accumulation regime obtaining up to now has come up against its limits and a stable securing of rule is not possible without the fundamental transformation of the mode of regulation. Due to the difficulties of such a reconstruction, an organic crisis is being realised as a cycle through a chain of larger and smaller economic, social and political crises. In each of these partial crises conflicting strategies collide. Ad-hoc solutions and longer-term approaches are combined and tested. In the first crisis wave of 2008/2009 the elements of a second, greater crisis were accumulating.

Thesis 3: Through corporatist means, the first wave of crisis-management stabilised and sharpened the imbalances of financial-market capitalism.

The first wave of crisis-management was marked by strong (neo-)corporatist elements, relatively limited international cooperation and strong state intervention. The goal was a short-term stabilisation at all cost. The short crisis-corporative phase in Germany and many other countries was characterised by the conjunction of an increase in demand (car scrapping-bonuses), securing of jobs (part-time worker regulation) and strengthening of the finance and production sectors. The decisive position of the financial markets was untouched; rating agencies and IMF have managed a new rise to power. In this the German government has become the most important centre and agent of neoliberal “consolidation” within the EU. Austerity policies have been carried out throughout Europe – an authoritarian neoliberalism. In the crisis, relations of force shifted once again clearly in favour of the representatives of financial-market capitalism. In addition, precisely in the European Union the institutional constraints of a neoliberal policy were reinforced.

Thesis 4: The regional “winners and losers” of the crisis belong together.

The first crisis in the crisis and the first wave of crisis-management have had very different consequences for different countries and regions. Those countries that particularly owe their growth in the last years to debt and speculation are hardest hit. This group includes the USA and, in the EU, especially Spain, Ireland Greece, etc. Countries and regions, on the other had, which, in a mirror image, through their export capacity, had become the global and European creditors of debt-capitalism (China, Germany, Japan, Switzerland, a series of emerging countries) are the relative “winners”, whose gain, however, rises and falls with the stability of the “losers”. Thus the upswing in Germany is quite clearly dependent on securing demand in the European area, the USA and China. At the same time these present “gains” make it possible to reduce (official) unemployment.

Strong inner-European contradictions have arisen, which the left has up to now not been able to deal with solidaristically.

Thesis 5: The second wave of crisis-management leads to the restoration of neoliberalism through authoritarian means and a more extreme neoliberal integration of the European Union.

European financial markets, the IMF and the Merkel government (together with the Scandinavian, the Dutch and the Austrian governments) are aligned in betting on a radicalisation of austerity-policy measures, in other words, massive cuts and, not least, far-reaching privatisations. As far as measures for improving the revenue side are present, they overwhelmingly involve value added tax. This has motivated numerous protests from Greece and Spain to Great Britain, which have, however, been without consequences.

In the course of this, EU integration into the EU for the German federal government is no longer a value in itself, but the condition for a new international standing for Germany, which is based on its strong position in world trade, or, in other words, the dominance of Germany in the EU is the basis for its expansion in global trade. The world export champion is becoming the refuge of neoliberal principles in the time of its crisis.

The left is confronted with the reinforced power and danger of neoliberalism and needs an independent project of an alternative European integration.

Thesis 6: Uncertainty will increase - even for the German export model. Different pathways are possible for the organic crisis: either more as a succession of partial crises or through the collapse of subsystems.

The immediate success of neoliberal crisis policies has created the basis of today’s new crisis.

In a situation such as this, three different economic scenarios can be expected:

a) It is possible, that despite its decline global demand will suffer no serious breakdown. In this case Germany’s export successes can continue to guarantee low-intensity growth in Germany, without a change of model becoming necessary. If need be, small and gradual changes in the direction of energy use and ecological modernisation can be made.

b) It is also possible to think that the recovery will stagnate (even stagflation) and a long-term trend to zero-growth stabilise. This would – in order to secure the economy, social systems and state budgets – entail the harshest redistribution conflicts around taxes, social services, wages and labour standards as well as ecological measures.

c) We consider as relatively likely, in view of the multi-faceted imbalances and the financial over-accumulation that is now building up again, a further deep financial and economic crash. Major crises and corresponding transformations even within capitalism normally proceed in a series of breaks and are very protracted.

The left must brace itself for a highly insecure situation, severe attacks, repression and rapid changes in the tactical situation.

Thesis 7: The current crisis has four fundamental dimensions: It concerns social cohesion, the reproduction of the natural and social bases of life, the exercise of power, and the guaranteeing of security.

Integration Crisis: First, the capacity for integration of countries, regions and also of world society has been drastically reduced. Inequality and injustice, as well as division and exclusion, are overburdening societies. In the place of the most elementary approaches of solidaristic cooperation, national economic-position competition and resource extraction, as well as social and cultural polarisation predominate. The lower strata of world society as well as of national societies see themselves as hopelessly shut out.

Reproduction Crisis: Second, although the accumulation of assets has exploded, the investment in the social, cultural and natural foundations has lagged behind. It is a crisis in the relation to society as well as to nature. Resource shortages and contamination of the atmosphere with environmentally harmful gases have attained an irreversible character. The cycle of growth, resource exploitation and consumption maximisation remains unbroken.

Legitimation and Democracy Crisis: The gap between society and the established institutions is continuing to grow. The institutions appear as corrupt, in the service of the minority interests of the privileged and the rulers, dysfunctional, harmful or just helpless in the face of the real needs of large parts of the population. This also holds for the institutionalised left. Beyond very limited concerns, left parties and trade unions are hardly recognised or effective as a social force for a solidaristic reconstruction. Therefore protest movements arise which are hardly or not at all connected to the institutionalised left, and we are seeing the rise of a new, socially anchored right.

Security Crisis: Against the background of the above-mentioned developments we see the dwindling of, in part the capacity for, and in part the interest in, opting for civil forms of carrying out conflicts. On the one hand, they are seen as ineffective; on the other, the conflicts are fundamentalistically antagonised (internationally and increasingly within societies as “a clash of cultures”.) An interventionist foreign policy, global strategies for the securing of spheres of influence and of the most massive arms build-up as well as (counter-)terrorist movements and regional gangs are one side of the coin. The other consists of internal-societal surveillance (state as well as private), the expansion of repressive forms of control and counter-)violence.

Thesis 8: A multiplication of the conflicts will occur.

It is to be expected that the debt crisis will swell further and conflicts around further billion-euro bailouts and social cuts will characterise the political climate in Europe (and the USA). In the case of a renewed financial and economic crisis, it is questionable whether the states involved will succeed in mobilising several billion dollars or euros again, in order to impede a depression. A flaring up of conflicts around the re-regulation of the financial markets and the costs of the crisis would seem inevitable.

Thesis 9: The rulers are attempting to strategically manage the conflicts. In so doing, four concepts of society are competing with each other: The concept of a more extreme authoritarian neoliberalism, green capitalism, the new right and the Green New Deal.

The real crisis-management is situational, power-related and oriented toward quick solutions within the neoliberal framework. Based on the fact that the causes of the crises still exist, but that the capacity for a corporatist management financed by state debt has been markedly diminished, we must assume in the middle term that within the ruling bloc as well as outside of it (through civil society, the trade unions and social movements) the strategy of authoritarian neoliberalism will be challenged. To the extent that muddling-through will not be successful, what is most probable is either a closer connection between authoritarian neoliberalism and the new right or a green capitalist modernisation. Both paths can mutually support each other.

Strategy of authoritarian neoliberalism (consistency of direction on an unchanged basis)

The ruling circles are presently trying to reduce the threats to stability within the given structures. What is involved is a restoration of an authoritarian neoliberalism in that the crisis is met (as in previous major crises) with an intensification of the old regulatory mechanisms: financialisation, dictates to carry out social cutbacks, privatisation, flexibilisation, precarisation, de-democratisation. Although in Germany essential social services have been retained, cutbacks there will be more selective and repressive. Combined with marginal social partial amelioration and symbolic concessions the coercion is emerging more openly behind the crumbling consensus. Internationally, a class politics benefitting the wealthy and export-oriented transnational corporations will be practised. The guiding principle is the global free market and the individual as entrepreneur of his own labour power and provider of his own basic (social) services. As far as the economic cycle permits in some countries social concessions will also be made, while others will face social cutbacks on a scale not seen up to now.

The strength of this strategy of consistency of direction on an unchanged basis is its deep anchoring in the economic and political power elites and the ideological apparatuses as well as in the institutions. As long as rule is not directly threatened the power bloc itself will not launch a strong attack on this position. Therefore a muddling-through will prevail, which will have to use increasingly more authoritarian and repressive means.

The weakness of this strategy is that, first, it has to at least partly prune back precisely the propulsive force of the finance-market-driven accumulation regime, which up to now was the basis of neoliberalism. They can activate significantly more resources neither through incurring state debt nor through indebting the lower classes. Second, they also lack a stable mass base, since they have constantly less to offer every broader sector of the population. That is why many turn to the new right.

The New Right (Direction Constancy on a constricted basis)

In the USA and many countries of the European Union a new right has arisen, which has seized on the interests and the values (performance, rank, recognition) especially of the threatened middle strata of wage dependents and autonomous workers and integrates these into the project of a defence of individual privileges, of one’s own territory and culture, on a foundation of neoliberalism. To the subaltern groups participation in such a project is offered. At the same time civil and human rights are restricted, parts of society completely rejected (“illegal”, “criminal”, “terrorists”, “Muslims”, etc.) and de-civilising promoted. We have the construction of “fortress societies” with totalitarian elements. Demarcations and exclusions within society and against the outside, concentration on short-term “national interests” and a selective connecting of protectionism to open capital movement are elements of this project. In the EU the pursuit of this strategy is tied to a further division into a core Europe and a periphery. The sealing off of the external borders could become even more drastic. For the elites of financial-market capitalism this strategy, it is true, ensures a mass basis in its centres and allows it mainly to strengthen its own regional position of power. However, this occurs on a limited and even shrivelling basis and opens up no new fields of accumulation. By contrast these could be opened by a transition to a “green capitalism”.

“Green capitalism” (change of direction on a modified basis)

For a long time now, ecological modernisation and the construction of renewable energies are options for renewing the technological bases and for opening new sources of accumulation. The revolution of information and communication processing as well as transportation in the last 30 years is to be combined with a revolution in energy production and the material base. The bourgeois capitalist bases of society are further developed (“revolutionised”) and at the same time the structures of domination are preserved. The subalterns remain largely passive objects of this development. Certain interests are integrated as regards the form of rule. Parts of the leadership groups of protest movements are incorporated.

Such a strategy requires a modification of the mode of regulation. The massive expansion of accumulation in the fields of ecological modernisation is only possible if there are binding and realisable political targets, if long-term investment and promotional programmes create incentives and provide security and also if a targeted demand policy is created in these areas. Eco-Keynesian elements of market steering would be combined with neoliberal regulation and expansion of the areas of valorisation. Green capitalism is at once the continuation of neoliberalism and a break. The continuation and intensification of an “accumulation through expropriation” (Harvey) in the domain of natural resources culminating in land grabbing or the individualisation of environmental problems (“enlightened consumption”) show continuity as much as trade in emissions with its extension of market logic to the combating of environmental pollution. It is not just that limited financial-market regulation is sought; it is much more a matter of developing new instruments.

The strength of this strategy lies in the area of a new industrial policy. It can mainly be capitalised by export-oriented countries with a high share of investment goods (Germany, Japan, increasingly also China), but in so doing it puts other countries under additional pressure. For the market-oriented parts of the middle strata it creates new areas of activity and at the same time threatens traditional industries, without offering sufficient alternatives. It is highly adaptable to neoliberalism and only requires modifications of the given institutions, an accommodation of the leading protagonists (for example, of energy corporations) as well as the integration of new groups.

Green capitalism is a “bastard capitalism”, which combines very conflicting features in its mode of accumulation and of regulation. This weakness of the green capitalist project provides an opening for a social-libertarian Green New Deal.

Social-libertarian Green New Deal (change of direction on a new basis)

This strategy of taming and incorporating capital by ecologically oriented sections of the middle class implies a consistent socio-ecological transformation and goes together with a massive destruction of capital. The latter involves the most powerful sectors of capital: the fossil-fuel companies, from oil to auto. These sectors, however, are not homogeneous, since especially the larger energy, chemical or even auto companies themselves are among the biggest greentech investors. A “controlled” devalorisation and destruction of fixed capital will, however, be extremely difficult.

There are currently no power-political conditions for such a new mode of accumulation and regulation, even if important conceptual bases for it have arisen and influential groups of the enlightened elite are promoting this option. It would require more comprehensive learning processes in parts of the ruling elites as well as more forceful countervailing forces with clear goals and a high capacity for cooperation in order to help bring about a breakthrough for this option. Within the ruling bloc the financial-market elites would drastically lose influence, while other forces would have to reorient themselves. This requires of the trade-union and left forces the connecting of clear and direct defence of interests with conversion strategies.

Unlike after 1945, no sustainable spiral of growing GDP and increase of private consumption can be set off. Especially the share of public expenditures, or the expenditures that involve public basic services, must be appreciably increased. The purposeful structural transformation requires deep interventions into private rights of disposal. A true ecologisation is not possible if the acquisition and consumer centeredness and the growth drive as well as the dominance of profit are not overcome. A Green New Deal cannot be an old New Deal with a green label but calls the basic structures of capitalism itself into question, or it will end up deeply conflicting with the needed ecological turn.

Regardless of which political camp succeeds in integrating other groups under its leadership in a reorganisation of the power bloc, the movement toward a green capitalism is already taking place. In the Federal Republic precisely those people are positioning themselves to play a leading role, who up to now had blocked an energy turn: the electricity-supply oligopolists. Market and technical solutions are favoured, including large-scale projects like Desertec, gigantic offshore wind parks, monopolised nets and – despite everything that has occurred – nuclear energy, if not at home, then still as an imported commodity. The fossil-fuel auto companies are banking on E-autos and new urban car-sharing models. IT enterprises, energy companies, rail and municipal enterprises are competing for the construction of the relevant infrastructures. Against the background of the given social relations of force and of the institutional consolidation of neoliberal budgetary and fiscal policy, the realisation of a social-libertarian Green New Deal is quite unlikely – the odds are better for the further development of a green capitalism, which can, however, also be converted into a Green New Deal under pressure of social forces, of learning processes, experimental successes and new crisis shocks.

Thesis 10: A radical realpolitik of social-ecological transformation during the crisis requires the double strategy of a development of own approaches of transition to a solidaristic society and of a democratic green socialism, as well as bringing such approaches into the actual struggles. 

The left especially needs to bring in its own transformative approach to the solution of the current crisis, in concrete form of entry projects.

The central conversion projects should mainly aim at (1) solidaristic labour elations, (2) the transition to solidaristic and poverty-proof systems of needs-oriented basic insurance and the securing of the standard of living, (3) an energy turn (in production and usage), (4) participatory democracy in the economy, locally and in the whole society, (5) a turn to the social, ecological and democratic renewal of the European Union and to a solidaristic world economic order.

Thesis 11: The left must prepare itself for harsh defensive battles, efforts to preserve and extend their social and institutional base and to constitute a renewed solidaristic mosaic left (in Germany, the EU and globally).

The party Die LINKE has not succeeded in capitalising on the greatest humiliation of (finance) capital in the last 80 years. Instead its position – but also the position of its social “camp”: the abject and poor, as well as the so-called middle strata – has rapidly deteriorated. At the same time discontent is growing. In Europe and the USA the struggles have returned, even if often almost unorganised and always in danger of going unheard for lack of representation or of being “hijacked” by problematic representation.

The following persons have worked on the formulation and discussion of these theses: 

Lutz Brangsch, Michael Brie, Mario Candeias, Erhard Crome, Judith Dellheim, Ralf Ehlert, Markus Euskirchen, Conny Hildebrandt, Christina Kaindl, Dieter Klein, Tadzio Müller, Rainer Rilling, Florian Wilde und Fanny Zeise.