‘THE FINANCIAL CRISIS HAS MADE HEROES OUT OF ROGUES!”

Interview with Ulrich Beck

[Billions for banks! That is not the only consequence of the financial crisis, says sociologist Ulrich Beck in this Spiegel Online 10/15/2008 interview translated from the German on the World Wide Web, www.spiegel.de/wirtschaft/01,1518,druch-584050.00.html. The state must make the economy more social and democratic.]

Spiegel: Mr. Beck, what is the most important consequence of the financial crisis?
Beck: The crisis endangers or completely shatters our whole economic order.

Spiegel: What do you mean?
Beck: The West feels superior. The West’s free market economy is better, for example than the socialist state economies of the past. China’s very successful mixture of private- and state-economy was often scorned. This feeling of superiority may be finally over.

Spiegel: How will the crisis affect trust in the elites?
Beck: Until the middle of October 2008 German chancellor Angela Merkel and Finance minister Peter Steinbruck believed they could solve the crisis nationally. They said the great storm would pass us by. Many German politicians looked at the world with this strange uninformed and self-satisfied outlook. They simply do not understand the degree of international dependence and the logic of globalization.

Spiegel: Has the political class in Germany come to nothing?
Beck: Yes, the political class and others. In other countries, the ideology of the automatic functioning of the unregulated market was adopted and repeated unimaginatively and unquestioningly. Years ago a critical politician like Joschka Fischer argued politics could do nothing against the laws of the market. This unimaginativeness and deformation are now avenged where the financial risk opens a global political space for government alternatives.

Spiegel: Some politicians and, less often, managers admit their mistakes regarding the crisis. With gigantic sums, the governments try to renew trust. Will they succeed?
Beck: In the example of the British prime minister Gordon Smith, one sees a dramatic change from market fetishism to state optimism. With similar passion as when he earlier fought for the free market, Brown now propagates his new plan to save the world, which everyone should support. How credible is that?

Spiegel: What is your answer?
Beck: The future will decide that. No one knows what therapy works against profit intoxication. We are all part of a colossal economic experiment with an open ending. How quickly heroes appear out of rogues or scoundrels! Didn’t Gordon Brown, Angela Merkel and Peter Steinbruck recently praise unregulated capitalism? For me, their wonderful conversion is a cabaret-style conversion.

Spiegel: Do you trust these politicians?
Beck: No. How can they be trusted? Whoever changes his opinion and banner overnight to a kind of state socialism for the rich is untrustworthy. The deeper the crisis becomes, the more the pressure mounts to believe those who caused the misery with their so-called expertise. This process prevents changing the elites, which should be possible in a democracy. This leads to the personal union of criminal and police.

Spiegel: Who should replace Merkel and Steinbruck?
Beck: That is the problem. For a long time, the whole political elite insisted there were no alternatives to the market economy.

Spiegel: Do you think the Left knows a way out of the crisis?
Beck: No. We have essentially a renovated Left. The German Left party wants to go back to the nation state. But we need a new transnational policy to regulate the financial markets. Citizen movements like the Attac critics of globalization recognize this necessity but are too weak to realize their goals.

Spiegel: The state shows strength with its guarantees for banks and savings deposits. Doesn’t the crisis create a new trust in the state?
Beck: No one knows if we have reached the bottom of the abyss. A new field of power politics opens up in the global risk consciousness, in anticipating the catastrophe to be prevented. People can now be convinced democracy should dominate the economy in the long-term. The economy should not dominate democracy. We should not allow this golden short-term opportunity to expire. A just tax policy and social security in the transnational framework are central, not only control of the banking sector.

Spiegel: For the financial markets, you urge turning away from laissez faire and turning toward the precautionary principle. Does this mean banks should only sell new financial products after they are tested for their harmlessness?
Beck: The problem is that the traditional economy only sees risk as a positive reality. This carelessness is completely wrong.

Spiegel: Do you support the demand of globalization critics to establish something like a technical control board?
Beck: Certainly, this possibility is built in the existing institutions.

Spiegel: Doesn’t the social market economy automatically ensure better regulation than the model of Anglo-Saxon capitalism?
Beck: By no means. The model of the social market economy is also caught in nation-state thinking. In Germany belief in the market triumphed over all other schools.

Spiegel: According to a recent poll by the Bertelsmann foundation, only 31 percent of Germans have a good opinion of the social market economy.
Beck: Politicians and managers are no longer regarded as risk managers but as risk creators. Even Hartz reforms [radical German welfare system that combined income support and unemployment benefits and reduced duration of benefits] have also reduced trust in the social security offered by the state. Politics shifts life risks one-sidedly on the individual and rids itself of its obligation for social security and welfare.

Spiegel: Will the old idea of equality have a greater meaning in the future?
Beck: A greater relative equality in any case. Instead of socializing losses and individualizing profits, banks managers and boards of directors should be liable for their losses and mistakes. Equality will also play a more important role internationally. Up-and-coming threshold countries like Brazil, India and China demand and receive more rights to join in the conversation.