Date: Thu, 03 Jul 2003 22:45:44 +0200
From: artefact-AT-t-online.de (Michael Eldred)
Subject: Re: having said all that...


Cologne 03-Jul-2003

Jan Straathof schrieb Thu, 3 Jul 2003 00:51:15 +0100:

> "Is the Social Welfare State over the hill ?"
>
> This question, so it seems, belongs to the attention-space of Heidegger's
> dangerous diagnose of the current world history.
>
> A week ago, MichaelE showed little doubt when he remarked that the
> 'Sozialstaat (is) currently well in decline' and today Anthony goes on
> further, he talks about the 'nihilstic results of the socialstate'. Although
> this opinion is currently widespreadly defended throughout the right-wing
> (and some parts of the left-wing) electorate of european states, i do not
> share this view.
>
> Let's first take a step back, away from the dayly headlines, and look a
> little at the history of the SWS. What we notice at once is that, on a socio-
> historical scale, the SWS is a relatively young phenomenon, it originated
> after 1945 in the north-western parts of Europe. It was a socio-economic
> compromise formation between three 'power-strata', viz.: the state, the
> employers and the employees (the clergy and aristo-nobility were finally
> austed). Yet most importantly, as political answer, it served to provide a
> sociental alternative to Sovjet Communist seductions.
>
> The compromise formation (sometimes called the Rheinland-model)
> worked in fact quite simple: the employers and the employees would
> bring in the labour and capital to produce the welfare and the state would
> then (re-)distribute the wealth into some form of garanteed basic income,
> healthcare, justice, education and culture arrangement. And although, of
> course, not one country ever has (yet) reached the high levels of Marx's
> principle:"from each according to ability--to each according to need",
> if you look at what the SWS has actually accomplished, the last five
> decades, there is little reason to be ashamed. (ask my 80 year old mother)
>
> The critics of the SWS basically use two lines of argument: economics and
> demographis. On the economical level they say that the SWS costs too much
> and that it lacks enough insentives to drive creativity and innovation in
> production. On the demographical side - as Anthony's article shows - they
> argue that an ageing population implies a demise in power-presence on the
> world political plane. In think that both claims are questionable. The
> demographical argument is weak imo, becausethere is very little evidence
> in modern history that countries with young and growing populations possess
> the major say in geopolitics (look f.i. at minor role India, China and Africa
> played the last couple of 100 years).
>
> On the economical side things seem to look grimer for Europe's lovely SWS.
> But again, i'm not so pessimistic about the lack of dynamics and innovation in
> the economies of the euro-zone. Let's take Italy as an example: at the moment
> everybody there is lamenting because Fiat, her famous grand-old automobile
> manufacturer, is laying off 10.000's of its employees, ok this is horrible.
> Yet
> nobody is talking about the fact that Milan and its environs have become
> the european (and maybe the global) centre of fasion design, high quality
> textiles, and as a spring off it has/is created a dense aesthetic network of
> artist and manufacturers, ranging from furniture design to top-end kitchen
> artefacts. The Italians are doing what they were always good at, and that is:
> *making magnificently designed products*.
>
> Such 'success-stories' can also be told of other fields in Europe's economy:
> in the global market of civil aviation Europe is producing the most planes;
> and on applications of alternative or low level energy in civil and industrial
> construction Europe is leading competitive. Furthermore the coming influx
> of highly educated east europeans in the E.U. will probably compensate far
> enough the costs of integration and will most likely boost technological and
> cultural innovations. And in Africa (Europe's nearest market) it seems that
> the economical tide is turning in favor of european alliances. Imo the future
> of the expanding european economy is strong enough to support and further
> develop its variant of the SWS. But the real question is: is Europe's SWS-
> model a viable alternative for the developing South and underdeveloped
> parts of the North, or is it just based on a metaphysical illusion. Do/will we
> remember those greeks who talked about eudaimonia ....... ?
>
> yours,
> Jan

Hi Jan,

You approach the subject of the social welfare state from the
socio-historico-political and economic points of view. We both know that the SWS
is one of the most controversial and hotly debated in European politics at
present. The reason is that the current world economic slump has exposed all the
many weak points in the construction of the SWS.

The biggest weakness in the German pension scheme is that it was set up to work
like an instantaneous heater, in contrast to a hot water heater with storage tank.
I.e. the money to support the retired comes straight from deductions from the
incomes of the working younger generation. This is the so-called generation
contract -- the young support the old. Even when this scheme was set up after the
war, there were voices who warned that the whole thing would end in tears, because
a solidly financed social pensions scheme has to be based on capital reserves from
which the pensions can be paid. But politics is short-sighted and takes the
easiest path, and the general population doesn't understand economics anyway.

If someone tried to set up an insurance company based on this flow-through method
of paying out claims from current insurance premiums paid in, it would be declared
illegal. The law on insurance companies prohibits any insurance company from
financing its pay-outs through premiums currently paid in. It must have adequate
capital reserves that earn income in the form of interest and dividends. There
are, in fact, fraudulent investment schemes which work this way -- until the
pyramid collapses, when new subscribers are insufficient to cover pay-outs of
those already in the investment scheme. And yet, the pension scheme of a highly
stodgy, respectable State like the Federal German State is financed in this highly
unrespectable way. That is, the German public pension scheme stinks and was always
a FRAUD, from its very inception. (By contrast, the Swiss pension scheme is
capital-based, at least in part.)

In one respect, you are correct to point out that the SWS came into being after
the Second World War as part of the new ordering of Western Europe. The Rheinland
model of capitalism, the wonderful comprise called the social market economy, has
deeper roots, however, in German Social Democracy and its struggles in the
nineteenth century. The first bastion of the SWS was set up by Bismarck in the
1880s in the form of various social security insurance schemes as an answer to the
threats from the socialist workers' movement. Social insurance was the answer to
the insecurity of earning a living under capitalism, which had led to poor living
conditions for the working class.

I'd now like to take a step back for a slightly more ontological view of the
thinking behind the social welfare state. One has to bear in mind that Heidegger's
thinking is of no help in this step, because his thinking sees only the
ontological structure of _technae_ and Technik, and not the phenomena of economic
sociation associated with markets and capitalism. Heidegger consistently sweeps
the phenomena of profit-making to one side. His ignorance of economic phenomena is
frankly quite shocking. It seems that Heidegger only learned of capitalism through
Ernst Juenger's _Der Arbeiter_, which is one of the most flimsy books on the
subject of capitalism. It is somewhat surprising that Heidegger took Juenger's
extremely shallow metaphysics (die Gestalt des Arbeiters, etc.) so seriously.

Marx has more to offer, once one frees oneself of Marxist readings of Marx.
Marxists, like ALL other social scientists, Left-critical or otherwise, are
incapable of reading Marx ontologically, thus bringing capitalism as mode of being
to light. The famous Wertformanalyse (value-form analysis) in the first chapter of
Das Kapital (and the Kritik der politischen Oekonomie and the Grundrisse) has
spawned thousands of books of secondary literature, but almost nothing that meshes
with posing the ontological question concerning commodity value and money. The
Marxist epigones are as dumb and as blinkered as the Heideggerian epigones, each
in their own way.

To get back to the SWS -- it grew out of recognition of the circumstance that
capitalist economy is an insecure state of affairs which does not provide reliably
the goods for living reasonably well in society. There are always those who do
poorly on the market, or who are excluded altogether. The form of sociation
through market relations offers no guarantee of earning a sufficient income. On
the other hand, the social nexus through markets has tremendous flexibility
because the participants in the market can orient themselves towards new market
situations from one moment to the next. Another plus of the social nexus through
market exchange is that self-interests of market participants, whether they be
capitalists, workers, financiers, or landowners, are aligned with their strivings
on the market which, on the whole, unleashes great potential for
wealth-production. That is, the strength of capitalism is that it acknowledges and
gives room for play to human desires and the strivings to fulfil desires in market
competition. (Hegel saw this, by the way. He had read Adam Smith and David Ricardo
-- something which Heidegger never did.)

The ontological task here is to learn to see that the social relation of exchange
(_allagae_, _metabolae_) is abysmal, abgruendig, groundless -- in contrast to the
ontological structure of _technae_ and Technik, which is a knowing fore-seeing of
what can be brought forth and therefore precalculable. (The fifth book of the
Nicomachean Ethics is important for understanding exchange. To my knowledge,
Heidegger never refers to the fifth book of the Nicomachean Ethics. His thesis,
from 1922 onward, is that Sein ist Hergestelltsein, and this excludes and makes
unsayable the truth of other phenomena.)

The rough and tumble of capitalist market competition also requires supervision by
a superior social subject, the state, whose role it is to ensure fair and just
conditions of competition. The state itself is the object of political struggle
over the rules of play according to which the various social classes earn their
living. This includes curbing the economic power of large (esp. multinational)
capitals and also of powerful labour unions, both of which can be very destructive
for the overall economic well-being of society. But laying down rules of
competitive capitalist play in itself is not sufficient to ensure that all social
groups and classes earn enough to live reasonably well.

The idea of the social welfare state is that the standard of living of the members
of society should (a moral imperative!) be guaranteed -- independently of the
factual outcome of participation in the competitive capitalist economy. The
insecurity of markets is to be replaced, under the force of a moral imperative, by
the security of the social welfare state. Life should be made predictable,
precalculable, freed of dog-eat-dog competitiveness, to fulfil the heart's desires
for a quiet life on the part of librarians and other modest, orderly types.
Capitalists who earn millions are suspicious characters because their interest in
making money is said to be 'excessive' and therefore socially and morally
reprehensible. Social-democratic consciousness is modest and moralistic and, more
covertly, envious and resentful.

But cutting the nexus between income-earning and an individual's share of social
wealth is itself problematic. Why? Because human beings are self-interested, i.e.
each individual (and group of individuals) assesses for him or herself and those
close to them (usually family) first and foremost what is good for _themselves_ to
live. In market relations, self-interest on both sides is always essentially --
and legitimately -- at play. In relations with a social welfare state that
guarantees certain benefits, self-interest can wreak havoc through milking the
system. This, in turn, has to be countered by bureaucratic measures and controls
to try to prevent fraud perpetrated against the social welfare system. E.g. the
dire financial state of the public medical welfare system in Germany at present
has largely to do with self-interest having wrecked it. The patients have milked
it for all it is worth to gain maximum benefits 'for free', and the doctors have
milked it to gain maximum income. The realities of existing 'social justice' are
somewhat sobering because people remain ruthlessly self-interested even when, on
the other hand and in the same breath, they moralistically demand social justice
'for all'.

To take one more ontological step: We need to learn to see that the dimension of
social relations, i.e. human exchange and intercourse in the broadest sense --
including commodity exchange, communication, the exchange of glances, compliments,
pleasantries, political views, insults, blows, missiles, etc. etc. -- is abysmal
and not subject to control by any technical knowledge (despite all the attempts
made to exert such control, which all fall more or less under the rubrics of
rhetoric and political power). This is why capitalism itself is an insecure way of
life that demands risk-taking. And this is why any attempt at compensating for the
insecurity of capitalism through setting up a predictable, bureaucratically
managed scheme of social security has to come to grief, in one way or another.
Since human being is social being, we are ineluctably exposed to the fathomless
abyss of social relations with others, from the vagaries of the personal sphere up
to the power struggles of the political sphere.

Note that in this overly rough sketch, I am not arguing for dismantling the social
welfare state nor for reviving laissez faire capitalism with 'new freedom'
(neo-liberalism). Neither the unimpeded workings of markets through the invisible
hand, nor the bureaucratically administered system of social state welfare can
deliver on the promise of providing economic happiness. Some sort of mix of free
enterprise capitalism and social security is necessary -- even and especially in
the heartland of capitalism, the US. But some of the illusions of especially those
who plea for guaranteed social welfare and who condemn capitalism outright for the
inequality it generates have to be disposed of. There is no social-democratic
set-up of the world which will produce (gestellhaft hervorbringen) social justice
on a reliable, precalculable basis. Instead, those too strongly enamoured with the
social welfare state open up the prospect of what Graf Lambsdorff recently called
the "totalitarian social welfare state". Replacing the invisible hand of markets
with the visible hand of politics is necessary and inevitable and welcome to an
extent, but it is an illusion to think that the (visible, but invariably
machinating) games of political power struggle are to be preferred everywhere to
the elementary social cell and clever human invention of market exchange motivated
by self-interest.

The social welfare state, then, can be understood as the human striving to make
social life secure. But recall Sophocles' insight into human being:
_polla ta deina k'ouden anthropou deinoteron pelei_
"Many things are uncanny, and nothing stirs that is more uncanny than humankind."
In this sense, and in the sense sketched above, the social welfare state has
always been, as you say, a "metaphysical illusion".

Michael
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