The Economy …
Hearing the term ‘economy’, we all have some understanding of what it is – it seems. There are some caveats, however. The meaning attributed to the term is very different. It reaches from the common persons understanding of having difficulties to pay the bill for food and heating – or being in the lucky situation of having even at the end of the month enough to save for the holidays ahead – to looking at complex processes of exchange, the development of labour markets and the relationship between labour and capital, the development of the rate of inflation, international financial exchange and others, taken together as economy in the sense of an institution. And in both cases we can speak of a “good” or “bad” state of the economy.
Speaking of the “state” of the economy, has the double meaning: it is about the “status” and it is also about the “nation” or “country” (though these terms are not real synonyms). The OECD publishes regularly a report, titled The OECD Economic Outlook – the latest report had been presented and discussed on the 4th of December in Berlin, looking in particular at the development in the German speaking OECD member states, the subtitle read Gaining resilience in uncertain times.
Economic Outlook
There was an interesting note right at the beginning: the inflation rate has fallen, but at the same time the cost of food and energy, and subsequently cost of living has risen.
Both the basis of calculation and the meaning of the inflation rate are often discussed – and in fact it can be asked, for example, whether “equipment for horses and ponies” belongs in the shopping basket (as it is the case in Germany). Admittedly, they only have a low weight, but the significance can still be questioned.
And it must be questioned in principle, going much beyond the specific issue, of how the basket is compiled. In other words, we must look at the understanding of economic activities, i.e. of the economy. If a low inflation rate is hailed as a success, but at the same time the cost of living has risen in an important area of the population’s life, a fundamental problem has been identified (though not issued by the OECD): This understanding of the economy is based on an abstract economic calculation that has little to do with living conditions. This was also pointed out – probably with some ignorance of the true meaning – by one speaker: the success of the national economy (in relation to Switzerland) was emphasised, albeit with the premise that this was the result of cutting off only a few sectors. This undertanding of ‘the economy’ is also one of the reasons behind the fact that Keynes’ prediction (writing in 1930 about Economic Possibilities for our Grandchildren) that we can manage with a comparably short working time to satisfy needs, has not been fulfilled – and such radical shortening of working time will not be fulfilled under these conditions: success is seen precisely not in providing what people need; instead, success is about enriching companies, increasing profits and serving an abstract model of economic success.
Furthermore, the divergence between the falling inflation rate and the rising cost of living is hitting those households at the lower end of the income scale particularly hard. It is widely recognised that the proportion of costs for food and housing is particularly high in the lower income brackets. In other words, the lower the income, the higher the proportion of total income spent on food and housing. For those on higher incomes, therefore, there is still plenty of scope for spending on things like equestrian sports – later this will be taken up again.
The economic situation of households, however, is under severe pressure. Though not reflecting the most recent figures, the Fundamental Rights Report – 2024, published by the European Union Agency for Fundamental Rights, is alarming:
In 2022, 95.3 million people in the EU were at risk of poverty also exclusion. This is equivalent to 21.6% of the EU population. After an increase in 2020 and 2021, the proportion remained stable in 2222, compared with 2019. But poverty and social exclusion have increased among children, affecting 24.7%. This share represented about 20 million children in 2022, almost 1 million more than 2019. (https://fra.europa.eu/sites/default/files/fra_uploads/fra-2024-fundamental-rights-report-2024_en.pdf: 27)
For these – and also for those who are slightly better off – the economic outlook is anything but rosy. In short, and later this will be taken up again, the abstract understanding of the economy – abstracting from people’s real life – translates into an abstract understanding of rights: While everyone has the right to look at the splendour of the world of goods in the shops, this does not mean that everyone has the right to dispose of these goods. And equally, while everyone has the right to be entrepreneurial, corporate law does not recognise street level economic activities. Moreover, absurdly enough, street musicians, for example, must pay various taxes, even though these activities are usually not included in the calculation of value added/GDP. However, if in particular large companies are found guilty of tax evasion, lengthy proceedings are initiated. Presumably they can pay the penalty from the interest they receive on the ‘reserves’. – Admittedly, empirical studies would be required to figure the financial issues exactly out. However, here we are looking at the dimension of rights and economy that is hugely one-sided, putting itself above realities.
Migration, Language and Labour Market Integration
Before discussing this further, let’s have a brief look at another OECD meeting, earlier the same day. The title: Arriving: How well is the integration of refugees into the German labour market going?
Admittedly, the meeting focussed on labour market integration – however, this cannot be thought about without looking at the general challenge of migration and integration. Whereas questions of concepts and terminology (integration? inclusion?, adaptation …) will not be discussed here, the fundamental truth had been expressed a long time ago, when Germany brought so-called guest workers into the country – mainly from Greece, Italy, Yugoslavia and Turkey. At that time, contracts were limited in duration and the policy was often criticised with the slogan: ‘They brought workers, but people came’. Yes, it had been stated in passing during the meeting that we see today a reversal: People came, but they had been accepted only as workers.
Of course, it is not as simple as that. Many migrants cannot avail of a work permit; but the focus is laid on workers and labour market integration. Consequently, learning the language of the host country had been discussed; it had been also mentioned that for many positions there would not be any need, at least as long as one can fall back on an adequate command of the English language. Now, it would certainly be wrong to demand ‘Germany for the Germans’, or at least ‘Germany for German-speakers’. What is certain, however, is that migration policy must go beyond language acquisition and labour market integration – and it must do so as a policy of mutual respect.
Sole orientation on labour market integration reflects the one-sided understanding of the economy mentioned above: an economy that is not primarily geared to providing for the population, but that is established as self-contained system of abstract growth.
The perversity of such thinking is obvious when you ask yourself the following question: according to such standards, is it better to repair a small damage to an old but serviceable small car or to buy a new luxury car, preferably an oversized SUV? Of course, the latter – and that such thinking is exactly the pattern that is applied today. The newness of models on the market for automobiles, mobile/smart phones etc., including the inherent force to keep pace as one will face otherwise problems of compatibility and social connectivity and reputation. If we look at the development of personal communicators, for example, the significant ‘innovations’ are less remarkable from a technical point of view and more an expression of the competition for market leadership; furthermore, innovations had not been market driven, but ‘market driving’, i.e. thrown onto the market to create an artificial demand and thus change consumer habits (see e.g. https://www.smartmobil.de/ratgeber/vom-handy-zum-smartphone; sufficient for the present purpose: https://en.wikipedia.org/wiki/History_of_mobile_phones; 07/12/2024). While we are dealing here with a market that concerns goods that are (though not completely) luxury goods, the real question is a different one: it is about the commercialisation of the satisfaction of basic needs. Even if it may be an extreme case, it is only the basic pattern of a policy that may be legal but uses the law against justice: the CEO of the Netslé group believes that the supply of water should be regulated by the market. This rejects a right to free access to water. UNECE (United Nations Economic Commission for Europe) titles a short article on this (published in 2013) ‘Nestle CEO: Water Is Not A Human Right, Should Be Privatized’ (https://aarhusclearinghouse.unece.org/news/nestle-ceo-water-not-a-human-right-should-be-privatized; 07/12/2024). Without expanding this debate, it must be mentioned that the EU moved (latest) since 1995 towards a policy of strict privatisation of social and health services. While – in the EU – still everybody has the right to health services, this right does not refer to the time of accessibility nor is it seen as matter of quality.
The various mechanisms of decoupling the measurement of a country’s economic success from the improvement of the socio-economic situation of its population is just one expression of the decoupling of law and justice.
Rights as matter of asking the right question
Earlier, it had been said that
… empirical studies would be required to figure the financial issues exactly out. However, here we are looking at the dimension of rights and economy that is hugely one-sided, putting itself above realities.
All this is an expression of developments that are, on the one hand, widely known and expressed in phrases as Money Makes the World Go Round; on the other hand, the mechanism is too often not sufficiently thought through – we are not witnessing a mechanical pattern of influencing politics and shaping policies. Of course, this level should not be denied and the recent developments, namely the nominations of ministers by Trump and the chumming up on the part of some of the super-rich must not go unnoticed. The fundamental mechanism behind this, however, is the formation of a state ruled by law that detaches the conception of laws themselves from reality. The paradox is that, while nobody stands above the law, the law is itself designed in a way that serves an intimate circle. A pronounced – or should we say Kafkaesque? – example is the fact that the US-president cannot pardon himself, however s/he can very well appoint a minister of justice to grant his pardon.
The fundamental rules are reflecting the economy of equestrian sports – the reference made earlier must be seen in a rather serious perspective not only by way of patterns of consumption. A dimension that goes beyond consumption and sports can be taken from a short essay, written be Wassily Leontief, titled National Perspective: The Definition of Problems and Opportunities (in: The Long-Term Impact of Technology on Employment and Unemployment; A National Academy of Engineering Symposium June30, 1983; The National Academies Press DOI 10.17226/19470: 3-7). He questions an economy that serves an abstraction:
The general theoretical proposition that the worker who loses his job in one industry will necessarily be able to find employment, possibly after appropriate retraining, in some other industry is as invalid as would be the assertion that horses who lost their jobs in transportation and agriculture could necessarily have been put to another economically productive use.
What he highlights is – in a wider view – the law of the tendency of the profit rate to fall. In other words: THIS economy depends on the employment of human labour and is as such in a conflict with itself: though only the exploitation of human labour secures profit, it has limits to increase productivity and calls for replacement by technical means, lowering labour standards and externalising costs (see Herrmann, Peter, 2019: Value Theory. Is there still any value in it? Revisiting value and valuation in a global digital world; New York: Nova). An alternative is within this framework not allowed – or in the reflections of mainstream economists not even thinkable: seeing improving working conditions and reduction of working hours as a special kind of profit. Returning to Leontief, we read:
But what is more, shortening of labor hours – that is, a gradual increase in leisure or freely disposable time-would mean a change in the way of life of large masses of American people. Such a change can hardly occur without a change in our cultural and personal values. The Puritan work ethic, born in the sixteenth century, served the needs of nineteenth and twentieth century industrial society; now it will have to yield gradually to a somewhat different attitude toward life. Those who ask what the average working man and woman could do with so much free time forget that in Victorian England the ‘upper classes’ did not seem to have been demoralized by their idleness. Some went hunting others engaged in politics, and still others created some of the greatest poetry, literature, and science the world has known. (7)
Indeed, we are dealing with an economy that sees people as work animals, and only suitable = needed for certain given tasks that are part of the existing, gain-led economic model. Significantly, the question of whether migrants can and should also open new fields of work (beyond the tasks directly associated with migration) (new cultural skills, alternative medicine [such as TCM] …) was avoided. The fact that migration increases the possibilities of a radical reduction in working hours is also not an issue on the agenda of migration or economic development.
In other words, talking about rights and the economy must on the one hand look at the rights within the existing economic formation but equally address the question if the formation is geared to the fundamental rights of citizens and humanity – such rights are literally existential matter and the definition of what existence is about. Indeed,
[t]hose who ask what the average working man and woman could do with so much free time forget that in Victorian England the ‘upper classes’ did not seem to have been demoralized by their idleness.
Economics and economy – similar to law and justice?
The economy as abstraction, separated from the question of how it benefits everyone, is topic of today’s mainstream schools of economics. Numbers are juggled, average rates and development trends of ‘key figures’ are calculated and a magic square is looked at, namely the relationship between • price stability, • high level of employment, • trade balance and • steady economic growth.[1] Economics is, in this light, the discipline that is oriented on the macro-level of producing monetary prosperity without understanding the ‘macro-level’ as matter of a polity. The traditional understanding of the oikos – household is discarded and deprived from both, the understanding of the polity as social entity and the goal of mutual respect and the benefit for the members – remember, without idealising or romanticising the oikos, as we know from ancient philosophy, its constitutive part had been the critique of chrematistics, understood as accumulation of monetary assets.
In a similar vein we see today’s juridical systems as societal systems of regulation that lost the social out of sight. The spirit of the Chalk Circle (灰闌記 – play written by Li Qianfu, taken up in various European versions) is lost: instead of reflecting on complex realities, law is self-referential, aiming on an ‘inherent logic’ and defining justice (a) by the given coherence and (b) the addition of hatch closers. Obviously a system that is even for experts difficult to understand is emerging: paradoxically every attempt to correct the system by a new regulation results in the creation of new gaps and needs for interpretation which, of course, result in legislation, even more difficult to understand. – The horse must be running, and results in the same burn-out as the abstracted economy that moves from one overheated stage to the next.
[1] The foundation goes back to Jean-Baptiste Say (1767-1832).
At least we find more recently a magic hexagon, with magic hexagon, with the additional factors of environmental protection and fair income distribution. This does not change the fundamental ideology, makes it, however, more difficult to reach an equilibrium.