Talks in Antwerp/Amsterdam/Leuven (October 1997)
Concentration of power, Neoliberalism and its alternatives
TAKIS FOTOPOULOS
The object of my lecture today is to examine the causes of the present multi-dimensional crisis which is obvious at the economic, the political, the ecological and the broader social levels. To my mind, the ultimate causes of this crisis can not just be traced back to technology and/or overpopulation, productivism, consumerism, etc, as it is usually asserted. What I will try to show is that all these alleged causes are in fact the symptoms of a much more serious disease which is called “concentration of power”. In other words, it is today’s concentration of economic and political power, the former as a result of the rise of the market economy and the subsequent growth economy, and the latter as a result of the parallel rise of the present liberal oligarchy, which is the ultimate cause of the present crisis. Finally, I will try to show briefly that if we accept the explanation of the crisis in terms of the concentration of power, then, the project for an inclusive democracy ―which involves the equal distribution of economic, political and social power, that is, the effective dissolution of power relations and structures― is not just a utopia, but the only way out of the present crisis which, it can be argued, threatens not only the present forms of social life, but life itself.
Let’s start, first, with the concentration of economic power which, in a market economy, is crucially conditioning (although not determining, as Marxists argue) the other forms of concentration of power. In a nutshell, my argument is that the present concentration of economic power is the inevitable outcome of a process which started about two hundred years ago with the rise of the system of the market economy ―a system that has resulted in the present neoliberal economy which condemns one third of the world population to unemployment and one fifth of it to absolute poverty and a life expectancy of 40. It was the rise of this system which has led, through different processes and for different reasons, to the two types of the growth economy, i.e. the now defunct “socialist” version of it (what used to be called “actually existing socialism”) and the presently universal capitalist growth economy. As we all know, both versions of the growth economy, which may be defined as the system of economic organisation which is geared ―either “objectively” or deliberately― toward maximising economic growth, have been responsible for the greatest damage to the environment in the entire History.
But, before I discuss the issue of how we reached this stage, I would like to clarify the terms I am using, starting with the central concept of the market economy. Why I am talking about the rise of market economy and not capitalism? Obviously, the reason I prefer the term market economy is not to comply with today’s “political correctness” which has exorcised the words “capitalism” and ―more conveniently― “socialism”. It is a choice which is implied by my belief that although the Marxist concepts “capitalist mode of production” and “capitalist world economy” have provided important insights in the analysis of social classes and the world division of labour respectively, they are too narrow and outdated.
They are too narrow, because they imply that power relations in general can be analysed in terms of (or be reduced to) economic power relations whereas it is obvious that economic power is only one form of power and, if used in particular as the central concept in the analysis of social phenomena related to hierarchical relations (in the household, work etc.), or issues of racial and cultural “identity,” it is bound to lead to inadequate or oversimplified interpretations.
They are outdated, because in today’s internationalised market economy, neither the Marxist class analysis nor the concept of the world division of labour implied by the “world-system” approach, are particularly relevant. We need a different class analysis to understand today’s class structures, as well as different conceptions of the North and the South to understand the present international economic structures. Of course, this does not mean that the concept of the market economy, is, per se, broad enough to adequately interpret social phenomena like the ones I mentioned. Still, the very fact that this concept is used to explain only one part of reality, the economic domain, without claiming that this domain determines (not even “in the last instance”) the other domains, does allow enough flexibility for the development of adequate interdisciplinary interpretations of social reality.
So, I am using the term “market economy” to define the concrete system that emerged in a specific place (Europe) and at a particular time (two centuries ago) and not as a general historical category of an approach aiming to show the evolution of the economic system throughout History, as the Marxist concept of the mode of production supposedly does. I will define the market economy as the self-regulating system in which the fundamental economic problems (what, how, and for whom to produce) are solved “automatically,” through the price mechanism, rather than through conscious social decisions. Of course, this does not mean that in a market economy there are no social controls at all. Here, we should introduce an important distinction between the various types of social controls which will help us to interpret today’s marketization and internationalisation of the economy.
There are three main types of possible social controls on the market economy:
1. regulatory controls, which have usually been introduced by the capitalists in control of the market economy in order to “regulate” the market. The aim of regulatory controls is to create a stable framework for the smooth functioning of the market economy without affecting its essential self-regulating nature. Such controls have always been necessary for the functioning of the system of the market economy. Examples of such controls are the various controls introduced at present by the latest round of GATT, or by the Maastricht/Amsterdam treaties, which aim at regulating the world and the European markets respectively in the interest mainly of those controlling the respective markets (multinationals etc.).
2. social controls in the broad sense which, although they have as their primary aim the protection of those controlling the market economy against foreign competition, still, they may have some indirect effects that could be beneficial to the rest of society as well. A primary example of such controls is the various protectionist measures aiming at protecting domestic commodities and capital markets (tariffs, import controls, exchange controls etc.).
3. social controls in the narrow sense which aim at the protection of humans and nature against the effects of marketization. Such controls are usually introduced as a result of social struggles undertaken by those who are adversely affected by the market economy’s effects on them, or on their environment. Typical examples of such controls are social security legislation, welfare benefits, macro-economic controls to secure full employment, environmental controls etc.
The market economy, as I defined it, is a broader term than capitalism and the two should not be confused with each other. The market economy refers to the way resources are allocated, whereas capitalism refers to property relations. Although, historically, the market economy has been associated with capitalism, namely, private ownership and control of the means of production, a market allocation of resources is not inconceivable within a system of social ownership and control of economic resources. This distinction between capitalism and the market economy is particularly useful today when many in the self-styled “Left,” after the failure of the planned economy, rediscover the merits of a “socialist” market economy. At the same time, several “communist” parties in the South (China, Vietnam etc.) have embarked on a strategy to build a “socialist” market economy and are in the process of achieving a synthesis of the worst elements of the market economy (unemployment, inequality, poverty) and “socialist” statisem (authoritarianism, lack of any political freedom etc.).
Although the market today permeates all aspects of life, from family life to culture, education, religion, etcetera, it can easily be shown that, despite the fact that markets have existed for a very long time, the marketization of the economy is a new phenomenon, which emerged in the last two centuries. Markets, up to the end of the Middle Ages, played no significant role in the economic system. Even when, from the sixteenth century on, markets became both numerous and important, still, they were strictly controlled by society, under conditions that, made a self-regulating market unthinkable.
The crucial element that differentiates the market economy from all past economies was the fact that, for the first time in human history, a self-regulating market system emerged ―a system in which markets developed even for the elementsmeans of production, that is, labour, land and money. In fact, it was at the end of the eighteenth century that the transition from regulated markets to a system of self-regulated ones emerged, marking the “Great Transformation” of society, that is, the move to a market economy, which had built-in elements to become the present internationalised economy.
Thus, the introduction of new systems of industrial production during the Industrial Revolution, within the framework of a commercial society, where the means of production were under private ownership and control, inevitably led (with the critical support of the nation-state) to the transformation of the socially controlled economies of the past, in which the market played a marginal role in the economic process, into the present market economies. This was inevitable because private control of production required that those controlling the means of production would have to be economically efficient in order to survive competition. And this meant that they had to ensure two things:a. the free flow of labour and land at a minimal cost, and
b. the continual flow of investments into new techniques, methods of production and products, in an effort to improve efficiency and the sales figures
The first requirement, i.e. securing the free flow of the means of production at minimal cost, implies marketization and the second one growth. Marketization means that those having private control of the means of production have a vested interest in minimising the social controls on the markets, particularly the markets for labour, capital and land. This is so because if, for instance, legislation to protect labour is introduced, this will make the labour market less flexible and, consequently, the flow of labour, less smooth or more expensive. The second requirement, i.e. investing in new techniques, methods of production etc in order to survive competition inevitably leads to expansion. This is a process aptly expressed by the motto “grow or die”. So, the two requirements that I mentioned, which are both implied by the same needs of efficiency and competitiveness, highlight, on the one hand, the “objective” logic of the system of the market economy that is expressed by marketization and, on the other, the dynamic of the same system, economic growth.
Therefore, in a market economy we have two sets of needs which, in effect, are in direct conflict with each other. On the one hand, we have the “private” needs of those controlling the means of production for efficiency and competitiveness, which inevitably lead to marketization and growth and, on the other, we have the social needs to protect labour, or the environment, which, also inevitably, lead to the expansion of social controls over the markets, i.e. to the “socialization” of the markets. Of course, such a conflict arises only in a system of social organisation where society is separate from the economy, as it is in a market economy. This is why, as soon as a market economy was established, a ceaseless social struggle began. Schematically, this is the struggle between those controlling the market economy, i.e. the capitalist elite controlling production and distribution, and the rest of society. Those controlling the market economy aimed at minimising social controls on markets, particularly the labour market, so that the free flow of commodities could be secured. On the other hand, those at the other end, particularly the growing working class, aimed at maximising social controls on the markets, that is, their objective was to maximise society's self-protection against the perils of the market economy, especially unemployment and poverty.
At the theoretical and political level, this conflict was expressed by the clash between economic liberalism and socialism (in both its statist and libertarian versions). Economic liberalism sought to establish a self-regulating market system, using as its main methods laissez-faire, free trade and regulatory controls. On the other hand, socialism sought to conserve humans, as well as productive organisation, using as its main methods social controls on the markets. This struggle constituted the central element of Western history, from the Industrial Revolution to date.
We must note here however that whereas the fundamental components of the market economy were two, marketization and growth, still it was only one of them, marketization, which, historically, has divided the intelligentsia of the industrial era and led to the two large theoretical and political movements, liberalism and socialism. No similar divide had arisen with respect to the second component, that is, economic growth, until we entered the post-industrial era. In both the capitalist and the “socialist” versions of the growth economy economic growth became a central element of what I will call the dominant social paradigm (i.e. the system of beliefs, ideas and the corresponding values, which is associated with the political, economic and social institutions). Thus, economic growth became a liberal as well as a socialist objective, although it is intrinsically linked to the market economy. This, of course, was due to the post-Enlightenment identification of Progress with the development of productive forces that was adopted by socialists, Marxists in particular.
Coming back to marketization, historically, we may distinguish three main phases in the process of marketization:
a. the liberal phase, from the 1830’s to the 1870’s, which after a transitional period of protectionism led to
b. the statist phase, from the 1930’s to the 1970s, which was succeeded by
c. the present neoliberal phase.
As it is obvious from the above periodization, the long-term trend since the rise of the market economy has always been one of minimising social controls on the markets and, what is important from our point of view, of a parallel concentration of economic power. It could easily be shown, both theoretically and empirically, that there is a direct relationship between marketization and concentration of economic power: the higher the degree of marketization (i.e. the lower the social controls on markets, particularly social controls in the narrow sense) the higher the degree of concentration of power. Historically, it was only during the relative brief statist phase that this long term trend towards marketization was reversed, although even then it was social controls to protect labour, rather than the environment, that were introduced. This was mainly the result of the intensification of the social struggle against the economic elites, a struggle which was favoured by a series of contingent political and economic factors that we do not have the time to consider here.
Today, the neoliberal internationalised market economy is universal. Here, it is important to note that the technological revolution which has led to the present post-industrial society not only has created mass open or disguised unemployment, which the state is now unable and unwilling to control, but also has led to structural changes in the working population and the electorate. So, a new class-structure has emerged in advanced capitalist countries. At the one end is the underclass, consisting mainly of the unemployed and those of the inactive population who fall under the poverty line. At the other end is the economic elite and the overclass, namely the upper middle class that has been created by the marketization process. Interestingly enough, the underclass, to which it is estimated about 30 percent of the adult working population belongs, and the overclass, which constitutes about 1 percent of the population, share between them about 28 percent of the national income, 14 percent each!
Between these two poles are the middle groups which constitute the vast majority of the population, about 70 percent of it. However, it is only the upper part of these middle groups, consisting of about 40 percent of the population, which financially is, according to a recent British study, the privileged minority, and electorally, according to Galbraith, the contended electoral majority. It is only this part of the population which is in full-time, well-paid and secure jobs that controls the bulk of income. In advanced capitalist countries, the top 40 percent of the population on the average control almost two thirds of income and by their political and economic power, determine the electoral outcome. On the other hand, the lower part of the middle groups, consisting of about 30 percent of the population, includes all those in low-paid, insecure and poorly protected jobs i.e. the marginalised and the insecure. Most of the growing army of part-timers and occasional workers in low-paid jobs with no formal employment protection, as well as the traditional blue collar low-skilled working class, belong to this category.
Therefore, the post-industrial neoliberal society is not even a “two-thirds society” as it used to be described. It is in fact a “40 percent society”. Now, socially, the social groups constituting this privileged minority are hostile to any expansion of statism and the welfare state and, in general, any effective social controls on markets which may affect their income and wealth. They are increasingly attracted by the ideology of the private provision of services like health, education and pensions ―although a significant part of this “attraction” is forced by the neoliberal undermining of the state provision of these services. Their attitude towards statism and the welfare state is determined by the fact that public services and their financing by taxation have a disparate effect on the privileged minority and the underclass. In other words, it is the privileged minority which has to finance ―mainly, through taxation― public services in which they are not interested anymore (the deterioration in their quality, as a result of neoliberal policies is an important factor here) and which benefit mostly the underclass. As the privileged minority is also the electoral majority (because they take an active part in the electoral process, whereas the underclass mostly do not bother to vote, frustrated by the inability of political parties to solve their problems), the electoral outcome in advanced capitalist countries is determined by the attitudes of the privileged minority/electoral majority.
The inevitable result of these changes in the class structure and composition of the electorate has been the rapid decline of traditional social-democratic parties and their consequent attempt to capture a significant part of the vote of the privileged minority by “modernizing” themselves, according to the guidelines of the neoliberal agenda. This is how what I call the “neoliberal consensus” has been created which replaced the defunct socialdemocratic consensus of the period of statism. The new consensus does not imply that the state has no more economic role to play. One should not confuse liberalism/neoliberalism with laissez-faire. We should not forget that it was the state itself that created the system of self-regulating markets. Furthermore, some form of state intervention has always been necessary for the smooth functioning of the market economy system. The state is called today to play a crucial role with respect to the supply-side of the economy and, in particular, to take measures to improve competitiveness, to train the working force to the requirements of the new technology, even to subsidise export industries. Therefore, the type of state intervention which is compatible with the marketization process not only is not discouraged but, instead, is actively promoted by the neoliberal consensus, especially by the supposedly “progressive” elements within it (Clinton administration, social-democratic ―or centre-left― parties in Britain, France, Italy, Greece etc).
So, the main objective of the elites which control today’s market economy is, at it has always been, to maximise the role of the market and minimise social controls over it, so that maximum “efficiency” and growth may be secured. Therefore, social controls in the narrow sense are universally phased out. The same applies to some significant social controls (in a broad sense) like import controls, tariffs etc. which are also ruled out as hampering the expansion of the present internationalised market economy. Still, this does not mean the elimination of all controls over the markets. Not only “regulatory” controls remain in place and in some cases are expanded but even some social controls are not eliminated. Also, as regards social controls in the narrow sense, although the welfare state is left to decay, various “safety nets” are kept in place in advanced capitalist countries, to check massive social unrest. So, we are not just faced with an attempt to put the clock back to the 1840s. In fact, a new synthesis is attempted today. The new synthesis aims to avoid the extremes of pure liberalism, by combining essentially self-regulating markets with various types of safety nets and controls, which secure the privileged position, primarily of the "over-class" and secondarily that of the “40 percent society,” as well as the mere survival of the “under-class,” without affecting the self-regulation process in its essentials. Therefore, the nation-state still has a significant role to play not only in securing, through its monopoly of violence, the market economy framework, but also in maintaining the infra-structure for the smooth functioning of the neoliberal economy.
Still, as I said before, the present neoliberal phase is not only associated with a minimisation of social controls over the market but also with an inevitable huge concentration of economic power. This economic concentration is evident at all levels: as a concentration of production and trade, concentration of capital, concentration of income within the North and the South and between them, concentration of wealth and so on. Thus, to give some data about the present concentration of economic power, the 500 largest corporations, although they employ just 5% of the world population, they control 25% of world production and 42% of the planet’s wealth. More specifically, up to 40% of world production in 12 important industrial sectors, which include the motor industry, electronics, computers, steel, oil, the mass media etc., are controlled by at most 5 companies, whereas 10 companies alone control every aspect of the food chain.
Finally, whereas the share of world trade for the 48 least developed nations (representing 10% of the world’s population) was halved in the past 20 years and today these countries control just 0,3% of world trade, 359 multinationals account for 40% of global trade!
Not surprisingly, the richest 20% of the world’s population are now 78 times wealthier than the poorest 20% whereas in 1960 they were just 30 times better off. In the European Union in particular, a recent Eurostat report showed that just over a quarter of the income in the EU 12, in 1993, was shared among the top 10% of households while income for the bottom 10% amounted to 2% of the total. But, as the distribution of income is a major determinant of the consumption pattern and ―in a market economy― of the production pattern as well, one can easily see the link between inequality and the present eco-damaging economic development.
Thus, as regards the top 10 percent first, it is well known that it is the consumerist lifestyles of the rich that are causing most environmental degradation. For instance, according to the latest data, the “Group of 7” richest capitalist countries in the world, where 12 percent of the world population live, is the cause of about 42 percent of greenhouse gas emissions .
At the other extreme, on the basis of all existing evidence, it is hard to reject the proposition that it is, mainly, poverty as development (i.e., poverty caused by development) that is causing the environmental degradation and not poverty as underdevelopment development (i.e., poverty caused by the lack of development). In other words, it is concentration of economic power, as a result of the importation of the system of the market economy and the consequent growth economy by the elites in the South, which has led to the destruction of local communities and of their self-reliance, in favour of the export economies which are being established today all over the world, within the framework of the internationalised market economy. Thus, in Latin America, whereas in 1961 about 11% of the population were landless, by 1975 this has gone up to 40%. In general, approximately 80% of all Third World agricultural land continues to be owned today by about 3% of landowners. It is as a result of this new and updated version of the enclosure movement that landless peasants take part in the destruction of their local environment, in the form of deforestation and general destruction of the eco-systems, for the sake of survival itself.
Therefore, what has to be stressed is that both in the case of the consumer patterns of the rich and the production patterns of the poor the ultimate cause of the environmental destruction is not just economic growth. The amount and ―more important― the type of growth taking place are crucially conditioned by the concentration of economic power, which, in turn, is, as I already mentioned, the inevitable outcome of the separation of the economy from society. Thus, the phenomenon of increasing concentration of economic power has characterised the entire historical period since the rise of the market economy. This is of course not surprising since both orthodox and Marxist economic theory could be used to show that the maximisation of economic growth and efficiency crucially depend on the further division of labour, specialisation and the expansion of the size of the market. The inevitable consequence of the pursuit of profit, through maximisation of efficiency and the size of the market, has been the concentration of economic power in the hands of the elites that control the economic process. It can easily be shown by empirical research that the pursuit of profit by those controlling the market economy does lead to concentration.
Here, it must be noted that the recent change as regards the scale of production does not affect the continuing and accelerating concentration. Thus, at an early stage of marketization, the concentration of economic power was the outcome of the “massification” of production, namely, the concentration of the production process in big production units that secured “economies of scale” and economic efficiency. Today, the concentration of economic power coincides with a parallel process of “de-massification” of production and diversification, which is consistent with the requirements of the post-industrial internationalised economy and modern technology. However, Still, this “de-massification” of production, although it maydoes influenceaffect the sizecale of production unit, it certainly does not affectinfluence the degree of concentration of economic power at the company level. For instance, the huge concentration of investment power in a small number of capitalist firms is indicative: the largest 100 multinational corporations account for a third of the total foreign direct investment stock.Furthermore, the increasing concentration of economic power which accompanied the rise of the market economy is also evident at the inter-country level. As it is well known, a historical gap has been created between the North and the South, since the time the market economy of the North started penetrating the traditional economies of the South. About two hundred years ago, when the marketization process was just starting in the North, the average per capita income in the rich countries was only one and a half times higher than that in poor countries. A hundred years later, in 1900, it was six times higher, and by the time of the importation of the growth economy into the South in the early fifties, it was 8.5 times higher. The gulf has increased dramatically since then, and by 1970 the per capita income in the North was 13 times higher than in the South. In the eighties and early nineties, the concentration process was further accelerated. Thus, the “Triad countries” i.e. the countries in the three main economic regions (North America, European Union and Japan)of Europe, Japan and North America which make up only 14 percent of world population, during the period 1980-91, attracted 75 percent of foreign direct investment, accounted for 70 percent of world trade and received about 70 percent of world income. As a result, the per capita income of “high income economies” (according to the World Bank definition) where 16% of the world population live, was in 1995 almost 58 times higher than that of “low income countries” where 56% of the world population live. In the last eight years alone, when the internationalised market economy became universal, the world inequality has exploded. The per capita income of the poorest countries, in 1987, was 7.3% of the US income (in PPP terms), whereas in 1995 it has fallen to 4.7%!
However, concentration of economic power has not been the prerogative of the capitalist growth economy. A similar concentration took place in the socialist growth economy. Therefore, the difference between the two types of growth economy with respect to concentration is reduced to who owns the means of production and how they are allocated among different uses. So, both the market mechanism of the capitalist growth economy, as well as the planning mechanism of the socialist growth economy result in establishing a few in privileged positions, at the expense of the many. In the market mechanism, this is brought about automatically through the unequal distribution of income that results from the mechanism’s functioning, while in central planning this is accomplished through the institutionalisation of the bureaucratic élite in a privileged position within the planning process.
Therefore, neither the “socialist” concentration of power was accidental, when socialism took the form of soviet “democracy” at the political level and central planning at the economic level, nor of course the capitalist concentration of power has been accidental, when capitalism has taken the form of parliamentary ‘democracy’ and the market economy respectively. In both cases, concentration is justified by the respective ideology, Marxism and liberalism. Thus, in Marxism, concentration of power is considered necessary in the “transitional” period to communism, whereas in liberalism, as long as it is “legal,” it is not considered to be incompatible with the fundamental liberal principle of the “primacy of the individual,” even though, of course, concentration negates the principle’s universality. It is therefore clear that both systems, in practice, were unable to keep their promises: neither “actually existing socialism” led to the liberation of human beings, nor “actually existing capitalism” has, in reality, affirmed the “primacy of the individual”.
Of course, concentration of economic power does not constitute a new phenomenon. In all hierarchical societies, some concentration of wealth has always accompanied the concentration of political and military power in the hands of the various élites ―a fact usually “justified” through a system of social rules based upon religion. The new element in the growth economy is the fact that the reproduction of the social system itself, as well as of the power of the élite controlling it, crucially depends on the realisation of the growth objective which, in turn, is `justified’ through its identification with Progress. So, economic growth functions not just as a fundamental social and economic goal, but also as a basic means to reproduce the structures of unequal distribution of economic and political power which characterise the modern hierarchical society, as well as a central element of the ideology that supports it.
Therefore, the hierarchical society took a new form with the rise of the market economy in the West and of the planned economy in the East. In this new form, the élite draws its power not only (as in the past) from the concentration of political, military or, in general, social power, but, primarily, from the concentration of economic power, whether this concentration is brought about by the market mechanism, or through central planning.
However, the fact that the modern hierarchical society relies for its reproduction on the maximisation of economic growth constitutes, also, its fundamental contradiction. This is not because, as it is usually argued, the continuation of the growth economy has serious environmental implications, but, because the necessary condition for the reproduction of the growth economy is the concentration of its benefits to a small section of the world population, in other words, the huge inequality in the distribution of world income. This is on two counts:
first, it is simply not physically possible for the wasteful consumption standards, which are today enjoyed by the “40 percent societies” in the North and the élites in the South, to be universalised and enjoyed by the world population. Thus, as it was recently pointed out “it seems clear that the material consumption of industrial people cannot be universalised to encompass all humans on earth. The required increase in material production is large. To simply universalise the North’s standard of living now, global industrial production would need to rise 130 times”. In this sense, one may argue that the present rapid growth rate in countries like China, whose GDP rose by an average rate of 11 percent in 1980-95, is physically sustainable only if the parallel huge increase in inequality continues .
second, a universalised growth economy is not environmentally sustainable, at the present state of technological knowledge and cost of “environmentally-friendly” technologies. In other words, the universalisation of such technologies would not be possible, given their cost and the concentration of world income. Furthermore, it is at least doubtful whether after the universalisation of such technologies their beneficial impact on the environment will remain the same.
So, concentration and ecological disintegration do not simply constitute consequences of the establishment of the growth economy, but also fundamental pre-conditions for its reproduction. Contrary to the under-consumptionist “civil societarians” social-liberals who hope that the elites of the Triad, facing the threat of an inadequate demand because of growing inequality, will be induced to introduce a world mixed economy, in fact, the opposite is the case. The growth economy in the North not only is not threatened by the growing inequality of the present internationalised market economy, but, instead, depends on it. Thus, just as the production of the growth economy is not possible without the plundering of nature, its physical reproduction is equally impossible without the further concentration of economic power.
So, the market/growth economy and concentration of economic power are opposite sides of the same coin. This means that neither the concentration of economic power nor the ecological implications of the growth economy areis avoidable within the present institutional framework of the internationalised market/growth economy. But ―and here is the contradiction― the increase in the concentration of economic power inevitably leads to the realisation that Progress, in the sense of improvements in welfare through growth, has a necessarily non-universal character. Therefore, the moment of truth for the present social system will come when it will be universally acknowledged that the very existence of the present wasteful consumption standards depends on the fact that only a small proportion of the world population, now or in the future, are able to enjoy them.
As regards today’s role of the state, as I said before, the nation-state, contrary to the claims of the “globalizers,” still has a significant role to play in the neoliberal internationalised economy. However, this role does not involve anymore the enforcement of social controls to protect society from the market. The state’s role today is exclusively related to securing the reproduction of the market economy through its monopoly of violence and to creating the stable framework for the efficient functioning of the markets. So, in the same way that in the first phase of marketization, when the market economy was basically national, the nation-state was assigned the role of enforcing ―through its monopoly of violence― the market rules, in today’s internationalised market economy the same role is assigned to the state, but also to international organisations like NATO and a capitalist controlled UN (the latest example was the Gulf war). Of course, this does not deny the fact I already mentioned of the loss of the state’s economic sovereignty and its replacement by a multi-level system of political-economic entities, consisting of micro-regions, traditional states, macro-regions and world cities which are becoming the keyboards of the global economy.
So, an important effect of the internationalisation of the market economy has been to enhance further the concentration of economic power, despite some physical decentralisation of industrial production. However, the accelerating trend towards internationalisation of the market economy and the resulting increasing concentration of economic power has serious implications as regards the concentration of political power as well. For instance, as a recent report points out with particular reference to the European Union, today, 50 percent of legislation is decided in Brussels.
All this has already led to a debate about the future of politics and democracy. Those who take for granted the present institutional framework of the market economy and liberal “democracy” are divided as regards their reading of future trends. On the one hand, there are those who support the view that the present trends, in the long run, lead not only to the end of the nation-state but also of “politics” and “democracy,” as we know them. Thus, the supporters of the “end of politics” thesis argue that the natural place for the general good, the political sphere, on which liberal democracy rested, disappears in the present age of the networks. On the other hand, there are those in the civil societarian “Left” who attempt to put a case that the nation-state is still the most appropriate engine for the reproduction of the growth economy and that the argument about globalisation is hugely overstated.
I would have no difficulty in agreeing with the thesis about the forthcoming end of “politics” and “democracy,” provided, however, that these terms are meant to represent the present statecraft and liberal oligarchy which today pass for politics and democracy respectively. This is so, because today’s “politics” and “democracy,” in fact, represent a flagrant distortion of the real meaning of these terms and are indeed in the process of being phased out, if not in form, at least in content. Just as in the past the “nationalization” of the market led to the death of the communities, the free towns and their federations, one may reasonably expect that the present internationalisation of the market will lead to the demise of nation-states and national politics.
But, the fact that we may agree with the hypothesis about the end of the nation-state and the consequent end of politics and democracy in their current meanings, does not imply that we will, also, have to agree with the conclusions of the supporters of this hypothesis. In other words, although it is obvious that within the new institutional framework no meaningful politics and democracy is possible, this does not mean politics and democracy themselves are superfluous. What is obviously superfluous is the present institutional framework of the market economy and today’s politics and democracy, which however both the supporters of the nation-state and those assuming its end, take for granted !
So, the crucial question which arises here is whether it is possible, within the existing institutional framework, to radically reduce the present huge concentration of power which, according to our analysis, is the ultimate cause of the present crisis. For social democrats of all sorts and the green “realos” this is possible through effective redistributive government action. But, such action is by definition excluded within the framework of the neoliberal internationalised market economy, which is taken for granted by them. It is simply impossible today, within the framework of free capital markets, for any one country or even for any one economic block to take action, independently of other countries or blocks, in order to introduce effective social controls to protect labour or the environment.
But, if we accept the thesis that I tried to put forward that the cause of the present multi-dimensional crisis is ultimately the concentration of power at all levels that is implied by the present socio-economic framework, the obvious conclusion is that the only way out of the crisis is the creation of the subjective and objective conditions which will lead to a new society. A society which, at the institutional level, will create the necessary conditions for the abolition of concentration of power and, by implication, for the re-integration of nature and society. Such a society is what I call an inclusive democracy, which I will attempt to summarise briefly here, whereas those interested in a further exploration of the topic and the crisis of the growth economy generally are referred to my latest book “Towards An Inclusive Democracy”.
First, I have to stress that the project for such a society is not just a utopia, in the negative sense of the word. A social project is not a utopia if it is based on today's reality. And today's reality is summed up by an unprecedented crisis of the “growth economy,” a crisis which engulfs all societal realms (political, economic, social, cultural) as well as the Society-Nature relationship. Furthermore, a social project is not a utopia, if it expresses the discontent of significant social sectors and their, explicit or implicit, contesting of existing society. Today, the main political, economic and social institutions on which the present concentration of power is founded are increasingly contested. Thus, not only basic political institutions are contested in various ways, but also fundamental economic institutions, like private property, are challenged in a massive way. The explosion of crime against property in the last quarter of a century, despite the drastic enhancement of private and public security, is not just a cultural or temporary phenomenon. It should be seen, instead, as a long-term trend reflecting the explosion of unemployment and the massive abuse of drugs (which are also structural phenomena) as well as the growing discontent with the rising inequality in the distribution of income and wealth ―an inequality, which, within the context of the present consumer society, becomes unbearable.
So, how we may define a new conception of democracy? A useful starting point in discussing a new conception of democracy may be to distinguish between the two main societal realms, the public and the private, to which we may add an “ecological realm,” defined as the sphere of the relations between the natural and the social worlds. Contrary to the practice of many supporters of the republican or democratic project, I will include in the public realm not just the political realm, but also the economic realm, as well as what I will call the “social realm in a broad sense”. In other words, I will include any area of human activity where decisions can be taken collectively and democratically. To my mind, the extension of the traditional public realm to include the economic, ecological and “social” realms is an indispensable element of an inclusive democracy. So, we may define the political realm as the sphere of political decision-taking, the area where political power is exercised. The economic realm is defined correspondingly as the sphere of economic decision-taking, the area where economic power is exercised with respect to the broad economic choices that any scarcity society has to make. Finally, the social realm is defined as the sphere of decision-taking in the workplace, the education place and any other economic or cultural institution which is a constituent element of a democratic society.
Correspondingly, we may distinguish between four main types of democracy that constitute the fundamental elements of an inclusive democracy: political, economic, ecological and “democracy in the social realm”. We may then define, briefly, political, economic and democracy in the social realm, as the institutional framework that aims at the equal distribution of political, economic and social power respectively, in other words, as the system which aims at the effective elimination of the domination of human being over human being. Similarly, we may define ecological democracy as the institutional framework that aims at the elimination of any human attempt to dominate the natural world, in other words, as the system which aims to reintegrate humans and nature.
Therefore, in this conception of inclusive democracy it is first recognised that political or direct democracy, where political power is shared equally among all citizens, is neither feasible nor desirable, unless it is accompanied by economic democracy in the sense of equal distribution of economic power. Political and economic democracy in this sense would represent the re-conquering of the political and economic realms by the public realm, that is, the reconquering of a true social individuality, the creation of the conditions of freedom and self-determination, both at the political and the economic levels.
However, political and economic power are not the only forms of power and therefore political and economic democracy do not, by themselves, secure an inclusive democracy. In other words, an inclusive democracy is inconceivable unless it extends to the broader social realm to embrace the workplace, the household, the educational institution and indeed any economic or cultural institution which constitutes an element of this realm. Finally, as regards ecological democracy, the replacement of the market economy by a new institutional framework of inclusive democracy constitutes the necessary (though not sufficient) condition for a harmonious relation between the natural and social worlds. There are strong grounds to believe that the relationship between an inclusive democracy and Nature would be much more harmonious than could ever be achieved in a market economy, or one based on socialist statism. In fact, the factors supporting this view refer to all three elements of an inclusive democracy: political, economic and social.To sum it up, I think that today, more than ever in the past, the choice we have to make is clear and can be described as “democracy or barbarism”. Democracy, however, does not mean the various oligarchic regimes in the North that call themselves today democratic, let alone the despotic regimes in the South. It also does not mean an anachronistic return to the classical conception of democracy. Democracy can only mean a synthesis of the two major historical traditions, namely, the democratic and the socialist tradition with the radical green, feminist and libertarian traditions. I hope that the project for an inclusive democracy that I described does attempt such a synthesis.―
© 1997, Takis Fotopoulos. All Rights Reserved.