Crisis of Work – Crisis of Democracy
by Ernst Lohoff
[This article posted on 3/26/2025 is translated from the German on the Internet, https://www.krisis.org/2025/krise–der–arbeit–krise–der–demokratie/.]
From: Institute for Radicalization Research at the Biko Education Collective (ed.): Radikalisiert euch! Contributions to Radical Theory and Practice, Münster 2023, pp. 45–58.
1
For several years now, there has been talk everywhere of a crisis of liberal democracy. And indeed, in all Western states, social centrifugal forces are growing and the political establishment is proving increasingly unable to counteract them. The emergence of right–wing populist parties and the rise of conspiracy theories as a parallel discourse to the classic public debate are both expressions and part of this development.
The forces that support the state are also aware that liberal democracy is in danger—and this threat is the starting point for the programs that have been distributing funds for the promotion of democracy, the prevention of extremism, and deradicalization since 2001. However, this defense of “democracy” and “political freedom” is based on a fatal premise. It is supposed to simultaneously ward off the authoritarian threat and perpetuate the existing market economy—a mission impossible.
The Sunday speakers of the ruling order naturally see things differently. In a speech in the summer of 2022, Joachim Gauck, for example, expressed concern that skyrocketing energy prices and rapidly rising inflation could strengthen the AfD and other right–wing parties. He solemnly condemned the “contempt for the liberal lifestyle” that had “spread like poison into parts of society from extremist circles,” only to immediately follow up with the liberal credo: “The liberal thinker Friedrich August von Hayek is undoubtedly right when he states that freedom in society is inextricably linked to freedom in the economy.”1
2.
There was indeed once an era in which capitalist economic systems and representative democracy were closely linked. However, Gauck is on the wrong track when he invokes Hayek of all people. Modern liberal democracy was in fact a product of the “social democratic era” (Ralf Dahrendorf), in which market forces were heavily regulated by the state – in the eyes of Gauck’s radical market champion, the work of the devil.
From its beginnings in the late 19th century until well into the postwar period, the democratization process received decisive impetus from the struggles of the labor movement. It enforced the recognition of workers as equal and free subjects of labor whose interests must be taken into account by politics just as much as the interests of capital. In left–wing debates, this connection is discussed under the heading of “class compromise.” However, one crucial point is often overlooked. This “class compromise” was not simply a result of the political balance of power; it had something like a ‘material basis’ in the way capitalist wealth was accumulated at the level of productive forces at that time: until the end of the Fordist boom, labor power was the basic commodity in the capitalist system of wealth. The extraction of surplus value from the industrial exploitation of living labor was the linchpin of the entire accumulation process. The wage–earning class owed not only its power of enforcement to this key role; at the same time, a contained market was thoroughly functional for an accumulation regime based on the industrial exploitation of labor. On the one hand, treating the workforce with reasonable care allowed for a much more sustainable and therefore more thorough use of this resource than the overexploitation with excessively long working hours and mass misery that had characterized capitalism in the 19th century. In this context, the social security system, although it represented a cost factor, also indirectly benefited capital. It could rely on a workforce that identified with its social function and developed a degree of loyalty to its ‘capital’ that was still foreign to the proletariat of the 19th century. On the other hand, the other important achievement of the social democratic era, the extensive transfer of “public services” and infrastructure to the public sector, as was common practice at least in Europe, was by no means at odds with the function of the state as an “ideal overall capitalist” (Marx). It guaranteed capitalist enterprises relatively inexpensive and, above all, reliable access to key goods such as telecommunications, water, and energy supplies. In addition, capital benefited indirectly from the relatively low fixed costs of private households for electricity, water, and rent. This reduced the reproduction costs of labor as a commodity and thus benefited the rate of surplus value.
3.
Never before had capital engaged in the production of goods for the market developed such a voracious appetite for labor as during the Fordist postwar boom. Never before had the basis for the exploitation of capital been so broad. This not only brought about a golden age for capital; at least in the big cities, the sellers of labor power were also able to assert their interests in society. Representative democracy owed its rise to unchallenged political dominance in Western societies and its anchoring in the mass consciousness there to this development. A political culture designed to balance interests emerged, giving liberal democracy a far more stable foundation than the parliamentary systems of the interwar period had enjoyed. However, capitalism based on the industrial exploitation of labor fell into a fundamental crisis after only a few decades. The displacement of living labor from the production process began to erode the basis of exploitation as early as the 1970s. Attempts to counter this process with Keynesian controls ended in stagflation, a combination of weak growth and inflation, in all core capitalist countries.
The crisis of the Fordist system was by no means the first crisis in the history of capitalism. In earlier stages of capitalist development, a way out of the economic slump had always opened up in the same way: after a period in which the rationalization process in established manufacturing sectors had freed up living labor and thus reduced the basis for capital formation, technological innovations had given rise to entirely new manufacturing sectors. The living labor absorbed en masse for the production of new types of goods for the market helped the system of value realization to experience a new upswing. After the slumps in the mid–19th century, it was primarily railway construction and steam shipping that opened up new horizons for capital. At the turn of the century, electrification and the emerging chemical industry took over this role, followed by the expanding automotive and plastics industries after the Second World War.
This time, however, this classic way out was blocked. Although a new technological revolution was emerging in the form of microelectronics, its special nature meant that it exacerbated the fundamental problem. Due to its universal applicability, microelectronics is the rationalization technology par excellence. Of course, the third industrial revolution gave rise to new products such as the PC and the cell phone, which require labor to manufacture; however, the number of workers needed is disproportionate to the mass of labor freed up by the application of technology in established manufacturing sectors.
4.
With the third and, even more so, the fourth industrial revolution, capitalism created a foundation that is toxic to the system of value realization. Nevertheless, the capitalist economy experienced a new boom phase from the mid–1980s onwards. This miracle was only possible because the process of capital accumulation detached itself from the process of valorization through the unleashing of the creation of “fictitious capital” (Marx), and capitalism converted future profit expectations into capital in ever greater quantities. An ‘inverse capitalism’ emerged, whose basic industry paradoxically lies in the financial superstructure.
Whereas until then labor power had been the key commodity of the capitalist system of wealth, capital market commodities, i.e., stocks, debt securities, etc., now took over this function, and the ‘real economy’ became dependent on the dynamics of fictitious capital formation. Only when the financial industry is booming and the volume of loans and other forms of fictitious capital is growing exponentially can the ‘real economy’ grow in its wake and the commodity of labor remain saleable.
For the system of capitalist wealth, the transition to ‘inverse capitalism’ meant temporary salvation, but at the same time, together with the position of wage earners, it undermined the very foundations of liberal democracy. While organized wage labor and capital were still on an equal footing in the Fordist era in the pursuit of their respective interests, their relationship became increasingly asymmetrical as labor power relinquished its key role. On the one hand, there was a structural deterioration in the position of labor sellers in the distribution struggle, and on the other hand, competition among them intensified considerably.
Since the 1980s, however, Western societies have experienced social polarization not only in the sense that the interests of different population groups have drifted apart noticeably. The identity politics that held Western society together also began to disintegrate, a process that initially went largely unnoticed. This was due in no small part to a decisive change in the internal structure of the commodity–producing world system. In the Fordist era, this was still composed of two competing blocs, the Western representative democracies and the real socialist camp. Because the prevailing thinking misunderstood the contrast between the two variants of commodity society as a fundamental systemic contradiction, it attached a completely false meaning to the collapse of real socialism. It was not perceived for what it was: the first chapter of the fundamental crisis of the commodity–producing world system. Instead, the end of the weaker link was seen as supposed proof of the correctness of the liberal dogma of the unity of political freedom and economic freedom, and seemed to legitimize the Western order.
5.
Neoliberal ideology sells social disintegration and universal competition as liberation for the individual and, with this strange concept of freedom, gained enormous influence in the last two decades of the 20th century. The idea that self–fulfillment and individual market success belong together has become deeply ingrained in everyday thinking during this phase. This would hardly have happened if the transition from the Fordist order to the new type of capitalism had meant nothing more than the economization of all relationships.
In terms of individual freedom, this era was Janus–faced. On the one hand, the compulsion to submit to market laws had never been so omnipresent and had never penetrated everyday life so deeply. On the other hand, the range of possible lifestyles has expanded, particularly as gender roles have lost their former rigidity. A climate change has also taken hold in terms of racism and homophobia: the racist–homophobic united front that emerged with the development of the modern working society has broken down in recent decades.
This development did not come about by chance. Classic capitalism, based on the exploitation of labor, created a strong bond between capital and “its” wage earners in the respective national economies by uniting both sides in the cult of work. Without belonging to the same church, without the identification of labor sellers with work and wage slavery, it would have been difficult for an internal relationship between capital and wage laborers based on a balance of interests to develop. However, wage laborers cannot identify with their externally determined existence without constructing something else that cannot compete in terms of self–sacrifice and is therefore devalued. And so, at its core, Fordist pride in work always remained the pride of white working men in relation to “their” nation–state and “their” national economy. In the Fordist era, capital took this need for identity into account by consistently assigning women and migrant workers only the cheap jobs in the working society. With the transition to capitalism directly linked to the global market and driven by the dynamics of the financial markets, however, the old partnership between capital and the white working man broke down.
Compared to the Fordist era, the transition to deregulated capitalism has intensified the pressure to align one’s own existence with the demands of the labor market. Unlike in the past, it is no longer enough to work diligently eight hours a day and complete one’s tasks. Optimizing one’s own human capital has become the new norm, and this is a permanent task that structures one’s entire life. Whether in its old form or developed into the cult of the self–entrepreneur, the religion of work remains indispensable in terms of identity politics. However, the white working man can no longer be sure of his privileged position. On the one hand, globalization has made capital stateless, and it readily threatens domestic labor sellers with relocation. On the other hand, companies are increasingly focusing on soft skills due to developments in productivity, making the privileges of the white working man increasingly dysfunctional from a business perspective. Of course, neither capital nor its state machinist have mutated into pioneers in the fight against racism and sexism. Other social forces have had to take on this role. But the relationship crisis has contributed significantly to the disintegration of the traditional sexist and racist order.
In Europe and the US, it is well known that the new right likes to rant about the “great replacement.” This narrative reflects a real development in that the white working man is indeed a dying breed; as a conspiracy theory, however, it transforms the upheaval in the capitalist structure into a deliberate plan of extermination by perfidious elites. In this crazy way, not only is the resentment over the erosion of one’s own special status given vent, but it also serves to express and dispel fears of crisis. If you put a stop to the “system parties,” silence the LGBTIQ communities, and assign women and migrants to their rightful place, then, so the hope goes, the old glory will return, or at least revenge will have been taken for the humiliations
6.
In a commodity society, everyone is dependent on market success, and the owners of the commodity labor on their success in the labor market. This conditions all members of a commodity society to pursue their private interests above all else. For this reason, general social affairs take on a highly peculiar form. They are governed by a special authority that exists alongside society and opposes it: the modern state. The state must achieve what the commodity society cannot achieve itself and ensure social cohesion. This integrative function always operates on two axes. On the one hand, state policy balances competing interests and guarantees the general framework for competition on all sides through its laws and administrative measures. On the other hand, it imaginatively and ideologically unites its citizens into a single entity that transcends disparate interests. Under National Socialism, the “workers of the brow and fist” were to unite under the aegis of the state to form the phantasm of the “people’s community.” In liberal democracy, the “hard–working people” are supposed to identify with their state under the banner of “constitutional patriotism” (Dolf Sternberger) and find each other as a “community of values.”
With the transition to “inverse capitalism” in the mid–1980s, a previously unknown contradiction between these two moments of state policy emerged. Practical politics focused on unleashing the dynamics of the financial markets, and the balance of interests shifted in favor of investment–seeking money capital. With the subordination of the “real economy” to “shareholder value,” the actual use of labor took a back seat. Nevertheless, the religion of work remained the bond that was supposed to hold society together ideologically and identitarily. Even though this contradiction characterized the new stage of capitalism from the outset, it took quite some time before it began to unleash its full destructive force. In the 1990s, the successes of neoliberal restructuring still masked this conflict. In view of falling inflation rates, a seemingly endless stock market boom, and a resurgence of global economic growth, the neoliberal promise of universal prosperity and peace under the banner of the total market seemed plausible for a long time, especially among the middle classes. Frustration over the relative decline of “honest work” was concentrated among the lower classes. However, this changed with the two major financial market crises that shook the global economy in the 2000s. The global market turmoil of 2008 in particular marked a turning point because it forced politicians to declare their identity politics bankrupt. To prevent a global economic meltdown, governments were forced to work with central banks to rescue the ailing banking system and, to this end, provide huge sums of money to the big banks without anything in return. In doing so, politicians sinned in several ways against the religion of work that they preach day in and day out. On the one hand, this approach blatantly violated the prevailing concept of justice based on the principle of equivalence. The banks that had triggered the malaise were given huge sums of money without anything in return. On the other hand, politicians did not tell the public what was “systemically important” in words, but they did so in deeds: it was the financial superstructure and its dynamics, not the constantly invoked “hard–working people.”
This slap in the face had a long–lasting effect, especially as the discrepancy between crisis management practices and a workaholic commitment to work became the norm. During the acute crisis, politicians had sworn up and down that rescuing the unpopular financial industry was an exceptional measure; but the announcement that the capitalist economy would soon be led back to the path of virtue through honest work and thrifty economic management, and that “irresponsible speculation” would be stopped in the future, remained an empty promise. Instead, the extraordinary emergency measure became the new normal. After the crash of 2008, the global economy only got back on track because central banks did everything in their power to promote the creation of private fictitious capital. On the one hand, they began to accumulate more and more fictitious capital themselves on a large scale, for example through the permanent purchase of government bonds. On the other hand, they pumped investment capital into the financial markets with a policy of ultra–cheap money, thereby creating new bubbles.
7.
In Germany in particular, the discrepancy between the necessities of crisis management and the prevailing ideology of work and austerity played a key role in the formation of a right–wing “system opposition.”
The AfD, the first party in this country to establish itself permanently in parliament by attacking the foundations of liberal democracy, began its existence as an anti–euro party that addressed precisely this contradiction. When southern Europe was hit by a ‘sovereign debt crisis’ in the wake of the government bailout of the banking system and the global economic slump triggered by the collapse of Lehman Brothers, there was only one way to prevent the economic collapse of countries such as Greece and Italy: The ECB had to pursue an extremely loose monetary policy, not only lowering key interest rates to zero, but also buying up government bonds on a large scale. Although this approach was in the interests of Germany as a business location within the crazy system of “inverse capitalism,” because the collapse of southern Europe would have triggered a fatal chain reaction, it was a slap in the face for the ideals of thrift and “honest work.” No wonder that in this situation a new opposition was able to form, which promised to take the ideology of the “Swabian housewife”—also upheld by the Merkel government—mercilessly seriously and relied on nationalist resentment against “lazy Greeks” and other good–for–nothings.
The crisis of representative democracy had an incubation period in all Western societies. Its length varies considerably from country to country, however. The US was already approaching the tipping point in 2016 with Donald Trump’s victory in the presidential elections. For the first time, a politician who openly espoused sexism and racism and pursued a program of deliberate social division at home moved into the White House, while at the same time taking an axe to global economic relations with his trade wars. In the same year, Brexit also marked the critical threshold in the UK. For the first time, a Western European government abused its role as the ideal overall capitalist and accepted hardly foreseeable economic damage just to satisfy the identity needs of the white working man at home. In Germany, it took particularly long in international comparison for the crisis of representative democracy to reach its acute phase. It was not until 2017 that the AfD, a party that gave a parliamentary voice to the commodity and labor subjects who were on the verge of a social rampage, entered the Bundestag.
One reason for this difference can certainly be found in the global division of labor that emerged in the wake of the neoliberal revolution. Since the days of Reagan and Thatcher, the US and the UK have focused on celebrating their success as centers of the financial industry, leaving industrial production to East Asia and Germany. Accordingly, social polarization took on extreme forms in the Anglo–Saxon world at an early stage. Large sections of the working population were pushed into the low–wage sector and marginalized, while entire regions such as the northeast of England and the US Rust Belt experienced an unprecedented collapse, and Silicon Valley and the City of London rose to become the epitome of the new era. The greater the degree of social disruption, the more resonance conformist rebellion finds. In this respect, Germany was among the laggards. Precisely because the global economy was kept going by the dynamics of fictitious capital creation, Germany was able to celebrate successes in the field of goods markets, and its economic structure remained comparatively industrial. Accordingly, elements of the old Fordist culture of consensus remained here much longer than elsewhere.
8.
The erosion of the liberal–democratic constellation is being further accelerated by the current economic crisis, which, unlike the crises of recent decades, is not directly caused by the financial superstructure but by the real economy. However it may develop, this gives it a new quality even at the present stage, in that it has a direct impact on everyday life. In the wake of disrupted supply chains and skyrocketing energy prices, not only is the general inflation rate worldwide reaching levels not seen in many decades, but the prices of essential goods such as heating, housing, electricity, and food are also skyrocketing. The situation is particularly dramatic in the Global South. But society here has also experienced a surge in impoverishment that is adding a new dimension to the crisis of democracy. While the last major crisis in this country was ‘only’ a disaster for liberal democracy in the field of identity production, this time its ability to integrate different political interests is also rapidly deteriorating.
The unleashing of financial market dynamics not only required the deregulation of financial markets, it was also linked to changes in the real economy. As far as industrial capital is concerned, one major upheaval stands out. In the name of shareholder value, large corporations began to optimize their profitability by consistently exploiting all cost differentials and outsourcing across national borders. This led to an unprecedented geographical fragmentation of manufacturing networks. As the coronavirus pandemic has shown, this fragmentation increases profit margins but, combined with the principle of just–in–time production, makes manufacturing processes extremely vulnerable to disruption. Because important intermediate products are now only manufactured at a handful of locations, a local lockdown in China is enough to bring production in Europe and the US to a standstill for months.
However, the smooth flow of resources on which the capitalist system of wealth is now more dependent than ever before is not only threatened by viruses. The Russian invasion of Ukraine marks the point at which authoritarian regimes are openly flouting the rules of the “new world order” and even shifting national borders. This forces Western democracies to make a choice: they can either accept that the identity–political needs of dictatorships will determine inter–state relations in the future, or they can accept confrontation.
As long as the West believes it can hold on to its prevailing economic and social model and continue the achievements of the neoliberal era, however, this amounts to a choice between a rock and a hard place. As economically superior as the West is to Russia, the combination of raw material addiction and privatization of important parts of critical infrastructure drives up the costs of an economic war with an authoritarian regime like Putin’s, which belongs to the economic periphery of the world market, to such an extent that it threatens to destabilize Western societies. Those who fight aggressive dictatorships under the banner of economic liberalism accept that things that are essential for low–income populations will become unaffordable. But this plays into the hands of authoritarians in their own countries.
The traffic light coalition does see the danger that the fight for “Western values” could unleash centrifugal forces, but tackling the root causes of the malaise is taboo. Instead, it is using government credit to temporarily reconcile the irreconcilable. Thanks to its special credit rating, the German government is loosening its purse strings to the tune of €200 billion, relieving private households and companies of some of the exorbitant additional costs for the time being. This practice has found its reflection in a strange confusion of language. Until now, the term “price cap” referred to an upper price limit imposed on companies by the government. Recently, however, the term “price cap” has been used to describe a situation in which the state covers part of gas and electricity bills and co–finances the extra profits of the private energy industry.
The pattern is not entirely new. Even when the state mobilized enormous financial resources during the coronavirus crisis and increased its debt, only a fraction of the money was used to finance the additional costs caused by the pandemic. The bulk of the funds were used by the state to compensate companies for lost revenue and to maintain economic structures geared toward private returns and the needs of the financial sector. At the time, this approach was justified as a response to a unique situation; but no sooner had the coronavirus aid expired than the spectacle was repeated with the energy price cap and the rescue of gas importer Uniper. “One–off” situations in which the state finances the private sector instead of receiving taxes from it now seem to be occurring on a regular basis.
In response to Russia’s invasion of Ukraine, Olaf Scholz spoke not only of a political “turning point,” but also, a few weeks later at the World Economic Forum in Davos, of an economic “epochal break” facing the West. However, he and his colleagues have no clear idea of the content and scope of this epochal break. Behind Scholz’s label of economic “epochal break” lies only the assumption that the West is facing a relative decline vis–à–vis emerging economic powers such as China, which could lead to weak growth and inflation in this country. There is, of course, much that is correct in this view and in the chancellor’s warnings about a process of deglobalization: the “new world order,” in which Europe and the US were able to stock up cheaply on the world’s resources thanks to their dominant position in global capitalism, is history. But this is only one aspect of a much more comprehensive economic turning point. With the collapse of the new world order, capitalism driven by financial market dynamics is also reaching its historical limits, causing the overall social costs of economic liberalism to explode. The idea that economic freedom and political freedom are two sides of the same coin has always been a myth. Under the conditions of our age of crisis, however, adherence to economic liberalism is proving to be the most reliable ally of authoritarianism.
The crisis of representative democracy has been building for many decades. It began with the end of the social democratic era and the neoliberal revolution. At that time, the mutual dependence of capital and labor was replaced by an asymmetrical order in which the use of labor power was degraded to a dependent variable of the movement of financial capital, and society had to submit to its needs. This loss of social checks and balances ultimately undermines the political common sense of representative democracy. The government’s deradicalization program, which preaches respect for the rules of representative democracy, human rights, and the renunciation of sexist and racist discrimination, while at the same time denying people real participation in social decision–making processes, is doomed to failure. It is not a question of whether this society will change radically, but only of what will replace false Western universalism: authoritarian rule or genuine universalism, a project of emancipatory resocialization beyond the religion of work. An “association of free people” (MEW 23: 92) that develops new forms of cooperation oriented toward their diverse needs may seem utopian. The idea that liberal democracy can be saved in the long run is even more utopian.