(Burlington,
Vermont, 19/4/96)
The
internationalisation of the
market
economy and the project
for
an inclusive democracy
TAKIS
FOTOPOULOS
I am going to talk tonight about the present internationalisation of the
market economy and its economic and political implications. Also, at the end, I
would like to touch on the question why today the need for a new liberatory
project is, to my mind, more urgent than ever.
In a nutshell, my argument is that the present internationalisation of
the market economy represents the completion of a process that within two
hundred years has created
a) the system of the market economy, which has resulted in the present
neoliberal economy that condemns one third of the world population to
unemployment and one fifth of it to
absolute poverty and
b) the growth economy, which has already resulted in 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 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 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outdated.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
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They are outdated because in today’s internationalised market economy,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
-
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 treaty, which aim at regulating the
world and the European markets respectively in the interest mainly of those
controlling the respective markets (multinationals etc.)
-
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.).
-
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‘ statism (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 (where markets were also self-regulating, since all markets tend to
produce prices that equalise supply and demand) 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 elements means 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 to 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:
-
the free flow of labour and land at a minimal cost, which implied the
minimisation of social controls (narrow sense) on the markets, particularly the
markets for labour, capital and land, i.e. the marketization of the economy. For
instance, legislation to protect labour made the labour market less flexible
and, consequently, the flow of labour, less smooth or more expensive. Therefore,
historically, those having private control of the means of production have
always directed their efforts towards further marketizing the economy, that is,
minimising the social controls on the market.
-
the continual flow of investments into new techniques, methods of
production and products, in an effort to improve efficiency and the sales
figures (--a logic aptly expressed by the motto `grow or die'). The outcome of
this process is economic growth.
Thus, as soon as a market economy was established, which separated
society from the economy, a ceaseless social struggle started. 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 a broad sense). Economic
liberalism sought to establish a self-regulating market, 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. An important point that can be made here
is 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.
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 linked to the post-Enlightenment identification of Progress
with the development of productive forces that was adopted by socialists,
Marxists in particular.
Historically,
we may
distinguish three main phases in
the process of marketization:
a) the liberal phase, which after a transitional period of protectionism
led to
b) the statist phase, which was succeeded by the present
c) neoliberal phase.
The liberal phase covered a period of about 40 years in the mid of the
last century. Something very similar to what is going on today happened
in the 1830s and the 1840s when, particularly in Britain, there was an
explosion of legislation repealing restrictive regulations and an attempt to
establish the foundations of a self-regulating market, that is, free trade, a
competitive labour market and the Gold Standard—namely, the international
monetary system of fixed exchange rates where the value of a currency was fixed
to the value of gold. Although universal free trade was not attained during this
time, for a brief period in the 1860s and the 1870s the world came close to a
self-regulating system, as described by classical economic theory. So, the
nineteenth century saw the first attempt for an internationalised market
economy. This is shown by the
massive expansion of the movement of commodities, as well as capital and labour
that took place during this period. This expansion
was not, of course,
an
unexpected development given that the precondition for the reproduction of the
newly established market economy was its continuous growth, and this growth, in
turn, necessitated the continuous expansion of the market, initially of the
domestic market, and later on of the external market
However, the attempt to establish a purely liberal internationalised
market economy, in the sense I described it (free trade, competitive labour
market etc), lasted only 40 years,
and by the 1870s and 1880s protectionist legislation was back. Thus, the aim to
liberalise the markets in the first phase of the marketization process had the
paradoxical effect of leading to more protection: either because of pressure by
those controlling production to be protected against foreign competition, or
because of pressure by the rest of society to be protected against the market
mechanism itself.
Protectionism, in both these two forms, undermined the market economy
that had been established in the nineteenth century and, in fact, led to its
near collapse in the twentieth. It undermined, first, the domestic market
economy by distorting the price mechanism and obstructing the self-regulation of
markets. It undermined, secondly, the world market economy by leading to
colonial rivalry and competition for markets still unprotected. As a result of
protectionist policies, the world economy, on which the nineteenth century
balance-of-power system had rested, started disintegrating. This inevitably led
to the near collapse of the system itself because, as Polanyi has persuasively
shown, the “100 years' peace” (1815-1914) crucially depended on two
freedoms: the freedom of trade and the freedom of capital. Once colonial rivalry
started having its effect on both freedoms, the first world war became
inevitable. Therefore, it was the collapse of pure liberalism which set the
foundations for the near collapse of the market economy itself in the 1930s and
opened the way for the rise of statism.
The outcome of the disintegration of the world economy and of the
consequent collapse of the Gold Standard was that all major countries entered a
period of active state interference to control the economy. In other words, they
entered the period of what I call statism, that is the period of active state
control of the economy and extensive interference with the self-regulating
mechanism of the market aimed at directly determining the level of economic
activity. This was an event that
marked a new phase in the marketization process which was, one may argue, the
logical conclusion of protectionism that particularly
flourished during and after the first world war and reached its peak in
the 1930s with the adoption of many direct restrictions on trade, such as import
and export licensing, quotas and exchange controls.
In the period between the mid-1930s and the mid-1970s, (the period of
statism) active state interference
to control the market mechanism was the norm all over the capitalist world.
Although the forms of statism in the West were not as comprehensive as in the
East, and, of course, did not take the form of a ‘systemic’ change, still
the aim, especially in the post-World War II period, was similar. In other
words, the aim was not just to help the private sector flourish under some
minimal social controls (as, for example, is the case with Clintonomics, or the
economics of most social democrats today) but rather to supplant the private
sector itself, especially in the areas where the private sector has failed to
cover the needs of the whole population—mainly, with respect to the provision
of social services (health, education, social insurance, public utilities). In
this framework, the state sector played an important part in controlling the
size of the market through the manipulation of aggregate demand. The means used
for this purpose were government spending and public investment, as well as the
economic activity of nationalised enterprises. The necessary condition, however,
for the economic system's efficient functioning was the relatively low degree of
internationalisation, that is, a degree which was compatible with an
institutional framework relatively protective of the domestic market for
commodities, capital and labour. It was precisely the negation of this
condition, as internationalisation of the market economy grew, drastic
alteration of this institutional framework that made the continuation of the
social-democratic consensus impossible.
Statism
led to a huge rise
of the public sector’s
significance in the economy and particularly of what has been called the welfare
state, which by the early 1970s, absorbed about one-fifth of the Gross Domestic
Product in advanced capitalist countries (apart from Japan). Indicative of the
rapid growth of the welfare state during this period is the fact that social
expenditures in Britain, which had risen from 4% of the GNP in 1910 to about 11%
in the interwar period, had reached an average of about 25% in the early 1970s.
However, despite the expansion of statism at the national economic level, the
marketization process at the international level (in the sense of gradual
lifting of controls on the movement of commodities and later of capital), which
was interrupted after the Great Depression and the explosion of protectionism
that followed, was resumed. Thus, whereas import penetration (imports as a
percentage of domestic market for manufactures) within Europe was only 6% in
1937 and 1950, it increased to 11% in 1963 and 17% in 1971, namely, at a level
significantly higher than the 1913 level of 13%.
At the same time, the emergence and rapid expansion of
MNC’s led to the creation
of an informal, at first, capital market that was free of state regulations, the
Euro-dollar market. The growth of this new market was instrumental in the later
lifting of exchange and capital controls. This is because the exchange controls
of nation-states, particularly those in Britain, where the Euro-dollar market
originated, were put under severe strain, throughout the 1970s. So, the
institutional arrangements adopted in the post-war period to liberalise the
markets for commodities and capital, at the planetary level (GATT rounds of
tariff reductions), at the regional level (the European Economic Community
[EEC], European Free Trade Association [EFTA]) and at the national level
(abolition of capital and exchange controls in the US and Britain in the 1970s
etc.) mostly institutionalised rather than created the internationalised market
economy. In other words, it was the market economy’s grow-or-die dynamic that
created the present internationalised economy, which was then ratified by the
various international treaties etc.
Growing internationalisation implied that the growth of the market
economy relied increasingly on the expansion of the world market rather than on
that of the domestic market, as before—a fact that had very significant
implications with regard to the state's economic role. During the post-war
period of social-democratic consensus, when conservatives and social democrats
adopted the same objectives (full employment commitment, welfare state,
progressive taxation to reduce inequalities) economic growth rested mainly on
the growth of domestic demand which accounted for almost 90 percent of total
demand in advanced capitalist countries. However, under conditions of growing
internationalisation, the size of the growth economy increasingly depends on
supply conditions, which in turn determine trade performance, rather than on
direct expansion of domestic demand. Thus, supply conditions
play an increasingly significant growing role with respect to
accumulation and economic growth, since it is international trade that
determines the size of each national
growth
economy, either positively (through an exports-led growth) or negatively
(through an imports-led de-industrialisation). In other words, competitiveness,
under conditions of free trade, becomes even more crucial, not only with respect
to an increasingly export-led growth, but also with respect to import
penetration that ultimately leads to domestic business closures and
unemployment. To put it schematically, the market economy, as
internationalisation grows, moves from a "domestic market-led" growth
economy to a "trade-led" one.
In the framework of a trade-led growth, the prevailing conditions on the
production side of the economy, in particular those relating to the cost of
production, become critical. Squeezing the cost of production, both in terms of
labour cost and in terms of employers' taxes and insurance contributions,
becomes very important. But, squeezing the cost of production necessitated a
drastic reduction in statism, since statism was responsible for a significant
rise in the cost of production during the period of the social-democratic
consensus, both directly and indirectly. Directly, because the expansion of the
welfare state meant a growing burden on employers' contributions and taxes.
Indirectly, because, under the conditions of near-full employment which
prevailed during the statist phase of the marketization process, organised
labour could press successfully for wage rises that exceeded significantly
increases in productivity.
The cumulative effect of not letting the labour market,-- free of state
intervention,-- to determine the levels of wages and employment, as a market
economy requires, was the crisis of the early 1970s. In other words, the crisis,
contrary to the usually advanced view, was not mainly due to the oil crisis but
to the fact that the degree of internationalisation of the market economy
achieved by then was not compatible anymore with statism. This was
because:
the nation-state's effective control of the economy had become almost
impossible in the framework of an increasingly
free movement of capital across borders. Thus, although international trade
openness increased significantly in the post-war period, still, the lack of
financial openness allowed governments to follow independent economic policies.
However, as soon as the development of Euro-currency markets significantly
reduced the effectiveness of controls on financial markets, multinational
corporations saw their power to undermine those national economic policies which
were incompatible with their own objectives effectively enhanced;
the expansion of statism itself had certain built-in elements leading to
inflation and/or a profitability squeeze, which, both, were particularly
troublesome within the competitive framework that the internationalised market
economy has created. Such an element was the rapid rise of state spending—to
finance the expansion of the state's social role—which in some cases was
faster than the rise of state revenue, leading to an inflationary financing of
the resulting budget deficits.
At the same time, technological developments, the information revolution,
marked the transition to a post-industrial society which meant a significant
decline in the working class numbers and therefore in the structure of the
electorate. Furthermore as these changes created significant amounts of
structural unemployment, the state commitment to full employment and the welfare
state became an intolerable burden for the economic elite. The time was ripe for
the flourishing of the neoliberal movement, first in academia (Chicago School of
economics, resurrection of Hayek etc.) and then in politics (Thatcherism,
Reaganomics). The neoliberal movement has been essentially a movement to
minimise social controls on the markets, i.e. to further the marketization of
the economy, through the liberalisation of markets, the labour market in
particular, deregulations, privatisations, the lifting of controls on the
movement of capital etc.
Thus, as regards commodity markets first, the protection of domestic
markets has already almost been eliminated within the two major economic blocs
(European Union and North America-NAFTA) and will soon almost disappear
world-wide, following the implementation of the new GATT agreement. So, the
combined effect of the ‘objective‘ factors I mentioned (economic and
technological) and the neoliberal policies to free the markets, has been that
the internationalisation of the market economy has accelerated sharply since the
1970s. In just over 20 years, the ratio of world exports to GDP
has grown
by 50 percent
(from 14 percent in 1970 to 21 percent in 1992) and in the USA, the biggest
market economy, this ratio has almost doubled in the same period—from 6 to 11
percent—and is now higher than in Japan.
Also, as far as capital markets are concerned, the neoliberal abolition
of exchange controls and restrictions to the movement of capital had a decisive
influence on the internationalisation of the market economy. In fact, according
to some observers, the recent significant rise in foreign direct investment
establishes a new trend where investment is tending to displace trade as the
driving force of international integration. Thus, foreign direct investment, as
a proportion of the advanced capitalist countries’ GDP, has nearly doubled in
twenty years and now stands at more than 10 percent. However, short-term capital
movements may be even more important with respect to the loss of the
nation-state’s economic sovereignty. It has been estimated that one trillion
dollars a day is changing hands on the world's foreign exchange markets and that
only around 5% of the deals struck are linked with foreign trade, whereas the
rest are purely speculative. Still, just twenty years ago, about 90 percent of
capital movements were linked to investment and trade and only 10 percent were
speculative.
The huge expansion of such capital movements has made it impossible for
any nation-state (or even an economic block) to introduce, independently, any
effective social controls on the markets. If we take into account the huge rise
in international borrowing that took place in international capital markets
since the liberalisation moves of the 1970s and the significant increase in
foreign penetration of national bond markets, it becomes obvious that no
national government today may follow economic policies that are disapproved of
by the capital markets, which have the power to create an intolerable economic
pressure on the respective country's borrowing ability, currency value and
investment flows. If we assume, for instance, that a social-democratic party
adopts, against the trend, expansionary policies in order to reduce
unemployment, it may be shown that under conditions of free capital mobility,
its currency may easily collapse in foreign exchange markets.
So, the nation-state, in today’s internationalised market economy,
faces an increasing loss of economic sovereignty. This is also reflected in the
creation of huge economic blocks, within the context of which the economic role
of the individual nation-state is being progressively downgraded in favour of
supra-national institutions. In fact, the same economic aims that brought about
the emergence of the neoliberal movement
have
led to the creation of these blocks. The basic aim is the improved
competitiveness of the sections of capital which are based on each block.
So, after about a hundred years since the first attempt to create an
internationalised market economy collapsed, today, a new attempt is being made which has much higher chances of
success that the previous one. The reason why such a system is now in a better
position to function more successfully than in the past is that the basic factor
that led to the collapse of the liberal phase and in particular of the Gold
Standard has been eliminated: that is, the various restrictions on the markets
for goods, labour and capital which, as we saw, had introduced various degrees
of ‘inflexibility’ into them. Since the neoliberal consensus has eliminated
most of these restrictions, a historic opportunity has been created for the
marketization process to be completed. With hindsight, it is therefore obvious
that Polanyi was wrong in thinking that the rise of statism in the thirties was
evidence of the utopian character of the self-regulating market and of the
existence of an “underlying social process” which leads societies to take
control of their market economies. In fact, statism proved to be a relatively
brief interlude in the marketization process. In this sense, statism was a
transitional phenomenon related to the failure of the first attempt to create a
system based on an internationalised self-regulating
market economy. This failure
was
due not to the supposedly utopian character of the marketization of society, as
Polanyi thought, but rather to the fact that the objective conditions for the
completion of this process had not as yet been created during the first phase of
marketization, in the nineteenth century.
It is therefore obvious that the rise of neoliberalism is not a
conjunctural phenomenon, as social democrats present it, but that it represents
the completion of the marketization process that was interrupted by the rise of
statism. Furthermore, the breakdown of `actually existing socialism' in the East
and the collapse of social democracy in the West, for reasons I will consider
next, have created the political conditions for the completion of the
marketization process. So, the fact that neoliberal policies are supported today
by both conservative and social-democratic parties, in government or in
opposition, and that the basic elements of neoliberalism have been incorporated
into the strategies of the international institutions which control the world
economy (IMF, World Bank),as well as in the treaties that have recently reformed
the EU (Single Market Act, Maastricht
Treaty), makes it plainly evident that we are faced with a new consensus.
This is a consensus that has replaced the defunct social-democratic
consensus and which reflects the radical structural changes brought about by the
development of the internationalised market economy.
As regards the collapse of social democracy and generally the political
implications of the internationalised market economy, we have to refer again to
the technological changes that not only created mass open or disguised
unemployment, which the state is now unable and unwilling to control, but also
to structural changes in the working population and the electorate. So, a new
class- structure has emerged. 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 the population. 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 marginalized 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 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, through
taxation, public services in which they are not interested anymore (because of
the deterioration in their quality, as a result of neoliberal policies) 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 `modernising' 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 social democratic 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 parties in Europe).
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.
So, what we face today is not the ‘globalisation’ of the economy, as
many call the present trends, but the internationalisation of the market
economy. The difference between globalisation and internationalisation is not
just semantic. Internationalisation, refers to the case where markets become
internationalised and as a result the economic policies of national governments
and the reproduction of the growth economy itself are conditioned by the
movement of commodities and capital across frontiers. On the other hand,
globalisation refers to the case where production itself becomes
internationalised, in the sense that production units become stateless bodies,
operating in a borderless world, with activities not primarily aiming at the
country which is their national base . and involving an integrated internal
division of labour spanning many countries. All the evidence is that
internationalisation does happen on a massive scale, but globalisation is still
very limited.
Furthermore, 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, 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:
micro-regions, traditional states and macro-regions with institutions of greater
or lesser functional scope and formal authority and with world cities becoming
the keyboards of the global economy.
One 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 from the North to the South and within
them. As I said before the two fundamental pillars of the market economy are
marketization and growth. Growth has already led to a huge concentration of
economic power which, as a result of the marketization of the last 20 years has
increased further, both between the North and the South and within them. Of
course, concentration of economic power is not 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, which resulted after the establishment of
the market economy as the inevitable outcome of its grow-or-die dynamics, 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.
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 said, 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.
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. It was estimated that to simply universalise the North’s standard
of living now, global industrial production would need to rise 130 times (not
taking into account population growth projections).
-
second, a universalised growth economy is not environmentally sustainable
in the sense that the universalisation of “environmentally-friendly”
technologies is not possible, given their cost and the present concentration of
world income.
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 arguments of the ‘civil
societarian’social-liberals self-styled “Left” which assume that the
elites of the three blocks (NAFTA, EU, Japan), facing the threat of an
inadequate demand because of growing inequality, will be induced to introduce a
world mixed economy (similar to that of the socialdemocratic consensus), 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. This is why the moment of truth for the
present social system will come when it will be universally realised 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, will
be able to enjoy them.
In conclusion, it is obvious that the present concentration of economic,
political and social power in the hands of the elites which control the growth
economy is not simply a cultural phenomenon related to
the values established by the industrial revolution, as significant
currents within the ecological movement naively believe. The concentration of
power constitutes the inevitable outcome of a historical process
that started with the establishment of hierarchical social structures and the implied ideology of domination of human over human
and nature and culminated in the last two centuries with the development of the
market economy and its by-product the growth economy.
Now, the accelerating trend towards internationalisation of the market
economy and the resulting increasing concentration of power 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. Because, in fact, today’s “politics” and “democracy”
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 “nationalisation” of the market led to the death of
the communities, the free towns and their federations, one may reasonably expect
that the internationalisation of the market will lead to the death of
nation-states and national politics. Even if the present political institutions
survive in the future they will be devoid of any real content and they will be
just remnants of the past, constituting a symbolic formality, similar to the
monarchies still existing in some Scandinavian countries.
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 liberal democracy, which however both the
supporters of the nation-state and those assuming its end,
take for granted!
It is therefore clear, as I said at the beginning, that the need for a
new liberatory project is today imperative if we do not wish to live in the new
barbarism that is now emerging. It is also clear that this new project cannot be
based on socialist statism, which has just collapsed in both its forms of
‘actually existing socialism’ in the East and social democracy in the West.
To my mind, a new liberatory project should involve a new conception of
inclusive democracy, which I will attempt to summarise briefly.
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’. Political, economic and democracy in the
social realm may be defined, briefly, 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. Correspondingly, 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. A crucial issue that arises with respect to democracy in
the social realm refers to relations in the household. Women's social and
economic status has been enhanced this century, as a result of the expanding
labour needs of the growth economy on the one hand and the activity of women's
movements on the other. Still, gender relations
at the household level are mostly hierarchical, especially in the South
where most of the world population lives. However, although the household shares
with the public realm a fundamental common characteristic, inequality and power
relations, the household has always been classified in the private realm.
Therefore, the problem that arises here is how the ‘democratisation’ of the
household may be achieved.
One possible solution is the dissolution of the household/public realm
divide. Thus, some feminist writers, particularly of the eco-feminist variety,
glorify the oikos and its values as a substitute for the polis and its politics,
something that, as Janet Biehl observes, "can easily be read as an attempt
to dissolve the political into the domestic, the civil into the familial, the
public into the private". Similarly, some green thinkers
attempt to reduce the public realm into an extended household model of a
small-scale, co-operative community. At the other end, some Marxist feminists
attempt to remove the public/private dualism by dissolving all private space
into a singular public, a socialised or fraternal state sphere.
However, as Val Plumwood points out, the feminists who argue for the
elimination of household privacy are today a minority although most feminists
stress the way in which the concept of household privacy has been misused to put
beyond challenge the subordination of women.
Another possible solution is, taking for granted that the household
belongs to the private realm, to define its meaning in terms of the freedom of
all its members. To my mind, the issue is not the dissolution of the
private/public realm divide. The real issue is how, maintaining and enhancing
the autonomy of the two realms, such institutional arrangements are adopted
that introduce democracy at the household and the social realm in general
and at the same time enhance the institutional arrangements of political and
economic democracy. This is particularly so if we take into account the basic
fact that an effective democracy is inconceivable unless free time is equally
distributed among all citizens, and this condition can never be satisfied as
long as the present hierarchical conditions in the household, the workplace and
elsewhere continue. Furthermore, democracy in the social realm, particularly in
the household, is impossible, unless such institutional arrangements are
introduced which recognise the character of the household as a needs-satisfier
and integrate the care and services provided within its framework into
the general scheme of needs satisfaction.
The final question that arises with respect to the conception of an
inclusive democracy refers to the
issue of how we may envisage an environmentally-friendly institutional framework
that would not serve as the basis of a Nature-dominating ideology. Some critics
of inclusive democracy misconceive the issue as if it was about the guarantees
that an inclusive democracy might offer in ensuring a better relationship of
society to nature than the alternative systems of the market economy, or
socialist statism. This is a clear misconception of what democracy is about
because, if we see it as a process of social self-institution where there is no
divinely or ‘objectively’ defined code of human conduct, such guarantees are
by definition ruled out. Therefore, the
replacement
of the market economy by a new institutional framework of inclusive democracy
constitutes only the necessary condition for a harmonious relation between the
natural and social worlds. The sufficient condition refers to the citizens’
level of ecological consciousness. Still, the radical change in the dominant
social paradigm that will follow the institution of an inclusive democracy,
combined with the decisive role that a well-rounded education in knowledge and
skills, i.e. the education of the individual as citizen will provide, in an
environmentally-friendly institutional framework, could reasonably be expected
to lead to a radical change in the human attitude towards Nature.
In other words, a democratic ecological problematique cannot go beyond
defining the institutional preconditions that offer the best hope for a better
human relationship to Nature. However, 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. The factors supporting this view refer to all three elements
of an inclusive democracy: political, economic and social.
At the political level, there are grounds for believing that the creation
of a public space will by itself have a very significant effect in reducing the
appeal of materialism. This is because the public space will provide a new
meaning of life to fill the existential void that the present consumer society
creates. The realisation of what it means to be human could reasonably be
expected to throw us back toward Nature. As it was recently pointed out with
reference to the work of Hannah
Arendt “a world in which labour is seen as only one part of a meaningful life
will find consumption less tempting”.
Also, at the economic level, it is not accidental that, historically, the
process of destroying the environment en masse has coincided with the process of
marketization of the economy. In other words, the emergence of the market
economy and of the consequent growth economy had crucial repercussions on the
society-Nature relationship and led to the rise of the growth ideology as the
dominant social paradigm. Thus, an ‘instrumentalist’ view of Nature became
dominant, in which Nature was seen as an instrument for growth, within a process
of endless concentration of power. If we assume that today only a confederal
community-based society could secure an inclusive democracy, it would be
reasonable to assume further that once the market economy is replaced by a
democratically run confederal economy,
the
grow-or-die dynamics of the market economy will be replaced by the new social
dynamic of the new society: a dynamic aiming at the satisfaction of the
community needs and not at growth per se. If the satisfaction of community needs
does not depend, as at present, on the continuous expansion of production to
cover the wants that the market creates, and if the link between society and
economy is restored, then there is no reason why the present instrumentalist
view of Nature will continue conditioning human behaviour.
Finally, democracy in the broader social realm could also be reasonably
expected to be environmentally-friendly. The phasing out of patriarchal
relations in the household and hierarchical relations in general should create a
new ethos of non-domination which would engulf not only First Nature but Second
Nature as well. In other words, the creation of democratic conditions in the
social realm should be a decisive step in the creation of the sufficient
condition for a harmonious nature-society relationship.
But, apart from the above political and economic factors, an ecological
factor is involved here, which strongly supports the belief in a harmonious
democracy-Nature relationship: the ‘localist’ character of a confederal
community-based society might also be expected to enhance its
environmentally-friendly character. Small scale communities are more likely to
have the formal conditions required for successful and enduring collective
management of the commons. Furthermore, it is reasonable to assume—and the
evidence about the remarkable success of local communities in safeguarding their
environments is overwhelming that when people rely directly on their natural
surroundings for their livelihood, they will develop an intimate knowledge of
those surroundings, which will necessarily affect positively their behaviour
towards them. However, the precondition for local control of the environment to
be successful is that the community depends on its natural surroundings for its
long-term livelihood and that it therefore has a direct interest in protecting
it—another reason why an ecological society is impossible without economic
democracy.
In conclusion, the present day ecological crisis is basically susceptible
to two solutions: one solution presupposes radical decentralisation. Thus, the
economic effectiveness of the renewable forms of energy (solar, wind, etc.)
depends crucially on the organisation of social and economic life in smaller
units. This solution however has already been marginalised by the
internationalised market economy, precisely because it is not compatible with
today's concentration of economic, political and social power. This is also why
alternative solutions are being advanced which are supposed to concentrate many
advantages of renewable energy, but without necessitating any radical changes in
the market/growth economy.
The new conception of democracy that I described briefly implies a new
conception of citizenship: economic, political, social and cultural. Thus,
political citizenship involves new political structures and the return to the
classical conception of politics (direct democracy). Economic citizenship
involves new economic structures of community ownership and control of economic
resources (economic democracy). Social citizenship involves self-management
structures at the workplace, democracy in the household and new welfare
structures where all basic needs (to be democratically determined) are covered
by community resources, whether they are satisfied in the household or at the
community level. Finally, cultural citizenship involves new democratic
structures of dissemination and control of information and culture (mass media,
art, etc.), which allow every member of the community to take part in the
process and at the same time develop his/her intellectual and cultural
potential.
This conception of citizenship,
which
could be called a democratic conception, presupposes a ‘participatory’
conception of active citizenship, where political activity is not a means to an
end, but an end in itself where as Hannah Arendt put it we
do not engage in political action simply to promote our welfare but to
realise the principles intrinsic to political life, such as freedom, equality,
justice, solidarity, courage and excellence. It is therefore obvious that this
conception of citizenship is qualitatively different from the liberal and
social-democratic conceptions which adopt an ‘instrumentalist’ view of
citizenship, i.e. a view which implies that citizenship entitles citizens with
certain rights that they can exercise as means to the end of individual welfare.
To conclude, 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.