Focus on Germany London Office July 2009 A New Start in Economic Policy Beyond Financial Capitalism ‘Germany must get moving’, the former German President Herzog demanded in 1997. Ten years later, this move has encompassed not only Germany, but gone through the entire world – but not in the way Roman Herzog imagined. Those who for thirty years preached that we should trust the self-regulating power of the markets and worshipped the lean state as the best of all possible states now suddenly have moved to doubt the markets’ power to heal themselves and call for the state to be their saviour. Friedhelm Hengsbach – one of the best known German commentators on ethical issues – not only deals in this article with the search for causes of the current financial and economic crisis but also offers scenarios for the future. Friedhelm Hengsbach* Financial Experts search for the Errors ‘Certainly the banks have made mistakes’, Klaus-Peter Müller, the former boss of Com­merzbank, admitted in an interview. But he stated exactly the same thing five years ago. He never said what the mistakes were. However, he sees the real cause of the crisis in a twofold failure by the state. After the speculative bubble of the 1990s, Alan Greenspan should never have operated such an expansionist monetary policy. And the Bush administration should not have let Lehmann Brothers go to the wall. But for the collapse of that bank, Commerzbank, *Friedhelm Hengsbach is a Jesuit and Professor Emeritus of Economics and Ethics at the Philosophi­cal-Theological University St. Georgen(Frankfurt). would have posted good results. ‘I can hardly bear to hear the word greed any­more.’ That sentence is by Hilmar Kopper(for­mer CEO of Deutsche Bank). If by these words he means that to explain away the financial cri­sis simply as the result of individual mistakes is itself mistaken, then one can agree with him. Because the moral outrage of voters stirred up by politicians with their broadsides of insults, or the pillorying of individual actors, are just as misguided as the fixation of public debate on the bonus payments to financial managers who have driven their banks to the wall. Financial experts are right to direct attention to Friedrich-Ebert-Stiftung London Office 66 Great Russell Street London WC1B 3BN Phone+44(0)20 7025 0990 Fax+44(0)20 7242 9973 e-mail website info@feslondon.org.uk www.feslondon.org.uk