The swift unraveling of the global
economy combined with the ascent to the US
presidency of an African-American liberal has left
millions anticipating that the world is on the
threshold of a new era. Some of president-elect
Barack Obama's appointees - in particular former
Treasury secretary Larry Summers to lead the
National Economic Council, New York Federal
Reserve Board chief Tim Geithner to head Treasury,
and former Dallas mayor Ron Kirk to serve as trade
representative - have certainly elicited some
skepticism.
But the sense that the old
neo-liberal formulas are thoroughly discredited
has convinced many that the new Democratic
leadership will break with the market
fundamentalist policies that
have reigned since the
early 1980s.
One important question is how
decisive and definitive the break with
neo-liberalism will be. Other questions, however,
go to the heart of capitalism itself. Will
government ownership, intervention, and control be
exercised simply to stabilize capitalism, after
which control will be given back to the corporate
elites? Are we going to see a second round of
Keynesian capitalism, where the state and
corporate elites along with labor work out a
partnership based on industrial policy, growth,
and high wages - though with a green dimension
this time around? Or will we witness the
beginnings of fundamental shifts in the ownership
and control of the economy in a more popular
direction?
There are limits to reform in
the system of global capitalism, but at no other
time in the last half century have those limits
seemed more fluid.
President Nicolas
Sarkozy of France has already staked out one
position. Declaring that "laissez-faire capitalism
is dead", he has created a strategic investment
fund of 20 billion euros (US$27 billion) to
promote technological innovation, keep advanced
industries in French hands, and save jobs.
"The day we don't build trains, airplanes,
automobiles, and ships, what will be left of the
French economy?" he recently asked. "Memories. I
will not make France a simple tourist reserve."
This kind of aggressive industrial policy aimed
partly at winning over the country's traditional
white working class can go hand-in-hand with the
exclusionary anti-immigrant policies with which
the French president has been associated.
Global social democracy A new
national Keynesianism along Sarkozyan lines,
however, is not the only alternative available to
global elites. Given the need for global
legitimacy to promote their interests in a world
where the balance of power is shifting towards the
south, Western elites might find more attractive
an offshoot of European Social Democracy and New
Deal liberalism that one might call "Global Social
Democracy" or GSD.
Even before the full
unfolding of the financial crisis, partisans of
GSD had been positioning it as alternative to
neo-liberal globalization in response to the
stresses and strains being provoked by the latter.
One personality associated with it is
British Prime Minister Gordon Brown, who led the
European response to the financial meltdown via
the partial nationalization of the banks. Widely
regarded as the godfather of the "Make Poverty
History" campaign in the United Kingdom, Brown,
while he was still the British chancellor,
proposed what he called an "alliance capitalism"
between market and state institutions that would
reproduce at the global stage what he said
Franklin Roosevelt did for the national economy:
"securing the benefits of the market while taming
its excesses."
This must be a system,
continued Brown, that "captures the full benefits
of global markets and capital flows, minimizes the
risk of disruption, maximizes opportunity for all,
and lifts up the most vulnerable - in short, the
restoration in the international economy of public
purpose and high ideals."
Joining Brown in
articulating the GSD discourse has been a diverse
group consisting of, among others, the economist
Jeffrey Sachs, investor George Soros, former UN
secretary general Kofi Annan, sociologist David
Held, economist and Nobel laureate Joseph
Stiglitz, and even former Microsoft boss Bill
Gates. There are, of course, differences of nuance
in the positions of these people, but the thrust
of their perspectives is the same: to bring about
a reformed social order and a reinvigorated
ideological consensus for global capitalism.
Among the key propositions advanced by
partisans of GSD are the following:
Globalization is essentially beneficial for
the world; the neo-liberals have simply botched
the job of managing it and selling it to the
public.
It is urgent to save globalization from the
neo-liberals because globalization is reversible
and may, in fact, already be in the process of
being reversed.
Growth and equity may come into conflict, in
which case one must prioritize equity.
Free trade may not, in fact, be beneficial in
the long run and may leave the majority poor, so
it is important for trade arrangements to be
subject to social and environmental
conditions.
Unilateralism must be avoided while
fundamental reform of the multilateral
institutions and agreements must be undertaken - a
process that might involve dumping or neutralizing
some of them, such as the World Trade
Organization's Trade-Related Intellectual Property
Rights Agreement (TRIPs).
Global social integration, or reducing
inequalities both within and across countries,
must accompany global market integration.
The global debt of developing countries must
be cancelled or radically reduced, so the
resulting savings can be used to stimulate the
local economy, thus contributing to global
reflation.
Poverty and environmental degradation are so
severe that a massive aid program or "Marshall
Plan" from the north to the south must be mounted
within the framework of the "Millennium
Development Goals".
A "Second Green Revolution" must be put into
motion, especially in Africa, through the
widespread adoption of genetically engineered
seeds.
Huge investments must be devoted to push the
global economy along more environmentally
sustainable paths, with government taking a
leading role ("Green Keynesianism" or "Green
Capitalism").
Military action to solve problems must be
de-emphasized in favor of diplomacy and "soft
power," although humanitarian military
intervention in situations involving genocide must
be undertaken.
The limits of Global
Social Democracy GSD has not received much
critical attention, perhaps because many
progressives are still fighting the last war, that
is, against neo-liberalism. A critique is urgent,
and not only because GSD is neo-liberalism's's
most likely successor. More important, although
GSD has some positive elements, it has, like the
old social democratic Keynesian paradigm, a number
of problematic features.
A critique might
begin by highlighting problems with four central
elements in the GSD perspective.
First,
GSD shares neo-liberalism's's bias for
globalization, differentiating itself mainly by
promising to promote globalization better than the
neo-liberals. This amounts to saying, however,
that simply by adding the dimension of "global
social integration" an inherently socially and
ecologically destructive and disruptive process
can be made palatable and acceptable.
GSD
assumes that people really want to be part of a
functionally integrated global economy where the
barriers between the national and the
international have disappeared. But would they not
in fact prefer to be part of economies that are
subject to local control and are buffered from the
vagaries of the international economy? Indeed,
today's swift downward trajectory of
interconnected economies underscores the validity
of one of anti-globalization movement's key
criticisms of the globalization process..
Second, GSD shares neo-liberalism's's
preference for the market as the principal
mechanism for production, distribution, and
consumption, differentiating itself mainly by
advocating state action to address market
failures. The kind of globalization the world
needs, according to Jeffrey Sachs in The End of
Poverty, would entail "harnessing ... the
remarkable power of trade and investment while
acknowledging and addressing limitations through
compensatory collective action."
This is
very different from saying that the citizenry and
civil society must make the key economic decisions
and the market, like the state bureaucracy, is
only one mechanism of implementation of democratic
decision-making.
Third, GSD is a
technocratic project, with experts hatching and
pushing reforms on society from above, instead of
being a participatory project where initiatives
percolate from the ground up. Fourth, GSD,
while critical of neo-liberalism, accepts the
framework of monopoly capitalism, which rests
fundamentally on deriving profit from the
exploitative extraction of surplus value from
labor, is driven from crisis to crisis by inherent
tendencies toward overproduction, and tends to
push the environment to its limits in its search
for profitability.
Like traditional
Keynesianism in the national arena, GSD seeks in
the global arena a new class compromise that is
accompanied by new methods to contain or minimize
capitalism's tendency toward crisis. Just as the
old social democracy and the New Deal stabilized
national capitalism, the historical function of
GSD is to iron out the contradictions of
contemporary global capitalism and to relegitimize
it after the crisis and chaos left by
neo-liberalism. GSD is, at root, about social
management.
Obama has a talent for
rhetorically bridging different political
discourses. He is also a "blank slate" when it
comes to economics. Like US president Franklin
Delano Roosevelt, he is not bound to the formulas
of the ancien regime. He is a pragmatist whose key
criterion is success at social management. As
such, he is uniquely positioned to lead this
ambitious reformist enterprise.
Reveille for progressives While
progressives were engaged in full-scale war
against neo-liberalism, reformist thinking was
percolating in critical establishment circles.
This thinking is now about to become policy, and
progressives must work double time to engage it.
It is not just a matter of moving from
criticism to prescription. The challenge is to
overcome the limits to the progressive political
imagination imposed by the aggressiveness of the
neo-liberal challenge in the 1980s combined with
the collapse of the bureaucratic socialist regimes
in the early 1990s. Progressives should boldly
aspire once again to paradigms of social
organization that unabashedly aim for equality and
participatory democratic control of both the
national economy and the global economy as
prerequisites for collective and individual
liberation.
Like the old post-war
Keynesian regime, GSD is about social management.
In contrast, the progressive perspective is about
social liberation.
Walden Bello
is a columnist for Foreign Policy In Focus, a
senior analyst at the Bangkok-based Focus on the
Global South, president of the Freedom from Debt
Coalition, and a professor of sociology at the
University of the Philippines.
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