SolidarityEconomy.net

by Jerry Harris, SolidarityEconomy.net

. Euro Social-Democrats Warnings on High Road

European social-democrats have supported globalization as the road to better economic development, but are now warning corporations to share the profits. Joaquin Almunia, the European monetary affairs commissioner said workers were not getting the rewards from increased productivity and the situation was unsustainable. Mr. Steinbruck, the German finance minister, said soaring profits are igniting a “crisis in legitimacy…there have been falls in real wages, real incomes, that have been bad for domestic demand and we have suffered from that for quite a long time.”

Adding to the debate was Franz Munterfering, chairman of Germany’s Social Democratic Party. Referring to hedge funds and private equity groups Munterfering labeled them “locusts.” When criticized he replied, “I have no regret whatsoever…it’s a nice image, locusts that move into a field, eat it to the ground, and move on to the next without looking back. I think it was quite apt. Locusts are those who act without sparing a thought for the consequences, for workers, indeed for the people, and try, with the masses of money they have, to make even more money as fast as possible. But someone always has to pay in the end…There is a finance industry out there, acting worldwide, which has little to do with classical entrepreneurship. Some of them act responsibly, others don’t. That is why I think we need rules that ensure that this industry, this modern form of capitalism, respects the requirements of the social market economy.”

Munterfering may be truly concerned, but his own party has helped lay the ground for this “modern form of capitalism.” Consequently the SPD has been hemorrhaging membership over the last five years. Attacking hedge funds and private equity investors is safe politics in Germany where, in opinion polls, they rank at about the same level as child abusers.

. Germany’s Munterfering on Globalization

With the WTO Doha round stagnating and growing protectionism appearing in every country the battle over globalization is again heating up. The political divide between low and high road strategies is evident in Munterfering’s following comments: “We have rules governing the social market economy here, and I would like them extended to Europe and, if possible , to the world. We have fading borders and this means the instruments of the national states are being constantly eroded. It is no longer possible for individual states to dictate the rules of the economic game as they did 40 or 50 years ago. The question is whether governments can still shape the laws that rule this world and shape them in a way that ensures that the social dimension is not destroyed. It isn’t something international organizations can do. And right now money has an advantage because it is a lot more flexible and it is much easier for it to cross borders than it is for politicians to agree. But we shouldn’t give up. The economy is here for the people and not the other way round.” ( Bertrand Benoit, SPD chief stands by call to tackle ‘locusts’ Financial Times, 2/15/07)