Globalisation and Class Struggle in Germany (page 4 of 5)
By Jerry Harris

Nationalist/Globalist Conflicts

Globalisation has not only created tensions between the capitalists and working class but divisions between nationalist and globalist wings of the bourgeoisie. One of the most interesting cases involves Vodafone’s takeover of Mannesmann and the resulting court case against six of Mannesmann’s former directors.

The $185 billion buy-out of Mannesmann by Britain’s Vodafone/Airtouch was the most expensive deal in corporate history and created the largest wireless telephone corporation in the world. Not only does the company control the biggest Euro markets in Britain, Germany and Italy, it has holdings in more than 30 countries including the U.S. and Japan. Vodafone/Mannesmann also achieved a monopoly over wireless communication putting it in position to be the largest Internet portal in Europe.

The takeover of Mannesmann was a protracted battle in which both corporations tried to gain advantage by moving directly into the other’s market. In January 1999 Vodaphone acquired Airtouch in the U.S., an important minority partner of Mannesmann. Mannesmann fought back by entering the British market when it bought out the large mobil phone network Orange for $33 billion. When Vodafone stoled away another Mannesmann partner, this time in an Internet deal with Vivendi in France, they had finally maneuvered into a dominant competitive position. Although both corporations had strong domestic identities their respective governments steered clear of being drawn into a nationalist brawl. Even as Mannesmann was threaten by a hostile foreign takeover, Schroder judged government interference could jeopardize future mergers in which German corporations would continue their global integration.

To think of the English, Germans, or any national group as winners in these mergers is to miss their essential character as transnational deals engineered by de-nationalized elites with common goals and interests. Even as Mannesmann’s CEO, Klau Esser, struggled to devise a better negotiating position he declined to use nationalist political rhetoric as a strategy to defend his corporation. Tens of thousands of union members protested the proposed merger, as did most German investors. Yet Esser ignored his domestic audience and appealed to his global shareholders to hold out for a higher share price. When Vodafone upped their offer by 77 million pounds the majority of shareholders bought the deal. Esser’s main goal was to build a new transnational giant beneficial to his international investor base not protect a ‘German’ company. Although considered a national champion in reality Mannessmann was already a transnationalized corporation with many institutional investors in the US and Britain. Mannesmann also had important global holdings such as Italy’s second-largest phone company Infostrade and major US interests in phone, publishing and music.

As the dust settled nationalist anger over the deal continued to boil resulting in a controversial trial in 2004. Six former directors of Mannessmann, including Ackermann of Deutsch Bank, were accused of breaching their fiduciary duties for awarding 60 million pounds ($74) in executive bonuses including 15 million pounds to Esser. In essence the case accused Mannesmann executives of being bribed into accepting Vodafone’s offer. Driving the case was popular anger over huge bonuses at a time when many Germans were facing cuts at work. But for the TCC the case was about whether or not Germany was ready to accept higher standards of executive pay common in the Anglo-American model. Therefore the real issue was over executive privileges adjusting to global corporate standards or holding to traditional lower levels of compensation set by the German social contract. The outcome was a weak compromise in which the judge ruled no criminal activity but also stated the bonuses were inappropriate.

The controversial case quickly spilled over to the issue of making executive pay levels public. The German tradition of making corporations responsible to a variety of stakeholders including workers and communities continued to fire resentment over excessive pay. Unions were rapidly seeing their traditional power eroded, members working longer hours plus weakening union influence on corporate boards. One concession within their reach was making executives disclose their salaries in an attempt to moderate pay levels to show “solidarity” with workers taking cuts. At first uncomfortable, executives began to accept disclosures because it moved Germany closer to Anglo-American business culture, the template for global corporate practice. Executives realized ultimately the results would be higher compensation rates as corporations compete for the best executives with transparent pay levels.

Still the German tradition of co-determination is a continual problem for executives pushing their corporations further into transnational practices. Infineon chief executive Ulrich Schumacher was forced to resign when he threaten to move corporate headquarters to Switzerland. And Jurgen Schrempp, head of DaimlerChrysler, has faced harsh criticism within his board over failed links with Mitsubishi Motors. Resistance to globalization not only comes from union members on the board of directors but also sectors of the business community that believe in the German post-war consensus model. The relationships, habits of business, economic success and long established political and economic interests built into social consensus are all obstacles to transnationalization creating multi-level conflicts in German society. The struggles between the national and globalist political/economic blocs are determining the specific nature of German transnationalization.

National Champions?

As the transformative process of globalization deepens a wide range of battles have erupted between competing capitalist groups. The debate over national champions is a fascinating mixture of global competition couched in nationalist rhetoric. The main players encompass German and French transnationalists as well as EU political elites from Brussels. The controversy began when France’s finance minister Nicolas Sarkozy, the most free market advocate in the conservative government, began to promote a national industrial policy to protect French engineering and pharmaceutical TNCs. When Sarkozy prevented Siemens from having a role in restructuring the troubled French engineering corporation Alstom, Schroder scolded the minister for being “extremely nationalistic” and came out with his own plan for creating a national champion in the German banking industry.

Both Sarkozy and Schroder are being pushed by popular national political pressures as workers and the middle class show mounting anger over de-industrialization and offshoring. Sarkozy who has high hopes to become the next president, is openly feuding with Jacques Chirac for popularity, while Schroder’s neo-liberal policies have his party on the edge of disaster. In addition TNCs will use any advantage to protect and extend their competitive position, including seeking refuge under nationalist rhetoric. But these conflicts also reflect a transitional period in which divided interest and consciousness can play an important role. Transnational capitalists may still feel rooted to their culture and still have important economic interests invested in their country of origin. All these factors can produce political battles that rage back and forth between nationalist and globalist tensions as a synthesis of interests begins to emerge with elements of the old national accumulation structure still present in the new transnational system.

All these factors were in evidence when the French government prevented the Franco-German pharmaceutical group Aventis from accepting a friendly takeover by Switzerland’s Novartis. Instead the French government backed a $57 billion bid from Sanofi-Synthelabo whose major stockholder is the French oil group Total. After completing the deal Thierry Desmarest, chief executive of Total commented, ‘It is important that big French companies have their decision-making centers in France…I think this project has numerous advantages for our country’36 But the purely French character of the merged corporation is questionable since Aventis had 9,000 workers in Frankfurt, a German CEO and half of its management board that came from the old German drug company Hoechst.

Underneath the nationalist rhetoric Desmarest’s main concern is to work around Europe’s commitment to national health care that constrains pharmaceutical profits in the face of neo-liberal competition from America. Both France and Germany have imposed sharp price cuts for drugs, Germany driving down costs by 16 percent for many pharmaceuticals. As Roche chairman Franz Humer reacted, ‘Europe needs to wake up. This short of pricing environment is helping to drive investment abroad.’37 Faced with mass support for cherished social programs from the national era, European TNCs are forced to moderate their political project. But in order to help level the playing field, European transnational capitalist are quite willing to use state intervention. Although nationalist in form, the French government’s intervention actually strengthens the competitive position of this Franco-German globalist firm. Merging Sanofi and Aventis will create the world’s third largest pharmaceutical TNC ready to compete on the global stage. Thus global capitalists transform the function of the state to serve their class interests while using nationalist rhetoric to defend their actions. Reacting to the French cry for a national champion, the chief executive of Novartis, Daniel Vasella, said, ‘I’ve never seen anything like it.’ To argue Aventis was “purely French was strange” because Rhone-Poulence had acquired the US company Rorer, then merged with a German company Hoeschst, which itself had bought out the US corporation Marion Merrell
Dow. 38 Hardly a ‘national’ champion, but the capital grouping around Sanofi and Total were able to use their ties to the French government to successfully battle off Novartis.

Another key issue is that an important sector of the globalist hegemonic bloc includes well-paid professionals who work for large TNCs, many in the drug industry. Maintaining political legitimacy and consolidating support for the globalist project remains an important national concern as each country shapes its own particular insertion into the global economy. Therefore retaining a base in certain job sectors is still a necessary task and the knowledge based pharmaceutical industry accounts for eight percent of the French GDP. Therefore globalist projects have important national considerations as they rearrange local economies to fit transnational networks. This can create a political mixture at the local level that makes certain aspects of their nationalist rhetoric ring true. This is how the synthesis takes form, using the state to serve transnational projects while still reflecting elements of national concern.

Volkswagon is another TNC that will use nationalist appeals to protect its competitive position in Germany. When the European Commission moved to open EU markets to independent manufacturers selling spare part replacements for autos, VW demanded government protection. Yet Bernd Pischetsrieder, VW chief executive, called French and German attempts to create national champions “nonsense.” And when asked about Germany’s ‘VW law’ which protects the automaker from takeover Pischetsrieder stated that it was ‘because politicians want to be re-elected.’ ‘I don’t think it has any other than emotional importance.’39

Commenting on Pischetsrieder’s attack on national champions the Financial Times praised ‘Business executives such as Mr. Ackermann and Mr. Pischetsrieder who can see clearly the truth to which the politicians are foolishly blind. Companies with global ambitions are capable of finding partners to give them scale and reach, but find they are blocked by outdated legislation, excessive regulation and tax structures from a pre-globalisation era.’40 Attacking the old accumulation structure is exactly the intent of the VW executive. Yet on an individual basis TNCs will take advantage of nationalist measures when they protect their own interests but promote transnational policies as a strategic direction in the struggle to realign the national economy. Again we see the adoption of nationalist traditions to promote transnational ends as emerging elements of globalisation. More >>