Germany and the ferocious battle for European capitalism
[Continued from last week — Part Two]
by Harpal Brar Behind the wave of consolidation — of mergers, acquisitions, restructurings, divestments and alliances sweeping across Europe — lies the accelerating industrial transformation of Europe's biggest economy, that of Germany. This transformation is both driven by, and in turn drives: global competition; deregulation; pressure on management for "shareholder value" (i.e., maximisation of profit); opportunities for cost-cutting made possible through size; the need to get bigger as a defence against predators; and the introduction of the euro and the creation of a pan- European market. Heads of major German businesses, have embarked upon a drive against their European and American rivals through a mixture of consolidation at home and acquisitions abroad. "The Germans are latecomers to globalisation but they are showing all the zeal of converts to the faith", wrote the Sunday Times of August 28, 1999. With disarming candour, and in terms almost Leninist, Dieter Zetsche, Daimler-Chrysler's finance director, stated: "There are now no new markets left to discover in the industry. We are fighting each other to win. This is what makes it so enjoyable" (Sunday Times, August 29, 1999). The ground for this frenzied consolidation at home and abroad was prepared by German monopoly capital's assault on the workplace aimed at breaking down what the bourgeoisie and its intellectual representatives call "old- style, inflexible working practices", with a view to cost-cutting and boosting the productivity of labour (increasing the extraction of surplus value). The Financial Times of November 21, 1998 speaks of this transformation: "By embarking on such a transformation, corporate Germany has jolted the country's traditional cosy relationship between labour and capital; and it is doing much to throw off the image of a conservative nation more concerned with retaining the comfortable vestiges of its post-war social- market economy than with modernising to compete in a global economy. "Perhaps the biggest revolution has taken place within Germany's factories, where companies have introduced an array of flexible working practices that would have been unthinkable a decade ago. "Workers, especially in the engineering and car industries, have accepted longer working hours and more varied shift patterns. Several companies now use 'credit time accounts' that allow managers to increase working hours during periods of strong demand, in return for time off later in the year". With the disappearance of the USSR and the east European socialist countries, and the consequent increasing intensification of inter- imperialist contradictions, German monopoly capital has definitely decided that the maximisation of profit and assuring itself a prominent place at the top table in the imperialist banqueting hall is going to be its priority. The Financial Times (April 16, 1999) wrote that within the first 100 days of the launch of the Euro on January 1, 1999: "The battle for European capitalism has begun in earnest. In the three months since the single currency was launched, the sleepy world of continental European corporate finance has burst into frenetic activity. The speed with which companies have adopted previously foreign techniques, notably the hostile takeover, has been astonishing. So has the ferocity of the resulting action." Export of capital We must now deal with the question of export of capital. "Typical of the old capitalism, when free competition held undivided sway, was the export of GOODS. Typical of the latest stage of capitalism, when the monopolies rule, is the export of CAPITAL" (Lenin, Imperialism, the Highest Stage of Capitalism Lenin's Collective Works Vol 22, p.240). The separation of the ownership of capital from the application of capital to production, of money capital from industrial capital (and consequently of the rentier from the entrepreneur), which is characteristic of capitalism, reaches unprecedented proportions in the era of imperialism — the era of the dominance of finance capital, with its predominance of the rentier and of the financial oligarchy. The latest stage of capitalism is characterised not only by the emergence of monopolistic associations of capitalists in all the advanced capitalist countries, but also by the emergence of, as Lenin said, the "monopolist position of a few very rich countries, in which the accumulation of capital has reached gigantic proportions", giving rise to "an enormous surplus of capital". And this: "[a] small number of financially powerful states stand out among all the rest ... In one way or another, nearly the whole of the rest of the world is more or less the debtor to and tributary of these international banker countries, these ... pillars of world finance capital". The necessity for exporting capital arises because in a small number of countries "capitalism has become 'overripe' and capital cannot find a field for 'profitable' investment". Hence the need to export this surplus of capital. Of course, there would be no question of surplus of capital if capitalism could raise the living standards of the masses — an argument all too frequently resorted to by the petty-bourgeois critics of capitalism. But capitalism would not be capitalism if it did such things. Capitalism is in the business of making a profit. It therefore exports "surplus capital" to places where an opportunity for making such a profit presents itself. The export of capital has accelerated enormously since Lenin's day, especially since the end of the Second World War. In the 13 years between 1983 and 1995, Foreign Direct Investment (FDI) grew five times faster than trade, and ten times faster than world output. Although benignly called "Transnational Corporations as Engines of Growth", the UN's World Investment Report (WIR) of 1992 supplies us with an abundance of statistics which enable us to discern the furious attempts being made by the imperialist powers to re-divide the world through the means of FDI by transnational corporations based in a handful of imperialist countries. The UK was the world's biggest overseas investor in 1999, with outflows of US$199 billion, and the US was the biggest recipient with inflows of US$276 billion. Most of these outflows between imperialist countries, accounted for as they are by merger and acquisition activity, do not go towards creating new productive facility. Far from creating any new employment opportunities, they only make for intensified rationalisation, cost cutting and mass redundancies. In a furious bid to counter falling profits in the imperialist countries, the trans-nationals from the main imperialist countries are investing heavily in the developing countries. Of the US$1,000 billion FDI in 2000, approximately one quarter went to the developing countries. The importance of the developing countries as an avenue for imperialist export of capital, and thus for enhancing the latter's profitability, may be judged from the fact that, whereas during the second half of the 1980s net private capital flows into the developing world were running at an annual average rate of US$15 billion, by 1996 they had risen to a peak level of US$241 billion. As far as the FDI to developing countries is concerned, most of it (two- thirds) goes to just a handful of countries: China, Singapore, Malaysia, Thailand, India, Mexico, Brazil, Argentina, Egypt, Hong Kong and Taiwan (the last two ought to be considered as part of China). China alone has attracted US$45 billion in 1998 and US$35 billion in 1999 by way of FDI inflows. The rates of return on FDI of the imperialist countries in third-world countries were estimated in the mid-1990s at 17 per cent, twice the rate of return in the imperialist countries. As a result, there has been a marked acceleration in the movement of manufacturing and service industries out of the countries with higher labour costs to third-world countries with low wage costs. Not surprisingly, the Economist of November 2, 1996, using the figures concerning wage rates in different countries produced by Morgan Stanley, the American investment bank, asks: "Whom would you rather employ: one German worker, two Americans, five Taiwanese or 128 Chinamen?" All this is producing misery for millions upon millions of workers in the imperialist and the oppressed countries alike, for all the benefits of technology and the colossal gains in productivity of labour to the geniuses of financial manipulation. In the words of Marx, this "Accumulation of wealth at one pole", only on an incomparably larger scale than in Marx's day, is "..at the same time accumulation of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital" (Capital, Vol 1). Unless and until the proletariat and the oppressed people overthrow imperialism, this will be their lot.
* * *Next week Part 3: Dominance of finance capital and corruption