Capital and Ressentiment E-Book

Joseph Vogl

• Herausgeber: John Wiley & Sons
• Kategorie: Geisteswissenschaft
• Sprache: Englisch
• Veröffentlichungsjahr: 2022

Seitenzahl: 373

Beschreibung

The proliferation of social media has provided ideal conditions in which feelings of anger and frustration can be expressed and shared, forming a deep pool of ressentiment that is being drawn upon and exploited by populist and authoritarian leaders. In his new book, Joseph Vogl shows how this dynamic is rooted in the fusing of finance capital and information in a new form of information capitalism that is reshaping the affective economy of our societies. The capital accumulation strategies of powerful new platforms and social media are pushing people into fragmented, opposing, and conflictual communities where ressentiment is nurtured and grows. The feelings of grievance and rejection generated by capitalism are redirected into attacks on migrants, foreigners, and others, thereby deflecting their critical potential, and bolstering the system that is their source. It is the cunning of ressentiment that provides the key to understanding why, despite the profusion of communication in our social media age, global finance and information capital can be neither understood nor attacked as a totalizing power. This brilliant analysis of the ways in which information capitalism is transforming the affective economy of our societies will be of great interest to anyone concerned with the forces that are shaping our societies today.

Leseprobe

Table of Contents

Cover

Title Page

Copyright Page

Preliminary remark

1 Monetative Power

Notes

2 The Information Standard: On the Episteme of the Finance Economy

Notes

3 Platforms

Notes

4 Control Power

Notes

5 Truth Games

Notes

Excursus: Fable and Finance

Notes

6 The Cunning of Ressentiment-Driven Reason

Notes

Bibliography

1 Books and articles

2 Laws, rulings, reports, and programs

Index

End User License Agreement

Guide

Cover

Table of Contents

Begin Reading

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Capital and Ressentiment

A Brief Theory of the Present

Joseph Vogl

Translated by Neil Solomon

polity

Copyright Page

Originally published as Kapital und Ressentiment © Verlag C.H.Beck oHG, München 2021

This English edition © Polity Press, 2022

The translation of this work was funded by Geisteswissenschaften International – Translation Funding for Work in the Humanities and Social Sciences from Germany, a joint initiative of the Fritz Thyssen Foundation, the German Federal Foreign Office, the collecting society VG WORT, and the Börsenverein des Deutschen Buchhandels (German Publishers & Booksellers Association).

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ISBN-13: 978-1-5095-5181-1 (hardback)

ISBN-13: 978-1-5095-5182-8 (paperback)

A catalogue record for this book is available from the British Library.

Library of Congress Control Number: 2022935477

by Fakenham Prepress Solutions, Fakenham, Norfolk NR21 8NL

The publisher has used its best endeavors to ensure that the URLs for external websites referred to in this book are correct and active at the time of going to press. However, the publisher has no responsibility for the websites and can make no guarantee that a site will remain live or that the content is or will remain appropriate.

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Preliminary remark

In the title of Capital and Ressentiment, the conjunction “and” is subjected to critical strain. It refers to the question of how the construction of new entrepreneurial forms of power in digital capitalism combines with the erosion of democratic procedures and institutions. Here, a trail is followed that leads from the domination of the financial industry to the emergence of the platform economy and finally to the dynamics and storms on the current markets of opinion.

Several central theses determine the trajectory of the following chapters. Thus, the current Internet industry is initially understood as a renewal of a financial regime that has been taking shape since the 1970s and, over the course of various crises, has opened up a new source of value creation: the management of information of all kinds. Information has become the most important resource in contemporary capitalism. The associated business models are also the result of the close elective affinity between finance and communication technologies. What is now called digitalization is much more than just the transformation of analog values into digital formats and the spread of such technologies into all possible social, political, and economic spheres. Electronic networks have, in fact, enabled an effective fusion of the economies of finance and information, bringing about a rapid expansion of the financial sector and the hegemony of finance capitalism. On the one hand, this has created an economic power that intervenes in the decision-making processes of governments, societies, and economies across national borders. On the other hand, the privatization of the Internet, legal privileges, and the commercialization of information since the 1990s have also spawned new kinds of media corporations whose business is the appropriation of public infrastructures, the expansion of private control mechanisms, and the creation and provision of information markets. In the context of network architectures, platform industries, and digital companies, the control of societies and public spaces has itself become a corporate project. Finally, the resulting debates about fragmented public spheres and political polarization, about the erosion of democracy and the current trend toward mendacious behavior in public life are taken as an opportunity to trace the interrelationship between economic processes, individuals’ relations to the world, and economies of affect. In this context, the social affect of ressentiment occupies a privileged position: in the current economic system, it functions as both a product and a productive force, and precisely with its politically and socially erosive forces contributes to the stabilization of finance and information capitalism. The aim of these theses is not to pursue a hermeneutics of epochs or embellish general diagnoses of the times. They do, however, support a concise theory of the present situation in that they relate to those circumstances and conditions that first make possible an understanding of this present period and how it is produced.

1Monetative Power

In economic history, major upheavals are marked less by resounding events than by imperceptible twists in long-term trends. While the recent financial crisis put a resounding end to a belle époque of finance capitalism, a rather pedantic census has recorded several hundred banking and currency crises since the 1970s, ranging from the Herstatt bankruptcy in 1974 to the collapse of the dot-com market in 2000.1 Such series provide ample material for attesting to a structural instability in the more recent financial system, in which turbulence and crashes have become routine and the concept of financial crisis itself has lost its power to reference the character of extraordinary market events: the “crises” have become stationary or steady-state in character. Above all, however, they reflect the gradual making of an economic regime in which, over the past four decades, the interaction of adverse circumstances, quandaries, new business ideas, rabid political interventions, and ideological upswings has led to finance capital breaking out of its welfare state containment to dictate the fate of nation-states, societies, and economies.

Against this backdrop, the quarter century after the end of the Second World War could always appear as an exceptional period, a golden but now vanished economic idyll in which, under the impression of the economic, social, and political disasters of the 1920s and 1930s, an attempt was made to save capitalism on the basis of moderate versions of the same. For, beyond all controversial assessments of this postwar period, it had to be conceded that strong unions and banking regulation, capital and currency controls, a defensive business cycle, tax and social policy, long-term investment and mass production, low interest rates and modest profit margins had led, at least temporarily, to industrial growth, wage increases, and a moderation in the distribution of wealth and income. As once envisioned by Max Weber, Joseph Schumpeter, John Maynard Keynes, or Karl Polanyi, the times of the unleashed markets of an extremist capitalism seemed to have finally found their end. Indeed, as late as 1968, there was hope that the existing economic institutions and instruments of Western industrialized countries could prevent uncontrolled inflation and depression, perpetuate economic growth, and optimize “processes in society as a whole.” In short, this was an era characterized by hopes for peace and plenty, for “prosperity for all,” and the prospect of defusing distributional struggles through expected growth dynamics.2

The erosion of these social and political compromise formulas then proceeded through a number of stages in which a dislocation in economic forces combined with a shift in political decision-making power. Both the reversal of the trend and its culmination were marked by two amply discussed dates. On the one hand, we have the end of the Bretton Woods Agreement in 1971 and 1973. This agreement represented the postwar order adopted in 1944, which, by pegging important currencies to the dollar and the dollar to gold, was supposed to guarantee stable exchange rates and thus provide safeguards for international transactions involving commodities, capital, and payments. Whatever may have triggered the demise of this financial, monetary, and economic epoch – increasing mobility in international capital movements and an expansive US monetary policy, the transformation of the US from an international creditor to a global debtor, the accumulation of foreign dollar assets, the growing US deficit due to the Vietnam War and increasing inflationary pressure, a search for higher returns on capital due to falling profit rates in American companies, export surpluses (especially in Germany and Japan), or the mismatch between US obligations and gold reserves – in any case, it marked a failure of complex constructs in fiscal policy as well as a slow but final transition from commodity money to credit money, to unbacked currency systems with fluctuating exchange rates.

This not only created new markets for new financial products, such as currency derivatives, but also initiated an almost exponential growth of the money supply in circulation.3 Today, five trillion dollars are traded on foreign-exchange markets worldwide on a daily basis. On the other hand, rising inflation rates, stagnation, and declining productivity in the United States motivated drastic interest rate increases by the Federal Reserve under Paul Volcker between 1979 and 1981. They accomplished the feat of turning the trade deficits and foreign debt of the US to its advantage and steering international surplus capital to Wall Street with high-interest investments. Even though Volcker’s decision was probably improvised and intuitive, the success of such inflation-fighting measures not only led to a strengthening of the dollar exchange rate but also to a momentous redistribution of wealth and income. While profit rates for banks and financial institutions, for securities, bonds, stocks, and large capital assets rose, and 70% of the profits from European trade surpluses flowed back onto the New York financial markets, debts became more expensive, wage increases were curbed, and the income of the manufacturing industry, small businesses, and agriculture was reduced. The growth of the financial sector and the returns on finance capital were accompanied by recession, Third World debt crises, and rising unemployment. With an invisible hand, income shares of the 55% of those households that had no financial assets or only negative ones were distributed to the top 45%.4

Expanding financial markets and debt economics thus secured the hegemony of US capitalism under changed auspices in the 1970s. In so doing, they provided the framework for the enactment of those liberalist programs first tested under Chile’s military dictatorship from 1973 onwards and pushed through in various sequences, time spans, and versions after the political arrival of Thatcher and Reagan in the 1980s. The measures ranged from the fight against unions and labor market reforms, via the privatization of social welfare and public functions and services, to the comprehensive revision of corporate, property, and income taxes, the targeted promotion of credit and financial markets, and capital gains relief. In the process, this mixture of heterogeneous developments and concerted actions has acquired a systemic or systematic context by being flanked by prominent institutional structures. Let’s take the International Monetary Fund (IMF), to name just one such organization alongside the World Bank, GATT, or WTO. It was founded in 1945 and initially had the task of coordinating international monetary policy and moderating possible tensions in the system of fixed exchange rates by means of compensatory payments. The IMF was, however, temporarily deprived of its function following the collapse of the world monetary system and the abrogation of the Bretton Woods Agreement. Its remit was then reinvented in the 1970s, and a new authority was created to monitor compliance with stability criteria in the face of floating exchange rates and also to act as lender of last resort for central banks and governments on the international financial markets.5

This marked the beginning of the great era of “structural adjustment programs” with which the World Bank and the IMF, with the help of the OECD, reacted to the debt crises in Latin America and Asia, linked the granting of loans to developing and emerging countries to reform conditions, generalized the corresponding socioeconomic development perspectives, and ultimately established the orientation of international economic and financial policy. The main points of the program were summarized in the Washington Consensus of 1989 and, in addition to demands for budgetary discipline, reductions in government spending, tax reforms, and privatization of state-owned enterprises, these also included market-oriented interest rates and exchange rates, investor protection, deregulation of markets, and liberalization of capital movements including the easing of constraints on foreign investment. With these guidelines for financial and economic global governance, the international financial institutions not only sought to change state structures and economic policy conditions, but also to provide targeted support for specific interest groups and agencies.6 Even if this policy has repeatedly been declared a failure,7 it can be seen as the blueprint for recent government experiments in which the spectrum of austerity programs tested in developing and emerging countries – stability and fiscal pact, debt brakes, budgetary discipline, privatizations – was once again executed within the eurozone.

Finally, such conditioning of political decision-making processes was also forced by a change in the function of central banks in the twentieth century. While national banks emerged from the notorious indebtedness of early modern territorial states and their management by private creditors and, like the Bank of England in 1694, were founded for the purpose of permanent state financing, that is, for the management of state deficits, these institutions gradually acquired a broader range of tasks. These tasks arose from specific historical situations and included, for example, the monopoly of note issuance and money creation, the safeguarding of the banking system, concerns about the value of the currency, the regulation of the money supply in circulation, and issues of price stability, interest rate policy, and inflation control. It was above all the banking, financial, and monetary crises since the end of the nineteenth century that determined the orientation of exemplary institutions – from the Federal Reserve System in the US (1913) to the Deutsche Bundesbank (1957) and the European Central Bank (ECB, 1992 and again in 2007) – and resulted in three main trends. They were conceived as safety nets for the financial and monetary system (1) and, at the same time, as bankers’ banks, as service providers for banks and financial markets that were tasked with ensuring the provision of capital reserves in times of need and distress (2). This is also linked to the special legal status of these banks, which is characterized by a formal sealing off or immunization against other government organs (3). Based on the close coupling between central banks, credit institutions, and the financial system, the dogma of the “independence” of central banks prevailed over the course of the twentieth century, and especially by the 1990s, and perhaps most radically for the ECB: according to Article 107 of the Maastricht Treaty (1992), in exercising “the powers and carrying out the tasks and duties conferred” upon it, the ECB may not “seek or take instructions from [European] Community institutions or bodies, from any government of a Member State or from any other body.”8

Thus, we are dealing with the creation of governmental enclaves that are independent of all other governmental bodies and, in particular, escape any control by legislative powers. This had far-reaching consequences and brought about a strict and at times constitutional separation of sovereign tasks such as money and monetary policy from the economic and fiscal policy of national governments. Invoking the liberal doctrine of monetarism, which assumes a more or less mechanical link between the money supply and economic development, this paved the way for a technocratic handling of political decisions and placed monetary policy under the idol of “governance without government.” Not least, this approach programmed a radical one-sidedness, a one-sided responsibility of central banks. On the one hand, any accountability to elected governments, to a democratic electorate, was annulled. It was a matter of protecting the financial-economic market order against “the tyranny of accidental parliamentary majorities” (Knut Wicksell), and especially with regard to the euro and the ECB, no secret was made of the fact that it was a matter of removing the “bothersome democracy … from the economic system.”9 On the other hand, their deference does extend to the moods of the financial public; and to safeguard currency and monetary value they are above all beholden to those investors and actors who dictate the dynamics of financial markets. Thus, as government institutions, central banks provide a kind of minority protection for the representatives of finance against fickle democratic majorities; by means of central banks, financial markets and their agencies have become an integral part of government practice, where they manifest their parademocratic nature.

It was only with the multiplicity and interplay of such political, institutional, and doctrinal interventions that the preconditions were created for promoting what has recently become finance (or financial-market) capitalism. And it was here that the foundations were laid for that global mass experiment which, for four decades now, has focused on a “financialization” of national economies and of economic and social infrastructures as a whole. Emerging from the efforts, particularly in the US since the late 1960s, to free itself from economic and political constraints, new spheres of action were opened up for the financial sector in the exercise of political decision-making power. This was initially reflected in a two-fold expansion of financial transactions, in both growth and scope. For example, the global volume of financial operations increased more than seventeen-fold between 1980 and 2007. The volume of trading on the New York Stock Exchange multiplied from $19 million a day in 1975 to $109 million a day in 1985; trading in derivatives and securitizations increased nearly ten-fold from 1998 to 2008; financial assets reached 355% of world gross domestic product in 2007; and transactions in so-called shadow banks, that is, transactions that take place outside of regulatory requirements such as equity guidelines and minimum reserves, assumed a size of 140% of global economic output in 2008, and 150% in 2015. This was accompanied by a multiplication of debt in the public sector but, above all, in the private sector: taking the United States as an example, debt rose from 155% of gross domestic product in 1980 to 353% of GDP in 2008. In addition, and again in the US, the share of the finance, insurance, and real estate (FIRE) industries in domestic product relative to goods production grew from about 30% in the early 1960s to over 90% by around 2010.

These developments were connected with a process in which the share of industrial profits in overall corporate returns steadily declined. It fell from 24% to 14%–15% in the US in the 1970s and was overtaken by the profit share of the FIRE-related businesses in the 1990s. This was also due to a reorganization of corporate structures that manifested itself not only in mergers and concentrations, in the outsourcing of labor, and in the privileging of shareholder interests, of short-term payouts to shareholders over long-term investments, but also in the diversion of profits to financial markets and in the transformation of large corporations into financing companies: the largest share of profits of companies such as General Electric or Ford Motor Company came not from sales of industrial products but from financial services; and if, for example, Nike was able to increase its revenues by 470% between 2002 and 2005, this was not due to sales of sneakers and jerseys but to earnings from interest and dividends. In the US, half of all investment by nonfinancial firms went into the financial sector in 2000, and in 2001, more than 40% of all corporate profits were in the financial industry.10

Financialization has thus become structural. It enjoyed academic endorsement as exemplified by the Efficient Market Hypothesis, which attested to the perfect competition, ideal pricing mechanisms, rational modes of action, and optimal information distribution specific to financial markets. And it is characterized by the growing importance of financial-economic motives, actors, instruments, and institutions for the conditions of material production as well as for the dynamics of domestic and international markets. It shapes the way in which the accumulation of financial capital has become a dominant force in the structuring of the social and political realm.

On the one hand, the strengthening of pension funds and the financially defined provision of public services, the molecularization of competition and the promotion of precarious forms of employment, and the increase of debt risks through consumer credit, credit card systems, education costs, and mortgages have guaranteed an increasing inclusion of populations in the value creation process of financial markets. The functioning of the capital market requires a constant tapping into new resources and leads to a claim that is sometimes explicitly stated: “The world needs our leadership”;11 this is how Larry Fink, the CEO of the world’s largest asset manager, Black Rock, put it, summarizing the financial industry’s vision of the future.

On the other hand, the systematic strengthening of financial markets and their institutions has proven to be a program of income and wealth redistribution that has now been sufficiently documented. The figures and dynamics are widely known and resemble each other in most contemporary industrialized countries. Thus, the expansion of capital markets has led to a release of divergent forces. It has also led to the fact that, in Europe, for example, since the turn of the millennium, the volume of private wealth has been four to six times the total annual national income and that the return on capital has significantly exceeded the long-term growth rate of economic output. This was reflected in the disparity between low and high incomes, between wages and capital gains.12 Between 1988 and 2008, 44% of income growth was generated by the richest 5%, and almost 20% by just 1% of the world’s adult population. From 1999 to 2009, the incomes of the bottom 10% of households in Germany shrank by 9.6%, while those of the top 10% grew by 16.6%; real incomes of wage earners declined by about 3% between 2005 and 2015. In 2007, 10% of the richest households in Germany owned two-thirds of total private net wealth, 1% owned more than one-third of it, and the top 0.1% held a 22.5% share. By contrast, the entire bottom half only accounted for 1.4% of total private net wealth. The situation was even more pronounced in the US, where 43% of total household net wealth was concentrated in the richest 1% of the population and 83% in the richest 10%. The share of total income held by the poorest 50% of the population fell from 20% in 1980 to 12% in 2018, accompanied by a reduction in real minimum wages since the 1980s. Moreover, countries with particularly dominant financial industries, such as the UK and the US, are now among those Western societies with the lowest levels of upward mobility.13

Even after the last financial and economic crisis, this trend has continued. According to a study by the International Labor Organization (ILO), in 2019 10% of those with the highest incomes commanded 49% of the sum of global wages, with the bottom half sharing only 6.4% and the bottom fifth less than 1%. This also relates to the stagnation or decline of low incomes in the years after 2008. In Germany in particular, 10% of the richest households have benefited almost exclusively from the swelling export surpluses of recent years, and more than half of the increase of three trillion euros in private wealth resulting from the real estate boom in the same period benefited the richest 10%, while almost 40% of the population has no assets or only debts. In 2020, the German Institute for Economic Research (DIW) determined that the richest 1% of the population owns around 35% of individual net wealth, while the richest tenth owns over 67% and the bottom half only 1%. Moreover, the 45 richest households have as much wealth as the weaker 50% combined.14 Apart from the fact that financial crises are always accompanied by a redistribution from the bottom to the top, a development can be observed, both in general and at the latest since the beginning of the 1980s, in which the growth of the gross domestic product (GDP) in Western industrialized countries, and especially in the US, has become decoupled from the growth of the incomes of 90% of the population. This ultimately raised doubts about whether the calculation of GDPs could in any sense still provide meaningful economic and wealth indicators without first taking into account concrete wealth and income distributions.15 Such a hyperconcentration of income and wealth is not only an indicator of the economic transformations of recent decades. The connection between overaccumulation and inequality also indicates a subordination of social and economic reproduction to the reproductive cycles of finance capital. In this, a gradual change in the organization of techniques of governance can be discerned, which has led to the status quo of a reign of finance, with at least five basic features. First, the term “finance economy” today cannot be taken to refer either to a purely economic state of affairs or to a specific market system. The protracted process of establishing the current financial regime cannot be grasped in terms of a dogmatic opposition between state and market or politics and economics. Moreover, the so-called liberalization of markets, and especially of financial markets, since the 1970s cannot be understood simply as a withdrawal of regulatory authority. On the contrary, it has been demonstrated that the demand for regulations, for regulatory practices, instruments, and agencies has increased in proportion to the privatization of state functions and enterprises.16 It is precisely the vehement assertion, reinforcement, securing, and legitimization of market mechanisms that has brought to the fore a plethora of public, semi-public, and private institutions that are evidence of a multiplication and dispersion of governance functions and are embodied in international committees, associations, treaties, and lobby groups. They operate, as it were, pluralistically and on different levels; and as elements and forms of a finance-economic global governance, they characterize more than just a regime that could be brought about, starting from North America and Europe, on the initiative of the leading economic powers. Much more, the mutual interpenetration of nation-state bodies, international organizations and networks, private agencies, corporations, and market processes has resulted in a multilayered web of regulatory regimes of varying density and scope. Market forces are pushed through a proliferation of regulatory instances, while, conversely, market dynamics and actors call for a consolidation of regulatory systems. Governance functions and market-based modes of action have entered into a bipolar internal relationship, defining an economic and financial system that deserves the title of regulatory capitalism.17 The liberal fiction of “free,” “efficient,” or “unregulated” markets that are supposed to be able to evolve happily and autonomously apart from government intervention loses any analytical value here. It is precisely the liberalization of markets and financial markets that has given rise to a global program of regulation and re-regulation. As a form of power of its own variety, the financial regime has thus taken on a diagrammatic character: it structures an immanent space in which sovereign prerogatives, governing actions, business transactions, and market operations are intertwined. The supporting or static structures of political architectures, such as those of the nation-state, are honeycombed by the dynamic axiomatics of finance capital, which breaks free of territorial ties and manifests itself as “a cosmopolitan, universal energy which breaks through every limitation and bond”18 by generating its own rules and dependencies.

Thus, with the processes of financialization, the transition from a geopolitical to a geoeconomic order has been completed. In this process, the financial regime has installed itself as a power operating inter- or transgovernmentally, of ill-defined legal and institutional location, which supplements or replaces the formal authority of governments, undermines the distinctions between public and private, and intervenes directly in national economies, in the governmental policies of old nation-states. As a special technology in the exercise of governmental power, the financial regime can thus secondly claim the character of a fourth power, asserting itself as a monetative power19 (with special escalation potential) that joins the trinity of legislative, executive, and judicial governmental powers.

The crisis management since 2007 has demonstrated just how the formation of reserves of transnational sovereignty has combined with the agencies of monetative power. Eurozone policies, in particular, have been distinguished in their operations by their bracketing of legal considerations and parliamentary participation, as well as by their suspension of formal procedural channels and democratic conventions. Various bodies such as the “Troika,” the “Quadriga,” the “Institutions,” or the “Eurogroup” have not only imposed the usual packages of measures on European debtor states, which a good-humored financial world has given the suggestive acronyms of PIIGS or GIPSI (i.e., Portugal, Italy, Ireland, Greece, and Spain). These measures include privatizations, savings, staff cuts, streamlining of the healthcare system, labor market reforms, cuts in social benefits, wages and pensions, or the restriction of trade union rights. On the contrary, to satisfy the interests of bondholders, sovereign powers were also exercised by means of direct interventions in national budget, tax, and labor legislation, interventions that were not necessarily covered by the legal framework of the eurozone. This seems all the more remarkable given that some of these bodies themselves were at best improvised and informal in character, initiating legislative processes as ill-defined executive bodies. The so-called Eurogroup, for example, which consists of the finance ministers of the euro states, the ECB president, the EU commissioner responsible for economic and financial affairs, and a representative of the IMF, monitors compliance with stability criteria as well as the budgetary policy and public finances of the euro countries, but is not provided for as a separate entity in European legislation and is not accountable to any regular European institution including parliament. When asked about the legitimacy of the decisions of the Eurogroup and its president during the negotiations on liquidity assistance for Greece, the following response was immediately issued: “… the Eurogroup does not exist in law, as it is not part of any of the EU treaties. It is an informal group of the finance ministers of the eurozone member states. Thus, there are no written rules about the way it conducts its business, and therefore its president is not legally bound.”20

It is not surprising, then, that public and private representatives of the financial regime sometimes complained about democratic overreach, reminding us, for example, that “[e]lections cannot be allowed to change economic policy” or that democratic constitutions represented “legacy problems of a political nature” and were “incompatible” with current financial-economic necessities.21 These concerns also articulate the tension between democratic procedures and a financial order whose global economy of power has been reproduced in Europe. From the struggle against legal and political hurdles in the adoption of the first bailouts to the special governing powers of various EU institutions, figures of exceptional political power have emerged that transcend national borders. As if heeding Milton Friedman’s advice to seize upon economic crises as opportunities to implement that which is politically unpalatable,22 the window of opportunity afforded by the last crisis was used to expand these actors’ room to maneuver, set political priorities, secure the interests of the financial industry, and reorder decision-making power despite constitutional concerns. Moreover, the associated exceptional powers were immediately made permanent: be it through the European Stability Mechanism (ESM), the special purpose vehicle established under Luxembourg law, whose entities enjoy complete immunity when deciding on emergency loans and whose directives are outside all parliamentary and judicial control; or be it through the European Fiscal Compact and the reform of the Stability and Growth Pact, which, in special situations, empower the EU Commission and the European Council to directly intervene in the budgetary policies of individual states. In this way, European legislative procedures were circumvented along the lines of an “unwritten emergency constitution.” Within existing legal systems, a legally nonformalized secondary structure has been created that functions as an extraordinary operational reserve for stationary or steady-state crisis situations.23 To this day, it is part of the orientation of the European art of government that the violation of economic austerity criteria is vehemently sanctioned, while the breach of constitutional and democratic norms is rather discreetly admonished, and it was probably this crisis policy that was essentially responsible for the unleashing of centrifugal forces in Europe.

Against this backdrop, the gap between the euro countries widened after 2008; between Italy and Germany, for example, the difference in gross national product has since increased by 8,000 euros per capita per year.24 Such distortions continued, albeit under different ratios and auspices, in the spring of 2020. Thus, in the shadow of the pandemic emergency and extraordinary situations associated with it, and under the EU’s watchful eye, not only were authoritarian structures solidified here and there, in Hungary or Poland, but at the same time existing financial-economic mandates and rules were again suspended. The irregular interventions and the purchase of government bonds by the ECB to prop up the euro, the diverse national rescue packages, and the projects to nationalize wage payments and losses have demonstrated that debt brakes, the Stability Pact, the Maastricht criteria, or the “black zero” (balanced budget) are not at all technical or technocratic frameworks, but action programs for achieving political goals, and can simply be ignored if priorities change. But apart from the fact that past austerity dictates in countries such as Greece, Spain, or Italy have proved to be crisis or shock amplifiers, lending by the European Investment Bank (EIB) and the European Stability Mechanism, as well as the notorious vetoes against Eurobonds and concerted borrowing, have directly echoed the old post-2008 debt policies. They have weakened the position of the so-called southern countries vis-à-vis the financial markets and further exacerbated the associated breaking points and forces of divergence within the eurozone. As early as April 2020, risk premiums on Roman sovereign bonds had soared, and just at the crest of the first Covid-19 wave, rating agencies urged a rapid reduction of Corona debt with the usual threat of credit rating downgrade.25

On the one hand, then, the financialization processes of the last four decades have led to a financial-economic global governance that, with the close intertwining of business routines and regulatory systems, of public and private regulatory instances, intensified the interdependence between political institutions and economic dynamics and took on the format of a separate government function. On the other hand, they reinforced the capacities with which the issues of the financial sphere occupy the social and political field. Thirdly, the cycles of international capital reproduction determine the way politics and society interpret themselves and their situation. They dictate the agenda of the “competitiveness” of institutions and states and fulfill the liberal hope of employing financial and foreign-exchange markets as “judges over governments,”26 i.e., as adjudicators of budgetary and investment decisions.

What has come to be understood as an “erosion of statehood” or political “globosclerosis”27 is reflected less in a weakening of governmental practices than in a restructuring of their goals, maxims, and procedures. In the intensified interconnectedness of regulatory capitalism, the accent of regulatory practice shifts; direct intervention and administrative command structures are augmented by an indirect system of incentives and inducements. As early as the 1980s, the American economist and political scientist Charles Lindblom had recognized the governmental dimension of markets in the establishment of automatic disciplining mechanisms that limit political and legal leeway with the grim scenarios of capital flight, interest rate disadvantages, investment abandonment, economic stagnation, and rising unemployment. Decision patterns are aligned with the anticipation of market preferences. Since then, the liberalization and opening of markets, from the financialization of the global economy to the structuring of the euro area, have generated a new enclosure or containment milieu in which the financial market in particular acts as a prison for political systems and government activities. Here it holds that “no market society can achieve a fully developed democracy because the market imprisons the policy-making process.”28 Modern market and economy-driven societies did not become “post-democratic” at some point; their ground plan and architecture have always been defined by the limitation of the scope of popular sovereignty and democracy. The reality of “market conforming” or “liberal” democracies is defined by the way in which markets seize or embed themselves in the institutions and subjects of these democracies. As the markets of all markets, financial markets in particular are arenas in which the flagrant unleashing of financial-economic forces is combined with the consistent construction of strict relations of dependency. So-called market discipline has become a fundamental criterion of policy and has tightened the interventional capacity of the financial regime.

From this perspective, the post-2007 turmoil does not appear as a major and tumultuous rupture, but as a continuation and restoration of a financial system that has been forming since the 1970s. In order to save the most recent form of finance capitalism, the course of events could not be left to the financial markets alone, and fourthly, the dramaturgy of the economic crisis has proven to be a consistent consolidation of the financial regime and its structures. What began as a liquidity problem in mortgages and financial markets in 2007 and transformed into a sovereign debt crisis led to a quandary in which debt was to be nationalized, banking institutions recapitalized, but government budgets supported only subject to certain conditions. This was particularly evident in the euro area. For as much as, for most euro countries, the liquidity crisis did not begin with budget deficits but with the implosion of financial markets,29 the subsequent escalation process prioritized above all the vital interest of creditors in the profitable circulation of government debt. Private bank defaults were paid for by borrowing from private banks, and holders of government bonds were privileged in the servicing of their debts; moreover, the prohibition of direct government financing by central banks and the ECB’s supply of cheap money to private institutions gave sufficient reason to pass this money on with added interest to finance government budgets. This triggered a capital cycle that, with the bold nationalization of private losses, was able to finance investors back into the position of creditors of last resort. The temporary inclination of finance capital to socialize itself was combated at great expense using public funds. In this respect, debt brakes, stability mechanisms, fiscal pacts, and deficit procedures can also claim the fiscal merit of securing the confidence as well as the prominent position of private creditor power and, moreover, of generating reliable public debtors who, in the event of a crisis and while limiting their fiscal sovereignty, give priority to the portfolios and claims of their creditors.

The transfer of the risks of the finance economy from markets to states, social systems, and populations has thus been successful. While, especially in Europe, shrinking economies, budget cuts, rising unemployment, cuts in social benefits, and stagnating or falling wages after 2008 may justify talk of an internal colonization of local societies, at the same time the attractiveness of financial markets has been increased. Already in 2009, Wall Street had one of its best years ever, and global assets grew by nine trillion in 2010, reaching a peak of $121.8 trillion. At the same time, the “bonus season” was more favorable than ever, generating $117 billion in 2008 and $145 billion in 2009 for the managers of the largest investment banks, asset managers, and hedge funds. Goldman Sachs alone posted stock profits of $13.4 billion in 2009 and paid out $16.2 billion in bonuses and compensation to its staff. In 2010, there were more millionaires worldwide and more wealth in their hands than in 2007, and while another sixty million people had fallen below the absolute poverty line, the volume of international derivatives trading was already greater in 2011 than in 2007.30

Economic policy has dedicated itself to the concerns and needs of private creditors and financial firms; and so it was only logical that erstwhile notions and ideas for reorganizing the financial markets, such as a financial transaction tax, higher taxes on capital gains, restrictive capital adequacy rules, changed incentives for investment and compensation, a ban on certain financial products, or the institutional separation of commercial and investment banking, were not implemented, or hardly at all, or at best in inconspicuous doses.31 This goes hand-in-hand with the observation that the dogmas of macroeconomics and its representatives also recovered very quickly from the intellectual challenges of the crisis years. While as late as 2008 the “whole intellectual edifice” of finance, including its models and forecasts, was seen to be collapsing,32 it was only shortly thereafter that all doubts were dispelled. As former Federal Reserve Chairman Ben Bernanke remarked in 2010 on behalf of a good part of his guild: “I don’t think the crisis by any means requires us to rethink economics and finance from the ground up.”33

Theoretically, politically, and practically, the finance industry’s room to maneuver has been secured under difficult conditions, ratifying in this way a situation in which states and societies have proven themselves to be reliable buttresses for the instabilities of the financial system. Crisis events have been responded to by taking care of their causes; and an automatic enrichment mechanism has been installed in which lower wage and income strata are available as potential net payers for the owners of financial capital. The redistribution of interest payments upward is matched by a redistribution of financial risk from top to bottom. One result could be noticed in the aftermath of the euro crisis: the weakest countries and population groups had borne the costs of the crisis. By means of such socioeconomic hedging, populations themselves were used as minimum reserves for the transactions of the financial markets, and the structural instabilities of these markets were offset using stable enrichment structures: what can be called “primitive accumulation” was made permanent and, with the differentiation of zones of exploitation and centers of accumulation, established a new class struggle in which the interests of mobile investor groups or “supercitizens” are pitted against earthbound state or subcitizens.

However, in the shadows of these events, dynamics had made themselves felt that testify to significant shifts in the status and significance of monetative power, dynamics that have begun to occupy economists intensely. For example, the processes of financialization have already ensured that the axis and well-established interplay between central and commercial banks have inevitably declined in importance. Until the second half of the twentieth century, banks were at the center of the financial system, guaranteeing the extension of credit, the provision of liquidity, and the management of payment flows, escorted in