The New Politics of Globalisation
The world is suffering from the most severe economic breakdown in decades and the international political community, under the umbrella of the G20 and the UN, is working feverishly to mitigate the hardest consequences of the downturn. But the political management of the crisis must not only focus on the tackling of economic issues and the reform of the regulatory framework for financial markets. Political leaders must also address some of the fundamental political and democratic problems that helped the crisis to materialise in the first place. If a new post-crisis economic system is to become more sustainable and responsive political control of the economy needs to be permanently restored.
The British MP and former Cabinet Minister Clare Short once said: ‘People have accused me of being in favour of Globalisation. This is equivalent to accusing me of being in favour of the sun rising in the morning.’ Short, who enjoys a reputation as a principled politician, expressed what was the widespread believe of the mainstream Western political class in the 1990s and early 2000s: economic Globalisation – driven by financial markets – was regarded as an inexorable law of nature. Attempting to shape the process was hence a hopeless undertaking.
This view has always been tricky. In fact it led to a democratic problem: if politicians – as a matter of faith – surrender the political scope of action over a process that has such a major effect on the societies whose interests they were elected to represent, what democratic mechanisms are left for people to influence the way Globalisation impacts on their lives? And if it is not elected politicians who set the rules of the game is it democratically legitimate that markets by and large determine their own boundaries?
In the wake of the financial crisis it became apparent that surrendering the scope of action to shape Globalisation did not only produce a democratic problem but was also a serious political mistake. As a result of the market being unable to heal itself and prevent a systemic crisis, governments were forced back into the driving seat. And there was no choice but to assume responsibility since no other institution is equipped with the necessary means to stabilise the economy.
But far from realising their political mistake politicians were ill prepared for this seemingly impossible scenario and reacted more than they guided. Caught on the wrong foot about the extent of the predicament of the financial sector and the beginning global recession, national governments had to prepare emergency landings for financial institutions and enacted stimulus packages to strengthen economic demand using dizzying amounts of taxpayers’ money. The irony therefore is that it was the ordinary citizen, who used to have little say over how the global economic system was governed, that in effect had to provide the means to prevent a disaster and was left with serious risks and liabilities.
Against this backdrop, it is crucial for political leaders to realise that what is needed now is not just basic repairs of a broken system. Above all politicians must comprehend that giving up the scope of action to shape economic Globalisation was a big mistake and part of the reason why the crisis could happen in the first place. Politics must not surrender democratic control over the global economy again but insist on setting the rules of the game in the future. This would also help to make Globalisation more democratic, accountable and responsive to citizen concerns taking into account their new role as risk-bearers of last resort. If political leaders, however, simply move back to pre-crisis business as usual there is a good chance that the next crisis is just around the corner.
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Point well made.
We need a Parliament for the U.N., an IMF that gives equal voting power to each member state, and financial regulations, environmental regulations and social policy undertaken at the U.N.
You are absolutely correct. Uncontrolled globalisation is not a force of nature.
European social democrats must now rise to the challenge of proposing solutions that address the crisis situation we now find ourselves in.
But how do you plan to regulate the global economy and global economic institutions? A world government?
* I believe that only the social politics can protect the people, but this doesn’t mean something like charity. The people need a healthy food and jobs.* I don’t think that’s necessary a world government…Another political leaders? Not at all! But I think that something like a “Chamber of scientists” with a real vision and from all the countries would help.
Well, good point. But the question of how to cope with globalisation is an old question. Globalistation is reality. But: What perspective of what should come after this transition period of (if so – hopefully) economic change, environmental need for change and how to frame it with social change or social improvements?
Using solely Western references to pin-point most recent problems of an economy unfolding beyond the political scope appears to be quite ahistorical. For example, McNamara under J.F. Kennedy gave up already political control by endorsing the general belief multi-national cooperations were more able to organise and to manage things. What is new about the crisis? It is not a return to Keynesian policy, but a refusal to look at the underpinnings of the Friedman doctrine reducing policy control to a matter of interests set by the central bank. After all it was Friedman who said consumption depended not upon weekly or monthly but on life time incomes, expectations (of heritages) included. Thus you have not seen a shift in power or in policy option when it comes to letting the banks do just that in whatever unison may be conceivable for the moment, as long as confidence in not merely money, but in its purchasing power is not questioned but remains on the bargaining table. Thus the gap between what people can perceive and understand and absurd figures quoted when it comes to bailing out banks and car manufacturers has been growing beyond any understanding of human error. Therefore lessons learned are no longer just crisis management but the capitalisation of the crisis: money used to consume money. It is a part of a simple game or is it? You cite the very people who have no control to be asked to bail out those who lost their money while gambling i.e. taking unnecessary risks. Yet that moral decline in the use of money for the future i.e. investment is no longer decisive as the rules of the game have changed. People are simply lost, politically speaking, when it comes to figuring out which policy would suit the day. It leaves them with the only option, namely to believe things continue as if nothing has happened while whisphering into their ears hopefully everything will return to normality. In other words, the hidden dimension of your argumentation is still locked into the national frame of thinking only there is control. In some of the replies to your blog there are raised the questions about world governance e.g. IMF. But before such world governance can be realized, there is a need for a different discussion in the West about globalisation. That discussion has been initiated by Louis Baeck e.g. the Islamic view of globalisation and is taking place in countries like India but very much from a different angle. If the economy is going to be reshaped according to political forces able to articulate a responsible agenda which includes world governance, then you would not need to be critical of a German FDP man heading the new economic committee in the European Parliament. People would themselves be able to judge what is sensible economic policy. Right now they don’t as they are more confused and equally dazed by the large amounts of money to handle a largely invisible crisis. So in appreciation of your attempt to bring some clarity into the globalisation debate, my question to you would be first of all can you imagine economic policy being shaped outside of national and Western references?
Dear Hatto, first of all thank you very much for your interesting comments. To answer your final question in one word: yes!
What I was arguing for in the article is that stakeholders (in this particular case citizens who are not just economic stakeholders but also – as it turns out – insurers of last resort) need to have a say in the shaping of economic policy at the appropriate level.
The same idea would apply throughout a system of multi-level governance and be a mechanism to make sure that Globalization is no longer exclusively determined by a small circle of Western elites but takes the full variety of interests and needs into account.
The West as such does not have a coherent view on this issue and other voices are completely marginalised. The answer is to democratise the Globalization process.