Sahra Wagenknecht: Wealth without greed

Bruno Kreisky Forum für Internationalen Dialog

On June 13th, 2016 Sahra Wagenknecht talks about her new book: “Wealth without greed – How do we save ourselves from capitalism”. The host is Journalist and author Robert Misik. The discussion is held at the Bruno Kreisky Forum for International Dialogue.

Misik starts with some praise: A clear marker of the quality and fascination of Sahra Wagenknecht, chairman of the Federal Group of the Left Party, is the over-crowded audience hall:

“I’ve never seen it so filled.”

The host gives special thanks to the Campus publishing house, which made today’s book presentation possible. This leads straight to his initial question:

After reading this book; is it a book about the rescue “of” capitalism or the rescue “from” capitalism?

Wagenknecht sees no reason whatsoever to save capitalism. First of, one needs to be clear about what is even meant by the term “capitalism”. Misunderstandings, after all, would result in a certain defensive reaction, such as:

“For goodness’ sake! Don’t save us from capitalism! It has brought so much prosperity after all. And we need performance incentives. We need the markets! “

The expert notes that capitalism likes to be identified with things that are originally not capitalist. She reminds of the debates, in which it became clear that capitalism is bound to performance stimulus: There is a strong belief that society only works well with success and pressure to perform. Without these parameters, the whole thing would turn lethargic, there would be no innovation and no proper products any longer.

Another thesis: What good is it if we do not have as much wealth concentrated in few hands – there will be more poverty as a result: One assumes in this manner, that capitalism at its core, is a form of society that rewards performance and places incentives to make an effort. And anyone going the extra mile could work their way “upwards”.

Applied to this day and age, though, this description no longer pertains, says the author. This can be recognized especially by the  low-wage sector in Germany, which already covers a quarter of the workforce. And here, we are talking about jobs with a lot of proficiency, particularly in the area of social / human services: home care, hospital professions, school nurses and many more, are oftentimes very low-paying jobs.

She also mentions the division of the labor market through the labor market reforms: The same performance is in fact paid differently. And that depends on the type of contract: permanent job, temporary workers, and so on. The same people, given different contracts, would do the same work, but earn differently. In privatized jobs such as post office or railroad, there are also differences in the level of salaries: The “tenured” ones earn differenty from new hires.

By this, one can tell, that something like a meritocracy, meaning fair pay in terms of achievement, does not actually exist. Especially concerning “important social sevices” such as the care of the elderly or childcare. These lines should actually be paid correspondingly higher.

On the other side of the spectrum, an incredible swelling of salaries is prevalent: One naturally wonders, just why exactly this reward is given – for example to managers, some of whom managed their companies straight into bankruptcy. Quite a few of them get obscene salaries of 20 million a year. These simply are wrong decisions to the extreme, a lot of the times even including a “Golden Handshake”, accompanied by a huge remuneration, Wagenknecht declares.

Another example: the financial market. In finance, services, some of which could even be designated as harmful, are being rewarded. This is no longer about a new product or an innovation, an idea, but rather about something destructive: high-frequency trading, derivatives trading. The real economic effect and the use to the public have been entirely lost.

The biggest incomes in capitalism, in her opinion, are not bound to any effort anyway: income from pure asset ownership. This income dwarfs even the exorbitant executive salaries. The heirs to BMW-shares in Germany for example, the dynasty Quandt and Klatten: Mrs. Klatten received hundreds of millions in income drawn in from the dividends that the BMW shares yield. Receiving income without ever having done anything for it, and in huge quantities at that, is what Wagenknecht sees as the “true capitalism”.

Another misconception: If abolishing capitalism, the markets would be abolished simultaneously. Capitalism is thus identified with the market economy. Large modern digital economies are major global monopolist: Google, Facebook, Amazon, Apple – no real market exists there. In many other areas, like pharmaceuticals and chemicals, it is just the same – there are 3,maybe 4 providers. This leaves no chance for new competitors. This can also be attributed to the new patent law, which creates blockages. So Capitalism has markets, but is not a market economy.

This is why, particularly in the first part of her book, Wagenknecht endeavors to explain the specifics of capitalism. The part, one really has to save oneself from. For her, the specific feature in capitalism, is that companies are investment properties and are instrumentalized as means of money accumulation. Companies are the levers to return-maximization.

“The core of my book’s proposal is: Different ownership relations in the economic sphere, leaning toward something that already exists today: namely business support foundations. That way, the company belongs to itself”, says Wagenknecht.

From this, two advantages would emerge:

  1. No external owners with a forced short-term perspective, pursuing their own interests – similar to stock companies; in the book, the example of SIEMENS is used; thereby there is far more money available for research, development and investment. And
  2. the realization of the message of earnest reconnaissance – no economic inheritance; this is a prerequisite for democracy to start working again.

A discussion must be taken up again, the expert says, in what kind of economic world we wish to live in. For if the new technologies, keywords “Industry 4.0, digitization” were to further remain in capitalist hands, this would lead to even more extreme inequalities: to a loss of many jobs and an accumulation of wealth in few hands.

“What we are already experiencing today, should be an incentive to consider alternatives. In the book I tried to develop some ideas on how a new approach of a non-capitalist system could be operational, in my opinion.”

Why, in your view, is it unimaginable that the present dysfunctional turbo capitalism could turn into operational capitalism?

One can make improvements: collect property tax, pass good labor laws to prevent wage dumping and much more.. But if you were to try and build welfare states after the pattern of the fifties, says Wagenknecht, you would fail at the imbalance of power and extortion. There is a vulnerability to blackmail in a particular frame, namely when the welfare state regulations are made so strict, that the return is no longer right: Then nobody invests. This is when they go “elsewhere”. This prerogative and opportunity is present in today’s economy.

“Not even after the deep, fundamental crisis and shock, after all the billions that have been squandered to support banks, it was politically really enforceable, to carry out a proper regulation of banks to prevent such transactions. The banking lobby has once more managed to hammer away at everything: with strong lobbying, with a strong influence. Therefore, this power needs to be tackled.”

In Germany, for example, is it legal for companies to donate to political parties. At BMW, a company worth billions, this easily comes out of petty cash. To parties, these donations constitute a substantial part of the funding. Big money also awaits as a huge corruption apparatus for politicians after leaving their active political career, having been baited with great jobs. They know that they only get that, if they have done a particular lobby favors during their political work.

So there are too many levers that could be a hindrance to changing the system as it is, says the expert.

Where could the opposing power for further reform arise from?

A change is possible only through a broad social movement that makes demands, via parties who take up the cause. When there is a social discourse present. The advantage of this is: If successful, it is no longer reversible. After all, if things went on as now, following the pressure for a wealth tax, after any change of government, the law would once more be softened too badly to make sense any more.

“We should leave capitalism behind us – that certainly won’t happen in the next five years. But I’d be happy if we could even get back a social debate. Mid-20th century, there was a lively, intellectual discussion about alternatives to capitalism. (…) I believe that much of the lethargy, the feeling of powerlessness and lack of resistance are due to to people’s believe that society simply can not be changed. “

It is after all, the new, which leads us ahead, says the expert. And that is the meaning of her book.

Are we in post-capitalsm? Are core economic engines at work, supporting this? What is your own concept?

There are developments that cry out to be reorganized differently. To achieve this, different ownership relations and new forms of organization are needed.

Business models of “data octopi” should not be in private hands, because they are monopolies. The dependence in this case has nothing to do with classical market economy any more.

Democratization of capital, completely new ownership relations: please sketch this out in more detail

What an economy needs, is for those people who have the ability to run a business, to have the opportunities available. This is not the case in capitalism, stresses Wagenknecht, since it is very difficult to access capital if you do not come from a wealthy family. A public venture capital fund is needed, which is large and makes such start-ups possible. It must not be about individual private companies that make individual owners rich. The state money would be very helpful for this – promotion of small enterprises by the state.

Wagenknecht’s further proposal for commercial companies is based on the foundation construct. On the one hand, there ar operating enterprises, which de facto only act as a shell and are used to obtain tax advantages, but this is not the model she means: On the other hand, there are foundations that belong to themselves and pursue worthy goals with the focus of deliberately not founding stock companies, but rather to allow the achievements of the company to benefit those who work in it and to whom the successes are actually owed. The management is in such a construct will infact have an interest in growing wages.

The model, which goes beyond this, is the common good company: In this model, it does not make sense to let private profit orientation unfold, because this plays out in fields where markets do not function. In areas such as e.g. education, health and housing, markets in fact lead to inhumane conditions. Therefore, other criteria should be decisive in these areas.

Some of this already exists today: In Vienna, for ecample, there is the communal housing, the Caritas, the Volkshilfe. What is possible beyond that?

Yes, this is only about niches in the housing market. But the fact that housing has become an object of speculation is dominant; private return hunters are basically deciding what housing space shapes.

“In this area a return orientation has no place. And the niches should become the dominant model.”

Private companies are okay, but on a small scale only. Whereever there is public funding and subsidies, however, profits should not flow into private pockets.

Ownership of land is where it all starts: this simply does not belong into private ownership. In  Wagenknecht’s view, this is an attack on the whole of society.

How to get from A to B? “revolutionary reformism” – does the concept resonate with you?

It is important to be aware of the large social movements necessary. There must be many people applying themselves and also parties that hold a majority together, to carry out such changes. The choice of term for this, is not of such great significance to Wagenknecht.

I’m being mean-spirited now: if we consider the SPD, the Left, the Greens in Germany – even if you were to have the majority, you just don’t get anything done…

The question is: Are there similarities per se, just because one party calls itself SPD and another Green. In Germany after all, the SPD is really more neoliberal by far, than “even” the SPÖ.

The audience applauds. Misik smirks.

The SPD has been pursuing a policy that goes against their own voters in a massive way: The “Agenda 2010” was a frontal attack on the rights of workers; the pension reform an attack on the security in old age, which is a necessity to the common man though, because he cannot accumulate huge assets for his own security; the Hartz reform an attack on the status of unemployment – which has been reduced to a humiliating position of paupers.

As long as this policy is adhered to, there is no red-green camp, but unfortunately a neoliberal camp, spanning the SPD and the Greens just as much as the CDU, or the FDP and also AfD in Germany today.

The author hopes for the SPD to get out of this again. However, the result being a very negative one for the SPD, is clear for Wagenknecht. She remembers really only a single progressive measure enforced lately: the introduction of the minimum wage. Which had been well overdue. Unfortunately, it is on a pitifully low level, and also has large gaps, yet constitutes the only thing to have changed.

An imaginary SPD follower would now be saying: “You are but radical opposition, constructing a world filled with sinister neoliberal villains!” – what would be your retort?

For years, the SPD has been conducting a policy that has extremely increased social inequality. The moment it decides on a policy that restores the welfare state, “we would be born partners”. When people are in fact disappointed in large numbers, a significant portion always goes to right. And these are very dangerous developments. One must not squander one’s credibility as a left. The SPD has gambled away its credibility. Therefore, as a left, one must not hang at their coattails.

What is the terrain of this reform policy?

It would be ideal, if the whole world were to become more just. In other words, if there were institutions that make changes in the entire world. The second stage would be: Europe. She rejects a policy that only acts once something has already prevailed in Europe, though. That would be a “nice excuse” to do nothing. Everything would be delegated to the global, European level and one could just pretend that nothing could ever be settled beforehand. Resulting in nothing happening.

“That’s what I am attacking. There are a number of things that one can push and govern in the various countries. And it is not at all as if national policy were powerless.”

If many European countries go one way, then there is also a majority at the European level. But she criticizes the concept of merely waiting until the majority reaches European level.

“If there is a majority in a country, then you have to realize it there. One has to take seriously and be able to implement what is decided there democratically. I want a Europe in which majority decisions of individual countries can actually be implemented, once more.”

Therefore she resists, that more and more competences are transferred to the European level. At the Brussels level there is no real democratic control. The space for this is not transparent. Wagenknecht experienced this herself in the European Parliament: For the voting in the European Parliament there was no pressure; in the committee there were more lobbyists than MPs. That would be unthinkable in the German Bundestag as well as the Austrian Parliament.

“I do not believe that European democracy is currently functioning as a supranational democracy. Maybe this will change sometime.”

The audience asks questions: Wagenknecht takes position as a closing point

Do politicians always act on what they think?

That, the economist does not believe. As far as Merkel’s view of the Left, this actually is her true attitude though, says the expert.

Environmental sustainability

This point is treated more closely in the book. Ecological sustainability, to Wagenknecht, is a second important point, why we need to think urgently about a new economic order. For the expert there is no “green capitalism”, because that is contrary to its essence.

“We need an economy that produces things that are made to last, which are repairable and made of materials that can be recycled and recouped into the production process.”

In her view, it is not a sign of prosperity, to constantly have to buy new equipment because it no longer works. Surely one is more prosperous in owning products that work long-lasting, and can be fixed.

Globalized world

Globalization should not be worn as a “fetish”. Rather, one should ask what we mean by it: Is there an international exchange, or does a single enterprise have global proportions? Is that desirable? Who needs these huge monster companies? Would it not be better if they were to be unbundled significantly and made smaller?

“The EU should better protect against dumping products. (…) With other products, which are based on child labor or dire social conditions, there should be protective rights and the market may even be closed to avoid being pressured that way.”

Globalized Free Trade: The EU is destroying agriculture in complete countries, for instance by delivering subsidized agricultural products to Africa. Free trade is really destructive there, because the local farmers cannot compete. Free trade is therefore per se not only something positive, but can also be very damaging when it comes to dumping, as an example.

What the author finds really important for the political debate:

“Companies are man-made and can be changed by people. If society works against the prosperity of majorities, then one should change it. And when a society is sick, then it should also feel called to change this, to keep the downward spiral from continuing.”

Robert Misik sees Sahra Wagenknecht off as host, and ends with a quote from an interview with Bruno Kreisky:

“What I rejected and struggled against for all my life, was this one sentence: “Oh well, it can’t be helped”.'”

Tranlation from German: Serena Nebo


Image Title Author License
Sarah Wagenknecht Anna Dichen CC BY-SA 4.0