“Money makes the world go round” put the brakes on turbocapitalism driven by financial markets

The prevailing global capitalism model focuses on speculative money multiplication, using destructive financial instruments. Recently, these led to the attack on the team bus of Borussia Dortmund.

In recent decades, a worldwide convergence of capitalisms that had previously differed mainly in social terms can be observed. Without regard for regional differences and social standards, the doctrine of "free trade" drives globalization. This is not about "fair trade" but about the capitalist conquest of the world in the service of the economic bosses, the super-rich and their fund managers. Investment funds such as private equity and hedge funds have a massive influence: they collect capital from all over the world in search of profitable investments, in order to invest it profitably at any price.

Before the market-fundamentalist offensive, socially differentiated capitalisms developed worldwide. In Germany, this was "socially tempered capitalism" (Oswald von Nell-Breuning). This concept of a social market economy, which by law provides social protection for those dependent on jobs, has been reduced above all by the neoliberal-oriented Agenda 2010 and pension reform of 2003.

Where the money comes from and where it goes?

The growing concentration of income and wealth is responsible for global development. As wealth continues to increase, the problem for the rich becomes permanently profitable investment. To remedy this, speculative instruments designed and sold by the banks are used with criminal potential without any relation to the production economy.

Concentrated global wealth as well as growing poverty are the two sides of the same coin. 800 million people suffering from hunger are confronted with exorbitant wealth. The eight richest men on earth own as much as the 3.6 billion of the poorer half of humanity. In Germany, wealth is concentrated in the top ten percent (almost 60 percent), while at the bottom end of the scale it is not wealth that is concentrated, but debt.

A variety of influences, above all the state’s refraining from imposing income and wealth taxes that burden these tops, are responsible for the concentration of wealth. Particularly influential is the completely inadequate taxation on the transfer of assets by heirs. At the same time, this division between rich and poor is harmful to the economy as a whole. The share of income generated by production that flows back to finance economic expenditures is declining in the longer term. Through this "over-saving", consumptive expenditures of the socially weak as well as real investments of the companies are not realized.

Why don’t the losers stand up to the winners??

The wealthy everywhere exert direct and indirect influence on politics. In fact, money rules the world at all levels. However, the expectation that the losers will stand up to the winners is hardly true, at least since the spread of right-wing populism. It is now also the losers of globalization who have been forced to descend from the middle income into poverty, but who allow themselves to be instrumentalized for a policy against their own interests in social betterment. Trump has succeeded with fallacies and "alternative facts" in winning approval among the "white working class" (Paul Krugman) as it were as "saviors". In this context, the political goals, such as tax reform in favor of the rich or the dismantling of legal protection against illness, contradict the promises made by Trump.

Does this model of sharpened inequality still have a chance of survival in the face of a desperate search for profitable investments by the wealthy?? What is certain is that this turbo-capitalism, driven by the financial markets, is reaching its limits, triggering burdens that are hardly manageable any more. There is no longer any certainty about the answer to the question of where the highly monopolized profit economy will develop under the pressure of the crisis. Ultimately, this system also threatens to fail due to ignorance of ecological challenges.

Maximization of wealth without reference to the productive economy

At the latest with the global financial market crisis that broke out in 2007 and has still not been overcome, it has become clear: What has emerged is a casino capitalism dominated by the powerful financial sector. While the capitalism described in textbooks still focuses on the value added generated in production and the dispute about its distribution between labor and capital, casino capitalism concentrates on the purely speculative multiplication of money. The often profitable but crisis-prone rule is: money creates more in money regardless of real production.

The function of money is no longer concentrated on the means of payment function. Rather, the asset function of money becomes independent without a production-economy value-added base. In 2010, the volume of financial transactions was seventy-five times higher than world production. If the bubble bursts, banks collapse and the economy crashes with rising unemployment. With the aim of avoiding a systemic crisis, taxpayers are called upon to finance the bailout funds.

Due to the concentration of wealth, the capitalist development dynamic of generating new fields of production on the basis of technological revolutions is lost at the same time. Thus, the monetary economy has finally lost its serving function. It has been converted into a virtual money machine.

Turbocapitalism poses deadly dangers

In the "95 Theses" circulated in April 2017 on the occasion of Luther’s anniversary by critics of financial market capitalism, there is the key sentence: "What began in Luther’s day has reached a new climax today: the monopoly of money". Luther’s fight against the Catholic Church’s sale of indulgences at the time is today’s fight against financial instruments in an "economy that kills" (Pope Francis). While the Reformation triggered by Luther was able to destroy the trade in indulgences, the elimination of the destructive financial instruments has not succeeded to this day despite severe crises.

Luther’s fight against the sale of indulgences corresponds today to the fight against destructive financial instruments.

Recently, with the attack on the Borussia Dortmund team in the bus, the inhumane use of a currently completely legal financial instrument has become visible. What is at stake? There are assets like oil, crops, but also currencies whose prices fluctuate massively. Speculating on prices that will later be below today’s level can generate profits comparable to betting. The perpetrator of Dortmund legally bought put options at the online bank Comdirect. In this example, this gave him the right to buy the BVB share by no later than 17. June for sale at a price of €5.20. On the day of the sale, he buys this share, the price of which has fallen to €4. Together with the fee of 20 cents for this put option, a net profit of €1 is achieved. However, the perpetrator does not wait idly for the uncertain fall of prices. He wants to achieve it by the attack with injured, even dead people. Financial instruments can kill! Comparable to the forced abolition of indulgences by Luther, a fundamental reformation against this speculative capitalism is necessary today. Such forward speculative transactions, without owning a stock or other asset, must be banned.

Ethically based rules against rampant greed

The symptoms of the crisis and the massive dislocations should be taken as an opportunity to face up to the fundamental reform of a socially, democratically and ecologically based capitalism. What is required is an ethically based order that aligns the tasks of the state and the economy with the goal of overall optimization. The latest financial market crisis shows that neoliberalism has failed as the unleashing of markets through the abandonment of state regulation. The capitalist market economy must be disempowered in favor of the primacy of politics.

The unfolding of the civilizing forces of the market economy in favor of sustainable prosperity and employment prevents, indeed destroys, an economy left to its own devices in the competition for high returns. This is why a strong regulatory policy is needed. Financial markets should be scaled back to their serving function. The regulating state must ensure that the rules of the game for economic activity are strictly observed. Greed has certainly been the driving force behind this misguided development. It is a deeply moral problem. This requires a social discourse on ethics and morality.

Not leaving capitalism to its own devices

However, saving capitalism through politically regulated shrinkage and a strong regulatory framework is a question of power. This is also why politics in Germany, in the EU and at the level of the G20 group must put the power of the banks and mega funds in their place. Comprehensive democratization serves this purpose above all. The parliamentary democracy needs the strengthening by the democratization of the economy. Not the unleashed economic actors, but the democratic politics sets the guard rails also by regulations of the economy. An important instrument is the expansion of co-determination. This is the only way to break through the politics controlled by the interests of the financial markets. Democracy must not stop at the banks.

Emile Zola, in his novel The money described the two possibilities: "All good arises from him, although all evil comes from him."It is precisely a matter of at least minimizing the evil. This is what the dismantling of the world domination of money is for. Without a deconcentration of wealth on the one hand and a fair distribution of income on the other, this "concrete utopia" (Ernst Bloch) will have little chance of success.

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