Reforms that are presented as economic necessities are in fact usually political choicesAlan Freeman
Tuesday October 12, 2004
GuardianIs social justice possible in a world dominated by corporate globalisation? This Friday, more than 20,000 people, drawn from social movements, peace organisations and trade unions across Europe and the world, will converge on London for the third European Social Forum to debate how to change direction. The experience of two countries, in particular, poses the question most starkly: Germany's welfare state reforms under Gerhard Schröder, and the transformation of Venezuela under Hugo Chavez. The fundamental issue is: does society serve the economy, or should the economy serve society?
The core of Schröder's Agenda 2010 package - alongside cuts in health and education spending - is labour reform. Private capital has deserted Germany. Investment has sunk from 24% to 20% of GDP in 10 years, leaving 4.5 million people without work. Schröder's solution is to drastically reduce what German citizens since Bismarck have regarded as universal rights. Long-term income support will be cut to a minimal €345 (£240) per month, and withdrawn from anyone refusing any job in any part of Germany, while workfare and self-employment schemes will create a new layer of low-paid workers in precarious jobs. In short, the market is to have its way with the people.
The most salient fact about these reforms is that the German people don't want them. This reality lies behind the ruling Social Democratic party's catastrophic recent election performance, the revival of the left-leaning Party of Democratic Socialism and, more ominously, the growth of the openly fascist right. This groundswell of opposition confronts an inherently undemocratic argument: what you want socially doesn't count, because the reforms are economically unavoidable - there is no other way to revive investment and growth except to cut the rights and price of labour. Germans may prefer not to push a million more children below the poverty line, and the odd bleeding-heart liberal may shrink from converting the workless into itinerants. Unfortunately, in a globalised world, there is only one route to a competitive Germany: do what the market requires.
But there is an instructive flaw in this central claim of the "reformers". On the most basic index of world market performance - trade - Germany is competitive, with an all-time high second-quarter surplus of €24bn. The real question is how to use that surplus, as happened during the 20 years when Germany achieved its current prosperity, to make sustainable and democratic social choices for Germany's future. The only sane answer is to adopt economic policies that use the surplus for social justice.
It's not as if such policies don't exist. Germany has the economic and political clout to take a different path, and to change the roadmap. Berlin could revive growth and employment by reining in the Bundesbank; enchanting the world by using its influence to slash euro interest rates (coinciding with Gordon Brown's objectives); and launching, for the first time from the left, a wave of state-led investment to bring Germany back from the brink of a new post-Versailles chaos. But it chooses not to heed its voters. It chooses the alternative to social rights. It chooses to open the gates to the far right - because that is what the neoliberal establishment demands.
Every apparently economic choice is, in reality, social. We can choose a society of basic rights - education, health, housing, child support and a dignified pension - or greed, pandemic inequality, ecological vandalism, civic chaos and social despair. As Jonathan Swift satirically suggested, if economic efficiency is the only issue, why not solve all problems by eating children?
Schröder's reforms are a delusionary reversal of the relation between economy and society. Justice and democracy are sacrificed on the altar of a mythical market presented, like the gods of an ancient religion, as a force outside society instead of a creation of it. They are a political choice dressed up as a market necessity.
Of course, some social options are not available under any economic system. It would be utopian to raise hopes of what simply cannot be. But Germany's choices are not of this type. All periods of high German economic growth coincided with large-scale social provision. Indeed, growth under the welfare state, at 240% from 1950-1970, has never been equalled. Another Germany is entirely possible, under three conditions. Society must get what it genuinely wants; economic policy must deliver this; and political alliances must carry these policies out.
The evidence in support of such approaches comes from many places, particularly Latin America whose rich experience will feature in the ESF debates in London this weekend. Western liberal and social democracy is still evaluating the experiments of Hugo Chavez in Venezuela, Lula in Brazil, and Nestor Kirchner in Argentina, but some things are already clear. First, "economic rationality" in the shape of neoliberal globalisation is socially and politically suicidal. In 25 years, the ratio between average income in the advanced countries and the rest of the world has more than doubled, from 10.7 to 23.3 - the steepest increase in history. In Argentina, whose experience is no different from the rest of the continent, the ratio between the average income of the top and the bottom decile has risen from 25 to 64 in 10 years. Market-driven globalisation is tearing these societies apart.
Second, when a figure such as Chavez proposes even quite moderate social reforms to re-establish, for broad swaths of the population, such basic rights as literacy, a minimum income, education and health, then political and social support is overwhelming. One need not even refer to the election's outcome for proof. The Venezuelan opposition itself integrated these reforms into its election programme. Faced with the tide of social backing for them, spurious arguments about economic sustainability melted away. Moreover, no one contests the actual numbers of people who voted. By any standard, Venezuela testifies that when social objectives are placed in the driving seat, the result is a massive re-engagement of the population into the political process.
The most simplistic response - that Venezuela's oil gave it the economic resources to make these changes - is the keystone of the matter. Of course, Venezuela has oil. So does the Middle East. But unlike other oil-rich states, Venezuela chose to use its resources to social ends. This was a political, not an economic choice. If poverty-racked Venezuela can apply a different economic model right next door to the centre of US military operations in the continent - in Colombia - then so can wealthy Germany, Europe and Japan, and so, for that matter, can the US.
Another world really is possible. The social forum, which began in Brazil's Porto Alegre, will make it so by reversing the traditional direction of intellectual trade. Instead of exporting northern economics to the south, it will begin importing southern sociology to the north.
· Alan Freeman is co-editor, with Boris Kagarlitsky, of The Politics of Empire and the Crisis of Globalisation, published by Pluto. Both will be speaking at the European Social Forum at Alexandra Palace in London on Saturday