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Elect the Ambassador

Extracted from Elect The Ambassador! – Building Democracy In A Globalised World - by Duncan Kerr (Pluto Press)

Labor frontbencher Duncan Kerr unveils his vision for a new international democracy.

Why do people who have won the democratic right to choose their own leaders feel powerless and alienated?

This is the central paradox of our times. Democracy may have emerged from the cold war unrivalled as the most desirable type of government; yet voters show ever more cynicism about electoral politics. The root cause of this lack of faith is that citizens have lost much of their real power as the location of real decision-making has shifted from the local and national to the global.

Voters instinctively know that there is nothing democratic about this shift. Democratic forms remain but, within, democracy seems to have been hollowed out. There ought be little surprise that ever-increasing numbers of citizens view electoral politics as a charade if the most important decisions shaping the future of their community are made not by them or by their elected representatives, but by seemingly ungovernable transnational corporations or by remote, unaccountable international institutions.

Such developments trouble many people. The loss of consent of the governed poses challenges for even the most powerful national governments. Since World War II the United States of America has been a leading advocate of open markets and globalisation. Yet United States Deputy Secretary of State Strobe Talbot laments: 'While globalisation induces international cohesion and empowers international enterprises, it also accentuates the limitations of national power.'

This book argues that much of this growing cynicism about democracy and electoral politics has come about because of these developments. It therefore begins by examining this thing called 'globalisation' which seems to be driving these changes. Is globalisation good or bad for us? Or is it like the curate's egg, 'good in parts'? Importantly, if it isn't wholly good for us, what, if anything, can we do about it?

The democratic deficit

All over the developed world voters are reacting with apathy or antagonism to their elected representatives. They appear to be fed up with choices between what they see as Tweedledee and Tweedledum parties and their candidates. They suspect - rightly in most cases - that however they cast their vote and whatever party is elected, the broad shape of the policy implemented by their national government will be much the same.

This is what Susan Strange - one of the first to analyse the impact of modern globalisation - has called the 'democratic deficit'. This deficit, she argues, is created because all major political parties in almost every country have accepted as a reality, if not in their rhetoric, that their political choices have narrowed because of the need to conform to what global markets will allow.

Thomas Friedman writes about globalisation as if it is a Homeric force - something, like earthquakes, fire and flood, beyond the capacity of communities to resist. Friedman claims nations must accommodate its demands or find their citizens left behind in isolation and poverty. He uses the term "Golden Straitjacket" to describe the policy choices that must be adopted by governments that want to attract foreign investment and stay in what he calls 'the Fast World'. This view of government as tied - with its implicit rejection of the power of humans to shape their own destiny - appears to be almost totally dominant among economic commentators.

Bowing to the markets: bondage or discipline?

A striking example of the convergence of policy choices being driven by this golden straitjacket discipline is provided by Australia under the Hawke and Keating governments from 1987 until 1996. These Australian governments were not alone in bowing to the market during this period. Indeed, a fair judgment would probably conclude that, at a time when the social safety net was being torn up in many countries, the Hawke and Keating Labor governments swam against the stream in seeking to preserve a strong system of basic welfare provision. But they too, despite their Laborist and social democratic origins, went along with much of what the market demanded.

This is what makes the example so illustrative. Implicitly accepting Thatcher's mantra 'there is no alternative', Australian Labor governments introduced smaller government, privatization of state assets, a national competition policy, the elimination of currency and foreign exchange controls, major reductions in tariffs and in non-tariff industry protection, as well as real wage reductions and increased labour-market flexibility.

Social democratic governments accepted the need for these policies because, like Friedman, they believed those measures were necessary for their countries to remain internationally competitive. Some accepted these choices reluctantly but many showed the fervour of the recently converted as they embraced the 'discipline' of the market. Doing so was seen as the measure of mature international citizenship. Speaking about the decision to float the Australian dollar, Keating was positively triumphalist:

The kind of discipline this government's faced up to would be something I think...[the opposition parties would] be totally incapable of facing. The float is the decision where Australia truly made its debut into the world - said, 'OK, we're now an international citizen'.

But embracing this kind of discipline means the nation state is now more limited in the security it can guarantee its citizens. Given that this is the case, what can social democrats - who in the main accept the inevitability, if not the desirability of globalisation - offer, other than comforting platitudes, to globalisation's losers?

If putting on Friedman's 'Golden Straitjacket' creates job insecurity for many workers and growing inequalities between citizens, then turning a blind eye to those consequences is bound to aggravate social tensions and to spawn populist resistance. This is the fertile ground that led to widespread support for Le Pen in France, the neo-Nazis in Austria, Buchanan in the United States of America and Hanson in Australia. The appeal of right-wing extremist movements to the marginalized will grow if they are the only forces offering an alternative.

We usually get little warning of major historical economic and social turning-points. In the early 1980s, for instance, the collapse of Communism and of the Soviet Union was almost unimaginable. Without some resolution to the crises of disempowerment and of increasing social division and growing disaffection over democratic processes, the capitalist system may be no more immune to cataclysmic change than was the communist system in Russia in 1989.

Social democracy

It makes little sense, however, to advocate policies of social inclusion and social justice, if there is no realistic prospect that these objectives can be achieved. The increasing individualism that has been a characteristic of globalisation provides a challenge to the relationship between the state and the citizen - even to the idea of the state itself having more than the most basic residual welfare role.

The contraction of the state's social role in the United States, Britain, Australia and New Zealand has been pronounced. Even in continental Europe, until recently the stronghold of the welfare state, the age at which state pensions are paid has been raised and many social services have been cut back. Present-day Western national governments are evolving, or have evolved into 'post-welfare states'.

This evolution has forced social democratic parties to redefine, either explicitly or covertly, their social programs. Before the onslaught of globalisation social democrats pursued a number of objectives. They advocated transfer payments - such as pensions, unemployment relief and the public provision of health and education - and also sought to protect workers from exploitation and to invest in infrastructure and publicly owned enterprise in order to build strong national economies. For most of the twentieth century these objectives formed the ideological battleground of electoral politics in Western democracies. However, the number of real differences between the moderate Right and the moderate Left has decreased. This convergence has led to growing public cynicism about the whole democratic system.

The debate about whether citizens have lost their power to influence the shape of their future thus concerns everyone; but the rub of the question is most acute for social democrats.

Individual economic liberty and the generation of private wealth have not provided solutions to the problems of structural inequality and social insecurity unleashed by the massive and continuing changes wrought by globalisation. Time and time again experience has shown that trickle-down doesn't trickle.

Whither - or wither - the nation state?

The idea that the nation state can no longer guarantee economic and social security for its citizens has revolutionary implications. Even if national governments are less constrained than Friedman and Strange suggest, social democrats will need to consider whether the evolution of their societies to post-welfare states is reversible. This means exploring what defensive strategies are possible, and at what cost.

A starting point is to ask whether the current international 'competition for the bottom' on tax policy can be avoided. 'Competition for the bottom' describes the process that occurs if nations and regions competitively reduce their tax rates to attract mobile capital. If one country offers tax cuts or other incentives, its competitors often think they have to follow suit in order to remain equally attractive to investors. This creates a vicious downward pressure on tax rates.

Tax revenue has already declined because of the collapse of claims for the legitimacy of the redistributive tax system and because of the growing opportunities for tax evasion as global commerce shifts mobile capital beyond national borders and through tax havens. This has led to the contraction and gradual disappearance of many aspects of the public sphere. The survival of civil society - of even a minimalist welfare state cannot be guaranteed if the state loses its capacity to collect tax.

Declining revenues have also led anxious policy-makers to sell off assets formerly held in public ownership. Privatisation of public provisions - energy, water, education, health, and even prisons and security services - means more than a change of ownership. The implications of the elimination of public ownership are more profound, affecting people's attitudes to each other and the idea of community. This means that, even if national governments have greater freedom than commentators such as Friedman suggest, the changes that globalisation has already wrought cannot be ignored by policy-makers who want to exercise the diminished options that remain.

Is reform possible?

Globalisation, free trade, the reduction of the public sphere to a residual role, increasing disparities in wealth between individuals and regions - all these have historical precedents. Similar great changes occurred in late nineteenth century Europe.

Benjamin Disraeli, writer, political thinker and prime minister in Victorian Britain, warned that untrammeled capitalism would create a human residue, an excluded underclass, a society of 'Two Nations' - of the rich and the poor.

Then, such a society of 'Two Nations' did not come to pass. Instead, in Russia, China, and some other less-developed nations, state socialism was attempted, while in more economically advanced nations the welfare state was created to take the rough edges off the anarchy of the markets and make the world safe for capitalism. The welfare state allowed the free market's dynamic capacity to create growth and wealth to coexist and even thrive within a framework that provided at least some basic social rights for all citizens. The welfare state thus ameliorated capitalism's human costs. Through most of the twentieth century almost all economically strong nation states moved to create some form of economic and social safety net for those who would otherwise have been left behind.

The modern, democratic, nation state thus grew out of the economic heritage of the industrial revolution and the political heritage of the French and American revolutions. It blended welfare-capitalism and the 'rights of man'.

Democracy confers legitimacy on governments chosen by the will of their citizens. Its ideal is that government is 'for the people, by the people, of the people'. It is a powerful tradition. Democratic theory asserts that to the extent that they choose, citizens can subject the otherwise unconstrained forces of the market to limits. The choices of what limits should be imposed are decided by electoral contest. The government of a democratic nation state is meant to be a mechanism through which citizens can express their common will.

But this theory no longer works as it once did. Globalisation has shifted the arena of decision-making from the local to the global. Many decisions that used to be made at the local and national level are now made by international institutions. And many choices that used to be open to national governments are, because of the forces of global capital, no longer realistically available. This returns us to the paradox created by globalisation; while democracy has triumphed, it seems to have lost much of its power.

If we now recognize that the capacity of citizens to make effective political choices has lessened because of this situation, can we do anything to extend social control of capital and the market to the international sphere? And if the nation state is restricted in its choices for the same reason, what opportunities exist to develop and democratize global government?

Global government is a fact - not a choice

This book argues that global government is already a fact of life. Global government includes formally recognized elements such as the United Nations and economic structures such as the Bretton Woods organisations (the World Bank and the international Monetary fund), and the World Trade Organisation. It also has many informal elements.

The structure of global government has evolved in a piece-meal way, through practice over time, and its constitution is unwritten. In this it resembles the British constitution, which also is unwritten and grew organically. This makes getting a grasp of its workings difficult. For that reason it was not until legal scholars provided accessible accounts of the British constitution that the intelligent lay-person could have a working knowledge of it.

The current transnational system of global government, with its intersecting influences of treaty law, international institution, transnational corporations and non-government organisations, is similarly elusive and difficult to summarise. A vast number of important decisions, often shrouded in secrecy, are being taken by global government. But, unlike the British government, it is almost completely outside democratic control.

The theme of this book is that citizens should begin to insist on the democratisation of global government. The alternative is not just that we will see more of the same - of mean-spirited, shrinking, post-welfare nation states. We will also witness growing social division between, and within, nations. At best, this will create fertile ground for heightened disaffection and conflict. At worst, it may see the world racked by explosions of racialism, xenophobia and ultra-nationalism.

Too often in history bad ideas have triumphed when real concerns about the community's insecurity have been ignored or given only lip-service. It seems improbable that growing inequality can be tolerated indefinitely. If, in all except cynical electoral rhetoric, political leaders treat the great problems of their times - rapidly increasing inequality, unemployment and poverty - as beyond solution, new populist political forces will emerge with claims to fill the vacuum.

It will not be possible for the social democratic tradition to survive if we abandon the international sphere to the political equivalent of Adam Smith's invisible hand. So, this book explores whether it is possible to breathe life back into the democratic ideal in a globalised world. It is optimistic about this possibility. It asserts that citizens can only exercise the whole of their power if they claim a right to be represented in processes of international decision-making. Such claims must be pressed with the objective of sustaining the legitimacy of consent to a form of government which already has, and increasingly will have a global dimension.

The structure of this book

This book begins by examining what 'going global' means. Chapter 1 sets out to provide some basic data about globalisation, and a thumbnail, theoretical overview of what it means. It examines who has gained and who has lost as a result of globalisation.

Chapter 2 then explores how much autonomy nation states retain in this globalised world. It asserts that national governments still possess some freedom of choice in economic sand social policy-setting but concludes that this will become increasingly constrained. It also argues that many problems that once could be solved at a national level can now only be effectively addressed by international decision-making.

Attention is then given to the significance of the demise of the public sphere. This focus is necessary because globalisation has driven policy choices towards acceptance of neoclassical or neo-liberal economics - that is, privileging the private sphere and denigrating the public one. The discussion highlights a looming global crisis in social policy.

Chapter 3 examines the implications of this crisis in social policy. It argues that we need new approaches and structures that can cope with the implications of the information age and allow for the development of global approaches to social, as well as economic policy. This chapter concludes that we need to pioneer new forms of transnational institutions that can not only make rules for the global economy but also enforce them.

Chapter 4 focusses attention on the fact that an emergent but already complex system of global government exists. It sets out the elements of that government and provides an overview of how this works. Importantly, it argues that those seeking to relocate decision-making back to the national level are misguided. It contends that there are aspects of modern globalisation that require global solutions. It recognises, however, that the way global government now operates is undemocratic and unaccountable. It proposes change and argues that, without the consent of the governed, international institutions will remain under assault.

Chapter 5 summarises the key conclusions from earlier chapters and makes the case that extending global democracy is an idea whose time has come.

Finally, in Chapter 6, a set of ten proposals is presented to form a starting point for an agenda of action designed to transform the way we respond to globalisation.

All politics are local: global politics are local politics

There are many beginning to speak out, even at the highest levels, in recognition that globalisation requires us to radically rethink the traditional roles of government and the citizen. Once again, Strobe Talbot gets to the heart of this issue. Writing about what he calls 'the end of foreign policy', Talbot contends:

In the context of the many global problems facing the United States today, and also in the context of their solutions, the very word 'foreign' is becoming obsolete. From the floor of the stock exchange in Singapore to the roof of the world over Patagonia where there is a hole in the ozone layer, what happens there matters here - and vice versa.

The power of this idea is captured in the phrase used in the title of the book - Elect the ambassador!

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