[OPE-L] The Fifth Branch: Financial Markets and Time-Space Compression (Interview with Elmar Altvater)

From: glevy@PRATT.EDU
Date: Mon Dec 05 2005 - 09:27:53 EST

From publish.nyc.indymedia.org

The Fifth Branch: Financial Markets and Time-Space Compression

      The financial markets as the fifth branch are probably the most
important markets today.

        By Elmar Altvater

        Many remain excluded from this time- and space compression. Most
of the earth's population are barred from the advantages of
globalization like greater mobility and improved communication.
Elmar Altvater is an emeritis professor of political economy at
the Free University of Berlin.


      The Economist Elmar Altvater on the Emancipation of the Financial
Markets from States and Politicians and Time-Space Compression in
the Age of Globalization

      [This interview published in: Freitag 45, 11/11/2005 is translated
from the German on the World Wide Web,

      FREITAG: The hardcore issue of balancing interests in our society
– redistributing disposable income in the sense of distribution
justice – is largely ignored by politics today. What remains is
regression from a participative social democracy to a purely formal
democracy. Is this a kind of negative end of politics that gives up
because it can do nothing beyond the status quo?

      ELMAR ALTVATER: A base consensus is necessary in a democracy. The
parties differ programmatically from each other but agree on this
consensus. In the old Germany, this consisted in the famous and
sometimes infamous liberal-democratic order, the western orientation
and freedom rights with a social state foundation.

      This base consensus does not exist any more but has been replaced by
confession to a plural society. This means those with economic power
have much more influence than those without economic power. There is
only a very formal understanding of procedures of democracy whose
substance is undermined. This is a great danger because democracy
needs substance. People want an active participation in distributing
the jointly produced prosperity, not only in elections every four
years. There is no base consensus about this any more because this
distribution is a matter of the market that has nothing to do with
the political process.

      FREITAG: In the meantime citizens have a partly repulsive relation
to the actors on the political planes. Is this justified? Aren’t
politicians artists in the circus dome, helpless and without courage
to admit their powerlessness?

      ELMAR ALTVATER: Politicians are actually at a loss. They are
stripped of power. There is a wonderful book by the SPD Bundestag
delegate Hermann Scheer titled “Politicians” that comes to this
conclusion from his own experience. He describes how many
international treaties are negotiated by the bureaucracy and then
ratified. The parliament has no possibilities any more for changing
anything. Only acclamation is left. Decisions are made without
cooperation. The rule of the executive becomes stronger the more
globalization spreads. The result is an emptying of political

      FREITAG: With globalization, the market emancipated from the society
has gained an unparalleled degree of independence. How can we find
our way back?

      ELMAR ALTVATER: Many see the worldwide market system as a condition
for democratization since the market offers elective possibilities
for consumers as democracy offers elective possibilities for
citizens. This is transfigured into a parallel. Democracy in the
world is said to grow with the expansion of the market. This is a
very optimistic and possibly mendacious idea because the market is a
practical necessity to which politics has to orient itself –
against the decision-making authority of the sovereign, the
population of a country. The sovereignty of states erodes with
globalization. States no longer play the role they originally played
in the concert of the powers.

      FREITAG: The financial markets are a decisive reason for this loss
of sovereignty. Is this a mechanism for depriving states of power?

      ELMAR ALTVATER: The financial markets are probably the most
important markets today. They embody external practical necessities.
The former chairperson of deutsche bank, Brauer, spoke of financial
markets as the fifth branch in democracy, after the legislative,
executive, judicial and media branches. No one can do anything
against the financial markets, Brauer said. Rating agencies evaluate
the credit-worthiness of businesses and states. The lower their
assessment, the higher the interests. However interests must be paid
from state budgets. Funds are lacking for other projects.

      In any case, the sovereignty of a government or state is limited in
controlling capital-money transactions. The great financial crises
in Asia and Latin America showed the power of financial markets on
national societies and large parts of the population.

      FREITAG: You said Oscar Lafontaine’s resignation as minister of
finance in March 1999 should be seen on this background.

      ELMAR ALTVATER: Yes. Much is still a mystery in this resignation.
The financial markets doubtlessly spread the most vicious propaganda
against Lafontaine. Ads were inserted in the mammoth British
newspapers against “Europe’s most dangerous man”. What was the
reason? Because he introduced controls on capital transactions and
wanted to stabilize volatile exchange rates. He wanted to establish
target zones for exchange rates.

      FREITAG: That would have been good for small and medium-sized

      ELMAR ALTVATER: …and for developing countries that usually get
nowhere against the financial speculation of the great funds of
banks and multinational corporations. In this situation, the
financial markets were passionately against Lafontaine. How this
happened in detail and how his resignation occurred has not been

      FREITAG: The technological dimension of time plays a role in your
analyses alongside the abolition of the spatial borders of the
nation-state container. Can the breaking of a time barrier endanger

      ELMAR ALTVATER: One definition of globalization says: we live with a
compression of time and space, practically destroy the space in
which time is accelerated and fly from Germany to east Asia in ten
hours. In other words, space no longer plays the role of a sound
barrier that it played for past generations. Many remain excluded
from this time- and space compression. Most of the earth’s
population are barred from the advantages of globalization like
greater mobility and improved communication.

      All this has important consequences. One consequence is that time
and space are the coordinates in which nature moves. We destroy
nature with compression, the destruction of space and time. This is
very obvious. The ecological consequences of economic processes in
the age of globalization are well known. One thinks of the role of
transportation in carbon dioxide emissions. A second consequence is
that democratic participation is restricted because participation
needs time, leisure and peace. As a result, all acceleration, a
necessity of globalization, tends to limit the democratic rights of
citizens. Typically enough, a law in Germany, the acceleration law,
enables rapid road construction. The so-called practical necessities
are carried out. Politics does what it can to make this possible.

      FREITAG: In other words, is there a collision between the rhythms of
markets and the rhythms of democracy?

      ELMAR ALTVATER: Yes. There are many rhythms of time that can
collide. This was always true but has intensified with
globalization. The time rhythms of markets and innovation speeds are
such that crashes often occur. The introduction of new streetcar
systems by Siemens was under such time pressure that the vehicles
were not really ready and had to be withdrawn because they were too
dangerous. That cost hundreds of millions of Euros. The compressors
with Daimler-Benz were developed too quickly and had to be recalled.
Rhythms are introduced that contradict both the necessary innovation
rhythm and the rhythms of people. This is true for the rhythms of
political processes.

      FREITAG: and the rhythms in which nature develops.

      ELMAR ALTVATER: Nature needs far more time than the economy allows.
Many people now suffer from this.

      FREITAG: The tendency of this new capitalism to produce an
increasingly radical economic inequality and dodge the principle of
the political equality of all citizens also seems ominous for

      ELMAR ALTVATER: Obviously. This is also not desirable. But when the
rich spend $500,000 or a million dollars at a dinner with the
president of the United States for the election campaign or to
reelect this president and these persons are rewarded with
ambassador posts to Germany or Great Britain, we witness a very
dubious side of democracy.

      FREITAG: The power of market forces brings about a loosening of the
cohesion in society, you write. Is there a real danger of the
crumbling of the community of fate as the nation state is often

      ELMAR ALTVATER: Yes. Through cuts of social benefits, many people
have lost a vital protection since they cannot manage with their
incomes. Then they fall out and a piece of cohesion is lost. When
one walks through cities today and asks about life ten or twenty
years ago, one sees the loss of social coherence. In the past, there
weren’t as many beggars and homeless in a rich country like
Germany. Our country has begun to resemble a third world country
like Brazil. The famous net of social security decried by Helmut
Kohl as a hammock began to curl up. Red-green only continued this.
Much coherence was lost.

      FREITAG: What will replace this cohesion? Was democracy only a fair
weather arrangement for the times of growth and prosperity?

      ELMAR ALTVATER: Dangers follow when one binds democracy to growth
knowing that growth reaches its limits. From the logic, this means
democracy also strikes its limits. Ludwig Erhard said explicitly:
everyone receives a piece of the ever-larger cake. Everyone
doesn’t receive an equally large piece but one that becomes larger
from time to time. Inequality can be endured. But when growth fails
to occur, no increases are possible any more. Reductions must be
distributed. This is very hard for a democracy. New conflicts come
to us. The inclination to solve them in an authoritarian way will
certainly be great.

      FREITAG: You said the democratic question is radicalized by the
crisis of ecology. What do you mean?

      ELMAR ALTVATER: When living conditions worsen through the ecological
crisis and growth must be restricted to solve them, there are three
possibilities of gaining an upper hand. One could solve this through
the market so some come off fine with increasing inequality as in
emissions trade and the others have to bear the whole burden. Or one
solves the whole in an authoritarian way by the military. In the
meantime, there have been many scenarios. The Pentagon has a game
plan. What happens when the greenhouse effect leads to the Gulf
Stream of the northern latitudes of the Atlantic becoming colder
owing to the greenhouse effect and then streams of refugees arise?
How can we keep this at arms length?

      The third variant is the solidarian variant. One asks how will the
energy resources be distributed when we can no longer fall back on
cheap oil. How can we realize a society that concentrates on
renewable sources of energy? How can we prevent the ruination of our
landscape? How can we reduce the greenhouse effect? What can we do
to preserve the biodiversity – a prerequisite for the evolution of
life? We humans are part of this life. We cannot develop if the
nature around us dies off.

      By Elmar Altvater mbatko@lycos.com http://www.mbtranslations.com

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