The globalization of economic flows may be the most manifest nowadays, and it is the first thing one thinks of when globalization itself is discussed. Limiting the once sovereign role of nation-state, expanding the market across the planet without a visible chance of anyone preventing it, amassing wealth in ever fewer countries is combined with the growing disproportion between the rich and the poor within these countries. What seemed probable over the few decades after World War II – the prominent role of the so-called nation state, care for the less able, less healthy and elderly population, free schooling and healthcare – seem to be vanishing into historic oblivion. The ancient principle of survival of the fittest is more and more at work, not even trying too hard to mask its role with seemingly humane goals. As early as twenty years ago, far-sighted economists foresaw the creation of new – global – economy, which would be something different from the currently known and widely accepted international economy.

The so-called welfare states owe most of their current problems to the structural change of the world’s economic system, which is, for some, a synonym for globalization. As we have already said, these changes greatly limit (even tend to fully abolish!) the force of action of nation-states so that, even if they want it, they are unable to provide their own citizens with what they have been used to for decade. Transnational capital does not have much mercy on social policy, equal care for all strata of population, especially those who are unable to generate profit. The increasing dissatisfaction of masses spurred by this is directed at their own governments, who, in turn, have their hands tied. Unless an international system is created in the foreseeable future whereby the control and freedoms of states, corporations and individuals will be regulated more clearly, there are ever smaller chances that citizens will receive any kind of protection from their governments. This also renders the institution of democratic elections senseless, reducing it to the role of mere political folklore. It is implied that the poor societies (mostly those of the Third and even the Second World) have nothing to seek in the “fair competition”. A newly imposed problem is the fear that even the wealthiest and the most stable societies will not be able to endure this race. If the market demands as advocated by the neo-liberal ideologists are accepted, the already attained wide scope of various social rights that their citizens are used to does not have much chance to survive. As Habermas clearly formulates it: ‘To remain competitive on the growing global market, they (the OECD states) have to take steps causing irreparable damage to the harmony of civil society… the most urgent task of the First World in the forthcoming decade will therefore be squaring the circle of welfare, social harmony and political freedom.’ ^[1] And we know all too well what a simple task squaring the circle is.

Attempts at an appropriate response to the collapse (after a lengthy agony) of the so-called laissez-faire capitalism date back as early as the times of the great economic crisis in the 1920s. This is the time of the occurrence of ‘controlled capitalism’ ^[2] , taking three forms in capitalist communities: as the ‘New Deal’ in the USA, ‘protective’ in Japan, and ‘social capitalism’ in Western Europe. Regardless of certain differences, the common element in all these three forms of reformed capitalism presents a concern for wide strata of population. They form the basis on which the welfare state developed later. Witnessing the return to some old economic models thought to be outdated, we can conclude that this actually specific historical regression. If this opinion is founded, then the not so loud discourse of neo-liberally oriented intellectuals and economists on history, which has reached its final, ultimate step (of evolution) – has no foundation. But more will be said on this later.

As it was compellingly demonstrated by Naomi Klein as well, all the trends of capital ‘movement’ to underdeveloped regions are present, but not out of concern for the welfare of local population as it is declaratively stated, but for their ruthless exploitation. But at the same time, such a manner of re-distributing production to the poor regions of the Third World will render millions of domestic workforce jobless, closing the circle of poverty. Regardless of the proclamations on the ‘visible progress’ of global economy. ‘The current progress of economic globalization points to the fact that capital is moving to underdeveloped regions, i.e. escaping developed regions, causing, primarily, social problems in them. Stopping this process would mean leaving underdeveloped regions to their ‘fate’ which would, in turn, whether they get ‘stuck’ with being underdeveloped, or choose their own way of developing which could be radically different from the Western, mean the discontinuation of the current globalization trend, or it would be limited only to developed regions as some kind of “mini-globalization”.’ ^[3] It is clear that this is a threat to globalization itself, if it is to be understood as the export of the Western, already confirmed model of organizing human society. If it remained only in some regions of the planet, then it could not be fully and duly labeled as globalization. If it were the generator of the occurrence of an alternative globalization, then the results would be even worse for the neo-liberal ideology. This is undoubtedly one of the major problems to which the above-mentioned have not provided an adequate answer so far.

Moreover, despite the proclaimed efforts (and perhaps even a genuine wish) to put an end to ethnically-based conflicts by reducing the significance of local identities, the growing poverty among and within various societies seems to be encouraging animosities, conflicts, and, in the foreseeable future, even wars of the conflicting ethic, religious, racial or class groups. ‘The neo-liberal type of globalization is creating a new geography of social inclusion (apartheid). The worlds of wealth and extreme poverty are not divided by the Great Wall of China – a new poverty is spreading amid the society of affluence. The “black holes of globalization”, people and regions excluded from progress, can be found in all the cities of the “First World” – in American urban ghettoes, North African communities in France, Japanese Yoseba slums, Asian megalopolises. They are inhabited by millions of homeless people, by a world of prostitution, crime and drugs, the sick and the illiterate.’ ^[4] In one of her texts ^[5] , Naomi Klein gives a vivid example of how ‘real’ is the advice of the intellectual gurus of neo-liberal provenance. Namely, explaining why capital is moving to underdeveloped regions, Thomas Friedman provides a very interesting answer. Claiming to have talked to several young Palestinians when he was at Ramallah at the West Coast in his twenties, he established that their desire for war, terrorist actions and suicide attacks results from lacking jobs, hope and dignity. At first sight, this explanation does not seem irrational. The listed reasons are surely a good reason for various sources of frustration. But what does Friedman propose for them? That moving ‘jobs’ from the West not only to India or Pakistan, but to Palestine as well would create not only a more prosperous world, but also a safer world for our own twenty-year-olds! This should be one of the crucial reasons in favour of globalization as envisaged by similar intellectuals.

More will be said about what kind of ‘jobs’ these are in the section on Naomi Klein’s book No logo. We shall dwell on another topic here. Friedman ‘forgets’ to state what are the political causes of the dissatisfaction of the Palestinian or Iraqi people. Klein does not hesitate to remind him: ’In other words, economic development will not come to Palestine via call centers but through liberation. Friedman's argument is equally absurd when applied to the country where terrorism is rising most rapidly: Iraq. As in Palestine, Iraq is facing an unemployment crisis, one fueled by occupation. And no wonder: Paul Bremer's first move as chief US envoy was to lay off 400,000 soldiers and other state workers. His second was to fling open Iraq's borders to cheap imports, predictably putting hundreds of local companies out of business.’ Klein is even more lucid when finding an even more efficient way of fighting terrorism: ’ Friedman's bright idea of fighting terrorism with outsourced American jobs is overly complicated. A better plan would be to end the occupation and stop sending American workers to steal Iraqi jobs.’

Although the current global economy is structured around three main centres of economic power, it can be best described as a post-hegemonistic order that no single centre, not even the USA, can control through rules of global trade or exchange. ^[6] By this, the advocates of such development of economic course mean that the complex world economy is developing on a totally free, unconditioned market and that individual, i.e. state responsibility is the only criterion of success or failure in this field. But regardless of this, despite internationalisation and regionalisation, the role and position of most developing countries in the global economy is changing incredibly slowly even in long time intervals of a whole century. Held and McGrew observe that the current international division of labour is based on the one recognised  by Marx. ^[7] Today’s globalisaton brings about an inconcievably united world for rich individuals, for the elites, but also a growing division inside societies, as the global international division of labour is divided into parts, into rich and poor countries, the globalization’s winners and losers. If globalization were as successful as it is (perhaps) desired, then its favourable effect would influence most of the world’s population, rather than those (chosen?) groups that most offen have a share in its implementation. Neo-liberals suggest that economic globalization is the only effective road (highlighted by D.P.) leading to global poverty reduction, whereas, in practice, this looks completely different. The failure of certain countries to join the community of the so-called First World is explained by their failure to harmonise and integrate into the contemporary world economy fast enouth. Translated from the language of euphemism, they seem to mean that these are simply – incompetent.

Not only are differences increasingly felt between states, but they are increasingly obvious inside the countries themselves. Stratification is more and more under way, ever fewer (super)rich individuals own ever bigger capital, while the number of those living below the threashold of poverty is growing proportionately. A few percent of the richest population segment owns more than one-half of national wealth. This chiefly applies to the USA, although such trends exist in capitalist countries as well. How paradoxical it all is is maybe best expressed by the fact that powerful corporations posssess more assets than many (=most) countries of the world, and that this list may even include individuals! An argument that it is about the progress of global economy may be valid, if limited to people we have just mentioned. Then there is really no dilemma that this argument is valid. But if the moral issue of simultaneous impoverishment of the majority of the world is raised as equal, then such an attitude is significal+ntly overshadowed. This is what neo-liberally oriented intellectuals call ’struggle on the open market’: ’To the extent that standardised life situations and careers are disappearing, individuals facing multiple options, feeling the growing burden of decisions they must now make themselves, i.e. arrangements that they have to negotiate themselves. The pressure of ’individualisation’ urges for new social rules to be discovered and controlled at the same time. Freed subjects, no longer bound and governed by traditional roles, must create binding relations through their own communication efforts.’ ^[8] The above is not questionable at all, but it is appropriate to remind that the ‘freed subjects’ have never been asked anything about their forhtcoming roles! Although these decisions affect them most directly, they were made elswhere. It is therfore no wander that, in the ever wider regions of the losers of globalization, the globalization proces is percieved simply as the continuation of well-known  colonisation, i.e. Western imperialism. It will remain so as long as the global inequality remains increasingly manifest. The fact that many citizens of the ’imperialist’ countries do not feel the benefits of the proclaimed process does not diminish in the least the justified anger of the inhabitants of all the underprivileged countries of the Second, Third and all all other worlds in the leaast. It is maybe here that one should look for the roots of growing terrorism which is really democratically shared – affecting everyone equally!

How do these radically oriented groups and their acts of violence come about? Even in developed countries, the increasing class differentiation brings about a fear that the existing wealth will have to be shared and that the aliens present in a given society will take away their ’share of the cake’ undeserved. Such fears (and let us remember that the Nazis once took over the power riding on such demagogical cliches) are (ab)used by politicians who political points with populist, isolationist and even openly hostile messages. National, regligious, racial or class hatred, as well as xenofobia are for the most part rooted in the above. Needless to say, when such forces take over the power, genuine economic progress is out of question! And this is all a logical consequence of the philosphy of open, ’deregulated’ market. It only favours its favourites which adapt most sucessfull to its unwritten laws, to a way of life in which the absolute purpose of human life is generating and increasing profit. Its aim is not common good, but the realisation of the ancient idea of the human society as war of all against all. The road from there to universal harmony it proclaims declaratively is a long and rough one. It is also questionable how justifiable is to expand the impact of market ideology to all other – non-economic – segments of society, and the democratic legitimacy of international financial institutions (such as the IMF, the World Bank, WTO etc.) is also highly questinable, as they have no forms of control ’above’ themselves and, accordingly, are not accountable to anyone. We can only speculate what abuses are possible here. Held tries to provide an answer to all these questions: ’These sobering realities lead to the conclusion that it is only within the borders of the state – within the nation as a moral community – that legitimate and effective solutions to the problem of global social injustice can be constructed.’ ^[9]

Historically, the state saw the greatest expansion and prosperity in Germany at the time of World War I and during the Nazi rule in 1930s. It is interesting that it is in the Third Reich ^[10] that appeals to social justice and various forms of social protection were vociferous, parallel with the development of impressive military machinery. This was, of course, one of major arguments used by those who criticize contemporary welfare states as well. The fact that this happened in Germany becomes clearer bearing in mind that it was in this country that the first steps to creating a welfare system were made as early as 1883, by establishing health care, taking care of the unemployed, senior population segments, etc. At the time, the costs allocated for these expenditures were not too great a burden for the state’s production sector. The initiator of establishing such a system was the famous Chancellor Bismarck. This idea spread like wildfire all over the planet during the twentieth century, to such extent that the clear definition of social policies has become a key feature of the modern state. However, some things had to be sacrificed by these policies. In this case it was the efficiency of capitalist production methods. The advocates of neo-liberal society put the blame on the enormous growth of public expenditure, taxation and bureaucracy as one of the causes of the inherent totalitarianism of the welfare stated. This can, of course, give an opportunity to the beneficiaries of the public social system to abuse it. Anthony Mueller does not fail to notice this: ’The coverage of old age, sickness and unemployment insurance, along with social aid, and disability insurance and with all the numerous special branches of social policy have turned Germany into an Eldorado for those seeking a free ride. Often described as "generous", the German social welfare system actually provides a plethora of incentives for intentionally becoming unemployed, seeking early retirement and fulfilling the necessary requirements in order to become eligible for social aid and disability payments.’ This especially applies to the period after World War II when any action directed against such policies was labeled as (expressed in modern terms) a form of ’politically incorrect discourse’. Thus, increasing expenditure is imposed on the economically active population, and in view of the aging population structure of most of the countries of the Western hemisphere, the percentage of really economically active people is drastically reduced and, proportionally, more burdened by various categories of budget beneficiaries. How to balance the reasonable and objective needs of social policy beneficiaries and their evident abuses is becoming a new problem to be addressed.

We can take an example from Italy. Namely, the legislator (the state in this case) has stipulated that an employee laid off from an enterprise with more than 15 employees may sue his or her own employer. There have been cases in practice that many of such claims have received positive replies. Should the employer be forced to re-employ the same worker, apart from being entitled to payment of all lost receivables, he or she would receive further compensation for dismissal, as well as the money from social insurance. What does this tell us? That the employer’s hands are ’tied’, that laying off workers may cause more economic harm than keeping them in their jobs. This is what opens space for various ’blackmail’ activities by employees, such as working to rule, lower productivity, open sabotage of the working process, etc. Not to mention that nothing would motivate the worker to achieve better work results, and the employer would not have the opportunity to make qualitative selection among different workers, under the threat of possible lawsuit and multiple damages that may follow. Furthermore, this is a direct hindrance to economic growth, as many companies will purposely remain within the limit of fifteen employees, lest they face this threat. This is only an example ^[11] of the implications of the excessive consideration of the employee’s interests in relation to the employer, which is still an important wheel in the development of every economy; and no less than referendum was held on this issue. Regarding this issue, Minardi quotes the opinion of Bruno Leoni from his book Liberty and Law, where he argues that employers are not the ‘stronger’ side in a possible dispute, nor must employees be the ‘weaker’ side. In cases when he or she needs workers more than the workers need him or her, and is unable to find them, the employer can by no means be regarded as the weaker side or seen through the traditional prism of the notorious exploiter.

One of the positive examples of neo-liberally oriented economy comes from Chile, where they came up with the idea of – private pensions! This is no doubt a very interesting suggestion, so let us see what it is about. ‘The Chilean pension model is a comprehensive alternative to the social collectivism initiated by German chancellor Otto von Bismarck at the end of the 19th century, which was used as a model for the welfare states of the 20th century. By cutting the link between individual contributions and benefits—that is, between effort and reward—and by entrusting governments not only with the responsibility but also with the management of these complex programs, the Bismarckian pay-as-you-go pension system turned out to be the central pillar of the welfare state, in which the possibility of winning elections by buying votes with other people’s money—even with the money of other generations—led to an inflation of social entitlements, and thus to gigantic unfunded, and hidden, state liabilities. In Chile, the same rationale that applies to the private pension system has already been extended, although imperfectly, to the areas of health and unemployment, with individual insurance (health) or accounts (unemployment) managed by the private sector.’ ^[12] This system has already been established in many South American countries (Mexico, Bolivia, Salvador, Peru, Columbia, Argentina, Uruguay), but also in many of the former Socialist block countries (Hungary, Poland, Kazakhstan), which may be especially interesting, but also indicative as a precedent.

Hungary was the first former Socialist country to ‘break the ice’ in 1998 and allow for a portion of the workers’ salaries to be invested in pension savings accounts. The previous method of investing in pension funds had been in deficit as early as the nineties, when the contributions amounted to 30% of the salary. If the system had remained unchanged, Hungary would have been forced to raise the taxes on wages up to 55%, which would, in a few decades (around 2035 as estimated) have lead to each pensioner being supported by only one worker. Knowing that in a country such as Italy the government used to pay disability pensions for 30,000 dead people, and also bearing in mind that it is the country with the lowest birth rate in the world, we can only imagine what the public expenditures were over a budget year. There was even an example of a woman receiving a (disability) pension as a blind person, while working as a driver at the same time. The annual expenditure on public pensions in Italy amounts to as much as 14.5% of GDP. José Piñera argues that nowadays pension systems are under the highest threat in Western Europe, with the proverbially strong influence of the traditional welfare state. Apart from purely economic, we can provide a non-economic argument in favour of private pension system. Poor people, who usually start working earlier than their somewhat better off peers, have (on the average) a shorter lifespan than the latter. Under such a method of pension payment, poorer workers would find it easier to accumulate higher amounts on their accounts, thereby de facto lessening the well-known gap between the rich and the poor, as the workers have so far been investing into a system providing them with the yield rate of less than 2%. Here is, finally a truly socially humane argument in favor of neo-liberal thinkers! If such a rate could be applied in different socio-economic models of different countries with an equal success rate, we see no reason why it should not be done.

Note:
Extract from an unpublished paper entitled The Philosophical Implications of Globalism and Anti-globalism, Belgrade, 2004

Translated from Serbian: Women's Center for Democracy and Human Rights, Serbia and Montenegro

About the author:
Dejan Petrović¸ Serbia and Montenegro, attained a BA degree from the University of Belgrade (2004). Addresses the issues of considerations of society, political theory, essay-writing and journalism. Especially interested in issues related to globalization and anti-globalization movement. Author of several dozed authored texts and interviews. Received awards for essays from Zarez and Srpsko pero magazines. Published in Vreme, Status, Habitus, Zarez, Aplauz and NSPM.

^[1] Jürgen Habermas: Postnacionalna konstelacija [Postnational Constellation], Otkrovenje, Belgrade, 2002, p. 84.

^[2] Miroslav Pečujlić: Planetarni kentaur – dva lika globalizacije [The Planetary Centaur – the Two Faces of Globalization], NSPM, Belgrade, 2003, p. 34.

^[3] Vladimir Vuletić: Globalizacija – proces ili projekt [Globalization – Process or Project], NSPM, Beograd, 2003, p. 89.

^[4] Miroslav Pečujlić: Planetarni kentaur – dva lika globalizacije [The Planetary Centaur – the Two Faces of Globalization], NSPM, Belgrade, 2003, p. 39,

^[5] Naomi Klein: Outsourcing the Friedman, Available at:http://www.commondreams.org/views04/0305-08.htm

^[6] David Held & Anthony McGrew: Globalization/Anti-Globalization, Polity Press, Cambridge,  2002, p. 51.

^[7] Ibid, p. 45.

^[8] Jürgen Habermas: Postnacionalna konstelacija [Postnational Constellation], Otkrovenje, Belgrade, 2002, p. 207. (translated from Serbian)

^[9] David Held & Anthony McGrew: Globalization/Anti-Globalization, Polity Press, Cambridge, 2002, p. 87.

^[10] Anthony Mueller: Bye-bye Bismarck, Available at: http://www.mises.org/story/1275

^[11] Alberto Mingardi: “Italy's Tyranny of Labour Protection”, The Wall Streat Journal Europe, June 13, 2003. Available at: http://www.josepinera.com/pag/pag_tex_italystyrranny.htm

^[12] José Piñera, “Toward a World of Worker-Capitalists”, The Boston Converzationi, Boston University, 2001, Available at: http://www.josepinera.com/pag/pag_tex_toward.htm