A Possible Result of the Economic Crisis: New Thinking about Time

The German sociologist, philosopher and politician Ralf Dahrendorf died on June 17, 2009, at the age of eighty, nearly a year ago. He was a member of the German parliament and of the British House of Lords, director of the London School of Economics and warden of St. Antony’s College at the University of Oxford, a position now occupied by Margaret MacMillan.

Shortly before his death he wrote the essay Back to the Protestant Work Ethic? There are no single causes of the current crisis, he wrote, and we don’t know how long it will last and what the world will look like when it stabilizes again. But there are a few fundamental things that we can already see clearly.

We have lived through the transition from Savings Capitalism to Credit-based Capitalism. [The German word Dahrendorf used was Pump-Kaptalismus. Pumping is the vernacular for borrowing.] This has much to do with Max Weber’s essay on the Protestant Ethic and the Spirit of Capitalism, in which he suggested that capitalism required the postponement of instant gratification. Weber argued that Protestantism, which demanded self-denial and saving for the future, was a decisive factor in achieving this result. In Europe there still lived some very old people who remembered the time when work and saving were considered universal requirements. In the USA the erosion of the Protestant work ethic and the change towards consumerism began after WW I. The change led to an ethos that required old-fashioned hard work and discipline on the production side of the economy but the precise opposite on the other side, the side of the consumer and also, most powerfully, on the side of the borrower. The system tended to undermine the basis – the work ethic – on which it was built.

“Enjoy now, pay later,” became the motto. This development meant the change from the real world to the virtual world, from the creation of values to the trade in derivatives. It led to the making of money out of money by those who did not own it, and also to the use of money that did not really exist.

All making of debts has its limits – that may be the key lesson of the current crisis in which much private indebtedness is being replaced by public indebtedness.

Most developed countries will be considerably poorer once the crisis is over. Economic growth will be slower. And in many countries the fruits of whatever economic growth there is will be eaten up by indebtedness. There may be new taxes. Inflation may severely afflict the less affluent.

All this may prompt new thinking about Time.

One characteristic of credit-based capitalism was the extraordinary short-breathedness [Kurzatmigkeit] of all economic activities. In the extreme case of trading with derivatives this took the form of fictional assets being traded before the question of their real existence could be raised. This was only a part of the universal haste. Hardly was a transaction finished when bonus payments had to be made to all the participants. Everybody was out of breath.

New attitudes towards Time would have to begin at the top. The question of the high income of the top managers – one of the reasons for the public anger – will be soluble as soon as their rewards are coupled to their achievements in the longer term. The concept of the stake-holder, much wider than that of the mere share-holder, which had sunk into oblivion when credit-based capitalism was flourishing in its most extreme forms, may be revived. New thinking about Time may also involve new thinking about the global aspects of the crisis, not to mention the huge questions raised by climate change.

There will be no return to the Protestant work ethic. But the revival of ancient virtues may be possible and is highly desirable. New concepts may be devised regarding the more orderly and measured gratification of human desires.

All this may lead to a more responsible capitalism.