His critics consider capitalism a scourge of humanity. Why this accusation is wrong explains historian Werner Plumpe. Because the capitalist economy is just for the benefit of the poorer.
The keyword “capitalism” leaves no one unmoved. Especially since the financial crisis since 2007, it is considered unleashed, as a threat to the stability of our society. Werner Plumpe advises a differentiated approach.
In conversation, the historian argues that capitalism is not a “system”, but a way of doing business. The addition in particular have enjoyed an advantage as they are formed the bulk of the population.
Professor Plumpe, for many people capitalism is a kind of predator. Where does this bad reputation come from?
Werner Plumpe: Friends did not have the capitalistic way of doing business right from the start. Some bothered the cheap junk, others the social situation of the lower classes, many finally the deification of money and the supposed release of greed. All this has been chalked up to capitalism but never asked if the connection is really right. The recurrent crises, unemployment and social misery also gave these judgments always new food. But capitalism is anything but a predator. If he were, he would not have been able to last that long.
So capitalism is unjustly vilified?
It is very difficult to tackle this idea. Since Karl Marx is the assumption in the world that capitalism is an exploitation system in which capital and labor are irreconcilable. The means of production therefore oppress the workers, the state serves only the interests of the ruling class. This is a very memorable image that many people have adopted because it has supposedly scientific evidence.
In the face of the mass misery of the nineteenth-century workers, it is not difficult to warm to socialist ideas.
Of course, criticism is completely understandable. But the question is, is this criticism the core of what we call capitalism? I’m skeptical. Because the new thing about capitalism is not exploitation, poverty and greed: that was already common before. The novelty is the facilitation and digestion of capital-intensive mass production for mass markets. The aim of the capitalist way of doing business is mass consumption. So it’s about the production and sale of bulk goods for the less affluent. And in economic history, this reorientation is unique. At the center of the economy is no longer the luxury of the upper classes, but the mass demand. By the way, this has nothing to do with altruism. It goes without saying about capital utilization; only it is tied to mass consumption.
Why the poor?
Capitalism emerged in northwestern Europe since the end of the 17th century. Especially the Netherlands and England should be mentioned. The growth of cities played a special role in its development: at that time, the number of ordinary people who had to supply themselves through markets rose sharply. One example is London, which had nearly one million inhabitants by the end of the 18th century. These many people had to be supplied with food, clothes and last but not least living space.
This need could only be met by a capitalist economy?
It was a very fast centralized experience: the economic challenge, especially in the growing urban centers, could only be achieved if capital intensive large masses of goods were produced at relatively low production costs. The thus just for ordinary people were affordable.
Do you have an example?
At great financial expense, huge quantities of beer were produced. But then sold individually in the glass was so cheap that the worker could afford it. Similarly, clothing was produced on a large scale so that people could meet their needs at reasonable prices. For the upper class, who had access to the highest quality goods anyway, it was often just junk. But for the poor, capitalism was a revolution, if you like. The new factories gave (albeit often poorly paid) work, and they made the goods that even ordinary households could afford.
A market for the masses had previously not existed in the form.
At least not to that extent. In the cities existed markets that were operated by craftsmen. But that was not mass production. In addition, many craftsmen oriented themselves to the demand of the wealthy – the nobility and clergy, because it was for goldsmiths or artisans earn good money. This type of production was therefore poorly prepared for a sharp increase in demand for low-cost goods. It lacked the necessary dynamics, because the number of the rich was manageable, their needs also. The novelty of emerging capitalism was that the early entrepreneurs with their new factories aimed at the masses of the population. This gradually created a new, unexpected dynamic. Capitalism almost exploded the efficiency of the economy. And right there,
The growth of the population was certainly not the only factor that favored the development of capitalism?
Certain framework conditions had to exist, in particular, people had to be able to use their property relatively freely in accordance with their ideas and their income expectations, without being subject to strict official regulations. This was the case for a variety of reasons at the time of formation of capitalism, especially in the Netherlands and England, but also in individual large city republics. And then there could be no too restrictive state market regulations, but openness – even for failure. In addition, competition favored the establishment of capitalist practices. And finally, some supreme interest in hedging new risky companies was not without significance. So it had to come together a lot …
That sounds a bit abstract. Do you have an example?
Take a businessman who starts brewing beer in Amsterdam at the end of the 17th century. This requires considerable capital expenditure, which is worthwhile only if he can sell his beer unhindered in the urban market. He can and must defend himself against the competition, but he can also fail. But the authorities must respect the market and must not limit it by price regulations or conditions so that the effort is no longer worthwhile. This may be a bizarre example, but the brewing industry was one of the earliest capitalist business areas.
Such conditions were not yet available in the German states at this time.
In Germany, the cities were much smaller than in the Netherlands or England, the majority of the territorial rulers in particular interested in direct revenue and the maintenance of the conventional order. The number of authoritarian regulations, such as market and consumer regulations, which regulated production and sales in some detail, was extremely long. And they also continued to exist when something like that had long since given way in other parts of Europe. There was therefore no question of free markets, at least in general.
“Free markets” are a term of struggle in our time. They are synonymous with unleashed capitalism, which culminated in the financial crisis since 2007.
This is something else. The “free markets” of so-called neo-liberalism were promises, according to which the most unregulated markets would bring the highest degree of efficiency and economic equilibrium. The 2007/2008 financial crisis showed that such deregulated markets can be extremely risky, so the notion of market perfection is a kind of wishful thinking. Only one should watch who one criticizes. After 2008, a kind of Black Peter game took place, in which the financial markets were charged with risks, but they only had, because the state policy had so wanted. When a speculative bubble bursts, the question naturally arises as to who is actually to blame. And then many politicians and observers have quickly agreed on a kind of unleashed capitalism as a rogue, against which only the state, be it through bank rescue or through regulation, offer help. But that is very one-sided.
Who else was it?
You have to look at this crisis very closely and look at who did what at what time. It has been pretended that the bankers said they had out of the blue such practices that led to disaster. They had pursued any capitalist interests, it was said. But this is highly misleading because there is no such thing as “capitalist interests” or “capitalism” that acts intentionally.
Businesses always act for their own good?
Exactly. Banks and companies do not pursue “capitalist interests” but their own. That applies to the American financial institutions as well as to the German ones. Capitalism is an order, a framework in which the actors involved, be they banks, industrial companies or trade unions, are not guided by any abstract capitalist but by their own interests, and simply have their own advantage in mind.
But who bears the blame for the financial crisis since 2007?
One question is crucial: why could banks act that way? At this point, one lands very quickly in the policy, which in the case of the United States has favored exactly this behavior of the banks for a long time. The politicians in question believed that this would strengthen the economy or provide housing for poorer citizens.
So the politicians just gambled?
It was not a few bankers who came up with all the deregulation of financial markets since the 1990s. The question of shaping the international financial and capital markets has been around since the 1970s and the release of exchange rates. In addition, the euro and petrodollar pushed the markets. What the new global financial architecture should look like was not clear for a long time. Since the 1990s, practices such as the securitization of loans, etc., which initially served as a solution to the problem, have then quickly gained momentum in the context of loose monetary policy. The financial capitalism that failed in 2007/2008 was politically desirable for a long time! That in this milieu, fueled by real estate price increases,
That sounds pretty irresponsible indeed.
This was possible because the new architecture of the financial markets initially appeared as a problem solution: The risks were only recognized when it was too late. For many states with high debts, there was another motive; The booming financial markets facilitated their refinancing significantly. The fact that some banks more than outplayed their business models was certainly a mistake, but who wanted to get out prematurely in the big race?
Meanwhile, the heavily indebted states are hanging on the drip of financial institutions. Who controls whom?
That’s a good question. In any case, many states can no longer afford to bankrupt banks whose services depend on them. In the strict sense, the “too big to fail” is almost a declaration of war on capitalist structures, since it is no longer market success that should decide the existence of companies, but their assumed economic significance, which then seems to justify political aid. At the moment, states are in a dilemma: on the one hand, they should be able to regulate risk provisioning more, on the other hand, this could burden the functioning of the financial sector, on which so much depends. By the same token, capitalism no longer has that much to do.
Capitalism and growth are twins who can not live without each other. What does this mean in a time of dwindling resources and environmental degradation?
This is indeed a complicated relationship. At its core, capitalism can only assert itself with very sparing and efficient practices, but it has the paradoxical effect of allowing more and more people’s lives to increase their productivity. Although sparing and efficient in detail, the cumulative effect of the high population numbers that this has made possible is problematic: natural resources are becoming increasingly strained, from landscape sprawl and pollution to resource use. It is questionable, however, whether it would be helpful to forego further increases in productivity in view of the continuing increase in the population. A change in material metabolism,
Nevertheless, the question of the limits of growth for humanity is in the truest sense of the word existential.
Right. It will be a challenge to capitalism today and in the future to produce things with higher productivity in such a way that resource consumption and environmental impact are in an acceptable relationship to each other. This is an ongoing, ever-changing challenge. But the many material revolutions in capitalism show that this need not be ruled out.
Again and again the swan song is celebrated on capitalism. How likely are you to end?
Although there are fluctuations at the level of productivity development and efficiency gains, they nevertheless show a fairly stable upward trend overall, at least historically. That he, as Marx supposed, becomes a brake on the “progress of the productive forces” did not materialize .Capitalism will not fail. Above all, he is at risk if his political stabilization can no longer be guaranteed. If, for example, the state fails as guardian of the market and guarantor of stable money. Then the state would take the place of the capitalist coordination mechanisms, which, as in socialism, it would have to implement by planning and allocation, replacing the market and decentralized use of property. Many are hopeful that things will be more just, but real socialism has shown that it is not that easy.
One last question: You have named your new book about capitalism after Wilhelm Hauff’s fairy tale “The Cold Heart”. Maybe capitalism is causing you some discomfort?
Above, I have spoken of the paradox inherent in capitalism, namely, by raising efficiency, at the same time causing enormous cumulative effects. But this problem would not really be different without a capitalist order. It is strange that our economy is “cold”, that is, it is economic and efficiency-oriented and takes into account social, ethical or aesthetic considerations only if they are price-relevant, but a “warm” economy in which political production produces and distributes it , is most likely much more arbitrary and certainly much less powerful. A powerful “cold” economy, which at the same time leaves room for maneuver for its political design, is always preferable to this. Hauff’s contrast of the dignified Black Forest domesticity with the immoral capitalist Amsterdam, embodied in the Dutchman Michel, who, with the promise of wealth, enshrines naive fellows and replaces warm hearts with cold stones, is a beautiful fiction of romantic literature; You should not confuse this with reality.