Financial crisis: chicanery on the way to a global society

The personalization (greed) or playing off the state against the economy conceals the more complex background of the financial market crisis

The complexities of the "structured products" invented by financial mathematicians in the financial industry, which were too complex for the layman (investor) at least, disguised the lucrative trade in bad mortgage loans, which had been going on for years, as a simple chain letter construction. Today’s explanations for the now acute financial market or even world economic crisis seem to conceal a more complex social ie in their simplicity, in a strangely counter-current complementarity.

It is hardly satisfactory that the crisis is often reduced (by the mass media) to the culpable actions of a few individuals. It is a labeling fraud to brand the actions of investment bankers and brokers (and correspondingly investors, as is to be remembered) now in the crisis as "greedy" and "irresponsible", even from a prasidial address as immoral. In other words, what was previously business as usual – profit maximization, cost minimization and the pursuit of profit – has been successfully implemented. It is a personalization of the events, which can also be understood as a helpless effort of the mass media to bring complex ies closer to the audience.

Nor does it serve the purpose of enlightenment to play off the state (the political system) against the economy in the face of the crisis. In the loss of faith in a (social) market economy, the end of capitalism is proclaimed, and modern society is caricatured as a mere economic enterprise. To understand the state in the current precarious situation as an anchor to be used situationally, as a stopgap "to prevent something worse", also misses the point. The demand that the state, with all the welcome and necessary help, should withdraw from the markets as soon as possible in order to prevent "North Korean conditions" obscures the role of the political system in modern society. "Never again GDR" is then as blatantly as inappropriately the credo (FAZ, of 8. October 2008, p. 11).

Today, we can say it with the sociologist Niklas Luhmann, who died in 1997 (cf. "Gesellschaft der Gesellschaft", Frankfurt/M. 1997) know better. The characterization of modern society as a "capitalist system" is inappropriate in its exaggeration of the economy in the same way that its description as "democracy" or as "socialism" (to be striven for) exaggerates the political dimension of society in its dominance.

It seems more appropriate to ame, with Luhmann, that modern society in its present form is in fact a "functionally differentiated" society. In the last two hundred years, function-oriented systems (such as politics, law, economy, science, religion, education, mass media) have developed, which are in a heterarchical, non-hierarchical relationship. The different functions of modern society can only be performed by the respective functional systems themselves, not by a dominant system, such as the economy (then apostrophized as "capitalism") or politics (then today furrowed as "socialism" or even "communism").

The economy can no more provide for collectively binding decisions to be enforced with power (as a function of politics) than politics can solve questions of scarcity or allocation of capital (as the function of economics). But also the enforcement of new knowledge, of scientific truths, as an achievement of the scientific system, can as little be enforced with political power as bought – at best in this (in)sense politically or economically corrupted. It is precisely the functional autonomy of the functional systems that leads to a mutual dependence, which is itself functionally necessary. The economic system can no more fulfill its function without a collectively binding decision (such as a commonly accepted contractual security) than science or politics could do without capital. Without the constant achievements of science (and technology), economic growth, for example, can hardly be sustained.

Today, a globally operating economic and financial system seems as self-evident as it seems absurd to ame a religion organized along national lines (such as Thai Buddhism or French Catholicism). Likewise, science can only be understood as a functional system acting supranationally. To relate scientific truths, new findings to nation states ("German science"), would be a laughable endeavor. Even in the system of education, for example in the so-called "Bologna process" of the harmonization of degrees of scientific teaching in Europe, or through international comparisons ("Pisa study"), efforts in the direction of a "world education system" can be recognized. In the legal system, too, efforts toward a supranationally applicable law can be discerned, for example in the orientation toward "human rights" as a universal canon of values, or in the institution of the International Criminal Court in The Hague.

The world economic system was able to assert itself in a period of upheaval at the expense of politics

The fact that today, as traditionally, political power is organized on a nation-state basis is dysfunctional in relation to the existing global economic system (and especially in view of the obviously globally operating financial market). Even a "united" Europe is (still) hopelessly divided in political terms and hardly capable of – important – joint decisions. World-class political institutions, such as the UN, appear at best as "toothless tigers".

It is obvious that, in view of the global economic system, it is impossible for a nationally organized financial policy to fulfill its function – i.e. to enforce collectively binding regulations (centrally: tax and key interest rates). This dysfunctional balance between economics and politics has enabled the world economic system to pursue a "free-market financial policy", i.e. to play political power off against competing enterprises and to minimize tax revenues in a tax competition – thus keeping "tax prices" low in the application of core economic competence. In addition, a national financial policy was simply unable to recognize the regulatory destructive character of financial constructs that can be traded in the global economy (such as "collateralized debt obligations", which camouflaged bad mortgage loans for many years), or. was convinced of the blessings of creative "financial engineering" – mind you, for the benefit of their own nation-states.

In this perspective, it is not the "irresponsible greed", especially of individuals, that has caused immeasurable profits and then immeasurable losses. Rather, in a dysfunctional situation of upheaval, the global economic system has simply succeeded (or succeeds, concealed as "neoliberalism"). it succeeds, disguised as "neoliberalism"), to function at the expense of politics, or rather, at the expense of the economy. to corrupt them. The enormous profits or. Increases in value made possible by the world (financial) economy are due to a "tax competition" initiated between nation states. In addition, the economy could – and can – minimize costs through international competition for years by implementing dumping wages in many industries due to the lack of legal regulations regarding minimum wages, or by. which, in turn, were often tax-subsidized, as they were barely sufficient for subsistence and still are.

Even in the course of the crisis, global economic rationality has succeeded in minimizing costs by using taxpayer-funded subsidies as indispensable "emergency aid" in precarious situations. to roll off. Although this led and leads to mountains of national debt, and tax subsidies benefiting the real economy had and have to be massively cut (not least in Germany by the Hartz IV legislation), from a "limited global economic" perspective a thoroughly efficient and rational action can be stated. Costs and prices are minimized; profits maximized. Business as usual.

In this perspective, the current financial market crisis does not appear as a problem, but rather as the solution of a functionally differentiated society that strives to maintain the functionality of its functional systems. It is therefore the world economic system itself, which acts in an economically rational manner, that is now forcing political institutions to act at the global level. It is precisely in this sense that the concerted actions (such as interest rate cuts) of the most important central banks (U.S., Europe, China) are to be understood. Or the G7 summit meetings of the most important finance ministers that have become necessary. Or the attempt to establish a centralized institution with real fiscal power to regulate global financial flows (based on the IMF)?) – or what other measures there may be.

In principle, it will – hopefully – be a matter of adapting the scope of political power to the de facto existing world economic system. In the real economic interdependence of nation-states, the globalization of the (financial) political system seems more promising than the opposite tendency: namely, to (re)align the economy with limited political power through the isolation of nation-states.

In any case, it is clear – and this is now abundantly clear in the crisis – that the close coupling of the functional systems in the provision of mutual services cannot permit the failure of a system (be it politics, economics, science, religion or education) without this leading to dysfunctionalities in society as a whole. It is not possible for any functional system to provide the services of another system – while at the same time being mutually functionally dependent on precisely these services. Scientific truths can neither be bought nor forced by power. The problem of scarcity (of goods, of services, of capital) can be solved with money, not with political means, with power. Collectively binding regulations, norms, can only be enforced with power, not with money, or with "reason", in view of scientific truths – etc.

Therefore, focusing the description of modern society on either economic ("capitalism") or political ("socialism") concerns seems misguided. It is therefore not so much the global economy or the globalized financial market that is in crisis, but the segmentary, i.e. primarily nation-state organized, politics. It is a crisis due to a functional imbalance between a globalized economy and politics. At present we do not see this imbalance as a problem, but we are witnessing a solution of this problem by the modern functionally differentiated world society.