A General Logic of Crisis

lrb.co.uk/v39/n01/adam-tooze/a-general-logic-of-crisis

Adam Tooze

Adam Tooze
How Will Capitalism End? by Wolfgang Streeck
Verso, 262 pp, £16.99, November 2016, ISBN 978 1 78478 401 0

‘Whatever it takes.’ These words, spoken by the president of the European Central Bank,
Mario Draghi, to a crowd of investors in the City of London on 26 July 2012, have come to
represent the symbolic end to the acute phase of the global financial crisis. In the political
sphere, by contrast, where words are supposed to be everything, we have not yet been
able to draw the line. More than four years on, we know that in 2012 the political fallout
was only just beginning. It was in December 2011 that David Cameron reopened the
European question by opting out of the new ‘fiscal compact’ drawn up by Angela Merkel
and Nicolas Sarkozy with the aim of enforcing budget discipline across the EU. In the US in
spring 2012, Mitt Romney emerged as the candidate from the Republican primaries, but
the freakshow anticipated the Trump campaign to come. In Italy the ousting of Berlusconi
in a backroom coup in November 2011 and the installation of the ‘unpolitical’ economist
Mario Monti as prime minister set the stage for the emergence of Beppe Grillo and Five
Star in the local elections of May 2012. In France as the fiscal compact began to bite,
François Hollande’s presidency was dead almost before it had started.

Amid all these events, Germany can easily seem like a bastion of stability, with ‘Merkel
über alles’ its anthem. But beneath the smooth surface, Merkel’s grip on the
chancellorship has since she took office in 2005 been supported by three successive
coalitions. And by early 2013 it was clear that her partners since 2009, the free-market,
libertarian, liberal FDP, were in trouble. They were being outflanked on their right-wing by a
new formation, the AfD, the Alternative für Deutschland, whose focus in 2013 was not
immigration but passionate opposition to the euro. Like much of the German right the AfD
was indignant not about austerity, but about the failure of Merkel to back an even harder
line. The AfD didn’t break the 5 per cent threshold required to enter parliament at its first
try, but it took enough votes from the FDP to drop it out of the Bundestag, leaving Merkel
to form a new coalition with the Social Democratic Party (SPD).

The AfD wasn’t the only force in German politics fuelled by the belief that things could not
go on as they were. In spring 2013, for the first time in decades, the German left had
begun to mount a principled critique of a major element of the European institutional
structure – the euro. It was Oskar Lafontaine – ‘Red Oskar’ – who broke the silence.
‘Hopes that the creation of the euro would force rational economic behaviour on all sides
were in vain,’ he said, and called for the single currency to be broken up so that southern

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Europe could recover. Lafontaine is a former SPD finance minister, from the left wing of
the party, once described by the Sun as the ‘most dangerous man in Europe’, who in 2005
split from the SPD and took tens of thousands of followers with him to join forces with the
ex-East German communists of the PDS. Out of that coalition emerged Die Linke, arguably
the real alternative for Germany, which the entire Bundestag has since conspired to keep
at arm’s length. Until 2013 Die Linke’s line was that it opposed Euro-austerity not the euro.
And at first the impact of Lafontaine’s heretical intervention was contained. He had just
resigned from official duties in the party. But Cyprus and the elections to the European
Parliament of 2014 kept the topic on the boil, and then came Syriza and the intense crisis
of 2015.

In 2015, even before the refugee crisis surged to the top of the agenda, the German right
was in uproar at what was seen as Merkel’s surrender over Greece, which should, it
believed, have been unceremoniously kicked out of the euro. The ECB, in its adoption of
quantitative easing, had revealed itself as an inflationist Trojan horse. Meanwhile, the left
was divided over the now unavoidable question of whether the EU was neoliberal to the
core, and if so, should be regarded as irredeemable, and rejected. Though the main part of
Syriza pulled back from leaving the euro, Lexit – the left-wing case for leaving the union –
was born that summer, and not only in Britain. In September 2015 Lafontaine popped up
again, this time in Paris on a platform alongside Yanis Varoufakis, calling for a Plan B for
Europe, a Europe beyond the euro.

In the German Lexit camp, alongside Lafontaine and his one-time state secretary in the
Finance Ministry, Heiner Flassbeck, the most prominent voice has belonged to the
sociologist Wolfgang Streeck. His role is a sign of the times. Until recently a long-term
SPD member, Streeck had done teaching stints at major US universities before becoming
the director of the prestigious Max Planck Institute. It was the financial crisis that returned
Streeck to his youthful roots on the far left. In Buying Time (2014) he argued that the crisis
of the euro could best be understood in terms proposed by the Frankfurt School. Social
theorists like Jürgen Habermas, Claus Offe and others had been right, he said, when in the
early 1970s they argued that democratic capitalism faced profound and irresolvable
problems. What they had underestimated, however, was the sheer aggression of capital
and the inventiveness of its functionaries in devising makeshifts to maintain profits while
at the same time keeping workers and consumers from becoming discontented. Three
successive strategies of displacement had kept the show on the road. In the 1970s
inflationary wage and price increases had promised more than was actually available.
Then, in the 1980s, state debt had swelled. Finally, neoliberalism became the dominant
current in global governance, inaugurating the austere ‘consolidation state’ and
simultaneously expanding private debt. Underpinning it all was an unfettered consumer
culture that has transformed every aspect of our lives – as consumers, workers, family
members and citizens. Europeans like to imagine they were selective in what they took
from this package. But the post-2008 crisis revealed, in Streeck’s eyes, that Europe and its
political institutions, notably the EU, were in fact the purest expression of neoliberalism.
Streeck was one of the first to dig up a now widely read essay by Friedrich Hayek from
1939, where he argued that liberals should favour international federation because
members would be able to agree only on a minimal set of prohibitions on the restraint of

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trade. Despite its protestations to the contrary, the EU was a free-market vehicle and the
euro was its logical fulfilment – a monetary system cut off, like no other before it, from the
control of democratic politics.

The significance of 2008, according to Streeck, was that this sequence of makeshift
mechanisms of crisis resolution – inflation, public and private debt – had reached its
endpoint. Streeck knows his Marx. But the core of his crisis theory is non-Marxian. It does
not rest on the violence of original primitive accumulation, or on the alienation or
exploitation inherent to the productive process, or even primarily on the declining rate of
growth or accumulation. In one disarming passage he describes capitalism as a ‘a non-
violent, civilised mode of material self-enrichment through market exchange’. What makes
capitalism toxic is its expansiveness, its relentless colonisation of the rest of society.
Drawing on Karl Polanyi, Streeck insists that capitalism destroys its own foundations. It
undermines the family units on which the reproduction of labour depends; it consumes
nature; it commodifies money, which to function has to rest on a foundation of social
trust. For its own good, capitalism needs political checks. The significance of 2008 and
what has happened since is that it is now clear these checks are no longer functioning.
Instead, as it entered crisis, capitalism overran everything: it forced the hand of
parliaments; it drove up state debts at taxpayers’ expense at the same time as
aggressively rolling back what remained of the welfare state; the elected governments of
Italy and Greece were sacrificed; referendums were cancelled or ignored.

In early 2014, as the likes of Habermas and the late Ulrich Beck called on their fellow
Germans to make the elections to the Strasbourg Parliament the constitutive moment of a
European demos, Streeck’s mind was on darker themes. In January 2014 at the British
Academy, he gave the lecture ‘How Will Capitalism End?’, which lends its dramatic title to
this collection. If, as events in Europe and the US seemed to demonstrate, capitalism had
broken free from its constraints, then visions of an ‘ever closer union’, at least in the form
of the EU, were out of touch with reality. We should be bracing ourselves for a prolonged
and agonising decomposition of the entire social fabric. It has been said that it is easier to
imagine the end of the world than the end of capitalism: Streeck believes we may one day
witness the proof of that. Capitalism will end not because it faces serious opposition but
because over the course of the coming decades and centuries it can be relied on to
consume and destroy its own foundations. We should expect ever intensifying stagnation,
inequality, the plundering of the public domain, corruption and the escalating risk of major
war, all of this accompanied by a pervasive erosion of social order, generalised social
entropy. Indeed, according to Streeck we have at least since the 1970s been living in what
he refers to as a ‘post-social society … a society lite’. We cope individually with conditions
of increasing uncertainty, while at the macro level both society and economy become
increasingly ungovernable. ‘Life in a society of this kind,’ he writes, ‘demands constant
improvisation, forcing individuals to substitute strategy for structure, and offers rich
opportunities to oligarchs and warlords while imposing uncertainty and insecurity on all
others, in some ways like the long interregnum that began in the fifth century CE and is
now called the Dark Age.’

Streeck isn’t merely making a diagnosis, but a call to arms. He encourages his fellow
sociologists to break through the ‘disciplinary truce’ that in the 1950s divided the economy
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from the rest of the social world and hived it off as the exclusive domain of economics.
But his hopes extend beyond the academic: ‘Sociologists and political scientists, in
alliance with heterodox economists of different stripes, have begun working on a new sort
of political economy, a socio-economics that would again make the economic subservient
to the social rather than vice versa, first as a theoretical and then, hopefully, as a political
project’. Streeck draws urgent practical conclusions: ‘Bringing capitalism back into the
ambit of democratic government, and thereby saving the latter from extinction, means de-
globalising capitalism.’ Capitalism must be cut back to the scale of the nation-state,
because it is at the level of the nation-state that Europeans have over the last two
centuries been able to establish ‘social cohesion and solidarity and governability’.

The brutality of the Eurozone’s containment of the Syriza government in Greece seemed to
vindicate Streeck’s warnings. His following has soared. In the Anglophone academy his
work has been embraced as a refreshing return to the basics of Marxisant crisis theory. In
Germany his impact has been more ambiguous. By contrast with the UK, France and the
US, where Euroscepticism has always been a strand on the left, in Germany Lexit has not.
The early days of the Federal Republic, when the SPD was bitterly opposed to Adenauer’s
policy of Westbindung (‘attachment to the West’, involving European integration and
membership of Nato), are long forgotten. Since the 1960s the mainstream German centre-
left has settled into a position of unquestioning loyalty to the project initiated by the CDU.
Franco-German opposition to the Iraq War in 2003 burnished Europe’s reputation as the
good side of ‘the West’. Against this backdrop, Streeck’s claim that unwavering
commitment to the EU and the ‘European ideal’ might itself be of a piece with neoliberal
ideology comes as a shock.

It didn’t take long for Habermas to pick up the gauntlet. In 2013 he accused Streeck of
‘nostalgia’ in favouring a retreat to ‘national fortresses’. Earlier this year Streeck retorted
that Habermas favoured a ‘political universalism’ that vainly tried ‘to match the infinite
universalistic advance of money and markets’; apparently Habermas regarded ‘the
predetermined course of historical evolution [as] normatively desirable and technically
necessary at the same time’. Why, Streeck demanded to know, should we fall in with
‘Angela Merkel and her frivolous claim that, “If the euro fails, Europe fails” – identifying a
two-thousand-year-old cultural and political landscape of grandiose jointly produced
diversity with a trivial utilitarian construction that happens to serve above all the interests
of the German export industries’. Around the same time, dismissing Martin Sandbu’s
vigorous defence of the euro, he vented his criticism of Merkel’s refugee policy.[*] It was,
in his view, another vain, modernist social-engineering project backed by Germany’s
employers and the opportunistic Merkel. What’s more, it was an ‘object lesson in what
other countries can expect from Germany acting European’, which means in practice an
attack on national autonomy, as Germany’s elite identify ‘their control of Europe with a
post-nationalism understood as anti-nationalism, which in turn is understood as the
quintessential lesson of German history’. Responding to Brexit in Die Zeit, he issued a
manifesto, co-authored with colleagues from the Max Planck Institute, entitled: ‘Europa
braucht die Nation’ (‘Europe Needs the Nation’). In the European context, it argued, Larry
Summers’s appeal for a ‘responsible nationalism’ meant limiting the power of the

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European Court of Justice, more opt-outs and replacing the euro with a reheated version
of the European Monetary System of 1979-98 vintage, enabling periodic, co-ordinated
revaluations.

The publication of How Will Capitalism End? thus comes when Streeck has positioned
himself as the leading intellectual proponent in Germany of a Gaullist vision of Europe
from the left. Now that his cards are fully on the table it is a good moment to try to answer
the question: how did Streeck turn critical theory into a vehicle for the assertion of the
primacy of the nation?

In one respect at least the national turn has allowed Streeck to subsume what might once
have been seen as a fatal weakness in his analysis into a consistent part of the argument.
A truly remarkable thing about his work is that he discusses the future of capitalism
entirely without reference to the place where the future of capitalism will surely be
decided: Asia. That no doubt reflects the limitations of his professional specialisation –
OECD industrial relations. China and India are beyond his ken. But given the arguments he
has been making, his Eurocentrism takes on a new meaning. If you are going to articulate
the basic tension of the crisis as existing between a superficial, utilitarian universality on
the one hand, and a ‘grandiose jointly produced diversity’ on the other, then Europe is,
indeed, the classic terrain on which to make your case. Not that there isn’t nationalism
elsewhere. But nowhere else has as many different nationalisms in such a tiny space and
nowhere else has tried to merge them the way the EU has. India and China never
subordinated themselves entirely to the dictates of neoliberalism, nor arguably has the
United States: compared to the EU, Nafta was integration-lite. So if the EU stands for a
peculiarly pure form of neoliberal capitalism – a basic contention of the Lexit camp –
where better to make one’s stand than Europe? In rejecting the false capitalist
homogeneity of the EU, one is saving Europe’s essence, namely its diversity. What could
be a better expression of that grandiose diversity, after all, than the battle of Brexit,
another round in the centuries-old cross-Channel struggle?

But Streeck is a political economist, so he isn’t content with civilisational arguments. He

wants to talk about nuts and bolts, the real power behind the scenes. The particular vector
of globalisation that has seized his imagination since 2008 is finance. As a somewhat
surprised Martin Wolf remarked in the Financial Times, Streeck worries so much about
debt you could mistake him for an Austrian economist. Debt, for Streeck, is an index of the
unsustainable balance between democracy and capitalism. It’s the way the system
borrows time. At times he takes this metaphor quite literally, describing credit as a
mechanism through which ‘not-yet-existing virtual resources … are pulled forward from the
future.’ Taken at face value that would suggest a very odd view of economic reality
indeed. Streeck is on more solid ground when he focuses on debt as a power relationship.
All modern states have managed the ongoing crises of capitalism through public debt, and
this constitutes a new type of dependency. Elected governments have to listen to two
constituencies, their people – the Staatsvolk – and the markets. Streeck joins the two in a
neologism, the Marktvolk.

The term Staatsvolk is standard in constitutional theory, but it invites the question of how
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a Volk is constituted. As German critics have pointed out, much of Streeck’s pessimism
about the EU derives from his refusal to consider the possibility that a European Volk
might actually be emerging in part as a result of the politics of the crisis. Streeck sees the
euro as having produced only resentment and division – a conventional enough view.
What is not conventional – what is, indeed, frankly alarming – is Streeck’s extension of the
term Volk. His coinage, Marktvolk, suggests the existence, opposed to the proper people,
the Staatsvolk, of another Volk, one defined by its mysteriousness, its rootlessness and
faithlessness, its commercialised and contractual approach to the world: the ‘market
people’. For a critical sociology, it is no doubt important to anatomise the transnational
financial elite. They form networks. And there are ways of studying those. But one thing
that the operators of the financial markets are not, even in the loosest sense of the word,
is a Volk, a national ethnic people, not unless one wants to evoke conspiracy theories
favoured by the alt-right. One wouldn’t wish to impute that to Streeck. But his choice of
words isn’t merely unfortunate: it also suggests a profound analytical misconception.

The two-Volk model doesn’t just conjure up a non-existent ‘market people’. It renders the
rooted, national Staatsvolk neutral with regard to capital, or even leads one to imagine the
two as juxtaposed. And yet when money moves against a democratically elected leftist
government, as recently in Greece or Portugal, or in the 1980s in France, it isn’t just the
rootless or foreign money that moves. The first to mobilise are generally disaffected
wealthy locals who think the wrong side has won, and must be stopped. It is a nation’s
own capitalists, after all, whose portfolios tend to be most heavily weighted towards local
assets that may now be vulnerable to taxation or worse. They are also more likely to hold
strong political views and are within easy reach of their vengeful opponents. In 2015 it
was domestic capital flight as much as international speculation that put pressure on
Syriza. It was local oligarchs, not hedge funds in Connecticut, who sent death threats to
intrusive tax inspectors. The ‘This is a Coup’ hashtag that went viral in the summer of
2015 was a metaphor. Actual coups, like the recent one in Brazil, are staged by people
who are rooted, fully paid-up citizens, who for that very reason are ready to go to any
lengths to defend their vested interests.

The weird geometry of Streeck’s Staatsvolk-Marktvolk juxtaposition points to an

inconsistency at the heart of his agenda. When Streeck says he wants to put society in
control he can expect general agreement. This, indeed, is pure Habermas, reasserting the
lifeworld against the system. It is the boilerplate of social democracy. But the question it
dodges is the all-important one: who or what is ‘the social’? The disagreement between
Habermas and Streeck, put in Habermas’s terms, is whether to move up and forwards to a
future cosmopolitan order, or down and backwards to the nation. But as Streeck himself
asks when he has his critical sociology hat on, what about class divisions within the social,
whether at the local, national or European level? In some of the best passages in How Will
Capitalism End? Streeck explains that the distinction between ‘society’ and ‘economy’ that
has structured the discipline of sociology, the dyad that made it possible to speak so
confidently of putting ‘society’ in charge of the ‘economy’, was in fact an artefact of the
peculiar class balance of the 1950s and 1960s. Streeck’s entire narrative rests on the
claim that this class balance was ruptured in the 1970s. Thatcher let the cat out of the
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bag with her declaration that ‘there is no such thing’ as society, just ‘individual men and
women and … families’. To which the response of critical theory should not be a
pantomimic ‘Oh yes there is and it should be in charge,’ but to ask what configuration of
social forces made it possible for Thatcher to make that claim and how might it be
reversed.

Instead of saying that national societies should be put back in charge of their economies,
shouldn’t Streeck be saying – to put words in his mouth – that the aim of the game is to
shift the balance of class forces, in such a way that one might once again meaningfully
and optimistically talk about ‘society’ taking control? His wager seems to be that the
struggle would best be conducted on a smaller scale and, given the legacies of history,
that must mean the nation. He doesn’t argue the case for more local action in any depth.
But he leaves us in no doubt that in his view the European Parliament is a sham and
Eurocrats are corrupt, self-serving flunkies. His position is unambitious and nostalgic, in
Habermas’s eyes. But the more serious concern is that it poses the question Streeck
himself puts so aggressively to the cosmopolitans: your vision may be attractive, but how
are we to get from a to b and who is going to get us there? What is it about the current
configuration of social forces that leads Streeck to believe a move back to the national
level would enable democratic control of a renationalised economy and not result, say, in
the kind of dirty backroom dealing that Downing Street appears to have done with Nissan
to retain manufacturing jobs in a post-Brexit Britain? Streeck criticises the cosmopolitans
for their elective affinity with Davos man, but the worry about deglobalisation is that its
primary movers would be even less attractive and might, despite their populist slogans, be
just as closely associated with big business. The experience of the 20th century suggests
that when trying to channel nationalists’ energies into progressive politics, it is crucial to
be clear-headed about one’s objectives. When you say you want to put the nation in charge
and to throw off the yoke imposed by the invisible power of the cosmopolitan ‘market
people’, who do you expect to rally to your banner? Streeck may protest to sympathetic
interviewers that when he advocates immigration restrictions that doesn’t make him a
closet AfD supporter or a proto-fascist. But given Streeck’s slide from a conflictual notion
of class to the idea of an integrated society and from there to an enthusiastic embrace of
the nation, and all this against the backdrop of bona fide nationalist mobilisation, what
does he expect?

The weaknesses of Streeck’s Staatsvolk v. Marktvolk scheme don’t end there. It isn’t just
that the two are entangled. It is also simplistic to imagine that the confrontation ever takes
place in dyadic isolation. States aren’t simply bounced between citizens and markets.
They have to deal with other states, which are themselves juggling their relations with
citizens and markets. And the state, the Staat that constitutes the Staatsvolk, has an
identity, logic and interests of its own and is itself tangled in a complex web. In the face of
Habermas’s normative cosmopolitanism and Streeck’s reductive economism, it is worth
emphasising that the EU was conceived first and foremost as neither a moral nor simply
an economic project, but as a power political vehicle to constrain West Germany while
also enabling it to contribute to Cold War rearmament and reconstruction. In the 1990s the
move to realise European Monetary Union was in part a neoliberal stratagem to install a
permanent disinflationary regime. In part it was an effort to create a European society by
stealth. But what moved it from the drawing board into reality was Helmut Kohl’s effort to
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reconcile France and the rest of the EU to German reunification and to bind a united
Germany indissolubly to Europe. Twenty-five years later the balance within Europe is
continually shifting and so too, crucially, is the position of the US in relation to Europe.
These complex forcefields won’t simply disappear in the face of deglobalisation. If you
break up the Eurozone, you don’t exit the power-field and thus gain sovereign autonomy.
You do change your position within it and your way of relating to it – and not necessarily
to your advantage. If we were to step back from the Eurozone to a reborn European
Monetary System, as Streeck advocates, that wouldn’t set France or Italy free, but would
place them back in the unequal power relationship with Germany that they sought to
escape in the 1980s. And to advocate doing this at precisely the moment when the gamble
the non-Germans made on the ECB has paid off, when an American-trained Italian
macroeconomist is floating the entire European bond market to the horror of German
conservatives, is either naive with regard to the way European monetary politics work, or
disingenuous.

The ECB, in Streeck’s eyes, is no more than a tool of the banks. When he mentions Draghi
at all it is to describe him as a ‘financial functionary’ or to associate him with Goldman
Sachs. This allows for no autonomy of the apparatus of government or the technicians
who run it. It’s true that the record of the ECB, particularly in the crucial period between
2008 and the autumn of 2011, gives little reason to think that central banks might play any
constructive role in mediating between capital markets and democratically elected
governments. Caught between Berlin, Paris, the Bundesbank in Frankfurt, the IMF and the
US Treasury, clinging to its own deeply conservative vision of economic governance,
refusing to face the entanglement of Europe’s banks both with US subprime assets and
European sovereign debt, the ECB’s leaders delivered one of the most destructive and, in
the end, self-subverting performances in the history of economic mismanagement.
Streeck never identifies whose interests he imagines might have been served by this
fiasco; he does no more than to gesture to ‘bankers’ and ‘German export interests’. But
insofar as the markets have spoken, their judgment has been devastating. It was precisely
the realisation of how deep the loss of confidence had become that prompted Draghi’s
unscripted remarks – ‘Whatever it takes’ – in July 2012. Of course central banks have
major legitimacy issues. Their autonomy cannot be taken for granted; they are held in
place by a complex geometry of forces. But saying that is quite different from generalising
a moment of unprecedented panic and mismanagement into an insuperable dilemma for
capitalist democracy. Thanks in large part to bond-buying by the Fed, the Bank of England
and the Bank of Japan, the bond vigilantes have remained confined to the Eurozone.

But, as has become clear since 2012, the careful calculation of options and precise
analysis of the mechanics of crisis is not Streeck’s project. With a passion bordering on
that of a convert, Streeck feels he has identified a general logic of crisis. The market and
its functionaries have brought about an existential crisis of social and political life: they
must be resisted by any means necessary. What’s more, the gravity and urgency of the
situation make detailed tactical argument unnecessary. Indeed, it may even be unwise to
be reasonable. As financial markets have shown again and again, panic is what gets you
attention. As Streeck remarked in Buying Time:

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 Greater agitation and unpredictability among the people – a spreading sense of the profound
absurdity of the market and money culture and its grotesque claims on the human lifeworld –
would at least be a social fact; it could come to be seen as the ‘psychology’ of citizens,
alongside the psychology of markets and demanding as much attention … even though they
have no banknotes as arguments but only words and (who knows?) paving stones.

To the Guardian he commented simply: ‘I think more such scariness must happen.’ The
authorities should be ‘scared shitless’.

One can see his point, of course. And there are those who regard the ‘scariness’ of Brexit
and Trump with a certain relish. But even if we were willing to treat this as a merely
tactical question, if the left were to dispense with reason, it would need to be sure of the
balance of power, sure that its words wouldn’t simply be laughed off and that the ‘paving
stones’ wouldn’t be met with overwhelming counter-force. It is a gamble, to say the least.
Yet Streeck isn’t content to stop there. In the gloomiest pages of How Will Capitalism
End?, as he takes an X-ray of the consumer culture that continues in his view to prolong
capitalism’s survival, it isn’t just pragmatism and coping that come under suspicion, but
hope too. For Streeck, coping and hoping aren’t simply habits characteristic of the modern
subject: they have, under the sign of market society, taken on a specific ideological
valence. For Streeck, ‘coping, hoping, doping and shopping’ form a behavioural structure
that is fundamental to sustaining profit and accumulation:

Life under social entropy elevates being optimistic to the status of a public virtue and civic
responsibility. In fact, one can say that even more than capitalism in its heyday, the entropic
society of disintegrated, de-structured and under-governed post-capitalism depends on its
ability to hitch itself onto the natural desire of people not to feel desperate, while defining
pessimism as a socially harmful personal deficiency.

With that in mind, the extraordinarily bleak vista of a new ‘dark age’ with which Streeck
begins the book reveals itself not just as a prediction, but as a critique of ideology. If we
are to see clearly at all, we must get over our desire not to feel desperate. What Streeck is
in search of are not intimations of the ‘presumably possible’ (Habermas), but a ‘new
framework, away from wishful demonstrations of the possible to a realistic accounting of
the real, to get ahead with the most urgent task for the left, which is sobering up.’

But if hope and wishful thinking are an opium of the masses, then the promise of a
disillusioned realism, a realistic accounting of the real no less, isn’t without its ideological
temptations either. Most obviously it can feed fatalism. But it can also do the opposite:
sweeping historic gloom goes hand in hand with rebirth, a promise commonly vested in
the nation. Such affinities are never necessary. There are pessimistic non-nationalist
visions just as there are sunny versions of nationalism. But in the current moment
Trump’s campaign rhetoric was striking precisely in its juxtaposition of an apocalyptic
vision with the promise of national rebirth. Streeck would no doubt be more comfortable
being compared with Max Weber, the most respectable of all German sociologists, but
also a nationalist and a prophet of the fin de siècle in whose rhetoric pretensions to steely
realism, dark imagery and assertions of voluntarist will came together in an intoxicating
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mix. When Imperial Germany fell to disaster in 1918, Weber greeted the advent of the
Weimar Republic as ‘a polar night of icy darkness and hardness’, and summoned his
students to heroic acts of violent resistance against the Polish occupiers of Danzig.

But we are not in the early Weimar Republic, nor are we living through the decline and fall
of the Roman Empire. We have our own problems and they are bad enough. The shocks of
the financial crisis, the Eurozone crisis, Ukraine and the refugee crisis go deep. The Trump
presidency may unleash even worse: the Iran nuclear deal was one of the rare
achievements of EU foreign policy. The rallying of nationalism across Europe is
undeniable and dangerous. The prospect of a Le Pen victory in France is one of real
menace. Is Streeck’s Gaullist manifesto for a Europe of the nations seriously intended to
take the wind out of Le Pen’s sails? His polemics suggest as much, but there is nothing in
his theoretical armoury that would allow him to elaborate the point. In Germany, the
solidity of the checks and balances in its constitution and the sophistication of its
democratic culture mean there is no real risk of a Trump, Le Pen, Brexit-style swerve to the
right. How then could Streeck’s interventions make any difference? Ahead of the German
election in 2017 there are only two real options for the country: another coalition centred
on Merkel, offering more of the same, or a novel ‘Red-Red-Green’ coalition of the SPD-Die
Linke and the Greens. This has been a possibility since the 1990s and is the bugbear of all
those determined to uphold the status quo inherited from West Germany. But if there is a
political move that might break the roadblock in Germany and thus in Europe, ‘R2G’ is it.
The history of the Cold War stands in its way, as do painful memories of Lafontaine’s split
from the SPD and a fear on the part of the SPD and the Greens of losing bourgeois voters.
If Die Linke, driven by its Lexit wing and concerned with the threat to its voter base in the
East from the AfD, were to swerve onto the protectionist, anti-EU line that Streeck and
others have been advancing since 2013, it would be hugely counterproductive. It is here,
operating within the delicate politics of a Red-Red-Green coalition, that Streeck’s
intellectual authority and relentless advocacy of the Lexit position could do real damage.
The result to be feared is not a new dark age, or the imminent collapse of capitalist
democracy, the Eurozone or the EU, but merely the depressing continuation of both Europe
and Germany’s failure to live up to their potential, the continued foreclosure of the
‘presumably possible’.

[*] Streeck’s review of Martin Sandbu’s Europe’s Orphan appeared in the LRB of 31 March
2016.

Letters
Vol. 39 No. 2 · 19 January 2017

Adam Tooze’s outpouring is material for a future anatomy of the class rhetoric of faux
cosmopolitanism as it flourishes among a soul-searching urban-academic middle class in
the post-Brexit moment (LRB, 5 January). Those of us who do not meet the demanding
standards of universalist utopianism can find solace in the fact that when it comes to
earthly matters, even the inhabitants of the moral high ground have in the past shown a
sense of healthy pragmatism, for example by abstaining from calling for Britain to join the

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European Monetary Union or the Dublin or Schengen agreements, making one suspect
that they, too, distinguish between different institutional constructions of Europeanism or
globalism, and between different national needs and interests in relation to them.

While Tooze does represent some aspects of my work fairly, I am highly uncomfortable
with his claim that I was asserting ‘the primacy of the nation’. (Other points, equally
disturbing, I cannot address here for reasons of space.) I know this trope from discussion
in Germany, where any positive reference to national borders or national sovereignty is
denounced as implying ‘a return to the nation-state of the 19th century’, or even as a call
for Abschottung (isolation, sealing-off in panic). I don’t know about ‘primacy’ – but when it
comes to the politics of Europe today and in the next ten or twenty years, I opt for sober –
British? – empiricism, everything else being highly inflammatory. In Europe the nation-
state (I tend not to refer to ‘nation’, only to the nation-state, which is an institution, a
political organisation, not an ethnic bloodbrotherhood) is very much alive; see the United
Kingdom, but also Scotland as a nation-state in waiting. (Quite a few of my anti-Brexit
British friends were pro-independence.) I cannot imagine a European Union, however it will
develop in coming years, in which the historical nation-states of Europe won’t play an
important, indeed a constitutive role. Europe cannot be a unitary polity, for innumerable
reasons. My concern is not with ‘an assertion of the primacy of the nation’, but with how
our historically inherited nation-states can be bound into a European fabric where they can
live in peace with each other and with themselves – the latter meaning, to me at least,
shielding themselves from powerful pressures, internal as well as external, for a neoliberal
restructuring of their economies and societies. Too much centralisation is
counterproductive in this respect; see the rise of anti-integrationist, nationalist parties
everywhere, and the exit from Europe of a country like the UK, that was at best only
marginally integrated in ‘Europe’ to begin with. The more you push for ‘more Europe’, the
less Europe you get.

So much for the politics. On political economy, ‘Europe’ – that’s to say, the European Union
and, in particular, its monetary union – has become a formidable neoliberal rationalisation
machine. I saw this coming, and said so, beginning in the 1990s with the turn of the
second Delors Commission to a supply-side economic policy. Forgotten was the ‘social
dimension’, not least because of British influence – and I don’t remember today’s
Remainers having had a word with their governments, Conservative or New Labour, on the
need to build into a ‘united Europe’ effective capabilities to defend the European welfare
state, at national or supranational level. That train has long left the station. One might
think historians like Tooze should have a sense of what social scientists call ‘path
dependency’. Democracy, defined as the institutionalised possibility of the unwashed
reminding the washed of their existence, is to some residual extent still present at national
level – see the Brexit vote – with no prospect of expansion to the elevated circles of the
Junckers and Draghis, for institutional, organisational, linguistic or whatever reasons. I
argue that democracy is more important than globalisation, and since global democracy is
no more than a pipe dream, a little less globalisation is quite all right if it gets us a little
more democracy. But perhaps that battle has already been lost.

Liberals like Mario Monti, a seasoned functionary of both haute finance and haute Europe,
who promised the cosmopolitans of Europe he would turn Italians into Germans (in a
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newspaper interview shortly before an election that sealed his political fate), may see this
differently, and Tooze is of course free to do so as well. Where it gets really dirty, however,
is where he blows up my innocent analytical distinction between ‘the people of the state’
and ‘the people of the market’ into an essentialist, racist, implicitly anti-Semitic
conceptualisation of politics and political economy. The relevant passages in my book are
devoted to explicating two competing pressures on democratic politics in an age of high
debt: pressures from the owners of passports commanding a right to vote (Staatsvolk),
and from the owners of bonds and movable capital commanding a right to sell
(Marktvolk). I say nothing about how the two are constituted, except to mention that
voting rights are national and selling rights international (which is so). Nothing in
particular on ethnicity, nowhere. Are there personal overlaps between the two ‘peoples’?
Sure, and I explicitly mention them, among the rich (who are, however, today more
internationally mobile than ever before in the modern era) and the less rich (those who
have money in private pension funds). Tooze implies, let’s be clear about this, that my
Staatsvolk is a Volksgemeinschaft and my Marktvolk is an international, probably Jewish
conspiracy; this is beyond the pale, and leaves me speechless.

A final point on Europe. The Sun called Oskar Lafontaine the ‘most dangerous man in
Europe’ shortly after he became finance minister in late 1998. Tooze forgets to mention
that the Sun and, if I remember correctly, other British papers adorned his image with a
swastika, the reason being that on his first visit to London, he had advocated tax
harmonisation in Europe. (If you’re German, you find that swastikas are readily applied by
anyone who disagrees with you; they can even be delivered with a Mark Antony tremolo –
viz Tooze: ‘One wouldn’t wish to impute that to Streeck.’) At the time I was a member of a
group created by the German chancellor’s office along with the ‘social partners’ (in
German parlance: trade unions and employer associations). We were charged with
devising ways to overcome what was then a deep employment crisis. (Not the Hartz
reforms; they came in 2003 when our group had long been disbanded.) Roughly coinciding
with Lafontaine’s London visit I gave a lecture in Amsterdam in which I touched on the way
European countries attracted the headquarters of multinational companies by affording
them special tax deals. In the audience was a high functionary of the Dutch Partij van de
Arbeid, who in the subsequent discussion shouted at me as though I were aspiring to be
the new Gauleiter for the Netherlands. I haven’t forgotten this. I learned from it how
complex European politics are: so complex that the idea that it would take no more than
an R2G government in Germany for national interests and obsessions to dissolve into thin
air is ridiculous. Others with less grounded experience may find it hard to understand why
so many in Europe perceive Habermas’s Europeanisation of Germany as a Germanisation
of Europe. Universalism, however, can be imperialism; when I call for the preservation of a
modicum of national sovereignty within whatever European construction will finally
emerge, it is because I want Europeans to live in peace with one another, which to me
requires, among other things, that countries be able to command a halfway effective
capacity to defend themselves against competitive pressures and German rule, and in
particular against the former imposed by the latter. High capitalism is a difficult enough
fellow to fight.

Wolfgang Streeck
Cologne
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Adam Tooze writes: Wolfgang Streeck accuses me of blowing up his ‘innocent analytical
distinction between “the people of the state” and “the people of the market” into an
essentialist, racist, implicitly anti-Semitic conceptualisation of politics and political
economy’. This reading is more revealing of Streeck’s insecurities than it is of anything I
wrote. But the ‘innocent analytical distinction’ is indeed deeply problematic and a brief
look at the table that Streeck uses to illustrate it will show why:

Staatsvolk Marktvolk

national international

citizens investors

civil rights claims

voters creditors

elections (periodic) auctions (continual)

public opinion interest rates

loyalty ‘confidence’

public services debt service

His distinction is innocent, he insists, of any reference to ethnicity. Except of course in the
headings of the two columns, where he applies the term Volk, not just to the Staat, but, in
his neologism, to the market as well. Streeck prefers, he declares, to discuss the ‘nation-
state’ rather than the ‘nation’, yet in his schema the first attribute of the ‘people of the
state’ is their nationality. He doesn’t advocate a return to 19th-century nationalism, he
insists, but in his discussion of what constitutes a national demos he refers to the
constitutive role of two centuries of history, one of which presumably would be the 19th,
and invokes shared ‘experiences, practices and perspectives … understandings …
histories, values, aspirations and compromises’, the stock in trade of cultural nationalism.
He does not mean Staatsvolk to evoke the Nazi racial community (Volksgemeinschaft). I
didn’t say he did. But it just so happens that the locus of social solidarity that Streeck
chooses to prioritise is the nation. And as he surely knows it was the First World War that
forged a new association between the nation and the social out of which emerged the
notion of a Volksgemeinschaft, the term the Nazis later appropriated and, one is tempted
to add, passed down to the solidaristic corporatism of the Federal Republic. If the postwar
moment occurred when the social was reified, it wasn’t just the balance of class forces
that produced that effect. The logic of wartime mass mobilisation had something to do
with it too, and in the German case that meant the Third Reich.

In any case the real trouble is not with the concept of the Staatsvolk, but the concept of
the Marktvolk. If one takes Streeck’s table at face value, and he gives no indication that he
means it in scare quotes, he is proposing that we conceive of a ‘people’ that is
international, and that consists of investors who pursue claims rather than asserting civil
rights, who are continuously involved in weighing the world in terms of rate of return, who
care not about loyalty but about market confidence and prioritise their pound of flesh over

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public services. Now corporations, banks and other corporations may indeed be motivated
in this way by their internal make-up and legal structure and competitive strategy. It may
be convenient to talk in short-hand about ‘the market’ exerting such pressures. But what is
talk of a people, a Volk, doing here? It is, indeed, characteristic of anti-Semites and other
conspiracy theorists that they associate such traits with ‘peoples’. Since Streeck is clearly
upset by any such association would he not be better off, instead of expostulating about
accusations no one has actually made, to take some well-meant advice and reconsider his
entire unfortunate schema?

Streeck objects to my use of the term the ‘primacy of the nation’. He is right. It was
imprecise. What his recent manifestos assert is not the primacy of the nation but its
indispensability and its unsurpassablity as a horizon of democratic politics. Streeck
doesn’t like what he sees as the hostility of cosmopolitanism towards the nation. Against
anti-national cosmopolitanism, he believes, the nation should be reasserted both in its
‘factual existence as moral and economic communities of shared understandings and
institutionalised solidarity’ and in its ‘moral right to exist as such’.

Which brings us to the wild opening broadside of Streeck’s response. It would be

unbecoming in an exchange such as this to complain about a bit of thuggery. It would,
indeed, be a shame to miss out on Streeck’s outbursts. ‘Urban’, ‘middle-class’, ‘academic’,
‘cosmopolitan’, ‘faux’, ‘soul-searching’, ‘outpouring’ – the extraordinary chain of
contemptuous associations with which he reduces a serious critique of his work to
‘material for a future anatomy of class rhetoric’ does at least serve one useful purpose. In
a backhanded confirmation of the central point of my review, Streeck leaves us in no
doubt as to the place he chooses for himself in the cultural politics of our times.

Vol. 39 No. 5 · 2 March 2017

I find it inconceivable that, as Adam Tooze suggests, Wolfgang Streeck entertains

ethnonationalist fantasies of the type associated with Nazi use of the term Volk (LRB, 5
January). However, if not actually asking for trouble, Streeck was bound to get it from the
moment he joined Volk with Markt (as do other German scholars in the fields of
economics, social sciences and political theory). The term Marktvolk has been around for
centuries, typically meaning buyers and sellers who flock to local, mainly village,
marketplaces. However, there isn’t any hint of this context in Streeck’s use of the term; for
him it refers to such ‘people’ as international bankers and investors (what is, laughably,
sometimes called the financial ‘community’). His analytical point (about owners of mobile
capital) stands, relevant and powerful. However, few readers of the compound noun today
could fail to hear resonances of the kind described by Tooze.

The question that remains is why Streeck didn’t opt for the alternative: Marktleute. The
term is both clunky (in dictionaries rendered as ‘marketeers’) and quaint. Yet Leute might
have been perfectly serviceable for Streeck’s purpose. His whole point seems to be,
plausibly, that the globally footloose money boys are without affiliation other than to the
accumulation of more money. The more anonymous character of Leute would capture
this, detaching the point from the historical associations of Volk (above all its evocation of
international capital as ‘Jewish money’).

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Christopher Prendergast
King’s College, Cambridge

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