The global market economy – our current outlook:
Since 1989, the market economy, aka capitalism, reigns supreme in many forms and disguises globally: social market economy, state-controlled market economy, zombie-capitalism, to name only a few. It has brought economic prosperity to many, but also new forms of marginalisation and economic vulnerabilities to people in all countries. Economic activities have destroyed our natural resource base, sometimes beyond its ability to renew itself, and it has devalued widely used technologies and technical achievements without necessarily replacing them by better ones. The market economy has left many politically powerless, and is weakening democracy and strengthening authoritarian rules. While the nation state remains globally the entity by which people are governed, the globalised market economy transcends these national borders and has created globally problems, which, however, no global institution has the authority to resolve.
Our current political, philosophical and economic narrative does not give us the means to successfully address today’s challenges. In many countries we see political “clowns” or “harlekins” voted into office, who rebel against the established order, but they do their havoc on behest of the powers that be. And these are not the peoples of this world, but oligarchs, and super-rich entrepreneurs whose reach into everybody’s life is more powerful than any government. Some time ago the BBC reported that about 6 super-rich managers in the City of London determined the course of the Tory party with regard to the Brexit. What is more important to note, is, that only a few realise that there are forces operating behind the political scene well hidden from public scrutiny.
What could a new outlook be?
We have globally not one, but multiple divides. These divides are social, economic, political and philosophical in nature. If we want to overcome them, our narrative has to accept the complexity and it has to accept the diversity. It has to be built around values, and the knowledge that many means and ways can be employed to address successfully the existing divides. Tolerance as advocated by former German President Joachim Gauck will have to be the centrepiece, with strong intolerance towards all those who defy our values. These values are the canon of human rights. Respect of others and their gender, race, religious beliefs are paramount. Freedom of speech ends where this respect is denied.
Let’s take a look at the complexity of our divides. Surely there are even more divides, such as the age-old gender divide and the divide between the generations. Although we have overcome some of the gender divide since the early 20th century, globally we have not really eliminated them. The struggle between the generations is just heating up over issues like sustainability, e.g. climate change, and care of the elderly. In industrialised countries we struggle to establish nursing services, in the less industrialised countries family support is quickly disappearing and there are no alternatives in sight.
But let’s look at some of the divides and see how they hang together and how they can be addressed.
The political divide:
The traditional divide between left and right, is becoming more and more meaningless. In particular the social-democrats, haven’t as yet noticed it. Parties further to the left, remain less affected, as they reflect the views of those who believe that the system is wrong, although they are losing grounds to the rebels from the right. The largest groups in the spectrum of views are still those seeking pragmatically solutions through political compromises. But they do not find the words to respond to the provocations and fake information of the right and extreme left.
We live In the post-neoliberal era. Neoliberalism has changed fundamentally the individual outlook of people and their ambitions in life. The trade offs the younger generation is willing to accept in their personal life, are quite different from those of their parents and grandparents. Hence the balance between individual responsibility and solidary, collective responsibility needs to be newly established and calibrated. In particular, not the state should have the operative responsibility for the collective system, but non-commercial, but highly efficient institutions, overseen by state and user representatives, should take over. The state should retain the overall oversight, and ensure that fairness is being observed in the determination of benefits and obligations for the participants in the social security system. State subsidies financed from tax income should come from taxes which are levied on the rich and be given to supplement the benefits of those, who have not acquired a minimum level of benefits. The currently discussed case of topping up retirement benefits of some 1.5 million retirees in Germany to a minimum level and to fund these from a tax on financial transactions, is a good beginning, in spite of all the justified criticism of the current proposal to only levy a tax on purchases of a very limited number of financial transactions. The narrative thus should be: as much individual freedom and self-determination as possible, as much collective responsibility and oversight as necessary to guarantee fairness and social security.
But as these adjustments are being discussed by governments and parliaments, the media focus their attention primarily on the divide between internationalists and nationalists, and in fact mislead the general public. It is not this clash of views which is the most important one in ongoing political debates. As this debate is at times acrimonious, with lots of provocations, even vulgarity and violence, they make easy headlines. Mostly those not in positions of political command or those speaking supposedly in the name of the “powerless” use provocative and vulgar language. But it is not the language, which is used, which is the challenge. It is fake information and fake solutions to our current problems, which are the issue.
It is remarkable in this context to note, that information and knowledge are still being used as a means to gain political influence and power. Previously, information was withheld, as knowledge was power. Publicly, only criticism, which did not threaten the existing order, was permissible. Withholding information by the media and the political powers was grudgingly accepted, but in the age of social media and digitised surveys this has greatly changed. Information is collected and at times manipulated to suit specific interests. The influence, which a company like Cambridge Analytica has yielded not only in the UK, but in elections in 68 countries around the world, is staggering. A President to whom in 3 years 15000 public lies are attributed, does not even care, nor do his supporters. Truth and honesty are a challenge at all times in our personal and in public life. We all live with “white lies”, but the extent to which these are dominating today published information is intolerable. In particular, if and when human rights are being violated. We need to define rules of what constitutes truth and honesty. The current political efforts to make facebook and twitter exercise stricter controls is one step, but we need to take many more. A political debate about a well formulated policy for social media behaviour and use, which is understandable to each and every one, is sourly lacking. As is a policy with regard to technological advances.
The technological divide:
The one technological advance which penetrates all economic sectors and almost all aspects of life, is the digitisation. Understandably, because in all forms of life and activities we need information: reliable, credible, quick and easy to understand. Digital systems help in this regard tremendously. But, they remain means to an end, although it appears in many discussions around digitisation that they are the all determining end.
Hence there is great confusion in the debate, and there is fear by those who receive the “wrong end of the stick” in this development, e.g. they lose their jobs, and are not qualified to assume newly created ones.
The current debate centres around the overpowering market position of a few US American companies like Google, Facebook, Twitter and Amazon. No question this is a problem. Another topic is data safety, cyber attacks and protection of personal data. Again, this is a problem, which begs for solutions. Less often is the focus on the enormous pressure on users to update their hard- and software without necessarily gaining much in terms of improved services. And only marginally is the focus drawn on the waste and vast need for specific raw materials (rare earths), which are mined in many instances under inhuman conditions and often by children. A brief notice went through the established media recently, that the Internet is emitting as much C02 as vehicular traffic. But that was just a flicker, and no discussion arose around this finding.
It is safe to assume that digitisation will continue, and will divide the world into those, who can afford the new instruments and those, who cannot. It is already dividing the world into those, who have access to these emerging technologies and their application, and those, who do not have such access. In particular, rural and remote areas lag behind, although they could benefit the most from the easy access to electronic services. Interestingly enough, China seems to be a rare exception to this general evolution, as the state invests in the needed infrastructure nationwide and rural entrepreneurs use the Internet for marketing agricultural products.
In educational and health services the penetration of digital systems is very spotty, even in wealthy countries. This is contributing to a divide between those, who will be ready for further changes and those, who will not. It will also drive a deep dividing line between those, who have access to up-to-date medical services and those, who do not. In this context it is worth noting, that a) we need to establish minimum standards of access, competency and affordability of digital systems, and b) we need to look out and politically support those developments which can help leapfrog over the dividing lines. African societies are full of examples for such leapfrogging, e.g. mobile banking, but regrettably also for great failures, e.g. electronic voting in general elections.
Therefore what we need, first and foremost, is a political debate and decisions which weigh the advantages and disadvantages of newly emerging technologies, in order to ensure that users feel they control the use of these technologies and not someone or something else.
The socio-economic divide between the rich and the poor:
It is by now a well documented fact, that the rich get richer more quickly than the poor get less poor. Abject poverty has been greatly diminished, but new forms of poverty have emerged. Barriers to escape from social exclusion and economic vulnerability are high and seem to be getting even higher. In wealthy countries social security systems help to protect families from abject poverty, but the overall rate of such vulnerable families in the German society hovers for years around 18 percent. In less wealthy countries with no or only nascent social security systems many young people take matters in their own hands and migrate to the US, Western Europe or the Gulf states. Not all succeed, as we can read in the papers and see on TV every day. The extent of the income divide is well documented. However, what is less well documented are the drivers for the increasing inequality in our societies. Hence, we do not discuss what can be done to block these drivers, and to level the playing field so that many more people get a chance to prosper. In fact, we do not have a consensus on what constitutes prosperity. But as long as we do not have a clear idea about this, we shall continue to experience the current inequalities. Proposals to tax the rich and use such tax revenue for social welfare of the less well off members of the society receive less and less popular support. Besides, in a country like Germany roughly one third of the federal budget is today used for social security and services with limited effect on reducing social inequality. The general scepticism is thus justified. Today’s challenges are asking for new measures; the state has a vital role to play, but maybe less in financial and operative terms. I shall come back to this.
The divide between rich and poor is less a problem of redistributing wealth, but rather to block the influence of private corporate interests on political decisions and the control of corporations over production and consumption patterns. It is more a question of limiting financial speculation and, where it occurs, to skim off part of the exorbitant gains which are being realized, in order to plough those revenues into fostering new economic activities which will bring sustainable production and consumption patterns about.
We shall have to be much smarter and nimbler in finding the right mix between incentives, subsidies, tax breaks on the one hand, and taxes, levies, rules and regulations on what is permissible and what is not, on the other. We need much more information on public and private partnerships, and private non-profit networks which create sustainable production and foster sustainable consumption patterns. We need on a daily basis examples of good practices and a debate how this can be strengthened to such an extent that they become the dominant feature in our economies and societies at large. The agenda 2030 formulated under the auspices of the UN and adopted unanimously by all member states in 2015 is a strong platform, on which we can build such partnerships and policies in the international and national context.
Of course, there is opposition. There is lobbying against such transformative policies. But any politician worth his or her grain will have to be willing to face such opposition and counter vested private interests in the name of the interests of the majority of people. That these can be mobilized, we witness at this moment in many countries around the globe.
Reactions against the existing divides:
People begin to rebel against the current state of affairs and their trends. France, UK, USA, Hong Kong, Middle East, Latin America, to name only those which make it to be headline news. But similar uprisings occur in African countries, in Russia and China. What all these rebellions have in common is the fear of the future, the denial of the present, and the look into a past, which, as they see it, never existed. Furthermore, there is an increasing mistrust in the established public order, and the existing state, and its representatives are no longer given the authority, which, however, they need to function in the interest of the common good.
Closing the divides – rebalancing individual and common interests:
In fact, we have no clear understanding anymore of the common good. We structure the world around us according to our own personal views and interests, but lack the understanding or tolerance of other views and interests. A corollary to this individualized view of the world is that we are fearful that our ways and means are insufficient to rectify the situation. Yet, our starting point has to be confidence, that we can change the situation, and not fear, that we cannot change anything. We should not only provoke the powers that be, while at the same time leaving it to them to find solutions, but we should participate actively in finding solutions.
Confidence will move us forward. Public debates and discussions will be needed, projects and experiments, not only among and with like-minded people, but with those, who hold a different view. More often than not, we may have as a result “we agree, that we disagree”, and we may fail. But eventually, we may reach points where we can see the common interests of us all, and can begin to act on that basis, while also entrusting politicians with the power to guard our common present and future.