Against denunciation of the welfare state
by Rudolf Walther
[This article published on 9/4/2020 is translated from the German on the Internet.]
No economist is so misunderstood and misinterpreted as Adam Smith. Many consider him to be an advocate of the “free market” and narrow-minded egoism. What a mistake! Smith saw an important and strong role for the state. Cooperation and mutual help are inscribed in the division of labor. Others irrationally denounce the welfare state as “comfortable stable feeding.”
Neoliberalism is an indoctrination and ideology that makes fetishes like the market and competition into natural laws. A few profit and the majority suffer. In the neoliberal model, profits explode and investments stagnate.
The myths that the market is self-healing and that financial markets return to equilibrium are promoted. Labor and environmental regulations are only obstacles to profit maximization. Income and wealth inequality go through the roof and all state intervention is denounced as profit endangering. When coupled with tax avoidance, it leads to a permanent free-fall economy and state incapacity for its public responsibility. Encouraging a labor-friendly and environment-friendly-future becomes impossible. The unfettered market has unlimited power.
The poor need a strong state. The state should shrivel the financial sector and discipline the economy so the economy is not all-powerful. The public sector should be expanded so democracy and not plutocracy occurs. Tax havens, stock-buybacks, micro-second betting, and insider trading are market distortions only available to mammoth corporations and the super-rich.
Trump’s tax evasion is an indictment of America’s plutocracy. Trump paid no federal taxes for a decade and received a $73 million tax refund. We have socialism for the rich and merciless capitalism for everyone else!
Late-stage finance market capitalism is on life support. The economy should be a part of life, not a steamroller crushing self-determination and creativity. With political will, social security could be solvent for another 75 years – by eliminating the $130K cap on social security taxes.
The state could prioritize public investment, job guarantees, and reduced working hours so everyone benefits from high tech and robotization. Cooperation and competition depend on each other like the right hand and the left hand.