MOHAMED EL SAYED SAID Egypt: The Dialectics of State Security and Social Decay BEITRÄGE/ARTICLES A s opposed to the»success stories« that became a meta-narrative in development literature, Egypt stands as a particularly sad example of »stories of failure«. By this latter category we mean countries whose performance fell drastically short of expectations aroused by early achievements in the realm of culture and human development, or by their encouraging points of entry into »the modernity project«. For Egypt, the 20th century was almost a complete failure. At the beginning of the century, the country looked in relatively good shape and was seen as poised for economic take-off. In so many indicators, it was the country in the South that most fitted the model of robust transition to modernity. However, by the end of the century it was amply clear that many other countries that looked far behind it on the scale of development until the late 1950 s, have managed to leap forward, leaving Egypt much below on the scale of human and economic development as reported by the UN. A Society in Crisis In fact, the story is much more complicated than is read from indicators of economic failure or retreat. The country is in the midst of a comprehensive crisis which has led to a confusion about its very identity, future choices and destiny. Its poor achievements in the economic and social fields force Egypt to reflect on the causes of protracted failure and accordingly on the nature of the society that it aspires to create. Failure to achieve much on the road to modernity is perceived by many as an adequate warrant for questioning the relevance of»modernity« and its associated»culture of enlightenment«. Counter-attack started as a critique to the concept of progress which furnishes the basis of modernity. Islamists expanded this critique to a universal assault on the type of society which the modernists strive to construct. The debate over the meaning of progress and the type of society also involved the»epistemic and moral foundations« of modernity as opposed to the model set by Islam. Aside from this, the whole debate was thoroughly soaked in the politics of identity. The politics of frustration and the search for meaning and self-fulfillment are rooted in the nexus of interactions with the West since the beginning of the colonial age. Foreign policies thus lie at the heart of the debate on the quality and nature of»strategic choices« or the type of society desired. Contradictory choices in the field of foreign policies represent the most confused and confusing issues of debate across the whole Arab world, with Egypt at the heart of it. At the close of the 20 th century though, it seems that Egypt may have escaped the destiny of some other Islamic societies that witnessed Islamic revolutions or coups. In fact, the bureaucratic elite is re-asserting itself in power against both Islamic and secular oppositions. An important factor is the exit ticket from the suffocating economic crisis of the 1980 s. The ruling elite has scored modest economic gains but these gains were very important politically. Successes are not made possible by arriving at radically higher levels of economic efficiency. In fact, the very continuity of these successes is increasingly put in doubt. Hence, there are also big questions about the nature of the social and economic policy packages that need to be implemented to allow the country to take off. Better economic performance may have silenced the opposition to the dominant economic strategy. The nation is, however, far from settled as to the nature of the economy that it wants to establish. Naturally, the question of economic development is by no means isolated from the issue of democratic reforms. Indeed, politics is another area of reversals and fundamental failures. The country IPG 1/2000 Said, Egypt: State Security and Social Decay 5

started its long road to democracy with the opening of a pseudo parliament in 1866 . By 1923 it had a liberal democratic constitution. The coup d’état of 1952 declared the restoration of »healthy representative political life« as one of its primary six goals. With the establishment of a bureaucratic authoritarian regime, this particular goal was openly betrayed. Having pioneered the road to political(democratic) reforms since 1976 , Egypt could have been placed as leading the»third wave« of democratization, if this process were not aborted. Moreover, at the turn of the century, the country is much less democratic than could have been expected and certainly much less democratic than many other countries that came later to the road of political liberalization. A good part of the ordeal pertains to culture. By all means, certain cultural traits or qualities are part of any thorough explanation of failures and retreats. However, this may not be traced to certain real or imagined cultural»fixties«. The problem may prove to be much more profound since certain mixes of political, social and economic conditions may have so brutally damaged public consciousness that the single most important phenomenon in the political culture of society at this moment is so-called apathy and general disinterest in the public sphere. In this sense, the damage may prove lasting or much more profound unless bravely redressed by»fresh and vigorous endeavor« for restoring self-confidence through renewal and re-invigoration of old and new values. Society will have to come to grips with the profundity of its current dilemmas so that truly rational solutions can possibly be suggested and implemented. Without this act of self-conscious re-construction, the economy could take off, but fundamental distortions and imbalances would certainly grow proportionally. We shall take a number of these parameters and themes for a deeper and more detailed analysis below. Cultural Humiliation and the Rise of Islamism One possible explanation for the failure of democratic transition in Egypt is the rise of Islamic fundamentalism and fanaticism as a major challenge to political stability in the last 25 years. We may not take this explanation at face value for a number of reasons. In the first place, there is undeniable proof that it is the pseudo-secular state that sanctified the manipulation of religious symbols in the aftermath of the 1967 national defeat. It was also president Sadat that elevated religion into a vital part of regime ideology. He is also responsible for encouraging fanatical religious elements to reorganize and to aggressively relaunch violence in the political arena since 1971 . Religion was systematically manipulated at the beginning as an ideology for a new hegemonic coalition that would have replaced the populist coalition of Nasser’s regime. There are also some suspicions that the same motives were behind the state manipulation of religious strife starting in 1971 immediately after Sadat’s ascendance to the post of President. The elevation of religion into a central part of regime ideology was further sanctioned in the 1974 (October) paper that was assumed to replace the »national charter« as the major philosophy document of the ruling elite. Religious ideology was later given an even greater push when the constitution of 1971 was specifically amended to achieve dubious political goals through the assertion(in article two) that Islamic Shari’a is the main source of legislation. Depite this, there is no specific or obvious correlation between the course of democratization on the one hand and the evolution of fundamentalist challenge on the other. For example, President Sadat introduced the multi-party system in 1976 exactly during the time when his alliance with the Islamists was at its peak. Interestingly, the true spring of democracy in the recent history of Egypt took place immediately after the assassination of President Sadat at the hands of Islamic militants and during President Mubarak’s first term in office ( 1981–1987 ). The assassination of President Sadat was taken to be the greatest single challenge to political stability in the modern history of the country, but the early response to this challenge was further relaxation of political life. Reversing the liberalization drive of Mubarak’s early rule started in 1986/7 , long before the launching – during the 1990 s – of the terror campaign by fanatical Islamists. Nonetheless, there is some more persuasive evidence that the Islamic fundamentalist challenge formed a crucial factor behind 6 Said, Egypt: State Security and Social Decay IPG 1/2000

the failure of this democratization. In fact, ruling regimes in the Arab and Islamic world pursued both policies of cooperation and confrontation with the Islamic fundamentalist challenge, at times alternatively and at times simultaneously. The fact that totalitarian(and in certain cases medievalist) religious opposition to existing authoritarian regimes is the political and social force which is filling the political vacuum is an indication of the intrinsic weakness of democratic opposition and its failure to take roots. The emerging bi-polar pattern of domestic politics and the increasing unity demonstrated by religious political forces across the Arab and Islamic world have objectively pulled the whole political arena towards violence and authoritarianism. In fact, some of the most dogmatic democrats have come to declare alliance with the ruling regime in the face of what seemed to them to be a totalitarian challenge. There is profound confusion on the(democratic) response to totalitarian challenge. This is clearly indicated by the Algerian election debacle in December 1991 which was won by Islamists professing their desire to establish a non-electoral system. The Egyptian power elite watched this example with grave alarm since 1988 . The dilemma that motivated some of the most sincere democrats to support the state crackdown on liberties is the following: If democracy concedes to the electoral victory of a political force that declares its rejection of democracy, it commits suicide. If, in free election, it fails to accept the will of the people, then it has betrayed its own principle. Democrats would then have to accept accusations of double standards and hypocrisy. The latter seemed to be the lesser of the two evils. Democrats could in theory justify their position by reference to the experience of the Nazi take-over, as well as by stating the exceptional nature of the crisis. Denial of democratic liberties could accordingly be excused by promising a shorter end to the crisis; for example by comparisons with situations in which totalitar-ian Islamists managed to take over political power such as Iran in 1979 . This is what is implicitly advocated by supporters of state authoritarian reaction against the advances of Islamic fundamentalism. The depth of the fundamentalist Islamic challenge is what concerns us at this juncture. Since its emergence as an organized political(party) action in Egypt in the late 1920 s, the fundamentalist trend has launched a comprehensive critique of modernity in all realms of life. This critique focused on attacking the so-called renaissance project for imitating the Western model of progress and Western organization of the public realm. Borrowing this model is described as betrayal of Islam or something very close to apostasy. Later on, beginning in the late 1970 s, this model was also characterized as dependency, cultural clientelism and intellectual domination. Against the institution of the nation state, which inherited the Ottoman Empire, it called for the revival of the Islamic caliphate system and / or Islamic internationalism whereby the modern legal system would be practically dis-mantled and replaced by Islamic Shari’a. Modern social organizations were variously criticized as expressions of Western hegemony. Demands for the segregation of women received particular attention. Both socialism and capitalism were criticized in favor of re-initiating Islamic economics. In the realm of politics, a certain image of consultative process is the only thing that could constrain Islamic rule that is eventually entrusted to an individual ruler, whose main mandate is the implementation of Shari’a or Islamic law. The long-lived popular myth of the»just despot« has undoubtedly influenced these visions of rule and rulers until now. The incredible momentum gained by this trend is partially fuelled by beliefs in the»intrinsic superiority« of an Islamic panacea that is said to cure all ills of modern life. Shari’a is believed to automatically»fill the world with the lights of justice«. Social and economic malaise may account for certain features of the Islamic fundamentalist drive in the 1930 s as well as in the 1980 s and 1990 s. One is far from convinced, however, that yearning for social reform triggers the ideology of political Islam, even when touched by a socially radical spirit, as the situation was in Iran in the late 1970 s. In fact, in this ideology, the poor and the meek are promised charity and care by the rich and powerful rather than solutions based on self-determination and empowerment. The real attraction of this ideology lies in its success in awakening in people a profound sense of self-esteem instead of the deep humiliation caused by cultural eradication and denial. The modernity project, as transmitted to them is only telling people that what they had and what they inherited IPG 1/2000 Said, Egypt: State Security and Social Decay 7

from their grandfathers is backward and has to be replaced in order to»progress«. The Islamic message is exposing them to a global and universal mission based on the opposite meaning; that they have a morally superior vision and world view. The real problem of such a vision is that it is abstract, obscure and opposes modernity by archaic social and cultural practices detrimental to the purposes of religion and to human needs and aspirations. More significant is the fact that this archaic ideological form contained impulses for violence that wasted peoples’ energies in destructive practices. However, a thorough and objective assessment of the whole syndrome should clearly subject the authoritarian bureaucratic elite to radical critique on this issue as well. Insensitivity, corrupt attitudes and propensity to violence on the part of ruling bureaucracies should also carry a good part of the blame for the moral and material destruction caused by terrorism in the last quarter of a century. Political Islamic forces will continue to exist in Egypt as elsewhere in the Arab world. The resilience of Islamic culture is also undeniable. This very fact condemns the strategy based on liquidation and eradication of fundamentalism to futility and waste. At the turn of the century, we may safely state that the country is slowly coming to grips with the need for reconciliation and mutual recognition between secular and religious forces. After long and torturous debates amongst the terrorist sector of the Islamic movement, the majority including the old guard is decisively realising the need to renounce violence and to re-enter the political arena as a civil force. This particular trend is still showing(and will probably continue to show) inclination to extremism. However, learning may also play a balancing role. The centrist Islamic force, represented by the Muslim Brothers, have witnessed important transformation that sway them to acceptance of the pragmatic aspects of democracy and modernity. Assets for political reconciliation are thus building up outside regime policies. A truly historical reconciliation and mutual recognition hinges, though, on devising creative cultural categories that may compromise secular and religious visions of human liberation. This is currently being recognized. Some of the latest development in both Islamic and secular thought in Egypt clearly show this trend. The purpose is clear; to allow the country to entertain the right to internal peace and to encourage all trends of thought to develop freely and bring to fruition its positive and constructive ideas. Protestation against the fraud made in the name of modernity is legitimate from a truly critical perspective. Self-critique of the enlightenment project should profess its failure to bring about genuine solutions to problems of underdevelopment; solutions should be cultivated from within rather than simply transmitted from an alien environment. This failure is shared by all major trends of thought and is currently being seen as a common responsibility of all authentic intellectual pursuit in Egypt as elsewhere in Arab and Islamic societies. The emergence of a new intellectual project will take some time. The existing premises, as we enter the 21st century, are far from adequate or mature. But the essential recognition of the need for this project has already become entrenched. The Moral Costs of Foreign Policy Pragmatism In the view of this writer, the real cause behind the swift rise of Islamic fundamentalism and fanaticism is the prevalence of an acute sense of cultural and political humiliation incurred by Muslim societies within the international system. Muslims feel that they are targeted by various hegemonic forces and given inferior and damaging treatment in which their culture and religion are looked down upon. The obstinacy of British colonialism in the face of decades of nationalist struggle lies behind the birth of Islamic fundamentalism in the late 1920 s. The defeat of 1967 and the associated occupation of Arab territories seem to be the main reason behind its re-birth and expansion all over the Arab world and indeed the rest of the world during the last quarter of a century. In brief, Islamic fundamentalism gained remarkable momentum when the secular nationalist regimes proved their failure to redress the injustice caused by Israel(and inter alia by Western powers led by the United States) against Palestinians, Arabs and Muslims at large. The long and traumatic encounter with the West was portrayed as the expression of Western determination to crush 8 Said, Egypt: State Security and Social Decay IPG 1/2000

Arabs and to keep them constrained and tightly subjugated. Western attitudes are explained by reference to a long history of religiously motivated prejudice and hate. The semi-secular position of Egyptian nationalism is thus condemned as the manifestation of servility to Western conspiracy as well as the reason for Arab failures in military and political encounters with the West. It goes without saying that Israel is seen as the proxy or tool of Western – and specifically American – aggression against Palestinians and Arabs. Since fundamentalist forces were showing an uncompromising attitude towards Israel, they tended to deny the legitimacy of existing regimes. In this perspective, Islamic fundamentalist ideology, of both moderate and fanatic variants, is produced in the context of the crisis of legitimization triggered by national military defeat in 1967 . For this reason, the Islamic fundamentalist trend started to clash directly with president Sadat only on the occasion of signing of the Camp David Accord in 1978 and the Egyptian Israeli peace treaty in 1979 . Clashes with Arab regimes since then have continued to focus on the peace process in the Middle East. In the view of Muslim fundamentalists, peace diplomacy overlooked the basic rights of the Palestinian people, including the right of Palestinian refugees to return, the right to selfdetermination in an independent state, the return of East Jerusalem and the rest of the territories occupied in 1967 . Generally these aspects are seen as»structural« and entrenched in peace diplomacy through the exclusion of the United Nations and international legitimacy. Muslim fundamentalists are not alone in discrediting Egypt’s peace diplomacy and the policy of close relations with the United States and the West more generally. In fact, all other radical trends share with Muslim fundamentalism the opposition to the regime’s foreign policies. Indeed, the regime itself continued to cherish some of its long valued nationalist traditions in its relations with Israel and the United States. The present regime has established its very legitimacy on nationalist and anti-imperialists slogans. The Egyptian foreign policies since the independence and until the death of President Nasser were one of the main sources of»third-worldism«, as this unique discourse prevailed in the 1950 s and 1960 s. The 1967 defeat sharply undermined Egypt’s challenge to what was described as American hegemony and the legacy of Western imperialism and neo-colonialism. President Sadat marshaled a wholesale attack on this Nasserist jargon, basing his legitimacy instead on an almost complete rupture with it. He started presenting himself as a staunch enemy of Soviet domination, a theme which met with complete approval from the army before and immediately after the October war. His master plan of building a close alliance with the United States as a new strategy of foreign policy started to unfold after the October war of 1973 . From the viewpoint of the United States, the actual implementation of this policy was tried and tested through Egypt’s individual peace with Israel, which left Egypt in tension with all its previous Arab and Third World allies. Mubarak’s regime only introduced minor changes to this policy, making it more rational and less messianistic. In fact, the true essence of this general foreign strategy was achieved during the years of Mubarak’s rule. Pragmatism and direct cost-benefit approach has become the guiding principle of Egypt’s foreign policy. This by no means contradicts certain highly valued goals, commitments and parameters. The essence of Egyptian foreign policy was transformed from aggressive critique of Western imperialism and hostility against the American hegemony into reliance on the West and building special relations with the US . Strategic services to the US , delivered by Egypt under Sadat and Mubarak, included blocking the export of the Iranian revolution to the Arab World, aiding Iraq in the war against Iran 1980 – 1988 and mobilizing against Soviet presence in Afghanistan. The most vital service was helping the US construct the Arab and international alliance against the Iraqi invasion of Kuwait. It also included aiding American policy objectives in the Third World at large and sub-Saharan Africa in particular. How-ever, the most valuable strategic service to the US is maintaining peace with Israel inspite of the latter’s failure to act in harmony with the UN resolutions and the principles of international law and international legitimacy. The reversal and transformation of Egyptian foreign policy under Sadat and Mubarak constituted a fundamental departure from the essentials of identity politics that dominated Egyptian poliIPG 1/2000 Said, Egypt: State Security and Social Decay 9

tical culture for so long. It was simply logical to regard this reversal as betrayal to Islamic fundamentals, Pan Arab principles and the very ideals of Egyptian nationalism. Muslim fundamentalists are not alone in rejecting this policy orientation. In fact, most other trends in Egyptian politics share a critical assessment of Egypt’s foreign policy at the turn of the century. The present set-up of foreign policy may have managed to solicit the support of the majority of the power elite and the masses at large. More important perhaps is the fact that the changes associated with the breakdown of the Soviet Union and the emergence of the uni-polar system have further demonstrated the»wisdom« of breaking away from third-worldism and close ties with the Soviet Union in Nasser’s time. However, certain crucial factors have contributed to increasing doubts on the relevance of the present foreign policy. A more profound thinking on Egypt’s future role in the international system is yet to emerge but debates may have already started. In cultural terms, the shift towards crude pragmatism was not accomplished without a heavy toll and grave tensions. The swift rise of Islamic militant opposition, across the Arab world, not just in Egypt, is a clear proof of the toll paid by the Egyptian State. On the other hand, less apparent but perhaps much more damaging on the long run is that the reversal of foreign policy orientation has caused disillusionment on the part of a whole generation of Egyptians, whose consciousness was formed by nationalist and progressive slogans. Indeed, the public at large has lost this unique pride associated with meaningful, even if it were failing, endeavor to reform the international system in the name of the underprivileged. On the other hand, Egypt had to pay heavily for its determination to maintain peace with Israel, irrespective of what the latter does in the region. For almost a decade, Egypt was boycotted by the rest of the Arab world. Even after restoring Egypt’s status in the region in the aftermath of the second Gulf crisis, Egypt is still lacking the ability to mobilize the region behind positive and constructive projects such as the building of a free trade zone or economic community. The erosion of Egypt’s leadership is largely explained by the stumbling of the peace process and the failure to pull the region out of the logic of violence and retaliation. In other words, Egypt’s peace strategy was unheeded for long enough to cause the region major disasters such as the Israeli invasion of Lebanon and the Iraqi invasion of Kuwait. Close association with the United States has also damaged Egypt’s moral standing among many communities in the Arab world and the Third World more generally. The increasing monopoly over power within the international system and its use or misuse, in disregard of the United Nations and rules of international law, cause great fears and worries about the prospect of American interventions and destructive wars. Those fears are specially echoed in the Arab world where frustrations over America’s failure to act in harmony with international legitimacy are most acutely felt. This was easily seen during the Gulf crisis when the Egyptian army was marching in unity with the American military towards Basra and Baghdad in 1991 , against the shared sentiments of all Egyptians who were appalled by the magnitude of destruction inflicted upon Iraq as a state and society. The continued and incessant targeting of Iraq by the American war machine until the end of the 20 th century is supplying ever fresh evidence to those who condemn Egypt’s close ties with the US on the nature of American designs and conduct in the region. Egypt is seen as an accomplice to these designs regardless of how heatedly it projects its differences with the US on such issues of military and destructive interventions. The last few years in the 20 th century witnessed growing tensions with the US over regional and international issues. The nationalist overtone born by official Egyptian statements and conscious display of tensions and disagreements inflames enthusiasm amongst the public. The state was more than careful to use these nationalist sentiments but not to allow itself to be carried away from the special and»strategic bond« with the US and its policies in the region. At the turn of the century, Egyptian foreign policy is still faced with the two major unsettled issues of vital interest to it and to humanity at large. The first is the need to demonstrate the will to forge a new path for the evolving international system based on common interests and common values, on participation and on the ideals of international law. Pursuing these principles will inevi10 Said, Egypt: State Security and Social Decay IPG 1/2000

tably put close ties with the US in jeopardy. The second is the issue of peace between Arabs and Israelis. Certain minor gains have been achieved, especially in relation to the Palestinian people’s traumatic suffering. Nonetheless, it is very difficult to conclude that Israel has actually taken the strategic decision to meet Palestinian demands and rights as formulated by the United Nations and as expected by the Arab public opinion. Egypt will continue to be confronted by this major issue while not having adequate comprehension of the causes of failure or the instruments to correct the path of peace. Foreign Aid and the Rise of Consumerism Our brief discussion of foreign policy is not alien to the politics of economic development. In fact, foreign policy played the»leading economic role« in the last quarter of a century. Various foreign sources contributed the greatest part of national income. These sources include foreign assistance, remittances of Egyptians working abroad, basically in rich oil exporting Arab countries, the flow of foreign(mainly Arab) capital and the export of services(basically tourism and the Suez Canal). Official foreign assistance constituted a crucial source of finance needed for the rehabilitation of infrastructure that suffered an almost complete collapse during the 1970 s. The special and strategic relationship with the United States in the last 25 years was certainly the key to the flow of foreign assistance. Not only that, American aid constitutes about two thirds of annual official assistance to Egypt. Other sources such as European, Japanese and multilateral assistance are partly solicited by direct and indirect American opinions. A simple and straightforward comparison of Western attitudes – between the Nasserist period ( 1952–1970 ) and the period of both Sadat and Mubarak( 1979–1999 ) unambiguously demonstrates the correlation between strategic affinity and generosity of foreign aid. Waiving half of Egypt’s official foreign debt further indicates this correlation by various western debtors in response to Egypt’s role in supporting the American plans against Iraq, on the occasion of its invasion of Kuwait. The flood of foreign capital during the last 25 years has coincided with a generally modest economic performance. The enormous volume of foreign financial flows failed to empower the country to take off or to achieve levels of economic growth adequate for passing major bottlenecks. In fact, economic distortions and imbalances grew in vast proportions during the 1980 s. The economy was virtually collapsing during the very period that witnessed the greatest injection of foreign money capital in the history of the country. Improvements in the economic situation only started in the second half of the 1990 s after, and largely by virtue of, the implementation of the IMF stabilization program which was aided by writing off and rescheduling Egypt’s foreign debt and debt service. The modesty of economic achievements in times of huge injections of foreign aid can be explained by some technical factors as well as by reference to the concrete conditions under which the re-integration of Egypt into the world economy took place. Technically, foreign aid was largely invested in infrastructure projects with long gestation periods and delayed spillover effects. This odd phenomenon may also be explained by reference to the so-called Dutch disease. The export of labor, especially during the 1980 s, has suppressed all other exports and reduced the competitiveness of the economy at large. However, the sickness in the economy did not manifest itself on the side of exports but rather on the side of imports since Egypt was traditionally a very low export economy. The economy was transformed into heavy reliance on imports. The open door policy – in Arabic»Infitah« or opening – was generally condemned as anarchic and consumption oriented. Thirst for imported luxury consumption goods is a traditional manifestation of stress associated with protracted war economy. Another explanatory model is based on the notion of the rentier economy. According to this perspective, the Egyptian economy has evolved in the same direction as other Arab oil exporting economies characterized by exceedingly heavy reliance on oil exports. Reliance on rent income tends to suppress the development of other commodity sectors, especially manufacturing. This theorem is deeply rooted in modern economic science since its inception which witnessed the struggle against a landed aristocracy privileged with high land rent. The situation of oil exporting countries is rather different from the model of conflict between proIPG 1/2000 Said, Egypt: State Security and Social Decay 11

fits and rents. Additionally, the trade between resource and manufactured commodities should not be approximated to rent versus profit or landlords versus entrepreneurs. At any rate, the model of rentier income with the associated suppression of productivity could not possibly be applied to Egypt who is a very modest exporter of oil. As indicated earlier, the real yield of labor exports is greatly higher than the export of oil or any other natural or resource commodity. What holds true in these models is the fact that the country had for a relatively long time deferred the hard decisions it should have taken for restoring health to the economy and resuming serious economic development endeavor. The flow of capital from relatively cheap foreign sources made this deferral possible. It is a mockery of history that a truly poor country could use so much foreign capital in order not to improve its productivity and foreign competitiveness but on the contrary to finance very high levels of consumption, basically through importation. Some of the decisions needed to restore the economic health were taken in the early 1990 s (instead of the early 1980 s), with the implementation of the IMF stabilization program. Some others are still to be taken for the purpose of better mobilization of resources and improvement of productivity. Better administration of state finances has allowed much better economic performance. However, the country is still far from being qualified for economic transformation or take-off. On the most immediate level, the resource gap is still huge. Egypt continues to rely on foreign sources for financing a major part of investment. Gross domestic savings have significantly improved with the implementation of the stabilization program; from 7 % of GDP in 1992 to 15 % of GDP in 1997 . The resource gap sharply declined from 12 % to only 6 % in the same years. Nonetheless, the latter figure is still very high. More important indeed is the fact that the investment performance of the country is still very meager when measured by the ratio of gross domestic investment to GDP ; a modest 18 % in 1997 . But if the country is hoping to improve its status or achieve take-off, it should raise this ratio to at least 25–30 %. In turn, this high level of investment demands not only very efficient economic management but, more importantly, the willingness to sacrifice and endure hardships. The real test of determination to achieve economic take-off lies precisely in the capacity of a given society to mobilize resources for investment and accordingly to temporarily control consumption. Asceticism is not only a moral virtue, it is also a precondition for building momentum towards economic progress. It could also be viewed as a transparent indicator of how serious a society is in breaking with economic stagnation and poverty. The economic philosophy which prevailed in Egypt during the last quarter of a century, posesses entirely different inclinations. Instead of controlling consumption, this philosophy did precisely the opposite by pushing the country towards a consumption economy. On the abstract level, it is assumed that the momentum for economic growth could be built by propelling demand. Demand-driven growth is advocated by reference to Keynesian economics. More significant perhaps is the assumption, which gained some fame through modern media culture, that the American economy is a vindication of this growth model. This propagandistic image of the American eco-nomic model is further consolidated by advice given by American experts and American aid agencies which focus on reducing government spending while promoting private demand. Actual economic performance clearly demonstrates the fallacies of this propaganda. Demand generated in the Egyptian economy was met largely through foreign, rather than domestic, production. Hence, the freeing of foreign trade formed an important dimension of economic policy, at the risk of a chronic and constantly growing trade deficit. In brief, Egypt helped develop foreign rather than local production. A quarter of a century of open-door policy, so understood and so implemented, ended up in actual de-industrialization and transition to a service economy. A thorough understanding of the choices made and results achieved so far have much less to do with economic arguments than with political parameters and political objectives. The re-integration of Egypt into the world economy during the 1970 s was modeled with political purposes in mind; specifically the creation of a false sense of prosperity as the economic base for political stability of the regime in power. 12 Said, Egypt: State Security and Social Decay IPG 1/2000

The paramount objective of Egypt’s integration into the world economic system is to secure itself political cooperation internationally. Hence, what is important is the stability of the regime and its peace process with Israel. For this reason, Egypt was exempted from strict adherence to the IMF and other international organization rules during the 1980 s. When this was eventually demanded after waiving almost half of the official debt(about 26 billion dollar), it managed to gain the most lenient austerity program. While the adjustment program carried the same economic medicine as is usual with IMF programs, including the lifting of food subsidies and the reduction in the growth of public spending as well as raising new revenues through direct and indirect taxes, implementation was gradual and was compensated for in a number of ways. The fear of popular unrest prevented international economic institutions from exerting hard pressures for reducing private consumption. The specter of food riots in January 1977 continued to frighten policy makers away from measures which may have drastically reduced the living standards of the poorer sector of the population. And while the living standards of low middle classes tended to stagnate, or perhaps slightly decline, during the last decade, spending by upper middle classes continued to expand unabated. Some of these indicators are shown in the table below. Table 1: The structure of demand in the Egyptian economy (selected years) Government spending Private spending Gross domestic investment Gross domestic savings Resource balance 1970 1992 1997 25 14 10 66 80 78 14 18 18 9 7 15 – 5– – 12– – 6 – Source: The World Bank. World Development Report, Washington D.C. 1975 , 1998/9 . In fact, manifestations of consumerism are sometimes surprising. Some of these manifestations are simply expressions of hedonism. In a country, which lies at the lower end of the lowmiddle-income countries in the World Bank development tables, such manifestations are shocking. Egypt is acutely aware of the social and cultural anachronisms demonstrated by the spreading of consumer culture in an underdeveloped society. It is, however, much less interested in taking note of the detrimental implications of the present »development model« for the economy and its prospects for take-off and sustained development. This aspect will force itself onto the agenda if the economy is hit with shocks similar to the recent Asian crisis. Private Appropriation of Public Assets and Rising Inequality During the last quarter of a century, the formation of a consumer society was only one dimension of the government’s domestic strategy. Another dimension was the quest for the highest level of social and political stability through social equilibrium. So, while the state was quite hospitable to the upper classes, it has also been careful to maintain the satisfaction of middle and upper middle classes through various forms of bribery. In fact, the state actually strives to gain the satisfaction of all social classes, even by risking the economic health of the country. This has in fact continued for such a long time that the system has come to show certain absurdities. For example, the state bureaucracy as such continues to employ almost one quarter of the active labor force, mostly in very low or even negative-productivity jobs. Moreover, it continues to carry the burden of running an extensive network of social services, some of which have no match anywhere in the world. In fact, the postpopulist state has expanded on a number of social commitments beyond the levels known during the heydays of populism in the 1960 s. One such commitment is cheap housing for low-income groups. The cost of running subsidized housing projects is staggering by the standards of a poor country with a limited national budget. Some social programs, such as new housing projects, need budgetary commitments. However, maintaining social stability called on the state to sustain social programs the costs of which are IPG 1/2000 Said, Egypt: State Security and Social Decay 13

either paid by certain social groups or by future generations. An example of the former is the system of rent fixation for old housing units. Landlords of old urban real estate have been forced to bear the burden of fixed rents since the mid1960 s while new real estate(not subject to rent fixation) has been highly commercialized. But future generations are going to pay the costs of ongoing social programs in a totally different sense. Most, if not all, social services are delivered on a nominally free basis by means of keeping wage levels extremely low and by neglecting maintenance and running costs, not to mention new investments. With the passing of time, the people who run these social and government services learn to cheat the system and to sharply lower its standards. Free services become bad services. Various vital social institutions are sharply undermined in efficiency and effectively privatized in the distributive sense. In fact, the whole social system is falling victim to a grave sickness. The most crucial manifestation of sickness in the social system and the body politic is the vast erosion of the state’s capacity of maintaining the system’s functional efficiency. The state budget can only maintain its large army of employees on very low salaries. In a society seized by consumption and striving for better styles of life, petty but large-scale corruption has prevailed in almost every field of public service. The damage has been greatest in cases that needed a high level of functional control such as urban development and urban management, but also in the field of education and health services. The cancerous proliferation of urban settlements is a clear manifestation of functional grotesque, partially resulting from syste-matic payment of bribes in return for freezing construction regulations and rules, or the usurpation of public land. This has resulted in making the evolution of cities and city life a true absurdity. The situation in the education system is even more absurd and certainly more worrying. The extremely low level of pay for teachers and educators forces them to expand the practice of private tutoring. This is a question of necessity rather than choice. However, a number of factors have also made this phenomenon a consensual, almost habitual and contractual arrangement to the point that official schooling is becoming the complementary rather than the principal source of education. Due to budgetary constraints, investments in infrastructure and schools have been stopped for almost a quarter of a century up until the early 1990 s. This fact led to vast deterioration of schooling conditions. The same phenomenon applies to universities. Overcrowding, lack of teacher discipline and lack of resources for laboratory training or fieldwork also pushed university education downwards. In so many ways, the continuation of the same old institutional forms of free education is helping effective, legal and illegal, privatization of the education system to accelerate. Vicious circles start to prevail whereby private tutoring is thriving because of the deterioration of public education and vice versa. The same phenomenon of private appropriation of public assets is observed, amongst others, in the field of health. The real effect of obsolete institutional arrangements is that most, if not all, services and institutions in the public sphere are functionally defunct or sharply distorted. The consequences on the economy are glaring, with waste of scarce resources being the most obvious. The damage is greater on the moral level. An acute sense of chaos or system breakdown is spreading, leading to public apathy and sometimes despair. This same situation urges people to care for their own individual interests even when this is accomplished in violation of important public interests, with the consequence of generalizing the act of privatizing public assets. The phenomenon of corruption, political and bureaucratic, is the manifest and most shocking form of private appropriation of the public sphere. In fact, bureaucratic corruption is much more than a simple misuse of power. It is a social contract on the basis of which an almost complete distributive system is erected parallel to the formal one. Moreover, what distinguishes corruption at the turn of the century from earlier manifestations, is that it is a part of a general complicity, in which a number of social categories are taking part. In fact, a vertical coalition of all those who command control over any significant asset of power is more or less involved in corruption in a certain capacity. It goes without saying that strata and elements that belong to all major social classes form this coalition. Since this informal and illegal distribution 14 Said, Egypt: State Security and Social Decay IPG 1/2000

system is completely arbitrary and highly differentiated, it becomes the main source of maldistribution of national wealth. The immediate and logical result of all this is a remarkable increase in inequality, with the associated expansion of poverty. Available studies show consistent patterns of increasing inequalities in income distribution. Figures on poverty are certainly much less definitive. In the most generous estimates at least 35 % of Egyptians live under the poverty line. A more salient feature of inequalities is the tendency to cause such deep rifts in society that the very understanding that only one society exists becomes increasingly presumptuous. Upper and upper middle classes place their children in private schools to which they are driven by large cars from rich neighborhoods. They are treated in certain private clinics and have a distinguished nightlife and altogether totally different life styles. A huge mass of people from poor and middle classes share the fact that they are»incubated«(in every material and metaphoric sense) within an ailing or illmaintained public or private space to which institutions of housing, schools, hospitals, employment and the like belong. Treat people so and they will come to lose their political and moral independence as well as their dynamism and energy. Society becomes fragmented into loosely connected social realms. Social policies come to lose their significance as instruments of class balance or justice. The social system at large loses efficiency and even normal functioning. At the turn of the century, the state and society are showing alarm at the social situation. The President is calling for a new social contract. However, the common wish is for the promotion of a social safety net. Only a few show true understanding of the need for an entirely new institutional set up or indeed a new social system. The Politics of Legitimacy and Control A good part of the responsibility for signs of system breakdown and inefficiencies lies with the interconnections between bureaucratic and market forces. Maintaining a huge public sector formally regulated according to old price levels and remuneration systems, in the midst of a buoyant transition to the market system, proved to be detrimental to the health of the social system as a whole. Relations between the public and the private spheres become mutually poisonous, where the public rigidly controls the private, while the private is corrupting the public. The situation tends to eventually resolve itself through exchanging controls for kickbacks. Good controls and good business practices are thus sacrificed. Another level of explanation is simply based on politics. The state that fails to achieve transition to democratic and contractual politics, in poor societies, tends to buy people’s consent and acquiescence to the political order at the expense of functional necessities. After experimenting with various forms of fraud and violence, the state acts in such an accommodative and forgiving manner that the most essential requirements and standards of good practice in various functional realms are ignored, or severely undermined. The most obvious example is the traffic in Cairo. The anarchic character of the traffic results from many factors. A policy that encourages the possession of private automobiles was applied with such consistency that even the most elementary requirements for maintaining equilibrium in the urban system are ignored in practice. The fast increase in automobiles clearly contradicts the essential designs and engineering of Egyptian cities which were built with no notion of automobile traffic in mind. In fact, complete neighborhoods have no roads broader than ten feet. Cities that are rapidly swollen with floods of migrants from impoverished rural areas are further strained by all sorts of pollution and traffic problems. This contradiction entails the sinking of large investments into improving road networks and traffic infrastructure. The race between infrastructure development on the one hand and increases in the magnitude of traffic on the other, has acquired a compulsory nature, with waste of resources and destruction of the environment being the obvious results. In fact, the traffic has proven so difficult to regulate that the state has practically given up on any attempt to regulate driving behavior and safety measures. The result is increasing brutality in driving ethics. General apathy to law is also noticeable in many other realms. One of the most hazardous IPG 1/2000 Said, Egypt: State Security and Social Decay 15

is pollution. There is a law on pollution which prohibits discharging industrial waste into the Nile River and its canals as well as a whole range of other acts of aggression against the environment. Interestingly enough, the law itself gives ample reason not to implement it with the result that there are indeed very few cases of implementation. Disposal of all kinds of waste practically everywhere has pushed the country to the verge of an environmental disaster. A major source of strain on urban systems is the mushrooming of»arbitrary settlements« as they are called in the official lexicon. The term arbitrary implies illegal construction of housing units and housing projects which lack even the minimum standards of good engineering. The construction of housing projects or units, with or without legal license, in arbitrary neighborhoods implies neglect of all standards, many of which are required by law. The ease with which people have managed to ignore minimum requirements of housing projects is only matched by the ability of certain individuals to extend their control over public land. Usurpation of state-owned land for commercial and speculative purposes formed one of the main channels of wealth and corruption during the last quarter of a century. The law itself converts usurpation to a legal practice in the name of usufruct. Moreover, the law meticulously arranges for acts of conciliation between state agencies in charge of public domain on the one hand and those who subjected this domain to effective private control by illegal means on the other. The privilege of stealing state land for private commercial uses are by no means granted to everyone or equally but the practice was far from confined to people holding political or bureaucratic power. The state and state property is effectively privatized in innumerable ways. The fact of the matter is that this effective privatization shows the state, that seems so powerful and so insensitive and intrusive with the slightest forms of political opposition, to be truly soft or weak vis-à-vis major social interests, irrespective of their harmony with law or public good. Ordinary people are careful to take note of this obvious gap between the strong interest in»policing« society coupled with the failure to implement the law necessary for the healthy functioning of the social system. In fact, even the poor manage to take their share of the cake by properly blackmailing the state or simply exchanging complicity for state laxity in implementing standards and laws akin to the proper functioning of the social system. For example, criteria for passing exams in the educational system are relaxed, requirements for good higher education, including medical and engineering education, are overlooked with the purpose of allowing the largest possible numbers of students in. The deal for those in the top echelons of society is even better. University professors, for example, are practically forgiven when they fail to observe the minimum standards of good academic performance, including sometimes protracted absence from their classes. The irony of this particular example is that safeguards and privileges originally designed for protecting academic freedom are abused for the sake of granting a bureaucratic privilege in a context characterized by disrespect to academic freedom and academic integrity. The scope and frequency of violations and simple neglect of the most elementary rational and functional safeguards in various realms of life contradicts the legacy of an old and immobile bureaucracy. The key to resolving this puzzle is exchanging people’s consent for political legitimacy. Maintaining tenure in political power as well as bureaucratic privileges becomes the only rationale which explains failure to implement minimum standards of good and professional practice in so many fields. But the prime condition for the continuity of such a situation is its generalization through collective complicity. Social arrangements evolve with time so that the system accumulates adequate support from within at the expense of the rational schemes of things. All such tacit arrangements specifically designed to maintain the security of the given functional regimes have one common denominator which is the over-all state security and security apparatus. Changes in these matrices of control and privileges correlate with»strategic« state security considerations and state security maps. For example, during the period 1979–1988 , the black market was allowed almost total control over the main sources of private financial flows, especially the remittances of Egyptians working abroad. 16 Said, Egypt: State Security and Social Decay IPG 1/2000

The phenomenon of blackening almost dominated the market for hard currencies. Interestingly, however, this phenomenon was strongly linked to Saudi forms of Islamic fundamentalism. The coupling of the two phenomena, in the years 1979–1988 , created what was known as Islamic investment houses. These latter are notorious for being the greatest fraud in the social history of the country. The role of the state in all of this needs to be fully uncovered. Political and bureaucratic corruption attracted most of the attention of those who tried to explain the government failure to implement law against this fraud. In fact though, the main reason for the sudden crackdown on Islamic investment houses was the shift in state policy from alliance with a Saudi-inspired brand of political and cultural Islam to an uncompromising hostility to it, at least within Egypt. When the state eventually intervened in 1988 , a huge number of small savers saw their life-long savings disappear. Equally interesting perhaps is the fact that the matrix of control over workers’ remittances has changed. The more conventional bureaucratic and corporate forms later replaced the»Islamic form« of control. Security was at the heart of this shift. We may indeed follow this analytic model in order to come to grips with changes in trade and economic policies at large. The central banner around which new coalitions of business interests were formed in the 1990 s is said to be the transition from consumption-oriented opening towards productive opening. Under this banner a number of changes were made such as promoting the shift of trade agencies to manufacturers of the same articles of consumption which they used to import. A whole new compound of industrialists / entrepreneurs gathered around a hard core of commodities and services consumed by the upper middle classes, basically housing articles and automobiles. In the course of this shift not only the structure of the economy changed but the matrix of privilege and control also shifted. Heavier industries almost lost ground altogether. Even the class of big private entrepreneurs who had been ridiculed by Egyptian intellectuals for being crooks and thieves have gained a certain measure of»social respect« due to their role in »re-industrializing the country«. We may also follow this analytical model for understanding the mechanics of consent and controls akin to different social categories and groups. Two major conclusions emerge from it. First, overall social arrangements fail to generate adequate sources of change from within. Generalized complicity is giving the system inertia and continuity. The only possibility for change in the short run is the alarm caused by waste and erosions and by the loss of potential for take-off and self-sustained development. This alarm may give adequate warrant for change when it affects top policy makers who are receptive to the truth revealed to them by honest scientists and intellectuals. A second conclusion pertains to the dismal situation of democratization in Egypt at the turn of the century. In the type of society which we portrayed above, the ruling regime is not hostile to participation in the economic sphere. Access to participation in the economic realm is far from blocked even for those of obscure roots or class. Access to political participation is, however, totally controlled or restricted. This also applies to civil activities that may not have immediate political significance, such as sports. After a decade and a half of continuous struggle for freeing civil society from harsh prohibitions, the state managed to re-introduce most of these prohibitions in a new law. It passed this law against the objections of all concerned parties, especially human rights activists. All this is indeed tied to the big question of political legitimacy. Military and authoritarian regimes are normally justified in the name of public order and efficiency. In the case of Egypt, the regime, which turned conservative in the 1970 s, is clearly willing to compromise efficiency for legitimacy and stability, partly by overlooking functional necessities and partly by carrying on with its populist heritage even when new circumstances render this heritage obsolete. But the main instrument of perpetuating itself in power is the systematic blocking of peaceful and democratic avenues of change. The ruling regime has consistently rejected demands for guarantees to fair elections and constitutional reforms. Resistance to genuine democratization will continue for some time to come. But reforms which allow more liberal politics and participation may gradually get introduced. The best case scenario is presented by the possibility of a negotiated approach to democracy, regardless of how long the transition may be. IPG 1/2000 Said, Egypt: State Security and Social Decay 17

Transition to participatory and democratic politics equipped with transparency and a spirit of frankness and honest negotiation may serve the best interests of all sectors of society. Many difficulties are involved in this transition, including the charting of a whole new social bargain conducive to auto-development and take-off. This may cause some worry. A call for creativity is warranted. ̇ References Nabil Abdel Fattah: The Sword and the Qur’an. The struggle between religion and state in Egypt. Madbouli, Cairro, 1977 . Arabic Language. Anwar Abdel Malek: Egypt’s renaissance. The Egyptian Book Authority, Cairo, 1983 . Arabic language. Anwaar Abdel Malek: The Egyptian Society and the Army 1952–1967 . El Mahrousa, Cairo, 1989 . Arabic language. Waheed Abdel Meguid: The Egyptian Crisis: dangers of Secular Islamic Polarization. Arab Reader’s house, Cairo, 1993 . Arabic language. Samir Amin: The Crisis of Arab Society. Dar El Mustakbal, Cairo, 1985 . Arabic language. Hassan Bakr.: Political Violence in Egypt 1977–1993 . Mahrousa Books, Cairo, 1996 . Arabic Language. Kirk Beattle: Prospects of Democratization in Egypt. American Arab Affairs. 38 . Spring 1991 . pp. 21–47 . Center for Political and Strategic Studies, Al Ahram Foundation: The Arab Strategic report, annual editions 1985,...,1998 . Al Ahram Foundation, Cairo. Series of annual reports in Arabic and English languages. 1985 ,…, 1998 . R. Dekmejian,: Islamic Revolution and fundamentalism in the Arab World. Syracuse University press, Syracuse, 1985 . The Egyptian Organization for Human Rights:»The State of Human Rights in Egypt.« Series of annual reports, 1988 ,.., 1998 . Arabic and English languages. Saad Eddin Ibrahim: Egypt Reviews Itself. El Mustakbal, Cairo, 1993 . Arabic language. Ali Hilal Dessouki: The political System in Egypt 1 803–1997 . Center for political Research, Cairo University. 1997 . Arabic Language. Ali Hilal Dessouki: Islamic Resurgence in the Arab World. Praeger, New York, 1982 . Ali Hillal Dessouki and Said Ali Abdel Moneim(eds.): Egypt and the Challenges of 1990 s. Center for political research and studies, Cairo University. 1991 . Arabic Language. Raymond Hinnebush: Egyptian Politics Under Mubarak. Lynne Rienner, Boulder, Colorado, 1986. Amani Kandil: Civil Action and Social Change. Center for political and Strategic Studies, Al Ahram Cairo, 1998 . Arabic language. Samia Said: Who Rules Egypt: Analytic Study of the Social Origins of the Economic Opening Elite. Dar El Mustakbal, Cairo, 1986. Arabic Language. Al Najjar Said: The Future of Development in Egypt. El Nedaa El Jadid Messages. Arabic Language. Mustafa kamel Sayyid: Civil Society in Egypt. Middle East Journal, vol. 8 , 1993 . pp. 112–27 . The World Bank: Egypt in the Global Economy. The Middle East and North Africa Economic Studies. Washington, D.C. , 1998 . The World Bank: World Development Report. Washington, D.C. 1994 , 1997 and 1998 . 18 Said, Egypt: State Security and Social Decay IPG 1/2000

MATTHEW HASSAN KUKAH Nigeria: Reversing the Tide of Decline T he prolonged crisis of legitimacy which brought about the collapse of Soviet Communism in 1989 provided the spark for the quest for what has now come to be known as a»new world order«. Popular thought has been that for this project to succeed, the new order must be anchored on liberal democracy. For us in Africa, the period has introduced new dynamics and challenges leading many students of the continent to believe that the struggle has begun, not for democracy per se but for Africa’s»second liberation«. Many believe that it is only the success of this second liberation that can truly guarantee a platform for lasting democracy, for rule of law, prosperity, development, freedom, justice and equality. Unfortunately in Africa democracy is still considered to be just a means to an end to hunger, illiteracy and squalor. For Nigeria, democracy is now seen as the vehicle of development which is to pull the country out of the misery inflicted on it during more than two decades of semi-feudal, military and civilian dictatorships. Democracy is perceived as a means of establishing a just society. While globalization propels the ideals of the new world order, for Africa it is still vital to deal with the economic and political decay arising from years of slavery and colonialism. In his study of the crisis surrounding the African state, Basil Davidson, one of the foremost students of Africa, came to the sobering conclusion that colonial Africa had sowed the seeds that would make the project of statecraft in Africa a long, tiresome, oppressive, sisyphean exercise in frustration, thus leading him to refer to it as a curse. There are many who would argue today that the post-colonial project was bound to fail due to its inherent crisis of legitimacy and the internal contradictions which existed within the system inherited by the new African elite. The project of the state in Africa would be trailed by persistent problems of underdevelopment and stagnation. The Protracted Crisis of the Nigerian State With hindsight, it is clear that when the British conceded independence to Nigeria(October 1 , 1960 ), they merely decided to cut their losses and move on to consolidate their economic interests in the new Nigeria. There had been no serious program to industrialize and modernize the country(as the logic of colonialism tended to dictate) and forty years after this so-called independence, most of the questions which surfaced before independence remain unanswered. Nigeria’s quest has seen the nation move from the West Minster Parliamentary system, which was terminated with the first military coup of January 15 , 1966 , to the American presidential system and then to a prolonged military interregnum. Of the forty years of our national independence, thirty were under military rule! Barely five years after Nigeria’s independence, the first military coup took place on January 15 , 1966 . Ostensibly, the intervention was welcome because, on the whole, Nigerians had come to the conclusion that the civilian regime would not succeed in extricating itself from the contradictions and limitations of their class and ethnic and regional antecedents. In 1963 , Federal elections had been characterized by political violence and ethnic identities had become weapons of war. Corruption had become endemic so that when the leader of the coup(later known as the»The Coup of the Young Majors«) told Nigerians that he wanted to rescue them from a thieving elite, he struck a patriotic chord. Although the young men failed in their bid, military rule was established when superior military officers took over the reins of government. However, the fact that the new government was overthrown via another military coup on July 29 indicated that military rule would turn out to be a cure that was worse than the disease. The first military government threw itself IPG 1/2000 Kukah, Nigeria: Reversing the Tide of Decline 19

open to charges of ethnicism and regionalism(the leader of the coup, Major Kaduna Nzeogwu, was an Igbo as was Major General Aguyi Ironsi, the new Head of State who took over after the failed coup). The Ironsi regime was soon overthrown and charged by Northern military officers with favoritism, complicity and spite for the North (since he had failed to prosecute the perpetrators of the Coup). The new coup brought Colonel Yakabu Gowon, an officer from the Middle Belt to power. These developments pushed the country inexorably over the precipice and finally forced the nation into a bitter three-year civil war ( 1967–1970 ). After the civil war, the government embarked on a program of what came to be known as the three R’s(Reconstruction, Rehabilitation and Reconciliation). It then promised to hand over power to a civilian government as soon as it had laid down the ground rules for the project of the three R’s. Unfortunately, the military got a taste for power and refused to step back on the grounds that the country was not ripe for democracy. In 1975 , a set of soldiers who wanted to establish a democracy overthrew the government of Gowon to the joy of all Nigerians. In less than six months, General Murtala Muhammed, the new Head of State, was himself killed in a coup. He had endeared himself to Nigerians with his radical determination to rid the nation of corruption and to set it on a path of national rebirth, democracy and growth. Happily, General Obasanjo, who took over power, kept the promise of his predecessor and duly set a program in motion to return the nation to civil rule. On October 1 , 1979 , Nigeria welcomed the dawn of a new democratic era. Unfortunately, barely four years later, the military overturned the project of democracy by sacking the civilian government led by Alhaji Shehu Shagari. It would take two coups, a few aborted ones and the spilling of blood over a fifteen year period before the nation would breathe the air of democratic freedom again. The coup that threw out Alhaji Shagari led to the emergence of Major Muhammad Buhari, who was himself overthrown on August 25 , 1985 . His successor, General Babangida, managed to hold onto power by embarking on populist programs and announcing a transition to civil rule. Thus, from 1986 , the attention and the energies of the nation were concentrated on achieving a successful transition program. This program raised many hopes because it seemed to have some ideological focus. Babangida set up a Political Bureau that was entrusted with the responsibility of fashioning out a program that would capture the hopes, anxieties and fears of Nigerians. The Political Bureau recommended two political parties as the ideal for Nigeria. Unfortunately, General Babangida had built his own personal ambitions into the program. The result was that the nation kept going from one crisis to the other. They ranged from acrimonious debates over Nigeria’s purported membership in an international Islamic body(the Organisation of Islamic Conference), to the Northern States becoming engulfed in religious and communal clashes. Tensions between Christians and Muslims became a serious threat to the project of democracy because they divided the country along its most dangerous fault lines – North / South and Christian / Muslim. Yet, so determined were Nigerians to embark on the course of democracy that they willingly participated in the program by forming nearly 30 political associations. However, the President decreed that only two of them would be registered and therefore they ought to either merge or drop out of the race. When the politicians showed no willingness to change their minds, he banned all the associations and created two parties by decree: the Social Democratic Party ( SDP ) and the National Republican Convention ( NRC ). The President caused party manifestos to be written for both parties with very little differences in terms of content. He merely stated in an address to the nation that the difference between the two parties lay in the fact that one was a little to the left( SDP ) and the other one a little to the right( NRC ). Notwithstanding this ideological constriction, some 36 very prominent politicians threw their hats into the ring and sought nominations for the presidency. After investing time and money their dreams were shattered when the President single-handedly banned that entire class of politicians. A new class emerged to continue the struggle to succeed the military. Both parties finally held conventions to nominate their presidential candidates. Interestingly, both nominated Muslim candidates. One of them was Chief Moshood 20 Kukah, Nigeria: Reversing the Tide of Decline IPG 1/2000

K. Abiola(elected on the platform of the SDP ), a multi-millionaire who had made most of his money from military contacts and who still had very strong links to the top echelons of the military. He was a close friend and confidante of President Babangida. He chose Ambassador Babagana Kingibe, himself a Muslim and diplomat from the North, as his running mate. The other party had one Alhaji Bashir Tofa about whom very little was known. He chose a Southerner, Dr. Sylvester Ugo, as his running mate. Nigerians did not contest the banning of the politicians because they did not want to give the President an opportunity to renege on his promises. Their overwhelming vote for Alhaji Abiola in the end was also very telling. Why did the North refuse to vote for Alhaji Tofa even in his home state, Kano? Secondly, why did Christians in the South(who had been victimized by President Babangida over the OIC problem) still go on to vote for a party that fielded two Muslims? There may be many answers but part of it clearly lies with the fact that Nigerians had become so determined to rid themselves of military rule that they felt that no sacrifices would be too big to make. The presidential election held on June 12 was the most peaceful, fair and free election that the country has had till then. As its results began to pour in, showing that the candidate of the SDP , Chief Abiola, was going to secure an overwhelming victory, the President ordered the National Electoral Commission to halt further reports on the elections. One week later he told a stunned nation that the elections had been annulled. The annulment of the elections sent the nation into a convulsion. It revealed to the world that President Babangida had no plans to relinquish power and that indeed his treacherous, zigzag, mine-infested transition program actually led the nation further away from democracy. Caught in his own trap, General Babangida stage-managed a safe passage by telling Nigerians that he had decided to step aside. He set up what he called the Interim National Government( ING ), which was headed by Chief Ernest Shonekan, a business mogul. However, the ING itself was certified dead on arrival. Lacking legitimacy, Chief Shonekan was unable to seriously address the issues of the nation until a Lagos High Court declared his government illegal. Sensing a power vacuum, General Abacha, the then Minister of Defence and most senior military officer, who had been waiting in the wings like a vulture, swooped in and took over the carcass of the Shonekan government on November 16 , 1994 . Abacha ruled with brutality. His almost five years in power were the worst in the Nigerian state. Holding the entire nation in a thrall he literally carved the nation’s resources in two. What he could not loot or what was awaiting his looting, belonged temporarily to the nation. He personified power and corruption and used fear, blackmail, murder and terror to bring the entire nation to its knees. He set up a contraption which he called a transition program, forced Nigerians into the parties and forced the main actors, whom he personally chose to oversee the parties, to adopt him as the only candidate in the race against himself. The puppetry was brought to an inglorious end when the General, who had ridden roughshot over the Nigerian landscape with so much arrogance, himself met an abrupt end on June 8 , 1998 . The new government under General Abdusalam Abubakar showed commitment and sincerity. Abdusalam was quick to sense the national mood and denounced the military as having over-stepped the mark. It was plain to see that the military had lost its cohesion(due to the many failed coups) and had become merely parasitic. Its widespread looting and general lack of esprit de corps made it clear that perpetuating its rule would only further ruin the country. The trade-off was that it was allowed a dignified exit to join the new economic bourgeoisie and establish for itself a new role in society. General Abdusalam put in place a very quick transition program which threw the field open to political competition leading to the emergence of a democratically elected government, which was finally inaugurated on May 29 , 1999 . Olusegun Obasanjo, a retired military officer and former Head of State( 1975–1979 ), became Nigeria’s new President. The Arduous Task of National Reconstruction For individuals or societies, nothing could be more comforting than the feeling that, as Reverend Martin Luther King said,»we are free at last, thank God we are free«. These are the sentiments of IPG 1/2000 Kukah, Nigeria: Reversing the Tide of Decline 21

many Nigerians today. Freedom from military rule is now for us the freedom to dream new dreams and see new visions. The vision of Nigeria becoming a great country can and should now orientate again our striving as a nation. But the task of turning the vision into reality is an arduous one. The long years of military rule, its scandalous looting of the treasury which turned governance into banditry, has left the nation in a serious moral crisis. The legacy includes a huge domestic debt; 300 billion dollars worth of external debt; an army of unemployed youth; a crisis-ridden, cashhungry energy industry; unresolved communal chaos in oil-producing communities; a weak and disenchanted civil service; a hated military establishment; a decrepit educational system; a corrupt, underpaid, undisciplined police force and a highly militarized civil society. The first challenge that Nigeria faces is the need to quickly transform Nigerians from the subjects of military dictatorship into citizens, anxious to unleash their energy and dynamism for the construction of a new and stable polity. The nation must seek to recapture the idealism of its first generation of professional elite who went into the army, civil service, journalism, law and medicine with the ambition of transforming their nation into a just and democratic society. A War Against Corruption There are many who will argue that perhaps the greatest threat to democratic stability in Nigeria is corruption. Tragically, over the last 15 years or so, this has grown into a Leviathan. It has left a legacy that will continue to haunt this nation and to cast a dark shadow over our quest for democracy unless the battle against it is won. All-pervasive corruption has been the single most important factor for the slide of Nigeria’s per capita income from $ 1.470 in 1980 to a meagre$ 300 in 1999 , leaving 67 million Nigerians(out of 115 millions) living below the poverty line. Although corruption had been a nagging problem since the beginning of Nigeria’s fledgling post-independence democracy, over the years it gradually became the oxygen for an indolent, rentcollecting ruling class supported by the military. It reached such levels that almost everyone and everything had a price in Nigeria. Early governments had made some pretensions at containing corruption by embarking on populist-oriented strategies such as the»War-Against-Indiscipline« campaign whereby police officers were encouraged to travel only in vehicles that were made in Nigeria. However, from the early 1970 s, when Nigeria began to export crude oil in large commercial quantities, a noticeable change occurred in the attitude of the elite towards the economy. With oil displacing cash crops, Nigeria gradually moved away from the rudimentary industrial base laid after independence. Oil provided the rent on the appropriation of which the political struggle increasingly focused. It was under President Babangida that profligacy became the mode of governance. The military recklessly stole and misappropriated the billions of dollars the country earned from oil export. The introduction of the Structural Adjustment Program merely widened the scope for corruption. Babangida distorted the entire civil service structure by politicizing it. Indiscipline, inefficiency and corruption crept into the system when the traditional Permanent Secretaries were converted into political appointees known as Directors General. They were to be self-accounting officers and their professional life span was tied to the period of the appointment. Insecurity crept in and the entire civil service became beholden to the political whimsicality and arbitrariness of those who appointed them. The tendency was for the appointees to make up for their insecurity by subverting the rules and enhancing their person a l empires. Even though the rule of President Babangida witnessed sheer brigandage, the government kept up certain pretensions towards accountability. However, General Abacha’s medieval and predatory approach, his outright theft of state resources under dubious camouflages, turned the country into a sort of zoo. Nigeria has to win the war against corruption. And hope has been rising recently that Nigeria can win it. Restoring National Cohesion What they did not steal the military governments 22 Kukah, Nigeria: Reversing the Tide of Decline IPG 1/2000

invested in dubious urban-based projects, with the consequence that rural life became a serious problem. Ordinary men and women, most of them with little skills, migrated in large numbers into the cities in search of the imaginary Golden Fleece. Criminality began to soar. With all their instruments of coercion, the military proved to be unable to bring armed robbery to an end in Nigeria. This inability of the government to guarantee security has meant that, on the whole, it has been very easy for citizens to take the law into their own hands. Communal and religious strife across the nation became endemic. Thus, strengthening national cohesion must be one of the highest topics on the national agenda. The religious and communal problems in the Northern states have as their Southern counterpart the Niger Delta problem. Today, this region, which is the fountainhead of the nation’s wealth, has become a boiling point. Theft, hostage taking, intimidation, blackmail and torture have come to accompany the activities of the oil companies. In 1999 , the Ijaw Youth of the Niger Delta released a document which they called the Kaima Declaration(after the town in which it was presented). They put the nation on hold with the claim that they would make the country ungovernable and the exploration of oil hazardous. The youth of the Niger Delta are doing almost exactly what the young people of South Africa did in the mid 1980 s during the battle against apartheid when they made their towns and villages ungovernable. To address this issue is a matter of urgency. So far the government has implemented the»Niger Delta Bill«, designed to ease the sufferings of the people in the short-term and to address, once and for all, the long neglected problems of development in the area. In a crucial respect, both national cohesion and democracy are about political culture. The idea of politics as a zero-sum game has undermined our democratic experiment. The government in power must learn to imbibe the spirit of give and take as well as cooperation across the lines. But society must also learn. The mass media play a decisive role here. They must not only criticise, but embark on a program of constructive criticism. The Islamic and Christian religious institutions must also preach the gospel of tolerance and peaceful coexistence. Improving Education On paper and by African standards, Nigeria’s educational institutions are an envy and should inspire confidence and hope among other Africa nations. In fact, Nigeria has currently over 50 federal, state and private universities, 40 polytechnics, 50 colleges of education and a total of 1,800 secondary schools. Every year 2.5 million children are enrolled in primary schools across the nation. Moreover, in the middle of the 1980 s the federal government set up the Technical Aids Corp as a means of assisting other African nations to meet their educational needs. Through this program, graduate students have been recruited to assist other poor African nations. However, like most other institutions in Nigeria, the educational ones are in a serious state of infrastructural disrepair and decay. Staff morale is at its lowest ebb. Therefore, many fear that from the primary to the university level young men and women who are ill equipped to face the challenges of national development in the early 21 st century are being turned out. The decay set in as a result of the irresponsible and inefficient leadership which the military foisted upon the country. It is imperative that the Nigerian government improve the present educational system to take full advantage of the country’s still enthusiastic youth. Only then will education become a vital tool for national integration and development. If Nigeria were to sort its educational problem out many other things would also fall into place. One important aspect must be mentioned in this context: Nigeria must find a vital role for its growing number of very well educated professional women who have, up until now, always been treated as second class citizens. Revitalizing Agriculture The discovery of oil in large commercial quantities and the years of military rule have turned Nigeria’s huge agricultural potentials into one vast wasteland. As more able-bodied men and women drifted into the cities in search of jobs that were not available, farming, the mainstay of the nation, took a back seat. Poverty now gnaws the soul of our society. Before bowing out of office in 1979 , the IPG 1/2000 Kukah, Nigeria: Reversing the Tide of Decline 23

present President, Olusegun Obasanjo, himself had inaugurated a national agricultural program in 1978 known as»Operation Feed the Nation« ( OFN ). He showed his commitment to that program by returning to farming after his retirement from public service and until his incarceration. It is urgent to revitalize this program. Increased food production in Nigeria would have the added benefit of reducing food insecurity in the immediate sub-region of West Africa as well. Obviously, without a healthy population no other program of sustainable development can succeed. Nigeria’s Development in the African Context As Richard Skar, an outstanding student of Nigerian politics once remarked, populous Nigeria will be crucial for the fate of African democracy. Indeed, developments in Nigeria must be seen in the context of the wider African developments. If the fall of Communism marked the»end of history« for the West then the end of apartheid marked an end of history in many respects for Africa. For the last forty or so years, apartheid has been the mill-stone around the neck of Africa. Its collapse therefore will either expose the limitations of African states in dealing with their problems or offer them new perspectives and better opportunities to expand the frontiers of their freedom and energies. There are many who will argue that in South Africa there was a transfer of office, but not of power, or that the black people in South Africa have the crown while the whites have the jewels. But even if this pessimistic view were to be true, it misses the point about the long drawn-out arduous historical processes that lead a society to change and development. The psychological feeling of freedom which came with the end of apartheid offered a breathing space, but over and above that, it offered Africans the opportunity to take responsibility for success as well as failure. The Mandela phenomenon or what has come to be known as the»Mandiba touch« led to their victory in the Rugby World Cup and the Africa Cup of Nations in 1997 and 1998 respectively. The feeling goes beyond mere symbolism. But Mandela is no longer in office and the question that Africans now have to address is: who will replace Mandela as the symbol of Africa? It is here that the new developments in Nigeria gain additional significance. If Nigeria manages to successfully address its domestic problems, it can become a platform for addressing Africa’s myriad of problems. Already in the early 1990 s, the dawn of a new democratic age could be seen in Africa. National conferences opened up political platforms for action. From Benin to Zaire to Togo, the story was the same. There was an upsurge in democratic activism. 250 political parties sprung up in Zaire, 100 the Congo, 68 in Cameroon, 30 in Senegal, 25 in Burkina Faso, 17 in Benin and 16 in Guinea. Observers believed that perhaps»the winds of change in Africa« which Harold Macmillan, the former British Prime Minister, referred to in 1960 may have finally arrived. Tragically, the celebrations proved premature. Even more African nations slid into turmoil. Refugee trails became larger still while starvation and war continued to stalk the continent. Just as subsequent convulsions in the former Yugoslavia served notice that the new world order could turn into disorder, so did Rwanda open up the same challenges in Africa. The 1999 summit of the Organisation of African Unity( OAU ) in Algeria marked a new attempt at turning the tide of decline in Africa. In their communiqué the heads of state and government said an emphatic»no more« to coup d’états in Africa. The leaders signalled their commitment to a peaceful entry into the new millennium with the promise of making the continent a military-free zone. Since, as is often said, democracies do not go to war with each other, it is clear that even in its most fragile form, democracy still offers Africa the best hope for a stable future. This optimism is of course fragile in that it will wane if the benefits associated with democracy – social services, an end to poverty and disease – do not show up. It has certainly often been the persistence of these ills that has generated tensions or rebellions and therefore played right into the hands of warlords and religious and ethnic bigots. While much depends on Nigeria’s own successful reconstruction, which would turn the country from a symptom of Africa’s decay into a source of hope and strength for the entire continent, there are also immediate international obligations. The country’s role in international peace-keeping, such as in the Congo, in Sierra 24 Kukah, Nigeria: Reversing the Tide of Decline IPG 1/2000

Leone and Liberia, has been commended by the international community. But in the days of the Abacha regime the country was also ridiculed by outsiders for trying to ensure for others what it itself could not uphold – democracy. Now at last, the nation has the moral authority to summon the rest of Africa to bid farewell to coup-making and hence war. In fact, the West African region could now start to enjoy political and economic stability. To ensure this is also the responsibility of Nigeria. The country should pioneer a massive sub-regional free trade zone. Conditions have never been more favorable. If at the same time East Africa can resuscitate its East African Community( EAC ), put an end to its regional squabbles and link up with the Southern African Development Community ( SADDC ), then Sub-Saharan Africa can reasonably expect economic activities between the trinity of economic blocs. With proper management and a conscious injection of substantial local and foreign capital, Africa can then position itself to trade with such blocs as the European Union. Council would change the way Africa sees itself and would help in positioning the continent for a great role in the new century. ̇ The Role of the International Community The international community remains a very critical factor for the survival of Nigeria’s, and by extension, Africa’s faltering democracies. Western nations must help the continent to move away from its present position as beggar and to occupy a place at the table of the international community. The problem of external debt will, no doubt, continue to constrain our economic and political ambitions. More favorable terms would clearly be of help. But Nigeria has no moral justification for standing in line with countries such as Burkina Faso, Gambia or Ethiopia and plead for debt forgiveness. For it is evident that its thieving elite has done more damage to the country than the entire debt problem. But the international community could support Africa also in another respect, focusing on such key players as Nigeria, South Africa, Zimbabwe, Kenya and Egypt. An important step would be to offer them more prominent participation in the United Nations and other international agencies. There is no doubt that, for instance, a permanent seat at the United Nations Security IPG 1/2000 Kukah, Nigeria: Reversing the Tide of Decline 25

JOSÉ DIRCEU Brazil: The Predicament of Dependency, Stagnation and Social Disintegration O n the eve of the third millennium, Brazil is beset by restrictions. While possessing the economic, cultural and even technological foundations for development, the country is also in a position of losing its economic autonomy and risks sacrificing its most crucial element: political independence and national identity. Brazil began as a European colony, first belonging to Portugal and later dependent on London. During the last fifty years, the country has experienced a long growth period. However, the consequence of this economic growth process has been a concentration of income. Brazil now boasts the unenviable position of having the worst income concentration index in the world and is ranked 79 in the United Nations’ Human Development Index. Brazil experienced thirty years of dictatorial regimes in the middle of the 20 th century. Contrary to other European countries, it stopped making even minimal democratic reforms in the areas of politics, tax and agriculture. It was incapable of solving problems such as the drought suffered in the Northeast of the country. Two thirds of the population became concentrated in cities and metropolitan areas where today people live in fear and insecurity, the product of a dependent and exclusive development model. A third or more of their inhabitants do not have access to public services such as health, education, basic sanitation and safety. The seriousness of Brazil’s situation at the end of the century is expressed by the growth of social apartheid and political instability which have again taken control of the country. In addition to reinforcing injustice, Brazil’s model of economic growth is ecologically unsustainable. Brazil is ranked eighth as an industrial economy, has the fifth largest land mass and the sixth largest population in the world. It is among the twelve countries world-wide that have basic industry as well as modern agroindustry. Brazil’s universities are excellent centers of scientific and technological research and the country has one of the last remaining agricultural frontiers. Its mineral resources and the biodiversity of the Amazon Basin are renowned. But the great challenge Brazil faces today at the turn of millennium is to prevent globalization from aggravating the country’s social, cultural and political inequalities. The hope of meeting the challenge hinges on a democratic revolution. Social and Political Decay Today, Brazil suffers from economic stagnation, political instability and extreme inequality. This has been a result of the country’s dependent and subordinated inclusion in the globalization process and its loss of political and economic autonomy. The entrepreneurial and political elite and Brazil’s governing conservative coalition completely lost sight of national direction by increasing the country’s debt and allowing its economy to become totally dependent on speculative capital. Privatization, along with the opening and deregulation of the Brazilian economy, denationalized the country’s assets, and to a certain extent initiated a cycle of de-industrialization which aggravated Brazil’s regional and social inequality. The same predicament had already been witnessed in Argentina. It caused a surge of unemployment, violence and an unprecedented increase in crime, exacerbated by the failure of public security systems and the Federal Police Force. The social problems put the country’s future at jeopardy as they leave no place and no prospects for the majority of young people. In addition, the social and cultural gap between the country’s minority( 10 % of the population), in which half the national income is concentrated, and the majority is becoming ever wider. At the same time, public services are being dismantled 26 Dirceu, Brazil: The Predicament of Dependency, Stagnation and Social Desintegration IPG 1/2000

and Federal social expenditures cut. In the last ten years, Brazil has witnessed a gradual increase in taxes and prices of services which were formerly public and are now privatized, while public funds were deviated to support capital owners.»Unemployment benefits« are available only for a minority of workers. Governments come and go, and the country still has not organized a policy to fight poverty and achieve food security. Hunger continues to affect more than a third of Brazil’s population, particularly children. What Brazil needs is income redistribution on a large scale through a new wage policy, broad agrarian reform and tax reforms. Apart from exempting production and exports and simplifying the system, these reforms should tax endowments, large fortunes, inheritances and donations – the real wealth reserves. The country risks losing the legitimacy of its political institutions, especially the Judiciary and Legislature. However, the urgently needed response will not be forthcoming from the indifferent and compromising attitude of most of the elite groups, which are rife with corporate privileges and corruption. Brazil’s political system is the result of a democratic victory in the fight against dictatorship. The 1988 Constitution enabled the country to regain the right to elect its leaders. It restored independence and autonomy to the Judiciary, full powers to the Legislature and all constitutional guarantees and rights to the citizens. However, ten years later, Brazilian democracy is losing its legitimacy and representativeness. Immediate and far-reaching electoral reform is required to deal with such problems as the influence of money, vote buying, media manipulation, use of the government apparatus in elections and the political parties’ lack of representativeness. The introduction of re-election for the offices of President of the Republic, State governors and chief magistrates was a fatal blow to a system that was already characterized by party disloyalty and the influence of economic power, itself a consequence of the lack of public campaign financing. The current crisis of the Judiciary, besieged by inefficiency, nepotism and accusations of corruption, coming on top of a wave of corruption charges in local governments, could deal the final blow to the credibility of Brazil’s political institutions. It could trigger a process of radicalization on the one hand and of wide-spread political abstention on the other. The Need for Profound Reforms History and current conditions suggest that Brazil’s future is linked to its dependence on the capitalist West. However, Brazil is a well-endowed country with all the socio-economic conditions necessary for a sustainable national development process. Brazil’s dependence on foreign, mostly speculative, capital is the product of the country’s foreign and internal debt and the growing protectionism of developed economies: these are obstacles that have to be overcome. At present, Brazil cannot do that. The country needs access to capital, markets and technology for its development but it must also regain control over its economic decisions and keep developing its internal market. Without a major political reconstruction, a thorough reform of the tax system and a dramatic shake-up in income distribution, Brazil’s prospects for the next decade are bleak: a further aggravation of the current social and political crisis. Brazil has the internal conditions necessary to modernize its infrastructure and industrial outfit, develop its agroindustry and generate a growth cycle supported by the internal market and the resolution of its main social problems. This growth cycle would be based on the expansion of its consumer goods, construction, agro and tourism industries. Its principal agents would be small and medium-sized enterprises. However, such a program could only be accomplished if the problem of external and internal indebtedness were solved and income redistributed. Linking Brazil’s destiny to the G– 7 countries puts national sovereignty at risk and jeopardizes the country’s future. Continuing the current economic model can only exacerbate Brazil’s social, environmental and public safety problems over the next 10 years, as it has been doing over the last two decades. The system would increasingly lose legitimacy and the country would become increasingly ungovernable. This is definitely not the view of the country’s conservative entrepreneurial and political elite IPG 1/2000 Dirceu, Brazil: The Predicament of Dependency, Stagnation and Social Desintegration 27

groups. They are of the opinion that an open economy, privatization and foreign investments will boost productivity and guarantee sound economic growth over the next few years to the benefit of the country’s social concerns. They consider the public deficit as the fundamental issue and the reform of the social welfare system as the solution to it. They do not fear the loss of autonomy and are not worried about our debts. They are confident that the ongoing process of global financial liberalization and market expansion would benefit Brazil. Brazil’s people, in turn, view the future with increasing pessimism. The popularity of the government and the President is steadily diminishing while his policies are increasingly rejected. Every day the population is more aware that it cannot continue to service its debt and that there is no solution to the social question, to unemployment and to violence. The Need for a New Alliance For National Development But the country’s agenda has changed. Brazil is no longer willing to remain silent and acquiesce to the status quo. A debate has started throughout the whole of society, including the government, on how the country can be extricated from its current predicament. We all know that a country the size of Brazil, with its abundant resources and its serious social and economic problems, cannot go on living with political instability, economic stagnation and growing social and cultural inequality. For better or for worse, Brazil has undergone development over the last fifty years, even under the aegis of the thirty-year authoritarian regime between the»Estado Novo« and the military dictatorship, when inequality rose. But the country’s political elite and middle class had a project of national development, they had class interests, cohesion, political will and national vocation. They never hesitated in taking and maintaining power, even to the extent of affiliating themselves with foreign capital, but they did not lose sight of Brazil’s direction. This is the major issue at the end of the century; everything else will be merely consequential to it: To what extent is the elite going to subject Brazil’s future to international interests? Such a situation can continue until dependence on foreign capital makes Brazil’s social and economic development unfeasible and puts the nation’s independence and cultural identity at risk. Society is beginning to become aware of this predicament. The government and its conservative coalition are losing support, even in sectors which have traditionally supported it, i. e. the middle class and small and medium-sized enterprises. A new majority will be formed in Brazil along with various political alliances: on the right(Senator Antônio Carlos Magalhães, President of the National Congress, for the Liberal Front Party), on the center-right(Ciro Gomes of the Popular Socialist Party, who is also supported by parts of the Brazilian Social Democratic Party), and on the left, with the Workers Party( PT ) leading the others, a contest was initiated to claim the majority and govern Brazil. Even the Popular Democratic Movement Party( PMDB ) has attempted to gain its own political arena with Itamar Franco or Pedro Simon. Time is running out for the government of Fernando Henrique Cardoso. Witness the demonstrations by lorry drivers, farmers, the landless, the »March of the 100,000 for Brazil«, or the public demonstrations by the Brazilian Bishops and the Brazilian lawyers. Political opposition is turning into social mobilization. This is the key issue: Do the conservative coalition and the elite alliance still have the support of society to continue implementing their plan? Or is a new majority forming in the society, offering Brazil a new government that will break with the neo-liberal project and begin a new phase of development? The government will not change its direction. The President will maintain the current policy and the current economic model. Brazil will continue to depend on foreign investments and foreign debt, on agreements with the International Monetary Fund, reform of the social welfare system and the law of fiscal responsibility, i. e. on fiscal adjustment and monetary control. At most, this will imply a reduction of interest rates and compulsory banking requirements to appease pressures from the entrepreneurial class, but the model itself will not change. Brazil will go on privatizing, opening up the economy, financing transnational companies with public money and deregulating mar28 Dirceu, Brazil: The Predicament of Dependency, Stagnation and Social Desintegration IPG 1/2000

kets, including the labor market. This means that Brazil will go on without growth, increasing its debts and interest payments, denationalizing the economy and losing its internal market to multinationals. We will have growing unemployment, greater concentration of income and more cuts in social spending. At most, there will be minor bouts of economic growth, all depending on Argentina, the United States, or perhaps China or Japan. The other alternative is a new government that will carry out a democratic revolution in Brazil, implementing a program that is national, popular, social and democratic in character. This is something that the national elite did not and will not achieve. Such a democratic revolution would involve a major redistribution of income and comprehensive reforms in the areas of taxation, agriculture and wage structure. Moreover, there should be minimum income programs and plans to combat poverty as well as a national works and jobs program, with radical political democratization in the Executive, Legislature, Judiciary and cultural areas, including an ample participation of society in the control of the State. This new government should resume control over social funds, putting them at the service of national development cum income redistribution. It should redirect resources into production, making them available for national enterprises, small and medium-sized ones in particular. Such a government would not be afraid to defend national interests, the internal market and employment. It would pursue an industrial, technological and foreign trade policy like they do in developed countries and it would renegotiate foreign and internal debts. It would use the power and the means we have on the country’s behalf and would defend Brazil’s interests on an international level against the growing protectionism of the G– 7 group. This government would be capable of suspending privatization procedures and submitting those already implemented to auditing bodies and congressional investigative commissions. That way it would prevent denationalization and security risks with regard to strategic goods and services. The government would subordinate monetary and fiscal policy to the recovery of economic growth and finance programs for the direct and indirect generation of jobs. It would reform the financial system, reduce interest rates and even regulate foreign-exchange transactions in an attempt to stop the speculative flight of capital. Brazil’s main objective is the recovery of national development. This requires severing the country’s current dependency on the dynamics of globalization and North American hegemony. Brazil has the socio-economic, political and cultural conditions necessary to break with the current situation of stagnation and regression brought about by its political and entrepreneurial elite and to lead a regional coalition. Brazil possesses an industrial, agricultural, technological and educational base. Its population has the socio-cultural conditions to develop into one of the world’s greatest regions, with extensive natural resources, a large internal market and, most importantly, an emerging tropical civilization. The needed economic and social transformations depend on radical changes in Brazil’s institutions, changes that place the State under the control of society. Only a left-wing political front can bring about the necessary changes, based on the interests of the popular majority. Frustrated Expectations At the end of the 1970 s and the beginning of the 1980 s, Brazil experienced profound political transformations, the product of social changes that had been occurring since the beginning of the 1970 s. The rise of a strong democratic opposition in the middle class and the industrial workers’ movement, illustrated by the CUT (Central Workers’ Union Confederation), formed an alliance with a strong popular movement. It was supported by the Catholic Church and established conditions for ending the military dictatorship. It was also supported by an entrepreneurial sector that had grown during the military dictatorship. It upheld an economic program that still pictured Brazil as an autonomous nation with a national plan. There were great hopes for profound democratic and social changes in the country and popular participation was strong in demonstrations for the »Rights Now« campaign and the Constituent Assembly. The country wanted democracy and achieved it. Since the 1970 s, the Brazilian Democratic IPG 1/2000 Dirceu, Brazil: The Predicament of Dependency, Stagnation and Social Desintegration 29

Movement Party( PMDB ) was becoming consolidated as the opposition party to the dictatorship. It expressed popular sentiments and succeeded in uniting an intellectual and academic opposition in an alliance with major sectors of the entrepreneurial class. It constituted a synthesis of social, popular, nationalist and democratic opposition, offering an alternative for development with income redistribution. However, the end of the dictatorship was marked by a compromise among the political sectors that had had stakes in the regime. The government born from this alliance, which was to be led by Tancredo Neves, never really existed. It was taken over by José Sarney, one of the leaders of the National Reform Alliance( ARENA ), the party that legally confronted the dictatorship. His government acted as a barrier between opposing projects and failed after various attempts to stabilize the economy. At the same time the Constituent Assembly expressed the correlation of powers and interests of the alliance that defeated the dictatorship. It was shaped by the political and social pressure of the social movements, the Workers’ Party ( PT ) and the left in general. Its actions produced a democratic charter in which the section on economic order was approved by more than 80 % of the constituents. The 1988 Citizens’ Constitution and the Cruzado Plan led to great expectations that Brazil would see the end of inflation and could look forward to economic growth and reduced social inequalities. However, the rise of popular movements and the intensification of the economic crisis led the entrepreneurial elite to support and elect an opportunist, Fernando Collor de Mello, President of the Republic. The objective was to block the victory of a popular leftist candidate, Luís Inácio Lula da Silva. With Collor’s victory, a»neoliberal« program was initiated in Brazil, and the 1988 Constitution turned into an obstacle to the breakup of monopolies and the democratization of the economy. Lula da Silva’s rise reflected a strong popular social movement that attempted, through the PT and an alternative program,»to be the government« in order to change Brazil’s situation. Brazil still had enough democratic power to impose an unprecedented defeat on its elite classes. A broad popular and middle-class movement demanded that President Collor be constitutionally blocked by an impeachment process after a Congressional Investigative Commission had proved that the President himself was involved in his government’s corruption schemes. This was the country’s second disappointment after the preceding disillusionment with the PMDB government. Brazil now discovered that the entire political and electoral process was dominated by illegal donations and criminal operations protected by political authority. Once again, the elite supported a candidate against Lula da Silva, and on the strength of the »Real Plan«, Fernando Henrique Cardoso was first elected in 1994 and subsequently re-elected in 1998 . Although the election of Cardoso and the Real Plan seemed to restore Brazil’s hopes for better days, it had tragic consequences. Unemployment doubled and the country experienced a socially explosive situation that was unprecedented. Brazil increased its external debt by 100 percent to 500 billion dollars and accumulated an internal debt equivalent to the foreign one. Debt service obligations and the deficit of the social security system became unsustainable. Even though Brazil sold off its entire public assets, it did not reduce its debt nor did it invest in the nation’s social and physical infrastructure. Moreover, while many industries did become modernized, the majority ran into debt and lost foreign and internal markets to large multinational groups. In short, Brazil’s economy experienced the worst denationalization process in its entire history. Agricultural development came to a standstill, and apart from MERCOSUR , no external markets were acquired. The country’s technological capacity floundered and no advances in the educational system were made. The 1980 s were described as Latin America’s »lost decade«. However, the 1990 s will be known as the»infamous decade«, because of its legacy of unemployment and social crisis. Its consequences in Brazil are more conspicuous than those experienced by Ecuador, Peru, Colombia and Central America. The dreams and expectations of the Brazilian people were destroyed in the 1990 s. While the political and social consequences have not yet fully unfolded they are becoming visible in the emergence of wide-spread discontent, protest movements and popular revolts but also in the 30 Dirceu, Brazil: The Predicament of Dependency, Stagnation and Social Desintegration IPG 1/2000

fact that the political elite has become completely discredited and the country’s political institutions have lost their legitimacy. Defending Sovereignty, Resisting US Hegemony As time goes on, an increasing number of Brazilians realize that the globalization process and the so-called»Washington Consensus« have aggravated the social and economic problems of Brazil as well as of the rest of Latin America. International public opinion itself is becoming aware of the serious consequences the predominance of speculative financial capital has all over the world. In the last 10 years, the left has not ceased to denounce the dangers and consequences of this process. It is only now that international bodies such as the International Monetary Fund and the World Bank recognize that poverty and social exclusion have increased world-wide. They also recognize that the unemployment problem has worsened and that hunger and above all a complete lack of protection for children and the elderly have increased globally. In the Brazilian case, an additional aspect must be taken into account. Brazil is a tropical civilization and practically a continent. Its geopolitical and economic dimensions do not correspond to its global role, and the country cannot accept a continuation of the current global power structure. This is not a matter of winning a place for Brazil in today’s world and the institutions that underpin the present economic world order. Brazil should not accept the current agenda of international bodies such as the Millennium Round of the World Trade Organization, which only serves to deepen the global hegemony of financial capital and of the United States. Neither can Brazil accept the militarized geopolitical approach of the United States. The United Nations, if they are not to become completely demoralized, cannot endorse such a practice as shown in the Kosovo on the part of major global powers. Brazil will request a more democratic United Nations and wants to take part – on this basis – in the decisions of the international community and assume responsibilities at a global level. Unfortunately, Brazil’s government and diplomatic policy are not up to the country’s international tasks. In both the Colombian crisis and the tragic situation of East Timor, Brazil’s conduct was less than admirable. The country’s general understanding is that it should have assumed a protagonist’s role, albeit through regional and international bodies. It is deplorable to see a people who share our language and culture literally being massacred without our government putting itself immediately at the head of a broad international movement in defense of the sovereignty of such a closely related people. The Colombian situation is even more serious as it involves Brazil’s national security and territorial sovereignty. The aspirations of the USA and part of the international community regarding the Amazon region are public and widely known. There are many statements which confirm their claims. Brazil urgently needs to develop and defend the Amazon Basin, to redefine its territorial distribution and to support sustainable and socially just development for its populations. Brazil’s diplomatic conduct in the Colombian case is inexplicable and has endangered the country’s territorial integrity. The US government has already intervened openly in Colombia’s quasi civil war and skillfully manipulates activities in all directions in order to involve other Latin American countries. Brazil must not and cannot remain apathetic while being confronted with the dangers of involvement in a regional conflict. Brazil has a historical and cultural obligation to Latin America. It is already a member and integral part of MERCOSUR . This means that the economies and interests of South American countries, particularly Argentina, Uruguay, Paraguay and Brazil, are already mutually obligated and dependent. Furthermore, it means that any decision in one country seriously affects the economy of another and has political and social consequences. For Brazil, such integration should not be enough. Brazil should promote the election of a Latin American parliament, it should promote the development of institutions of social and environmental protection and it should promote cultural integration. Brazil has opted for MERCOSUR at the expense of the Free Trade Area of the Americas. It has opened its economy as no other country has done, and has initiated the so-called»reforms« recommended by the International Monetary Fund and IPG 1/2000 Dirceu, Brazil: The Predicament of Dependency, Stagnation and Social Desintegration 31

the World Bank. Today, Brazil is faced with a major crisis in its relations with Argentina given the artificial nature of trade relations between the two countries. In addition, there is the enormous trade dispute with the US and Europe, the result of genuine protectionism by these economies. The growing agenda of protectionism on the part of industrialized nations can no longer be tolerated by Brazil and similar countries. Typically, such protectionism is dressed up as liberal rhetoric and liberalization measures in sectors dominated by these industrialized nations, primarily in the areas of finance, information technology and services. Accepting that agenda would jeopardize the development of our countries for the next few decades. The International Monetary Fund, the World Bank and even the US Treasury are increasingly interfering with Brazil’s political decisions. Demands to liberalize the Brazilian economy are becoming ever more direct. Brazil’s economic decisions are monitored openly and pressure has been exerted on the national Congress. But for some, the major issue that emerges is Brazil’s dependence on speculative foreign capital, its debt and the denationalization of its economy, including its financial system. An additional problem is the predatory nature of foreign investments which take advantage of Brazil’s internal market without transferring technology and productive capital to the country, but aggravating its current account problem. The country’s dependence on the US and the international financial community is demonstrated by the submission of Brazilian diplomacy to US foreign policy and by the complete lack of initiative outside the North American sphere of influence. Obviously, that creates powerful and broadbased nationalist and anti-American sentiments in Brazil. As a consequence, there will be plenty of scope for dispute and conflicts between Brazil and the West over the next few years. These will occur not only in the areas of trade and technology but in the political arena as well. At present, Brazil’s military power betrays the country’s economic weakness and the crisis in public finance during the last ten years. But sooner or later Brazil must push for a redefinition of regional and global power. Therefore, the country will have to modernize its armed forces and increase its regional military power. US militarized geopolitics constitute a hidden threat to Brazil’s sovereignty, primarily with regard to the Amazon Basin. In Brazil, awareness is growing that the country needs to carefully examine its dependent and subordinate incorporation into the global picture. The feeling that Brazil’s national interests are not being considered in the process of globalization is spreading. The nations of the world will not be able to coexist with an economic system based on injustice, exclusion and militarized global power whose legacy include three billion human beings living below the poverty line, 102 countries that are poorer than 15 years ago and 1.5 billion people who do not have access to such a basic necessity as water. Brazil needs to assume its role in the world but to be able to do so it needs a democratic revolution which unites both people and country, regains autonomy for the nation and brings justice to its people. ̇ 32 Dirceu, Brazil: The Predicament of Dependency, Stagnation and Social Desintegration IPG 1/2000

HÉCTOR AGUILAR CAMÍN Mexico: Half Way There Ayer pasó, mañana no ha llegado Francisco Gómez de Quevedo y Villegas T here is an ancient Chinese curse:»May you live in interesting times.« In the final decades of the 20 th century, Mexico has indeed lived interesting times. At the end of the millennium, it is halfway towards completing a long historical transition. Although the goal is complex, it may be described in simple terms: we are building a prosperous, equitable and democratic country atop the remains of an authoritarian, unequal and poor one. Problem one: prosperity. Mexico is a country of one hundred million inhabitants and three quarters of a million square miles. In terms of population it is the eleventh largest country on earth, and thirteenth in terms of size. In 1994 it was classed as the thirteenth largest economy in the world. However, in the United Nations’ quality of life index, it was not thirteenth, but sixty-seventh. Problem two: inequality. Mexican society suffers from old and new inequalities. A handful of large companies are responsible for most industrial output and just two banks hold more than half of the country’s savings. Three large cities are home to a third of the population. In 1994 , the poorest 40 % received only 17 % of all income and the richest 10 % received 34 %. Forty of every one hundred Mexicans live below the international poverty line and thirteen out of every one hundred in conditions of extreme poverty. Society as a whole goes to school for an average of six years, but this figure climbs to ten grade years if only the urban areas are taken into account. In public health, epidemics typical of the underdeveloped world coexist with diseases common to developed countries. Life expectancy in Mexico is 70 years, but only 50 in depressed rural areas. It is a society of mixed races, with strong indigenous roots that were bequeathed the Spanish language, where five of every one hundred inhabitants speak an Indian language and only one out of every hundred speaks only that language. Problem three: democracy. Mexico is a nation of labyrinthine laws, but its political culture does not revolve around any ideal of true law enforcement. The country prefers gray negotiation to black and white law. It is a country that has never suspended elections since the end of the Revolution which gave birth to its modern era in 1917 . However it did not have its first effective and clean elections until 1994 , when President Ernesto Zedillo came to power. In the interim, despite the separation of powers, the executive absorbed the legislature and judiciary. It is a federal republic in which power has been wielded with an iron hand and where the word»federalism« has been twisted into centralism. Mexico has a culture both ancient and cosmopolitan, rich in regional cuisine and music, tied to the village pump yet prone to mass migrations born of both adventure and need. As the millennium draws to a close, this modern yet backward country, enormously rich yet enormously poor, plebeian yet plutocratic, hungry for progress yet held back by its historic inertias, is undergoing an immense and truly epoch-making transformation, comparable to any in its turbulent history. The Great Transformation at the End of the Millennium Mexico has undergone four major historic transformations: 1. the conquest and colonization by Spain in the 16 th century. 2. the Bourbonic reforms of the 18 th century which led to independence in 1821 , after the fall of the Spanish empire in the Americas. 3. the liberal reforms which took half of the nineteenth century to make true progress and 4 . the Mexican Revolution which casts its shadow over most of the 20 th century. In the last twenty years of the 20 th century, after the country’s public finances went IPG 1/2000 Aguilar Camín, Mexico: Half Way There 33

bankrupt in 1982 , Mexico began a fifth and just as profound transformation. Affecting every nerve and fiber, visible and invisible, of Mexican society, it may be summed up as a dual change: one of the model of economic development and another of the nature of the political regime. In the economic sphere, we see a moving away from a closed economy towards an open one. From an inward-looking development model to an outward-looking development model. From a protected economy, striving to satisfy its domestic market, to an export driven, free-trade economy. And from an economy regulated by an interventionist and proprietary state to an economy regulated above all else by market forces and a state more a promoter than a proprietor, with policies of subsidies, not intervention. In politics, we are witnessing the change from an unchecked presidentialist regime to a delimited presidential regime, in which the other branches are independent. It has evolved from a hegemonic, almost one-party, system, with controlled elections, to a system of competing parties, and it has brought with it government-independent free elections, plural and critical public opinion and citizens with different options as well as government alternatives. Where did this change begin? Whence did it emerge? Mexicans prefer an insular view of their history, as though everything happening in the patria had an explanation within its sovereign borders. However with a glance at world history one soon sees to what extent the major changes in Mexico coincide with major changes in world markets and politics. This Mexican fin-de20 thsiècle transformation is no exception: it is part of the industrial, financial and technological adjustment that profoundly shifted the coordinates of world markets back in the 1970 s. At the time, Mexico held solid stability and development credentials. It was exceptional among the successful cases of inward-looking growth that emerged in Latin America in the 1940 s. Such growth was based on import substituting industrialization, trade protectionism and state interventionism. In the 1970 s the secret to success in the world market changed drastically. The emerging economies of those years sought to adapt to new technological and commercial globalization processes. The unprecedented acceleration of those processes in the 1980 s outstripped national borders and planned economies, imposed a new transnational logic of major economic blocs and global opportunities for producers in the world economy’s different niches, and this adjustment had profound consequences. The most far-reaching of all, of course, was the unconditional surrender in 1989 of the socialist countries when faced with the evidence of their economic failure, social injustice and political oppression. More out of need than foresight, Mexico also had to adjust its conditions to the challenges of the day. It did so after the foreign debt crisis of 1981–82 , which had a severe and irreversible effect on public finances and the State’s economic and political thinking. Until that date, Mexico’s economy and politics were heavily subsidized and protected from competition. Mexico had subsidized and protected businessmen, subsidized and protected labor, subsidized and protected peasants, subsidized and protected middle classes – where individuals, journalists, artists and students were at home. It was also a country of subsidized and protected voters, with a subsidized and protected political opposition and a subsidized and protected hegemonic official party. At the end of the line, or at the top of the pile, there was a strong, subsidized and protected president. Everything in Mexico, or almost everything, was subsidized and protected, to some extent, by the state shroud. Everything was, when all was said and done, to some degree paid for out of the public purse. Therefore, when the government’s finances went bankrupt, Mexico suffered not only the bankruptcy of an economic organization, but the beginning of the end of a political regime. It meant the death knell not only for an economic development model but also for a model of political stability. The nation’s governing class had to set itself the task of what at the time was called»structural change«. This translated as putting an end to subsidies and protectionism, cutting back the state, opening the economy up to international competition and modernizing the country in line with world realities and the new economic miracles taking place in countries capable of exporting and exploiting their comparative advantages in the world market. The liberalizing reform moved 34 Aguilar Camín, Mexico: Half Way There IPG 1/2000

forward at a gradual place during the government of Miguel de la Madrid( 1982–1988 ) and took off during the administration of Carlos Salinas de Gortari( 1988–1994 ). However, both governments’ discourse was dominated by economic change, reluctant as they were, to different degrees, to dismantle the political apparatus that supported them. However, as the economic reforms advanced, the old corporatist political structure was dealt a blow from which it would not recover. Amid the long-lived economic crisis of the 80 s, political actors emerged who were not controlled by protection and subsidies, and demands for democratic change were made heard. These were the demands of a society irritated by economic crisis, a society which was in many aspects modern as a result of enormous but silent changes, in particular towards an open Mexico of educated middle classes, whose capacity for protest and political leadership was nurtured in the student movement of 1968 . It was soon to become obvious that the decision to liberalize and open up the Mexican economy meant not only economic reform but also a reform of the back-scratching state and corporatist policies which is a Mexican specialty summarized in the acronym PRI , which stands for the Institutional Revolutionary Party, the hegemonic party which has governed Mexico since its foundation in 1946 . And so the liberalizing reform was also looking to a transformation of the political culture. For a large part of the 20 th century, until 1982 , Mexico’s political culture revolved around a limited number of guiding principles that may be condensed into the expression»revolutionary nationalism«. According to that doctrine, driven by its historic vocation and national essence, Mexico had no choice but to be certain things. First, a secular country, inasmuch as the Catholic Church did not have the right to take part in public life. Second, a peasant country focused on agrarian issues, inasmuch as it kept open the possibility of giving land to the peasants, supported communal»ejido« farming and limited the spread of private property in the countryside. Third, a labor unionist country, inasmuch as it supported the organization of workers in unions and the defense of their labor rights. Fourth, a nationalist country, inasmuch as it was capable of containing the influence and pressure exercised by its historical adversary, the United States. Fifth, a statist country, because the State was the guarantor of social equilibrium, through the corporate distribution of protection and subsidies, and was also the manager and owner of the nation’s greatest assets: education, oil, electricity, telephones, airlines and sugar mills. The reform begun in 1982 challenged all of these pillars. The secular country was told that the Church was to regain its public rights. The peasant country was told that the distribution of land and communal farming were to be replaced by the development of the countryside. The labor unionist country was told that efficiency and productivity were incompatible with the political and labor privileges rife in Mexico at the time. The nationalist country was told that the nation’s opportunities lay not in defensive distrust but in open association with its former adversary, the United States. Finally, the statist country was told that the State was too large and inefficient and had to be reformed, to become smaller. During the reform, the government sold nationalized goods, such as the banks, the airlines, the sugar mills and the telephone company. It cut subsidies to a population that had got used to them, abolished protection for an economy used to captive markets, slashed privileges for a labor union organization used to privileged dealings and imposed restrictions on a bureaucracy used to a lack of controls. Nobody undertakes reforms on this scale without the risk of fractures. Such reforms are not skin deep. No country has been able to take such steps without high social costs and even dictatorial impositions, such as the case of Chile under Pinochet or Peru under Fujimori. Alternatively, no country in the Americas has not reformed because putting off reform has an even higher price, as may be seen in the case of Cuba. The price of change was high. In 1987 it exacted the first split in the history of the PRI . Cuts in government subsidies and steps to make public finances healthy threatened old networks of political and social loyalties. The scaling-down of the state was seen by many sectors as a rejection of the government’s social duties and affected many clients of the budget. The opening of trade meant that many companies, efficient under protectionism, went bankrupt. Privatization processes saw IPG 1/2000 Aguilar Camín, Mexico: Half Way There 35

few winners and many losers. The normalization of relations with the Church were a stake through the heart of official Jacobinism. Productivity was given such importance that old labor victories were actually annulled and relations between the unions and the government cooled. The end to land distribution shook old interests associated with tutelage and corruption in the countryside, one of the pillars of traditional political control in Mexico. The Free Trade Agreement and rapprochement with the United States were seen by many as a cession of sovereignty and economic surrender by the country. It is no coincidence that NAFTA was blamed by the Zapatistas for its rebellion because, it said, the agreement formalized Mexico’s turning its back on its poor. Mexican reforms faced the difficulties foreseen by Machiavelli in his famous passage on unarmed prophets:»… there is nothing more difficult to take in hand,…or more uncertain in its success, than … the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new … Men … do not readily believe in new things until they have had a long experience of them.« The Mexican reformers were not as unarmed as Machiavelli’s prophets. They were at the pinnacle of the state. They used the vertical tools of corporate Mexico, and the unchecked powers of presidentialism, to lay the foundations of change. The problem was, and still is, the fact that the benefits of the new order not only took a long time to bear fruit, but in 1995 led to a new crisis considered even worse than the 1982 débacle which actually gave birth to the reforms. To preserve political stability, the reformers had spent too much and made the mistake of generating the very economic imbalances that they wanted to correct. The trade deficit was high, as were the administration’s hidden deficits. The dollar-denominated public debt, in national treasury bonds, on that account alone amounted to thirty billion dollars. The crisis hit Mexico in the shape of an aggressive devaluation of its currency and an abrupt halt to growth. In the 1995 crisis, for the first time, it was not just the government and large companies that ran up large debts. Small and medium-sized companies, families and personal budgets, all went into the red. The middle classes were caught with heavy debts on their credit cards, home mortgages and cars. They had believed in the new miracle and they paid for their innocence with hard-earned cash. In turn, they made the government and reformers pay, at the ballot box. The rotten fruits of economic reform led to the changes at the political level, and brought to the fore of national demands the implementation of a democratic system that could control the government, protect society from its knee-jerk mistakes and provide it with the means to change governors and the governing party when their mistakes so warranted. After decades of political stability under the domination of an almost one-party system, the last decade of the 20 th century in Mexico was characterized by political competition. The PRI , with previously undisputed domination, struggled to survive in three hard-fought elections in 1988 , 1994 and 1997 , the year in which it lost its majority in the federal congress. The opposition parties became parties of cohabitation. They ended the century in power in both state and city governments which represented a third of the country’s population, and half of its economic base: Mexico City and the two richest states in the republic: Jalisco and Nuevo León. The government of Ernesto Zedillo( 1994– 2000 ) persisted in the economic reforms. Finding virtue in necessity, his administration also opened the gates to political reform and the establishment of democratic rules for the by now solid parties that channeled unconformity with the old regime. He also changed the rules for his own party, the PRI , and in the Fall of 1999 it held its first primaries to elect its presidential candidate, heretofore designated by the president in office. Everything that used to guarantee political stability is on the wane in Mexico: the unchecked presidentialism of the past, the hegemonic»revolutionary« party, the corporatist control of society and the centralization of public life. And the risks posed by the situation are all too clear: new actors might not be up to the task of standing up to a world on the way out, of containing its last stand and channeling the fractures it will cause. There are institutional vacuums and tasks pending that could buck the trend towards democracy. A summary of Mexico’s strengths and weaknesses at the end of the millennium would read as follows: 36 Aguilar Camín, Mexico: Half Way There IPG 1/2000

Mexico’s Weaknesses Violence The first weakness rearing its head in Mexico lies at the very heart of the State: the control of violence in all its forms – political violence, criminal violence and social violence. There are two aspects to this problem: inaction on the part of the authorities and distrust on the part of civil society. Inaction on the part of the authorities refers to the fact that for a long time now the control of violence and public security have not been fundamental priorities in State discourse or action. After the Revolution, the control of violence in Mexico was a problem that had been historically solved; in the 1920 s one group imposed its will on others, took control of national power, put down rebellions and established a solid government whose primary obsession was guaranteeing peace and containing violence. In the 1940 s and 50 s, Mexican governments seemed to have the problem of security solved. They dedicated their efforts to other matters: industrialization, literacy, balanced bud-gets – all very important priorities but ones that have little or nothing to do with the State’s fundamental duty: security. The problem of security seemed to have been mainly solved. In the final quarter of the century we have seen federal governments whose priority has been the economic and electoral reform of the country, not security. Security has a bad reputation. It is nothing to boast about and it is based on disagreeable things: society’s repressive, albeit legitimate, forces. In the final instance, it is a question of using violence against criminals and those who violate the social pact. It involves a legal activity, but a repressive, dark and violent one. Governors do not want to know about such things, and therefore tend to delegate them. This passing off of the State’s central problem from leading players to other actors, from a primary to a secondary priority, is one of the root causes of the crisis in public security, corruption in police forces and rise in unpunished acts of violence. 1 Hand in hand with the authority’s historical failings when it comes to a legal monopoly on violence goes the problem of political culture. There is an intangible, yet absolutely real, limit which restricts the use of the means of constraint by the authorities. For some time Mexico has been experiencing a credibility crisis on the part of civil society vis-à-vis the legitimacy of the use of force by the State. Governors are reluctant to use the forces of constraint mainly because citizens do not believe that they will be used with legitimacy and impartiality by the authorities. In all aspects of political life we have authority that cannot use the forces of constraint, whereby they are not believed to have the moral or political standing, common sense and good faith to use the force necessary to enforce the law. Every time those in power openly use constraint, citizens question their actions. As a result, rather than gaining prestige through enforcing the law, they tend to lose it: by using violence to catch a criminal, by collecting taxes and jailing evaders, by preventing the right of way from being abused, which infringes the citizen’s right to movement, by removing squatters from buildings and land, by charging for the use of public services and punishing non-payers, etc. For the government, the control of violence, which is the State’s prime duty, is not a priority commitment. However, neither is it considered such by civil society, and in time it has become Mexico’s main and most dangerous weakness. Illegality Mexico’s second weakness is intimately tied to the first: the survival of an entrenched culture of tolerance for illegality. This is a serious matter, given the new democratic tide sweeping the nation. For many decades, the benign authoritarianism that characterized the political life of Mexico overcame problems by stepping over, or under, the law. Throughout this long period, 1. The list of heads of public security and police commanders who have turned out to be criminals, partners of criminals, godfathers and patrons of organized crime is a long one. They have all gone from the highest positions in public security to jail. In the eighties, there was the powerful head of the Mexico City police, Arturo Durazo Moreno. In the nineties, the director of national security, José Antonio Zorrilla, and the general responsible for the fight against drugs, Jesús Gutiérrez Rebollo. It would be hard to come by a more illustrative example of the passing off of the State’s central duty, and its consequences. IPG 1/2000 Aguilar Camín, Mexico: Half Way There 37

sometimes with more and sometimes with less sense, but always with final and binding decisions, the authorities said what was just and what was not, who was guilty and who was not. It was an arbitrary but effective way of assigning and distributing decisions regarding justice in the country. That authoritarian system has been worn away in its transition towards a democratic system and today we have a system where the authorities do not and cannot decide with the discretion, legitimacy and / or final character that they once had. The new world of a democratic system which Mexico has now joined can only be governed by equality before the law. But law enforcement faces the inertia of the culture of illegality. In a recent report on the country’s political culture,»Mexicans in the 90 s«, based on a national survey taken in 1994 , Mexicans were asked if laws should be respected in all cases. Almost a third of those interviewed said that laws should only be respected when they are fair. Who decides if those laws are fair or not? What does it actually mean, when it is said that laws must be respected only if they are fair? It means that they must be respected if I think they are fair; in other words, they must be respected if I feel like it. The fact that a third of Mexicans think this shows that Mexico has unsound foundations in its civil society when it comes to entering a regime of effective application of the law. Once more the coin has two sides: civil society and the authorities. On the one hand, citizens do not feel obligated by the law, they feel unjustly constrained by it. On the other hand, the authorities do not feel capable of enforcing the law, they feel overrun by it. The problem is that the only stable reference point in a democracy is the equality of rights and duties before the law. It is this reference point that is the object of suspicion and arbitrariness at the heart of Mexican political culture. When it comes to the culture of legality, many Mexicans still hold to the old tradition of political legal negotiation where the law is seen as a reference point for negotiation or pressure. The politicization of legal trials has been systematic in public life, as has been the legalization of political life. This remains so. The basic problem is that a democratic system in which actors are not bound by the law but act in line with the logic of bending the law to meet the pressure brought by interests, is condemned to fragmentation and anarchy. Weak Presidency, Fragile Political Majorities The third weakness is a conjunction of political changes: the erosion of presidentialism and the absence of players to replace the central actor. In the second half of the 20 th century, the president of the republic was the central actor in the political life of the country. The nascent democracy in this turn-ofthe-century Mexico was to a large extent built by delimiting the powers of the President and of presidentialism. By delimiting that power, Mexico could suffer the paradox of becoming a weak power, with no substitute, which could lead not to the so-sought-after balance of powers but to a paralysis of government and even a power vacuum. This, in turn, could lead to authoritarianism. Presidentialism is disappearing with nothing to replace it as the basis for the governability of the country. Democratic competition has destroyed the old hegemonic majority of the PRI without replacing it with anything else. Mexico’s nascent democracy produced a stage of fragile majorities. There is no stable and solid majority among the country’s political contenders. If things remain as they are, it is foreseeable that the 2000 elections will give Mexico a winner who represents an absolute minority and an opposition, with a majority created only by adding all the votes together. This is a recipe for more acute or chronic crises like those that befell Congress in the final years of the century: a government with a fragile majority and an opposition with an absolute majority that instead of trying to govern, only sniped at the government. The result could be a no win situation, neither for the government nor for the opposition. No verdict, no government formed, only a catastrophic tie. This could only be followed by a paralysis of government. Which is just some short stop to a power vacuum. Divided Elites In the aforementioned conditions of a weak President and fragile majorities, the fourth severe weakness faced by the country lies in the fact that 38 Aguilar Camín, Mexico: Half Way There IPG 1/2000

Mexico’s democratic transition is not founded on an explicit pact of elites regarding the essential bases that must form the common ground for the development of the new democratic country. The two successful transitions in the Spanish-speaking world, Spain and Chile, so different in their direction and content, had this one common aspect: adversaries agreed on a few essential and untouchable things, and their transitions were based on that explicit agreement. This is no coincidence. All modern democracies are based on unquestionable tacit agreements. Of course, a democratic country is expected to produce fierce discussion and competition on such matters as power, access to power, and the figure in power. This discussion is also expected on the question of public policies, government priorities, spending and revenue. Fundamental or spectacular U-turns are not expected; take for instance Mexico´s own recent history, in 1982 the then president decided to nationalize the banks, just a few short years later( 1990 ) another president privatized them again. What will the next president decide? Presidents no longer have those powers, but the forces that have yet to replace them cannot agree as to what the fundamental standpoints ought to be upon which their disagreements should be built. Mexico is still a country where fundamental or radical U-turns are possible. It has yet to define its new national consensus. There is dispute surrounding essential aspects of economic policy. There is dispute surrounding essential questions of the development model to be followed. There is dispute on the historical and geopolitical space the country must occupy and dispute on the stance it must take on globalization. In other words, the foundations of the nation in the immediate future are called into question. Bureaucratic Discontinuity In the light of the above, operational weaknesses are of the greatest importance, and it is against this background that we now turn to the country’s fifth strategic weakness which appears at first sight to be a merely administrative one. Not only is there no President to take the lead in everything, there are also no solid political majorities to replace him. There is, moreover, no pact of elites to provide a fundamental agreement on direction. There is no government bureaucracy guaranteeing a degree of continuity in the passage between governments when power alternates. There is no such thing as a stable bureaucratic structure. There are no set routines for the figures in power to pass on the baton, which would guarantee that governments would not make serious problems and mistakes simply through lack of administrative coordination. Much of the crisis of December 1994 was due to a deficient transmission of power in the fields of public finances. Confidential areas of government may only be transferred on the basis of previous agreements and pacts among the old and new governing teams. Finance is one and national security another. All the Departments have operating secrets and confidential aspects which makes it impossible to administer if they are unknown. But none of them have teams guaranteeing continuity in the handling of those key questions at the highest level. The lack of a career civil service is in these conditions a hole through which the most legitimate, talented and well intentioned of governments might fall. Inequality Mexico’s final strategic weakness is its oldest imbalance: inequality. The backdrop to many of Mexico’s errors and crises is its excessive levels of inequality. Sometimes, when talking of inequality, certain groups start saying:»What are we supposed to do? We can’t be expected to go in for charity and philanthropy«. It is not out of a philanthropic desire that we must attain a less unequal country, more socially and economically homogeneous. It is to give the country true feasibility: economic feasibility, market feasibility, feasibility in social cohesion. To provide countries with longterm feasibility, inequality must be reduced and equal opportunities provided for all. To sum up, the profound weaknesses faced by Mexico at the end of the millennium may be resumed as follows: First, a crisis in the control of violence. Second, a crisis in the culture of illegality and the rule of law. Third, the erosion of presidentialism against a background of fragile majoriIPG 1/2000 Aguilar Camín, Mexico: Half Way There 39

ties. Fourth, the lack of a well-founded pact of elites that can guarantee the basic agreements for future development. Fifth, the absence of a bureaucracy guaranteeing operational continuity of government in the event of alternation of power. Sixth, chronic inequality, which without a solution will prevent the harmonious long-term development of any national community. Mexico’s Strengths However Mexico is not only constituted by weaknesses. Its strengths may be listed as follows: The Economic Sphere In all probability, the fundamental costs of the liberalizing reforms have already been paid and the task ahead consists mainly of conserving such macroeconomic equilibria as have been attained attained. Maybe that will be enough to guarantee a sustained growth horizon, sufficient to confirm in the collective mind that the path chosen was the right one and provide a new political atmosphere for the reforms taken. The modernizing reforms of the economy are not only on the right path – that of world change – but they have also found their practical niche, a strategic alliance with the United States and Canada in the framework of NAFTA . This is not only a trade treaty, but also an umbrella for strategic economic alliances. The strength of the exporting economy is one first indication of the success of economic reforms and openness. The value of exports doubled from 27 billion to 96 billion dollars between 1987 and 1995 . In 1998 , Mexico exported for 117,500 million dollars, this was more than Argentina, Chile and Brazil put together. In addition, there is obvious dynamism in the most modern parts of the economy and not only the export sector. There is an entire network of first-world competitors with an extraordinary set of possibilities. A substantial institutional step has been taken towards correcting the number one structural problem, domestic savings, with the establishment of a modern pension system. Despite this, without further profound changes in the sphere of economic liberalization, the prospects for Mexico’s economic performance in the coming 20 years are not spectacular. One scenario foresees growth rates of 4.5–5 % for the next thirty years, which would mean a climb from 4,300 to 12,000 dollars in per capita income. The Political Sphere Mexico is well equipped to see its search for democracy crowned by success. It has demonstrated an institutional capacity for change in the number one aspect of its political agenda over the last ten years: electoral honesty. This has not only been a political opening up, but also an institutional undertaking by new actors. For the first time in its history the country has the basic ingredients for free elections and an effective democratic life in the field of political competition. Its citizens have finally become proper citizens who vote and defend their vote. It has political parties with effective plans and focuses. It has electoral institutions whose rules and decisions are accepted by contenders. It has a political tradition of negotiation, inclusion and agreement. It also has an up-and-running consensus regarding its future. Exaggeration should be avoided when it comes to the differences and lack of consensus among elites, lest passing priorities or individual divergences be confused with a lack of fundamental consensus. Even those forces most fiercely opposed to the reforms of the last fifteen years concede that some of them are irreversible. Nobody is suggesting we simply return to the past. The privatization processes are criticized for a lack of transparency and the state ownership of oil or electricity is blindly defended, but nobody is proposing nationalization as an expedient route to economic efficiency, political need or social emergency. The cutting back of the state and what is seen as its renunciation of social duties and necessary redistribution are questioned, but nobody is suggesting a return to the proprietary, inefficient, deficit-ridden and obese state that existed before the reforms. The effectiveness of monetary or public-spending policies are questioned, but nobody is proposing systematic deficits as a budgetary tool, nor an unlimited national debt as a public investment resource, nor the printing of currency as an act of monetary sovereignty. 40 Aguilar Camín, Mexico: Half Way There IPG 1/2000

There is a consensus afoot, not only in Mexico but throughout the world that is taking shape in the agenda of the country’s central actors and that could be summed up in a few points: ̈ Full acceptance of the market economy, open to the challenges and opportunities of financial, commercial and technological liberalization; ̈ the need for a modern state capable of guaranteeing macroeconomic equilibriums, legal security, improved physical and human capital; ̈ a political system capable of generating democratic govern-ability and giving itself a broad and systematic social policy in order to respond to the scale of inequality in Mexico. In all of these aspects, Mexico is at the stage of an unfinished transition, a blend of misshapen inheritances and new directions still without a definitive face. The process to destate the country has not brought full political democracy and the modernizers have had to bend their knees to the authoritarian and corrupt past on which so far most of the political apparatus and political negotiation have been based. The privatization of public corporations did not bring the hoped-for economic efficiency, and the opening up to trade did not make the industrial base competitive, but in many cases actually ruined it. A social pyramid which for centuries has been branded by inequality has been yet further punished with poverty and plutocratic concentrations of wealth and opportunities. The dismantling of state control has left open a worrying scope for growth both in social and criminal violence. Yet, for the first time, Mexico has held credible and certified elections. Political competition and alternation in government have become an everyday fact and a real horizon, together with full freedom of the press. Certain companies show a dynamism and productivity as good as those seen anywhere in the world. The modernizing reforms have set out encouraging scenarios of healthy public finances, free trade with North America, institutional checks on bureaucratic patrimonialism and corruption, a clarification of land ownership, political freedom for churches, a reform of the legal system, a reform of the social security system and a process to refederalize national life that has already taken substantial steps in the field of education. This article could dwell on other rays of light and dark shadows. The truth lies in the chiaroscuro. If the gateway is to be the construction of a prosperous, equitable and democratic country, Mexico shall be democratic before it is prosperous, and prosperous before it is equitable. At the end of the millennium, it is half way. ̇ IPG 1/2000 Aguilar Camín, Mexico: Half Way There 41

MUCHKUND DUBEY India: Outstanding Achievements and Dismal Failures L ooking back, at the turn of the millennium, to the aspirations India held when it became independent more than half a century ago, the country has reason to be proud as well as deeply dissatisfied. Outstanding achievements stand besides dismal failures. The consolidation of democracy in what is probably the ethnically most heterogeneous country of the world is a most remarkable success – especially when seen in international comparison. But international comparison also shows India as a country with extreme poverty, mass illiteracy and forced child labor on a large scale. In general, India has been doing better in consolidating its position as a nation in the international system than in improving the life of the mass of its citizens. India’s Quest for National Security, International Status and Global Order Though designed basically to serve its national interest, India’s foreign policy was deeply anchored in the Gandhian ideals of truth, nonviolence, tolerance, and the notions of global governance and the world as the single family of humankind. The sheet-anchor of this policy was non-alignment – not as a negative or neutral concept of keeping out of the two rival power blocs that dominated the period following the Second World War, but as a positive concept of exercising independence of judgment and action in foreign policy matters. For many years after independence, India’s foreign policy admirably served its national interests. It gave India an international profile larger than warranted by its economic strength and military power. On several occasions India helped in lowering tension between the rival power blocs. India’s opinion on major global issues was eagerly awaited. Throughout this period, India was almost universally regarded as the most important leader of the non-aligned movement. Both external and internal factors, however, combined in the later years of the Nehru era and thereafter, to deprive India’s foreign policy of some of its effectiveness. Externally, India’s defeat at the hands of China in 1962 proved to be a major setback. Besides, the relationship of near permanent hostility with Pakistan exercised a disabling influence on India’s foreign policy. Internally, India was increasingly seen as a country which failed to live up to the expectations aroused by it after independence. And in the military field, it could not graduate to the status of a major military power as China did. The end of the Cold War posed new challenges to India’s foreign policy. Although the United States is militarily the only super-power, there is a multi-polar world in terms of economic power. Three main contenders of economic power have emerged: North America dominated by the United States, the European Union and the Asia Pacific region, dominated by Japan. In spite of their competition between each other, they have a vested interest in maintaining the status quo in the global power structure. Thus, instead of two rival power blocs contending for hegemony as in the era of the cold war, we have today a new alliance striving to maintain its hegemony. For India, this multi-polarity combined with the determination of the major powers to maintain the status quo, presents an uncertain complex environment which does not offer many new opportunities, but certainly increased India’s vulnerability. The end of the Cold War also coincided with increasing acceptance of democracy as a mode of governance and the inexorable march of the process of liberalization and globalization. The values of fundamental freedoms and basic human rights have come to be almost universally accepted and country after country in the Third World has 42 Dubey, India: Outstanding Achievements and Dismal Failures IPG 1/2000

adopted development strategies designed to give full play to the market forces and integrate the country into the world economy. This kind of development strategy is predicated on the reliance on foreign markets as well as foreign capital and technologies. It has, therefore, pronounced foreign policy implications. This not only gives a new salience to economic diplomacy, but also has enhanced the country’s dependence, at least in the short and medium term, on major economic powers of the world. Relations With the West India has found some aspects of the changes quite welcome. The end of the Cold War, the disappearance of the two rival power blocs and the adoption by the USA and the USSR of far-reaching measures of nuclear disarmament were a vindication of what India had long tried to achieve through the Non-Aligned Movement( NAM ). As the world’s largest democracy, India also hailed the impressive gains of democracy in the Third World. However, in several other respects, India had to make new departures in its foreign policy. The most important among them affected its policy towards the major Western countries, particularly the United States. India was required to discard the ideological baggage in dealing with these countries and explore new areas of convergence of interests, values and objectives. These countries have the markets, the capital and the technologies which India needs for its economic development. They, particularly the United States, can influence what happens in India’s neighborhood, like Pakistan and China. Besides, India cannot make any dent on the existing world order without their cooperation. Relations With Russia Unfortunately, there was a parting of the ways with the United States and its allies when India started on its journey as an independent nation. India decided not to align itself with any of the two Cold War contestants and, in fact, assumed the leadership of the non-aligned movement. The then leadership of the United States regarded this as a heresy. On the other hand, Pakistan decided to join the Western military alliances, mainly to built its military strength against India and not at all because it shared the objective of these alliances. This gave a distinct pro-Pakistani tilt to Western countries’ policy on matters affecting India’s vital interests. Thus, India was forced to turn to the Soviet Union to obtain economic assistance and to meet its security requirements, that mainly arose out of the Western military assistance to Pakistan. The Soviet Union willingly stepped in to fill these gaps. As a result, there was a quantum jump in the military and economic cooperation between the two countries. The infrastructure and the heavy industries that India was able to build during its successive Five Year Plans owe a great deal to the assistance extended to it by the Soviet Union. Towards the end of the eighties, the Soviet Union was emerging as the biggest trading partner of India in the world. And India’s dependence on the Soviet Union for military supplies was as high as 70 %– 80 %. Today, due to the continuing disarray – and the virtual collapse in 1998 – of the Russian economy and as both India and Russia are trying to integrate their economies with those of the West, economic relations between India and Russia have suffered a serious setback. But India still depends very heavily on Russia for military supplies. Besides, India believes that Russia has the natural resources and human capital to emerge in the next decade or so as a strong economic power, apart from remaining a formidable military power. India, therefore, has every intention to preserve the sinews of its past and existing relationship with Russia and to strengthen and expand them wherever feasible. Relations With China As India’s biggest and most powerful neighbor China is of strategic importance for India. But Sino-Indian relations underwent a sharp deterioration with the souring of the relations between China and the Soviet Union during the second half of the 1960 s. This coincided with the Chinese collusion with Pakistan with a view to keeping India embroiled in South Asian conflicts. China became Pakistan’s largest source of military supIPG 1/2000 Dubey, India: Outstandig Achievements and Dismal Failures 43

plies and assistance for military build-up. In fact, Chinese foreign policy in the region seems to be designed to prevent India from emerging as a rival Asian power. Occasional Indian initiatives to restore and impart momentum to Sino-Indian relations have not brought about a qualitative change in the relationship. Peace and calm along the border have remained hostage to China’s sweet will. Meanwhile, Chinese assistance to build the military might of Pakistan as a counter-weight against India, continues unabated. There is no chance of any qualitative change in India’s relations with China over the next 10 years or so. On the nuclear issue, it will be more difficult to reach an understanding with China than with other nuclear weapon states and their allies. India should, nevertheless, continue its effort to improve relations with China, while preparing itself to meet any – direct or indirect – threat to its security emanating from China. Ultimately, India will be able to forge durable relations with China and oblige China seriously to address the border problem only after it emerges as a strong, if not an equal, military and economic power. Relations With the Smaller Neighbors India is judged by the world often through the prism of the perception of its neighbors. Adverse relations with neighbors will continue to pull it back in its pursuit of playing its rightful role in the comity of nations. Besides, relations with neighbors impinge directly on India’s security – both military and non-military. India’s neighbors are also its best and natural partners for economic cooperation. Finally what happens to the pluralistic societies in India’s neighborhood, particularly Bangladesh and Sri Lanka, seriously affects India’s own ability to hold its pluralistic society together. India faces unique problems in dealing with its neighbors all of whom suffer from an identity crisis vis-à-vis India. This problem is presented in its acutest form in Pakistan. But India’s relations with its neighbors are also characterized by a bigneighbor-small-neighbor syndrome. Especially India’s smaller neighbors view any initiative coming from India with great suspicion. India, on the other hand, tends to take them for granted and accord lower priority to them in its foreign policy pre-occupations. Sometimes, India adopts policy measures in wanton disregard of how they are going to effect the interests of the small neighbors who take this policy of»benign neglect« as an insult. Circumstances compelled India to play a crucial role in the birth of the new nation of Bangladesh in December 1971 . This indeed came as a body blow to Pakistan and to the two-nation theory on which it is based. But India’s relations with Bangladesh have not been altogether troublefree. However on the whole, they have been wellmanaged, as evidenced by the Ganga Water Agreements signed with President Ziaur Rahman in 1977 and with Prime Minister Sheikh Hasina in 1996 as well as by the agreement reached on the return of the Bangladeshi Chakma refugees in India. India has unequivocally taken the side of the Sri Lankan government in its extremely violent and prolonged war with the LTTE , the organization which wants to carve out a separate state of the Tamils in Sri Lanka. India has done so because it fears that threats to the territorial integrity of neighbor countries might destabilize the multi-ethnic state in India itself. That is why under an accord with the Sri Lankan Government in 1987 India carried out a military campaign against the LTTE at considerable costs of men and material. Even after the withdrawal of its troops from Sri Lanka, India continues to give assistance in various forms to the Sri Lankan government in their fight against the LTTE . Many of the problems India has with its neighbors stem from their incapacity to deal effectively with their internal conflicts, especially ethnic conflicts. They spill over to India and create tensions in bilateral relations. Sometimes the problems also arise in India and spill over to the territories of neighbor countries. These problems will continue to dog India’s relations with its neighbors in the foreseeable future until all the South Asian countries reach the level of economic development, national cohesion and social harmony which characterize the societies of most of the developed countries. 44 Dubey, India: Outstanding Achievements and Dismal Failures IPG 1/2000

Relations With Pakistan Pakistan’s identity is linked to the two-nation theory based on religion. Ever since its inception, the country has perceived itself almost entirely in anti-Indian terms. Therefore, it does not want to come close to India in any sphere lest its identity be compromised. That is why educational, cultural and media cooperation between the two countries have either been totally in suspension or minimal. That is also the reason why in its trade policy Pakistan – in violation of the GATT / WTO rules – does not extend most-favored-nation treatment to India. Given Pakistan’s need to project to its people an enemy image of India and its policy of deliberately maintaining a distance from India in all spheres of interaction, Indo-Pak relations are unlikely to become normal in the foreseeable future. The usurpation of power in Pakistan by the military leaders who have played a direct role in the proxy wars against India, including that in Kargil, is going to make the task of restoring IndoPak relations to normal health, even more difficult. Kashmir is an important issue which must be resolved. But it is certainly not the core issue that Pakistan claims it to be. Problems between India and Pakistan are not going to disappear with the resolution of the Kashmir problem. In any case, it will be extremely difficult for any government in India to agree to a solution of the Kashmir problem by allowing self-determination on a religious basis. This will severely compromise the secular character of India and may result in large-scale communal violence and even civil war. This is something which India can hardly afford to do. But in spite of formidable obstacles, India and Pakistan will have to find a common basis for dealing with each other. As countries possessing nuclear weapons, it is their duty to their peoples and to the international community to prevent at all costs a nuclear war between them or a conventional war which may slide into a nuclear conflagration. They must, therefore, start discussing military and other confidence-building measures as soon as possible. The two countries are also incurring very heavy costs by not resolving such other issues as Sia Chen, maritime border demarcation, river water development etc. The costs of non-cooperation in the economic and commercial fields are also very high. Multilateral Economic Cooperation India has tried to respond to the emergence of mega-groupings in the world, like NAFTA , EU and APEC , by trying to associate itself in some form or the other with these groupings or by strengthening the existing framework of association. A few years ago, India signed a new agreement with the European Union. Its applications for membership of, or closer association with APEC and ASEAN are pending. Of course, it is unrealistic for India to expect to become a full-fledged member of such geographically contiguous groupings as ASEAN and EU . Nevertheless, it is useful to seek other forms of association with them because it will enable India to take advantage of cooperation in non-trade areas which are of great importance. Membership or association with various regional groupings is going to depend very much on India’s ability to maintain and enhance the dynamism of its economy. If the Indian economy reverts to a low-growth path, it will be perceived as a drag on and not a worthy partner of these regional groupings. APEC is an example of open regionalism. India’s ability to join or otherwise take advantage of cooperation under APEC will depend entirely on its ability to further open up its market. For India and other South Asian countries, there is in fact no substitute to a South Asian Association for Regional Cooperation( SAARC ) that rapidly moves towards a free trade area and eventually to an economic union. SAARC alone can help in harnessing the complementaries within the region in a coordinated manner. SAARC alone can significantly enhance the South Asian countries’ bargaining power in global economic negotiations. And SAARC alone can prevent the member countries from being marginalized in the world trading system. However, prospect for SAARC will remain blighted as long as Pakistan remains a member. For Pakistan is under a self-created political compulsion not to allow any movement in SAARC which will bring its economy closer to that of India. Therefore, the next best course of action for India is to take initiatives to conclude bilateral free trade agreements with each of the other member countries. A welcome movement in this direction was the conclusion of a free trade agreement with Sri Lanka towards the end of 1998 . IPG 1/2000 Dubey, India: Outstanding Achievements and Dismal Failures 45

There are also good prospects in South Asia for cooperation based on a growth triangle or quadrangle approach. This is basically a projectbased approach which bypasses the problems of the harmonization of macro-economic policies of the member states or of non-convergence of political perceptions. A proposal for a growth quadrangle between Bangladesh, Bhutan, Nepal and the North-Eastern part of India has been under consideration for some time, but it has not reached even the stage of the identification of projects. Finally, there is a proposal to start a new grouping called BIMSTEC (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation grouping). It is still mainly in the form of an idea with no indication of its scope, institutional framework or approach to cooperation. Nuclear Disarmament India decided to go in for a nuclear deterrent after more than 50 years of agonizing and after all attempts at guaranteeing its security by other means, particularly through nuclear disarmament, had failed. Since 1954 , when the then Indian Prime Minister Jawaharlal Nehru proposed the banning of nuclear weapon tests, India has taken a series of initiatives for achieving nuclear disarmament. Its last move in this direction was to submit to the Third Session of the U.N. General Assembly Devoted to Disarmament, Rajiv Gandhi’s Action Plan for the elimination of nuclear weapons in three stages by the year 2012 . Unfortunately, this initiative did not elicit a positive response from the nuclear weapon powers. By that time, there was increasing evidence that Pakistan had already started assembling nuclear devices. This left India no choice but to have its own nuclear deterrent. According to the Prime Minister, this deterrent will be only for self-defence. It would not involve India in a nuclear arms race and it would be based on the principle of no-first-use against nuclear weapon powers and no-use under any circumstances against non-nuclear-weapon states. This implies that tactical weapons, which are weapons of first strike, should have no place in India’s nuclear deterrent. It is also reasonable to expect that since India perceives nuclear threat to its security as coming mainly from Pakistan and China, it would not need to go in for strategic weapons of an inter-continental range. India is fully aware that the mere acquisition of a nuclear deterrent would not substantially enhance its status and bargaining position in the world. For this, it would have to combine the military power derived from nuclear weapons with a sustained economic dynamism. As a responsible nation with a great deal at stake in world peace and stability, India is very keen to join the mainstream of the international security and disarmament dialogue. In fact, today India is the only nuclear weapon power which is prepared to put all its nuclear weapons at the negotiating table. The PokharanII tests have placed India in a better position to play a constructive role in the field of both non-proliferation and nuclear disarmament. As it does not require to carry out further tests in order to build its minimum nuclear deterrent, India should be able to sign the Comprehensive Test Ban Treaty( CTBT ) with certain safeguards which other countries would also be seeking. For its minimum defensive nuclear deterrent, India has no reason to accumulate huge amounts of weapon-grade fissile material. The country is, therefore, also in a position to participate seriously in the negotiations for concluding a Fissile Material Cut-off Treaty( FMCT ). India and the United Nations Unfortunately, since the early 1980 s, the major powers have been engaged – and by now they have eminently succeeded – in whittling down the role of the United Nations. In the name of reforms, the U.N. has been downsized and its functions diluted and eroded beyond recognition. It is being kept on the verge of bankruptcy by deliberate non-payment of dues by the United States. All proposals to put its finances on an automatic predictable basis have been summarily rejected by the major powers. The U.N. is now prevented from carrying out its legitimate functions – accorded to it by the Charter – in the economic field. These functions have been transferred to the IMF , the World Bank and the WTO . The U.N. is now marginalized even in its peace-keeping role. Major powers are bypassing it, taking punitive actions against other states without U.N. authorization. 46 Dubey, India: Outstanding Achievements and Dismal Failures IPG 1/2000

It should be India’s endeavor to prevent this dangerous drift. After the end of the Cold War, the international system should be based on a democratic and dynamic multilateralism underpinn e d by the United Nations. India should play a proactive role in strengthening the United Nations and restoring to it the functions of its Charter. One of the highest priority is the democratization of U.N. decision-making. Security Council membership should be expanded. In this case, India would have a legitimate claim to be one of the new permanent members, because it has a population of close to a billion people, it is the world’s largest democracy and it has always played a prominent role in the United Nations. The Future of the Non-Aligned Movement The end of the Cold War has not invalidated the raison d’être of the Non-Aligned Movement ( NAM ). Much of its old agenda, like disarmament and development, still remains valid. Besides, there are new dangers – even more pernicious and farreaching. These include interventions in the domestic affairs of nations on so-called humanitarian grounds, which are determined not by the United Nations but arbitrarily by the major powers, and the escalating intrusion in the sovereign economic space of developing countries in the name of globalization and liberalization. There is also an urgent need on the part of developing countries to counter the wave of neo-protectionism, which takes the form of linking trade with labor or environmental standards. India, therefore, should continue to use the NAM forum for pursuing this agenda. NAM has lost a great deal of its effectiveness because its members have become much more vulnerable after the twin crises of debt and development of the early 1980 s. This situation is unlikely to change in the near future. India should, therefore, take NAM for what it is worth – still a handy and essential means for serving some of the most important ends of its foreign policy. The same is true, though in varying degrees, of the Group of 77 (G– 77 ) and the Group of 15 (G– 15 ). G– 77 is in greater disarray than NAM because of the erosion of the U.N. ’s economic functions, within the framework of which it has been functioning. Besides, G– 77 does not get the infusion of political will which NAM is still able to manage through its Summit conferences. India took the initiative at the Belgrade NAM Summit in 1989 for setting up the G– 15 so as to enable a group of politically and economically significant developing countries to hold regular consultations, coordinate positions on global issues at the highest level and to promote economic and technical cooperation. The idea was also to see G– 15 develop as a dialogue partner of the G– 7 . Even though G– 15 has not fulfilled this promise India should work to maintain and strengthen it. Accelerating Economic Growth Economic development was an integral part of the aspirations behind the independence movement of India. Those who fought for political freedom for India always associated it with economic freedom. In the»constructive program« launched by Mahatma Gandhi as part of the freedom movement, removal of poverty and discrimination, uplift of the deprived and marginalized sections of the population, economic self-reliance and mass mobilization for constructive work were regarded as means for attaining the goal of Swaraj (self-governance). The development strategy which was adopted by independent India emphasized self-reliance and gave priority to rapid industrialization. It was expected that industrialization would create largescale employment, which eventually would reduce poverty. Until then, the problem of poverty would be tackled by direct programs of poverty alleviation. Stress was laid on agricultural development, but in terms of allocation of resources during the early years, agriculture did not get the importance it deserved. Until the early 1970 s, when the Green Revolution demonstrated the possibility of increasing agricultural productivity, the agricultural development policy continued to remain ad hoc and piecemeal. The planners did not fully recognize the interdependence between industry and agriculture. As a consequence, industrialization itself suffered. The emphasis in industrialization was on heavy and capital goods industries and on import subIPG 1/2000 Dubey, India: Outstanding Achievements and Dismal Failures 47

stitution. For that purpose, a highly restrictive import policy was followed. Foreign competition was by and large kept out of the market. No culture of competition and competitiveness emerged. As a consequence, inefficiency and rent-seeking abounded and reduced the rate of industrial growth. An important feature of the Indian development strategy was the extraordinary importance attached to the public sector which was to occupy the commanding heights of the economy. Many industries that could have been easily left to the private sector were brought under state control. At that time, this kind of socialism suited Indian light industries. They benefitted from public expenditure in infrastructure and heavy industry and from the expansion of the supply of necessary inputs. Import restriction at first also suited the private sector because its infant industries needed protection. However, as protectionism persisted, these industries became perpetual infants. In its socialist model, the government did not make any real attempt to redistribute income and wealth. The land reform program was not implemented except in one or two states. The egalitarian approach of Indian socialism was mainly reflected in the programs of poverty alleviation which on the one hand were geared to employment generation and asset creation for the self-employed, and on the other to schemes of health care, nutrition, primary education and housing. There was also an emphasis on achieving development by mobilising domestic resources rather than relying on foreign aid, which never exceeded 10 % of a project’s total resources. Reliance on foreign aid was considered as compromising the country’s ability to assert its sovereignty in international affairs. The way Western countries let India down in moments of economic crises, e. g. President Johnson’s refusal to release food-grains after the severe drought of 1965–66 , provided additional justification for this policy of selfreliance. Whether this policy carried economic costs in terms of reduced prospects for growth is debatable. India’s development strategy had some very impressive achievements to its credit during the first two decades, when it was pursued singlemindedly. The nation was able to build a highly diversified industrial and technological base. Indigenous capacity to manufacture capital and defense goods was created. A nation-wide chain of scientific and industrial research institutions was established. There was rapid growth of medical, engineering and technical institutions and universities. This enabled India to emerge as a country with one of the largest pools of skilled manpower in the world. This was also the time when important investments were made in the agricultural field. As a result, food production generally kept pace with population growth. Later on, in the wake of the Green Revolution, India became selfreliant in food production. Nonetheless, the share of agriculture in GNP declined from 57 % in 1951 to 33 % in 1995 . However, agriculture still provides employment to 65 % of the labor force. Altogether, the growth rates of the economy fell short of the planners’ targets. In fact, until 1980 , the Indian economy grew very slowly as compared with the growth rates of several other developing countries. The average yearly growth rates were 4.1 % in the 1950 s, 3.8 % in the 1960 s and 3.3 % in the 1970 s. In the meantime population growth continued unabated. Moreover, there was a steady decline in productivity, mainly because internal and external competition were restricted. India’s share in world exports declined from 2 % in 1950 to 0.4 % in 1980 . In the 1980 s, an attempt was made to open the Indian economy. There was considerable deregulation. However, trade policy remained more or less unchanged. As a result of internal liberalization, the Indian economy was able for the first time after independence to break loose from the shackle of slow growth. During the 1980 s, GNP grew by 5.6 % yearly. The percentage of the population below the poverty line came down from above fifty to thirty. However, the success was achieved through fiscal profligacy and resort to large-scale borrowing – both domestic and external. Until 1980 , the successive governments had managed to keep the fiscal account in reasonable balance. But in the 1980 s the gross fiscal deficit of the Central Government increased from 6.2 % of GDP to 8.3 %. The external debt doubled during the decade and the debt service ratio rose from 13.6 % in 1984–85 to 30.9 % in 1989–90 . Starting in 1990 , after an acute foreign reserve crisis, a decisive and full-fledged departure was made from the earlier development strategy. Dere48 Dubey, India: Outstanding Achievements and Dismal Failures IPG 1/2000

gulation injected a substantial measure of domestic competition into the industrial sector. Wide-ranging tax reforms were carried out, with a broad reduction of direct taxes and a refinement and simplification of the excise regime. Import tariffs were systematically reduced. Their import-weighted average declined from 87 % in 1990 to 27 % in 1995–96 . Further reductions are scheduled. Quantitative import restrictions were removed for all intermediate and capital goods. For other imports they are to be removed by 2001 . The foreign investment regime was liberalized. Foreign investment is now allowed in virtually every sector of the economy. Majority foreign investment is allowed in most industries; and 100 % foreign investment is allowed in export-oriented units, electronics, some infra-structure sectors and technology parks. The new economic policy put India on a higher growth path. After the inevitable contraction of growth in the first year when heavy retrenchment was made in public expenditure in order to move towards fiscal balance, the economy picked up momentum and during the next three years recorded growth rates of more than 7 %. Exports grew with double-digit figures during 1991–96 and helped to increase foreign exchange reserves to 34 billion dollars by the end of 1999. Domestic savings increased from 23 % of GDP to 26 % during the period 1991–96 . And inflation has been under control, hovering between 3 and 7 percent. In the last few years, foreign portfolio investments in India averaged between three and four billion dollars. Though still very low as compared to the inflow of foreign capital into China and East Asian countries, this is a big improvement over the earlier trend when such investments used to be a mere trickle. The government’s target is to start attracting foreign investment to the tune of ten billion dollar per annum. For the last three years, there has been a feeling that the liberalization process has slowed down. The much awaited reform of the financial sector has been kept pending. The record on privatization of public sector units has not been too encouraging either. Very few public sector units have so far been divested, more with an eye to get hold of resources to reduce the fiscal deficit rather than to make industries more competitive. But by far the most disturbing feature of the economy is the persistence of fiscal imbalance and the lack of reform on the expenditure side of the budget. At first, there were some cuts in subsidies, but on the whole there has not been much progress in reducing public expenditure. By 1995–96 , interest payment accounted to a third of total government expenditure. Thus, reduction of the fiscal deficit is one of the most important tasks ahead. However it is a very difficult task, as the lack of fiscal discipline is largely the effect of serious governance shortcomings. There is a broad consensus in the country that liberalization should be pursued further. However, in a country like India, with its huge backlog of poverty and unemployment, regional and interclass disparities and a large marginalized population sector, the state will continue to play a very important role in the management of social and economic imbalances. Moreover, unlike some of the Latin American and the South-East Asian countries, India is not going to surrender its options of macro-economic policy-making. It will continue to pursue self-reliance in the critical sectors of the economy. In the process, it may sacrifice some growth. But it can make sure that the growth that does take place brings benefits to all the sections of the population and is based on firmer foundations, and that the economy is resilient enough to withstand external pressure and turmoils originating from outside sources. Lagging Social Development Like the economy, the social scene in India has been marked by some high features of achievements and low depths of retreat from the ideals which the nation set before itself. The difference in the social sector is that the lower depths eclipse the high features and the future prospects are not very bright. India’s tragedy is the breach of the social contract embodied in the Constitution. A yawning gap between legal and formal equality on the one hand and widening real inequalities and disparities on the other is staring at the face of the nation today. On the traditional structure of inequality between men and women, upper and lower castes and urban and rural population, is superimposed a new divide between those who have benefited from the lop-sided development process and those IPG 1/2000 Dubey, India: Outstanding Achievements and Dismal Failures 49

who have been left behind and marginalized by this process. The target groups of social integration policy(Scheduled Castes and Scheduled Tribes) experienced considerable improvement in their educational and cultural, but not their economic situation. Discrimination of Women There can be no true social development unless women become equal and active participants in the development process. Unfortunately, in India discrimination against women has been formalized through a plethora of customs, norms and practices to protect a highly resilient patriarchal system. Until 1975 , the emphasis was on legislative measures to confer rights to women. But they remained ineffective as they were not extended to all communities, most women remained unaware of their new rights, and the infrastructure and social milieu to enforce them were not created. The vast majority of women also remained untouched by efforts to provide them access to education and professional services. In fact, in the area of education inequality widened. Nothing was done to attack patriarchy. The process of economic and political transformation in fact strengthened and reinforced it. The continuing discrimination against women was reflected in the declining share of women in the population. After 1975 , the women’s movement experienced considerable development. It became active in different arenas of India’s complex social system and in the domains of politics and culture, extending its agenda beyond its original limited focus on education, health and employment. Children: High Mortality, Forced Labor The situation of children in India is not a good reflection on Indian society. The mortality rate of children under five years – even though it has declined substantially – is higher in India than in most Third World countries. Female child mortality exceeds male child mortality. Access of girls to basic health care, education and nutrition is much less than that of boys. Child labor is widespread and many children are bonded. A large number of bonded children and those under other forms of forced labor are subjected to torture and other abuses. Highly Deficient Social Services The Indian government is constitutionally obliged to provide the minimum necessary services in the areas of education, health and housing. But in each of them it is still far from meeting its obligation to the people. In spite of remarkable achievements in the fields of education and health, India’s position is extremely poor as compared with other Third World countries. Per-capita expenditure on health, education and housing in India is one of the lowest in the world and is going down in real terms. High school enrollment rates are marred by equally high drop-out rates. Almost half of the Indian population is still illiterate; India harbors the largest mass of illiterate population in the world. The rural female illiteracy ratio is even close to 70 %. However, a sample survey taken a couple of years ago shows that since the 1991 census the literacy rate has climbed up by about 10 % in the country as a whole. The conditions of drinking water supply, drainage, sewerage and garbage disposal, are abysmally poor all over the country. Large parts of urban conglomorates have been converted into slums. Epidemics like plague, cholera, tuberculosis, malaria and kalazar have returned or become more widespread. They are posing a serious problem. Food Security: a Success Story India has no doubt been successful in preventing starvation deaths, a phenomenon which frequently visited the Indian population during the colonial era. Domestic production of food-grains and other necessities have recorded an impressive increase and near self-sufficiency has been reached in food production. The real prices of food-grains have remained stable mainly on account of state intervention. The Integrated Rural Development Program and poverty alleviation programs have helped increase the real incomes of poor households and given them productive assets. The public distribution system, in spite of all its short50 Dubey, India: Outstanding Achievements and Dismal Failures IPG 1/2000

comings, has enhanced the food security of a large number of poor and middle-class families. However, all these achievements were not sufficient to eliminate large-scale poverty in India Stable Democracy Under Increasing Strain The two biggest achievements of India soon after independence were the recovery from the trauma of the partition and the integration of the Princely States. The partition was followed by the largest movement of refugees in human history. It goes to the credit of the then Government of India to have sheltered and eventually rehabilitated some 20 million refugees from Pakistan. Similarly, the merger into the Indian Union of some 600 Princely States which were given the freedom to join either India or Pakistan or even declare independence was a remarkable display of vision, foresight and negotiating skill of the Indian leadership of the time. The Democratic Miracle However, the most remarkable achievement of India in the political field has been its 52 year old democracy. To have run the largest democracy in the world, in a society that is linguistically, culturally, religiously and ethnically the most heterogeneous and complex one in the world, is a real tribute to the genius of the Indian people. Democracy in India has stood the test of time and is going to endure. The Indian electorate(in 1999 : 600 million) has cast its votes well and wisely, even though almost half of it is illiterate. The governments of the day have not, with a few odd exceptions, been able to influence election outcomes by using state power. They have more often been defeated than returned back to power. Democracy has brought about significant changes in the social structure and, in the process, has also been responsible for maintaining social cohesion and national unity. But for democracy, India would have disintegrated long time ago. And by far the most effective remedy for some of the acute current societal problems lies in more democracy. The democratic process has brought about a shift of political power from the middle and higher castes and classes of urban society to backward classes who are now the politically most influential ones in the country. They have won reservations for themselves in legislatures and government services as were accorded to the Scheduled Castes and Scheduled Tribes after independence through Constitutional provisions. Indeed, there are few examples in recent history of such a conspicuous shift of political power, involving such a huge mass of population, taking place in such a short period of time almost without any violence and in a democratic way. This is one more example of the miracles that democracy can create. The Unfinished Task of Devolution Indian federalism was, from the very beginning, tilted towards a strong central government. The fathers of the Indian Constitution had deliberately gone about establishing a unitary form of government within the framework of a federal structure. With the passage of time, the federal character of the state got further diluted, with the Central Government acquiring more and more power. The accentuation of regional disparities and interpersonal and inter-class / community inequalities during the process of development, among others, gave rise to demands for decentralization and selfgovernance. These were viewed by the ruling elite at the Center as disruptive and met by a further strengthening of the central power structure. This process took the most rampant form during the time of Mrs. Indira Gandhi. The result was the weakening or paralysis of a whole set of institutions in the country which were intended to hold the balance between the Center and the State Governments. As a reaction to this drift towards centralization, demands have been raised for restoring the balance struck in the Constitution, for greater devolution of functions, and particularly of finances, to the states, for the creation of new states, and for devolution at the grass-roots level. Among these, the demand for the creation of new states may respond to aspirations of ethnic identity, but not to the need for further devolution. What is needed is the devolution of much greater authority and power to the existing federating units or the states. In addition, in order to safeguard the integrity of the Union, it may become necessary to IPG 1/2000 Dubey, India: Outstanding Achievements and Dismal Failures 51

concede far-reaching measures of autonomy to certain states, particularly the state of Jammu and Kashmir and some of the North-Eastern states. The argument that nothing by way of greater devolution can be conceded to one state without conceding the same to the other states has no legal validity and, if accepted, can engulf the Union in much deeper crisis. If India is to avoid the fate of some erstwhile federal states( USSR , Yugoslavia), it is essential to grant far-reaching and variable degrees of autonomy to different states. In fact, insurgency has been going on for several years in the North-Eastern states. And the state of Jammu and Kashmir has been under the grip of cross-border terrorism and militant violence and destruction for well over a decade. This is already undermining the unity and integrity of the nation. The best unit of devolution is the village. This is where decentralization can really be put to work and make a difference in the development process. A major step in this direction was taken with the passage in the Indian Parliament of the 73 rd and 74 th Amendments to the Constitution. They made regular elections to village Panchayats and municipal civic bodies mandatory. Besides, they gave them extensive powers of taxation and administration. These amendments have, in fact, created a third tier of democracy in India. But unfortunately, the Panchayat Raj system has not gathered the momentum it should have. The elections to the Panchayats were unduly delayed by several states. In one state, they have still not taken place. There has been very little devolution of finances to the local level. The entire set of legislations, rules and regulations which are weighed heavily in favor of the Union and the states are yet to be revamped. Besides, the huge task of training thousands of local-level leaders who are to contest for elections to the local bodies, is yet to be accomplished. The Threat of Hindu Communalism The Constitutional provisions on the protection of minorities have been observed more in breach than compliance. The beginning of the 1980 s can very well be regarded as the end of the brief era of secularism in Indian history as it was shaped by the leaders of the nation’s modern renaissance. There is no sign of any determined and viable effort to resurrect the secularist movement. Instead, there is an ongoing drift towards Hindu communalism. During the 1980 s, Hindu communalism acquired altogether new dimensions. Communal riots became more frequent, better planned and more violent. Not principles but political expediency dictated the policies of major political parties on communal issues. In an effort to woo alternately the Hindu and the Muslim votes, the ruling Congress Party made a series of concessions to communal elements. This process culminated in the demolition of the Babri Masjid when the Government decided to remain a silent spectator. A spate of communal riots followed this shameful incident. The communal situation in the country has undergone a qualitative change after the Ayodhya incident. A feeling of mistrust and fear has spread among the more than 100 million Indian Muslim. This is a standing threat to national cohesion and unity. Political parties have staged a cosy retreat to a business-as-usual stance and the Government has not made any worthwhile effort to win back the confidence of the Muslim minority. In the meantime, there have also been several well-planned and orchestrated attacks on the places of worships and dwellings of the Christian minority. Corruption and Lawlessness The biggest failure of India as an independent nation has been in the realm of governance. There is an all-round decline of values, a pervasive loss of accountability and unfettered opportunity to criminals. Corruption is rampant both in high places – Ministers and senior bureaucrats – and at lower level. This has distorted democracy and is proving a drag on the process of development. The rule of law in the country is in a dire state. Political patronage has eroded rules and regulation. Those with power and their clientele prosper, and the ordinary citizens, particularly the poor and marginalized, suffer. It has become extremely difficult for ordinary citizens to claim their normal entitlement of wages, allowances and public services. The connection between politicians and criminals has been documented in government reports. 52 Dubey, India: Outstanding Achievements and Dismal Failures IPG 1/2000

Uncertain Prospects It is extremely difficult on the basis of the above survey to predict the prospects for India for the early 21 st century. A linear projection of the positive trends recently witnessed under some indicators, particularly the growth in GNP , exports and the literacy rate, would show India in the next twenty years as one of the four economically most powerful nations in the world, scoring high also on several social indicators. However taking into account the all-pervasive failure on the social front and the sad state of governance, it is very difficult to subscribe to such an optimistic view of India’s prospects. One should rather expect that in a situation of largescale poverty and social deprivation the free play of market forces will bring more misery and accentuate inequalities. It is unrealistic to believe that the Indian economy will be pulled up by the purchasing power of the middle class. Firstly, the size of this middle class, which is estimated to be 300 million, is often exaggerated and so is their purchasing power. Secondly, the demands of the remaining 700 million people, most of whom are deprived, would drain out the resources of the economy, making it very difficult to sustain or expand production to meet the demands of the middle class. In a democracy, there are limits to the extent that 700 million people can be ignored. The success of any development strategy depends upon the fulfillment of minimum social conditions. Among them are near universal literacy and access of all citizens to basic health services. The earlier Nehru-Mahalnobis strategy of development failed because it was not able to create these minimum social conditions. In their absence, the present development strategy based on the free play of market forces, is also likely to come a cropper. Experience in other parts of the world has shown that free-market reforms have yielded the desired results only in countries where these social conditions were created before the launching of economic reforms. So, over the next ten to twenty years, the Indian economy and society are likely to continue on their unpredictable path, surprising the world with spectacular performances in some sectors and during some years and disappointing it with failure to achieve even the minimum standards under certain indicators. It is to be expected that the social fabric of the nation will come under greater strain and its national unity under greater threat. The only chance for India to emerge as a leading nation in the world is the arrival on the scene of another savior like Mahatma Gandhi and of the kind of leadership that India was blessed with during the time of the freedom movement. ̇ IPG 1/2000 Dubey, India: Outstanding Achievements and Dismal Failures 53

YIHONG MAO China: Set to Advance Beyond Technocratic Semi-modernization T he tempestuously unfolding economic reforms which were introduced in the late 1970 s in China were accompanied by rapid social change. These changes as a whole are undoubtedly of global historical importance and the economic and political consequences which arise from them are considered to be one of the most significant challenges for the coming century by many persons in positions of responsibility in the West. Unnoticed by the general public at the time, a few peasants in a village in the south of China one winter night at the start of 1978 divided up the hitherto collectively cultivated land among themselves. This move, which was not only tolerated from above, but expressly accepted, marked the beginning of unprecedented reforms and the abandonment of the planned economy which had dominated the People’s Republic of China since its foundation in 1949 . The rules and principles of a market economy have not by any means been adopted in all areas and sectors, yet even to date China’s economic successes, within a relatively short period of time, are astonishing. Just a few figures to illustrate this: from 1979 to 1997 gross domestic product grew year on year by an average of 9.8 percent, from 1990 to 1997 growth even rose to an annual average of 11.6 percent. That represents top international performance. In the order of states with the highest gross national product, China ranks already as number seven. Its share in world trade rose from 0.75 percent in 1978 to 3.4 percent in 1997 . This makes it one of the ten leading trading nations in the world. Economically, China is considered in the world trade organ-izations and the world financial institutions to be one of the most important countries in the world. Thus it is no surprise that in 1998 China was once again the second most important investment country after the US , with foreign capital flowing above all into joint ventures and into the Special Economic Zones.»Since the end of the 1970 s, China has been the fastest growing economy in the world and it will most likely have caught up with the US by 2025 ,« the former German ambas-sador to Peking, Konrad Seitz, commented recently. The talk is of a»Chinese miracle« and to concern oneself with China has become fashionable. Limits to Gradualism In contrast to the land-slide changes, even collapses of the old systems and structures in the former Soviet Union(a real shock experience for the Chinese communists), the Chinese attempted to tread the path of gradual change in their development. It began with the reform of agriculture which relied, to start with, on the especially stable and effective family structures in the countryside and the process was introduced on a trial basis in selected poor rural areas. Thereafter, the experience which had been gained and the successes which had been achieved, which soon led to an improvement in the general supply situation, were to be applied to small businesses and the much more difficult industrial sectors, to urban areas and also to those regions which were disadvantaged by their lack of natural resources. As Deng Xiaoping expressed it, the procedure consisted of»crossing the river by feeling for the stones«. This motto revealed a very pragmatic orientation of the economic reform processes. An ideological dispute about dogmatic positions, an argument about socialism versus capitalism, was deemed to be unnecessary and pointless, indeed harmful. All sections of the population were intended to profit from the reform policy. The program was designated:»Growth with just distribution«. Political unrest and social conflict were seen not as a consequence of disparities in development but as their cause, with blame being placed 54 Mao, China: Beyond Technocratic Semi-modernization IPG 1/2000

on damaging external influences. The process of economic and social change was to be led and accompanied solely by the dominant political force in China, the Communist Party. Parallel power structures were not tolerated and were to be rigorously opposed because they would inevitably lead to failure in reaching economic objectives, to instability and to the break-up of the country. The increasing speed and depth of the reform processes have led to an escalation of the problems which the reformers had previously carefully sought to avoid. Now it has become apparent that the reform program was not a coordinated, planned act of transformation which was to take place at all levels of society. On the contrary, in the economic field the transformation took place rather on a trialand-error basis, the process being by no means a »well-trodden path leading to a happy end« but full of contradictions and changes. Whether this represents no more than one of those fluctuations – repeatedly observed in Chinese history – in what is otherwise seen as a largely continuous development, or whether this is a deep social and political crisis is a matter of debate. A final judgment will no doubt have to wait for a future date. The current problems are briefly described in the following sections. The Private Drain of State Assets Until the economic reforms, all enterprises were state-owned and at the same time departments of state administrative organs. With the reforms, ownership and management rights were separated, enterprises were to be given greater independence to increase their efficiency. The condition of the state enterprises in»important industrial branches and key sectors«(as stated recently in a communiqué of the Communist Party Central Committee) – that includes above all the textile, mining and steel industries – has in the meantime become one of the central problems of the Chinese economy. Despite well intentioned steps towards greater independent responsibility, the state-owned enterprises remained»property of the state« under the command of the Party. Their managers secured personal advantages and high incomes, particularly also in the context of privileges granted to the enterprises(e. g. waiving tax and transfer of profit obligations, settlement of deficits through subsidies and loans, preferential access to raw materials as well as low energy and transport costs). At the same time, the losses of the state-owned enterprises placed an enormous burden on the Chinese budget while jobs were lost despite the subsidies. The Growing Differences in Income The economic reform process meant privatization and more market than defined by the concept of a statist socialist market economy. That meant that the Communist Party retained its monopoly of political power in all areas of the state and the economy. The result was that clever party cadres at all levels were the first to establish the most profitable private businesses in commerce, industry and the service sector. They were able to do this thanks to their good connections to the bureaucracy, which itself consisted of functionaries. They targeted consumer-oriented production above all. Often their businesses might still formally be state firms, but in fact they are privately managed. Thus many party functionaries, but also new technically and economically knowledgeable elites, belong to the top earners. Millionaires and multi-millionaires are no longer a rarity. In contrast, at least 100 million Chinese live below the poverty line. The Growing Number of Unemployed The new moneyed elite is contrasted by a growing number of unemployed people. In terms which gloss over the real situation and which verge on the cynical, they are described in official terminology as»youha«(people contributing to optimization) or»xiagang«(people who have stepped down from their positions). When it was publicly admitted for the first time in 1979 that unemployment existed, they were called»daiye«, people waiting for employment. Prime Minister Zhu Rongji said about the growing problem:»The increasing number of redundancies in state-owned enterprises is a result which is profoundly connected with the deep-reaching contradictions of the economic growth of our country... This is an inevitable phase in the course of reform and development«. The figures indicated in the official statistics( 7 percent across the country and 3 percent in the cities for 1998 ) are a huge understateIPG 1/2000 Mao, China: Beyond Technocratic Semi-modernization 55

ment; independent observers estimate that at least 180 million are unemployed or underemployed, in the cities alone they estimate an unemployment rate of 10 percent. For employees in state-owned enterprises, a very modest system of unemployment insurance has been in existence since 1987 , the provisions of which vary greatly from region to region. But the financial payments lie clearly below subsistence level and are by no means sufficient even to secure bare survival. The earlier promise of the state to all its citizens of the»daily bowl of rice« is no longer being kept. This is leading to mounting social tensions, violent strikes and protests. The Disparate Development of the Regions The population of the urban coastal regions benefits far more from the economic reforms than many of the rural inhabitants. Rapid modernization and the many-faceted liberalization processes with their new perspectives, changed above all the living conditions in the urban agglomerations in the east and south of the country. The standard of living in the western provinces clearly lagged behind. It is estimated today that more than 60 million peasants are living in extreme poverty. The economic and legal development strategies have benefited the coastal regions. This has contributed to the growing conflict between the national minorities and the dominant Han Chinese. What is described by some observers as»internal colonization« could lead to a serious threat to the unitary state – always a nightmare in the historical development of China. It is not just the decentralization of the decision-making structures which has been set in motion that needs to be continued, but a federal restructuring of the centralized state could also become necessary as well. The reintegration of Hong Kong might be a promising experiment in this respect. Migration and Migrant Workers In recent Chinese history there have been many reasons to leave one’s home and one’s ancestors. War, poverty and wretched conditions as well as natural disasters were mostly responsible and sometimes it was also a sense of adventure. Today, millions of people are once again on the move in their own country as migrant workers(above all as unskilled construction workers), craftsmen, traders and cleaners. Most of them come from the underdeveloped rural areas. They leave neglected regions and villages in the hope of a better life in the glittering cities. The Chinese are proud that they manage to provide food for 21 percent of the world’s population with only seven percent of fertile arable land, but they have overlooked their own policies whereby conversely forty percent of all peasants of the world must labor for seven percent of the non-peasant population of the earth. Work on the land has remained hard, mechanization is low, yields are declining due to an increasing degradation of the soil and water shortages, the infrastructure is often lacking, conflicts due to unresolved land ownership issues are intensifying. Anger is turning against the bureaucracy which is still bloated and ineffective in many places(administrative reforms are only proceeding hesitantly). Thus in the meantime more than 100 million people are on the road in China and are pressing towards the cities. Here they increase the social problems of those who have become unemployed due to the lack of profitability of moribund state enterprises. The migrant workers are considered as illegals in every respect, without housing entitlement and claim to health care. But they exert downward pressure on wages and salaries, the average income of the losers in the economic modernization process is sinking dramatically. Ecological Damage and Disasters There have always been floods in the history of China and the effectiveness of Chinese emperors has been measured against their success in dealing with them. In recent times, the major river regions are flooded annually by exceptional floods and the destructive exploitation of natural resources is increasingly being seen as responsible. Erosion through rigorous deforestation, as well as soil which is becoming too salty and turning to steppe are on the increase. Urban settlement, new industries and the transport network are eating their way into the landscape without hindrance, favored by tremendous land speculation with no 56 Mao, China: Beyond Technocratic Semi-modernization IPG 1/2000

conditions imposed to protect the environment. Natural resources are ruthlessly exploited, the last yuan is squeezed out of outdated production plants which have not been re-equipped to take ecology into account. Air and water pollution has reached levels which cause concern and Chinese cities have already become the most polluted on earth. Those in positions of responsibility still seem to proceed on the basis of the motto that there is»no development without pollution«. Thus the major ecological concerns about the gigantic Three Gorges Project, which is intended to control the catastrophic flooding of the Yangzi while promoting the economic development of the hinterland, are rejected. The Main Problem: Omnipresent Corruption Officials and mandarins who take bribes are well known to the Chinese from their history. But today corruption has penetrated all of Chinese society through all its pores. Because the modernization of China primarily means economic development(Deng Xiaoping’s famously said:»It does not matter whether the cat is black or white as long as it catches mice«), it was followed by the development of a new system of values which was hitherto less important in Chinese tradition. Economic reforms under the leadership of the Communist Party, which remains unchallenged in the state, more than anything else turned power into an economic instrument. Party functionaries and bureaucrats on all levels responded to the unvarnished call to become rich(and thus to show themselves to be modern and progressive) primarily by»selling» the permits they had to grant. Of all the»collateral damages» caused by modernization, the population has become most angry about corruption. This triggered the hitherto most spectacular and then bloodily suppressed protest movement of 1989 . Nobody has any illusions about the success of the fight against corruption despite public campaigns and harsh punishment(mostly of lower and middle-level functionaries). It cannot be fought effectively without an independent judiciary and without the strict separation of party and state structures. Authoritarian Rule Reconfirmed The increasing frequency of social unrest(in 1998 there are said to have been more than 25 000 public actions), the enormous economic problems in the privatization process of state-owned enterprises(transformation into stock corporations), the consequences of devastating floods as well as the effects of the Asian financial crisis have made the Chinese leadership reduce the speed of economic reforms and industrial reforms in particular. At the same time it is responding with mounting nervousness to workers’ demonstrations, to civil rights activists who want to establish a new political party, to national independence aspirations which flare up every so often(the Uighurs in the north-west) and now also to the Falun Gong cult movement. The party’s claim to state leadership, but above all its ideological monopoly, was reinforced in March 1999 by the National People’s Congress in the form of six amendments to the constitution. These demanded more than simple allegiance to the legal government. Alongside the foundations of Marxism-Leninism and alongside the ideas of Mao Zedong, the theories of Deng Xiaoping were also laid down as ideological reference points for state and society. The preamble of the constitution now also contains the words that the»initial stages of socialism«, in which China now finds itself would still last for a long time. The coexistence of public and private forms of ownership is expressly recognized. It continues to be clear that modernization means economic reforms and technological transformation but that political and social changes are not on the agenda. That is another reason why the implementation of necessary additional areas of legislation are making slow progress while the economic laws demanded by foreign investors have been rapidly adopted. But a modernization strategy which includes all facets of society cannot succeed without establishing the rule of law in all areas of life. The reforms wanted by the state and party leadership have the objective of creating the so-called»post-social market economy», the economic model aimed for is called»socialist market economy«, an economy in which the social needs and interests of the people can only be safeguarded by the power and ideological policies of the Communist Party. IPG 1/2000 Mao, China: Beyond Technocratic Semi-modernization 57

So far, the political leadership has only understood that the economic system always encounters a crisis when it is no longer allowed to follow its internal laws of efficiency and profit but must obey political wishes and orders. It vehemently resists the insight that a rational economy together with modern science, medicine and technology will only survive in the long term if there is also qualified democracy. Even if divergent views are no longer rigorously pursued, any form of organized opposition is banned. In contrast, unrestricted consumption, new status symbols, a greater differentiation in society, luxury lifestyles, nationalism, the demonstration of military strength, severe action against internal trouble makers and the idealization of the unitary state are used as pacification instruments in the face of serious shortages, problems and conflicts in the socialist market economy which represents a technocratic semimodernization. It is not surprising that many Chinese respond to these whirlwind developments with a crisis of consciousness, hoping for an increase in spiritual energy from the irrational promises of salvation peddled by new cult movements which see science as the root of all evil. Renewal Movements The economic reforms which were introduced in 1978 were accompanied by a certain liberation in the thinking bound by 30 years of Marxist dogma according to which socialism and capitalism were implacable enemies. Deng Xiaoping formulated it approximately like this:»The planned economy does not equal socialism, for capitalism too contains elements of the planned economy. Similarly, market economy does not equal capitalism and socialism can contain elements of the market economy.« This thought process represents an almost revolutionary liberation of forces, energies and ideas which had hitherto remained suppressed. The proverbial ant-like hard work of the Chinese and their modest way of life could now be rewarded through an ambitious entrepreneurial spirit. A hitherto suppressed desire to act on one’s own initiative and individual self-determination inspired people, the hunger for consumption but also for education could be sated, the curiosity to travel could be satisfied. Liberalization was not restricted to the economy but expanded into other areas of society(philosophy, science, art, music, literature, fashion) and noticeably changed people’s lifestyles, particularly that of the young. Today, a second liberation of thinking is necessary if the social problems arising from political stagnation and stalled economic reforms are to be managed. Its course and its influence on the modernization of society will depend to a great deal on developments in the main intellectual currents in China. For theoretical debates have been an essential part of the political discourse throughout Chinese history. In recent years, five major intellectual currents can be identified. Neo-authoritarianism This current of thought started to develop in the early 1980 s and is growing in political importance. In contrast to the authority claimed by Communism, which is linked to the theoretical argument postulating the need for a dictatorship of the proletariat, neo-authoritarianism argues for the free development of the individual, which, most of all however, means self-determination of lifestyles. The argument goes as follows: An authoritarian government is necessary to ensure that such liberalization benefits economic progress. Further economic liberalization is the necessary precondition for political and social change. The masses were still lacking an understanding of autonomy and most certainly of the necessity and benefit of social contractual relationships. Individual selfdetermination should not lead to chaos. Thus, each demand for rapid democratization had to be evaluated no differently from the historical experience of Mao’s»Great Leap Forward« which ended in economic chaos after a gigantic waste of material resources and human lives. The necessary transformation of Chinese society is only possible in the context of political stability to be safeguarded by an authoritarian centralized state – in other words, reform from the top. It its obvious that Chinese neo-authoritarianism takes its orientation from the economic successes of the four »little tigers« in East Asia(South Korea, Taiwan, Hong Kong, Singapore) of which(after financial and economic crises as well as democratic changes) 58 Mao, China: Beyond Technocratic Semi-modernization IPG 1/2000

the model of Singapore, whose rulers have Chinese origins, remains as an example today. This current of thought is most easily combined with the claim to power of the respective rulers – today with the Communist Party of China. Criticism of Blind Belief in Institutions This way of thinking emerged from the observation and analysis of the collapse of the USSR. The failure of the transformation process in the former Soviet Union is attributed to the fact that only the institutions were restructured(perestroika), irrespective of the social situation and cultural traditions. The result was that the introduction of capitalist economic institutions was confused with the adoption of a market economic system as a whole. Social and democratic structures could certainly not be created in this way. The fiscal structures tested in western industrialized nations(solid public finances, tax law) and the associated economic legislation(e. g. property rights, company law, labor code, copyright, bankruptcy law as well as commercial regulations and consumer protection) had broken like a flood over structures which had developed in quite different ways and had exposed domestic resources to the exploitation of foreign interests. The only people to benefit from this outflow had been the domestic Mafia who now belonged to the global players on the international financial markets. Therefore, China could not develop into a wealthy and free modern nation by copying successful Western systems. On the contrary, only the special traditions and cultural heritage formed a stable basis for domestic changes without triggering a crisis. The reformist circles of this provenience advocate a»democratization of economic styles,« meaning a mixed economy, a plurality of ownership forms but not a direct introduction of political democracy. They are against a policy which equates comprehensive privatization of the economy and economic liberalism with the development of society as a whole. They point to the success of the so-called»commune and villageowned enterprises« which in some instances have become an important pillar of rural prosperity. Only when people saw themselves as economic subjects, were they capable of political democracy in society as a whole. In their respective social groups, they became familiar with basic community rules, such as the rule of equality, the rule of impartiality, important procedural rules(the other side should also be given a hearing), the recognition of objects of legal protection such as property, good name(honor), life and limb. These were deeply rooted in the cultural traditions of mankind as a whole and not specific to China. But, through the value they placed on work, their entrepreneurial spirit and their adeptness at acquiring technical skills, the Chinese possessed favorable conditions for a social and cultural renewal of the country. Good-bye to Radical Utopias The optimism which was founded on the belief in progress and oriented at western modernity, which still inspired the student movement of the 1980 s and which came to expression in very radical liberal forms and claims, is no longer evident today. On the contrary, a conservative atmosphere has spread in intellectual circles. This is connected with a fundamental»reflection on history«, a critique and re-evaluation of Hegel’s philosophy of history and its idea of progress which was then popularized by Marxism. The Chinese revolutionaries, including those of the Cultural Revolution, always equated the idea of modernization in theoretical Marxism, its specific concept of liberation and the associated victory over traditional relations of production, authority and consciousness, with social progress, even with the narrower technological and industrial progress of mankind. Tradition and conservative values were branded as resistance to progress which had to be eliminated. The Marxist idea, molded to Chinese conditions by Mao, that change was possible and needed both in subjective behavior and in the objective conditions which govern human actions, had released tremendous energies but had also turned out to be a trap which in promoting progress had once again created a new totalitarian power. History is no longer understood as an inevitable process, almost determined by destiny, in which the individual can be ignored. The development of individuals is now seen in the context of their culture, of traditional views and formed spaces; that is, as part of reality and the opportunities it provides. IPG 1/2000 Mao, China: Beyond Technocratic Semi-modernization 59

China Must Say»No« Widely felt resentment against the political, economic and cultural superiority of the West, above all the USA, came together in populist form in the book»China Can Say No – Political and Emotional Options in the Post-Cold War Era«. The book was published in 1996 and millions of copies were sold. Its rather unsubtle advice»in a time of change« is: pride in one’s own long cultural history, reflection on one’s national honor, giving up inferiority complexes(still evident in the servility shown towards the»long noses») emphasis on one’s own power and strength and position in the world, confidence in the reawakening of eastern civilization. The first and most important step into the modern age as determined by China was a decisive»No« to all agreements proposed by the West under the leadership of the USA . This polemic against the uncritical fixation on the West, which is undoubtedly widespread in China, has nothing to do with the results of a»modernization policy guided by the standards of economic and administrative reasoning which increasingly intervenes in the ecology of grown life forms, in the communicative internal structure of historical environments«(Habermas) which are increasingly questioned in the developed industrial nations. It is, rather, the jealous protest against a form of civilization which is spreading world-wide without any struggle worth speaking of. The global civilization which comes from the West today is seen as humiliating cultural, scientific, technological and military imperialism and is, indeed, often experienced as such. In this form it cannot be reconciled with the universal justice to which the global form of civilization makes moral and practical claim. This Euro-Americancentered appearance of modern civilization is countered with a no less arrogant attitude of Sinocentricity. The Renaissance of Confucianism The intellectual representatives of this direction critically examine the rather superficial ideas of democracy against the background of Confucian values. They fear that too much liberalization as well as the participation by everyone in public affairs would lead to the lowest cultural common denominator. They point to the cultural devastation produced by mass movements such as in the Cultural Revolution. The also reject Marxism which they see as fundamentally anti-culture, antitradition and responsible for the degeneration of Chinese thinking. They complain about the loss of the meaning and value of life, the collapse of traditional ethics, the alienation of people in all spheres of life, their commodity status as subjects and objects of consumption, the lack of connection between people, the antagonistic relationship between people and nature. They blame it all on secular, culturally neutral, indifferent, rational and normative modernization, on a global civilization which absorbed Chinese culture without a trace. They, in contrast, demand a development of Chinese society which is completely separated from European thinking, which is the subject of historical action but which also retains its traditional structures. Being embedded in an infinite, wise, moral sphere, however that is understood, is seen as providing the only condition for and guarantee of human rights and freedoms. Modernization and adherence to tradition were not a contradiction. Only the preservation and awareness of tradition made modernization possible. With their thinking, the neo-Confucians are significantly contributing to the»Culture China« stream which is so popular among the international Chinese community. Becoming Part of a Global Modern Civilization A look at the history of China in this century shows that it is the history of the endeavor to modernize. All efforts, also in their totalitarian form, served this end. In this respect, there is no difference between China and the historical processes and events in the West or between China and the European nations in the 20 th century. But what is often overlooked in China is that modernization means internationalization for all nations, if only because there are world financial markets, world trade and uniformity of industrial production. Much more clearly than before, it should be understood that modernization means participation in the continued development of world civilization which must, however, be freed 60 Mao, China: Beyond Technocratic Semi-modernization IPG 1/2000

of all centralizing reasoning(also on the Chinese side) and pressures for uniformity. It must also be understood that such modernization must not be restricted to economic changes. Even if economics is increasingly taking over politics by attacking and undermining its leadership claims and all natural and human developments appear to be subject to economic laws, many more areas of human cultural expression are involved in the globalization process. These are the sciences, medicine, technology, art, music, literature, sports but also traditions, religious convictions, values and mentalities. Their constructive coexistence and productive competition is regulated by public authority, at first within nations, but increasingly on a global level. But it only does so legally and justly if it is democratically organized and legitimized. No nation, and certainly no nation the size of China, can escape globalization. In order to ensure that the development towards a global community – which is, after all, also a community which shares a common fate – is not shaped by primal forces, chaos and destruction, a wealth of various orders have been created and agreements been concluded at an international level. International organizations enforce them and develop them further. Each nation which faces up to the challenges of modernization thus not only subjects itself to the control of the global community, it takes on responsibilities and duties and also has a claim to active help and support. This requires all kinds of integration, not only into the world economic order. It is also sensible and useful to be integrated into the network of non-governmental organizations. Here it must be pointed out that China with its well thought out exchange-rate policy prevented the further escalation of the so-called Asian crisis. By signing the Civil Pact in 1998 , the most important addition to the Universal Declaration of Human Rights of 1948 , China has made clear that human rights must be accorded greater importance. The international integration of China and its participation in globally applicable rules and orders must be consistently continued. The suggestion of the German Chancellor, Gerhard Schröder, that China ought to be included among the G 8 states should definitely be taken up. The West, on the other hand, must approach China neither defensively nor arrogantly, neither with an attitude of superiority nor with bad conscience or even fear. The reason why China is taken seriously should not be because its size and the enormity of the problems associated with it pose a threat to world civilization. China is in the process of modernization even if some observers would like to predict its collapse which would amount to a world historical catastrophe. China will change, the changes which have already happened in such a short time are themselves astonishing. Even if global civilization has in recent times been determined by the West, it exercises such fascination on many Chinese precisely because it does appear so open and flexible. That can be experienced and tested, par excellence, with the new communications technologies that bypass state influence and censorship. Young people in particular will not allow themselves to be pushed away from these developments of global civilization. It will vocally demand participation from the political leaders and the older generation each time an attempt is made to exclude them. This is a common cross-cultural feature in all regions of the earth which inspires hope. ̇ IPG 1/2000 Mao, China: Beyond Technocratic Semi-modernization 61

NIKOLAI SHMELEV Russia: The Emerging Consensus on National Reconstruction T he political situation that has emerged in Russia in recent years is still prompting our economists and sociologists to conduct a debate about the country’s future prospects primarily in a spirit of confrontation and mutual non-recognition: the left-wingers against the right-wingers, the socialists against the liberals, the dirigistes against the monetarists, and so on. But politics and the struggle for power have their own laws. It is hardly surprising that politicians of all leanings strive to make maximum use in their own narrow partypolitical interests of any, even invented, differences of opinion with their rivals merely so as to gain even the slightest political advantage and thus to strengthen their influence within society. Indeed, how can things be different in a situation where the public barely has time to memorize the surname of the latest prime minister before he is dismissed. However, all societies, including Russian society, is not just about politics and politicians. It is in fact a consciousness, a view on life and the ideals and aspirations of the»silent majority«, or put differently, that predominant»non-political« section of the population, who does not perhaps outwardly have a great bearing on the present situation but on whose moods and preferences, in the final analysis, everything depends. The Russian public is tired of division and is demanding agreement. I can confirm that at least in the economic and social spheres, such a consensus is possible. Moreover, it already exists not only in words but in deeds, the only problem being that it is either deliberately or involuntarily not noticed. It is probably difficult for the stunned Russian, having lost all his sense of orientation, to notice that a national consensus in these areas is taking shape or has already actually emerged. After all, in the political arena and in the mass media he primarily hears extreme views being voiced. The far left is calling for a return to the past, to an economy based on a totalitarian dictatorship and universal shortages, whereas the far right is still, after all the mistakes and failures of the policies of reform, talking about the healing force of»social Darwinism« and the dog-eat-dog struggle in the free market – what sort of consensus is that? However, the point is that if we look at things rationally, if we remove all the extremism and ignore the marginal forces on both the right and the left, which are absorbed by their mutual political destruction, we cannot help but recognize that Russia, which in the late 1980 s entered a phase of protracted socio-economic transformations absolutely unprepared either theoretically or practically, has not lived through these recent years for nothing. It was not enough to comprehend and realise that the former totalitarian system was completely ineffective economically and therefore not viable – it seems that everyone agrees with this view today with the exception of the most extreme marginal forces. It was not enough to extol(unfortunately, almost a century late) social standards such as freedom, democracy, human rights, a civil society, the free market and social management as supreme values, because there are currently no serious(i. e. non-extremist) political forces and no social groups of real weight and influence to push those standards through. It was still necessary, having experienced such suffering, destruction and shattered illusions, to arrive ultimately at an understanding of the specific tasks to be tackled by Russian society so that it can emerge from the present national crisis and at last embark on the path that most of the rest of the world is already proceeding along. I am convinced that such an understanding has been reached in Russia. Of course, it is possible and necessary(so as not to repeat the mistakes already made), to argue about the»price« that the whole of Russian society has had to pay for this understanding. But with each day that passes, it is becoming increasingly evident that in the eco62 Shmelev, Russia: The Emerging Consensus on National Reconstruction IPG 1/2000

nomy and the social sphere Russia now knows what it has to do, at least in the next 15–20 years. As to further into the future; by then it will be clear what is needed and how this can be achieved. The economy Thus, in Russian society, it seems that in the minds of the public at large, a high level of consensus has already formed on certain basic policies, which in their totality determine the reasonably clear contours of a most expedient and most probable national economic strategy on the threshold of the 21 st century. Why? Because the basic national economic tasks are objective and clear to society as a whole. If these tasks are not tackled, the country will not only fail to recover and make further process, it will simply not survive. Any responsible political force cannot, based purely on its instinct for self-preservation, avoid the need to tackle these tasks. The Settled Issue of Ownership The structure of ownership in the country has changed radically over the past decade and, in all probability, irrevocably. Today, about 30 % of national assets are owned by the state whereas 70 % is in private or mixed public-private ownership. Of course, the methods of privatization used in Russia deserve the severest possible criticism from a social and moral point of view and the actual transfer of state property to the private sector has resulted(at least at present) neither in increased efficiency in privatized companies nor in the emergence of effective investors or private entrepreneurs within them. Nevertheless, it is a fact that the structure of property today in Russia is in principle already close to the optimum and very reminiscent of that in leading Western countries. In the next few years some growth in the share of state ownership at the expense of mixed stateprivate ownership is likely if the relevant court procedures result in the cancellation of the worst privatization rulings and if owing to the apparent weakness of private investors and their reluctance to invest in the real economy the state is forced in the coming years to take on a more substantial share of investment efforts than at present. On the other hand, a certain level of growth in the private sector is to be expected, especially of small and medium-sized businesses, whose uncontrolled investment activity may grow quickly and sharply in the foreseeable future if the country’s further movement towards the free market continues and becomes consistent. However, the fundamentally new demarcation of economic power has already been achieved: science and education, defense and the bulk of its industry, electric power generation, roads, transport, communications, the health service, municipal housing and support for the northern territories all largely belong to and are under the authority of the state at all its levels. The remainder is in private ownership from the street stall to the major financial and industrial groups. There is every indication that Russian society has accepted such an ownership structure and even the majority of left-wing forces appear to have come to terms with this situation. The main links both within and between these two sectors are, and no doubt will continue to be, conducted primarily on the basis of free-market principles, which above all stipulate the independence(and consequently responsibility) of all economic units and the reduction to a minimum of all forms of direct state subsidies and grants. The property structure that has emerged does not run counter to the growing objective need for state regulation of economic processes. Planning and programming, as everywhere in the world, can be carried out much more effectively than by direct administrative dictate, primarily through indirect market-based methods including state orders, antimonopoly practices, monetary policy, movement of the discount rate and the exchange rate of the national currency, the budget, taxes, loans and social legislation. Industrial Restructuring Also evident are shifts in public opinion about the kind of economic structure in material and industrial terms that Russia will need in future. No one is seriously disputing the view, which until only recently seemed nonsense, that a significant share of the country’s economy was created for IPG 1/2000 Shmelev, Russia: The Emerging Consensus on National Reconstruction 63

nothing in previous decades: about one third of our industrial potential is simply of no use to us and it cannot and will not be viable under any circumstances and is therefore condemned to closure sooner or later. Roughly another third of this potential needs radical and very expensive restructuring in order to be competitive and effective in an international context. Also, no more than one third of Russia’s present industrial potential has a chance of integrating into the world economy and its scientific and technical progress. I am convinced that this restructuring of the country’s entire industrial potential is the main task for the present generation and more likely, the future generation of Russians. Either we tackle this task or, as it was once put,»we will be buried«. In this respect, today’s frequent contrasting of the two possible directions of»re-industrialization« seems artificial, namely the stress on the whole spectrum of consumer industries(i. e. foodstuffs, light industry, manufacture of domestic appliances, residential housing construction and car manufacture) and the development of high-tech industries as a priority without a direct link to the consumer market. Both are essential: the life of the country and its people is determined not only by the nature and volume of mass consumption but also by its task of ensuring worthy survival in a constantly changing world. Today, almost a decade since the start of our far-reaching reforms, it is difficult even to understand how we set out into such stormy waters with no compass and not even a rough idea of who was fated to live or who to die in the Russian economy. All this happened without a main, long-term strategy, such as a plan for radically restructuring the country’s economy and, correspondingly, an all-embracing structural(industrial) policy. But even more surprising is the fact that we still do not have such a policy up to this day and the process of discarding some production facilities, modernizing hopeless enterprises and offering inducements to promising industries is proceeding as it did before, i. e. in a completely uncontrolled manner without any well thought-out guidelines for state bodies or private investors, without an effective»social security net«, and largely owing to clashes between various lobbying groups and spontaneous speeches by interested social groups. According to the most conservative estimates, Russia will need to invest some US $ 500 billion in the coming decade to tackle its structural problems. Where is it to get this money from? This is a very difficult task which could become the key to the»national idea«, now being sought so urgently by the left-wing, the right-wing and the center. Thereby it is strengthening the signs of an emerging consensus in Russian society. However, finding and mobilizing these resources is not the end of the story. They have to be distributed sensibly and directed to areas where they will have the most effect. Is this possible without a well thought-out state strategy, without the relevant policies, without a department in charge of the Russian economy, whatever it may have been called, without even Gosplan? Indeed, the very process of moving these resources and channeling them into the most promising industries will remain impossible for a long time to come within the framework of a strictly free-market mechanism. Since we have no real stock market and it is not known when it will take shape, the private banks are still too weak and too corrupted by years of unbelievably high profits to invest in the real economy. There are not even any investment companies and essentially no pension trusts or other such funds. It will probably take a long time before major investors in Russia will accept the modest level of profit that usual(i. e. non-speculative) investment in the development of the real economy can provide them with objectively. The country cannot wait until then. The hope of direct(and of portfolio) investment, as experience has shown, is weak and unreliable, especially after 17 August 1998 . Today even convinced liberals, if they are capable of maintaining a minimum level of objectivity, must, I think, acknowledge that for years to come there will not be a more serious source of investment in the real economy than the state budget and state loans in one form or another. This will require, in turn, the relevant state mechanism for distributing such funds. This is without doubt a major point in the national consensus that is emerging today by degrees. 64 Shmelev, Russia: The Emerging Consensus on National Reconstruction IPG 1/2000

Emphasis on High Technology After the bombing of Yugoslavia had started, the whole of Russia(including, it seemed, even the most zealous»pro-Westerners«) realized, in my view, how naïve our recent illusions had been of the final emergence of universal peace-making and how nationally irresponsible the reform policies of recent years had been in bringing destruction and degeneration to Russia’s scientific and technological potential. A nation’s instinct for survival prompts an absolute and indisputable priority for the country for the foreseeable future: the imperative to preserve the main national capital and the chief guarantee of a fitting existence for Russia’s future, namely its brain power. We have to face the truth: in science, research and experimental design, Russia(even if at first only inefficiently) must, in the interest of national security, preserve its Academy of Sciences, its leading applied research institutes, its universities, and its 70 »numbered« cities, where more than three million people – the flower of the Russian nation – live. Correspondingly, primarily through budget support(which must not impede their usual commercial activities), the whole complex of high-technology production plants, which provide the country with its reliable nuclear shield and its mobile, compact and technologically well-equipped conventional armed forces, must not only be preserved but where possible further developed. Of course, Russia cannot do everything. However, it could not only maintain but also build on its leading position in a number of high-tech industries such as nuclear power generation, space exploration, aircraft construction and arms manufacture. All the arguments that we are doomed to the role of an energy provider and raw material resource for the post-industrial world are at best merely alarmist and at worst criminal. A Long-term Approach to Land Reform Maybe the most disputed and most unclear issue for the whole of Russian society today is what can be done with the country’s agricultural sector. Should the collective farm system be preserved in some form or other or is the future of Russian agriculture, as almost everywhere in the world, linked primarily to the private sector? Or can the collective farms that proved completely impractical develop with time into something resembling agro-industrial joint-stock companies? Or will something productive ultimately result from the personal plots and other small-scale farms based mainly on manual labor which presently only provide a little less than half of the country’s whole agricultural output and occupy no more than 2–3 % of all cultivated land? I think that, considering our past, this issue cannot be resolved at the top and certainly not quickly. Decades will probably be required and at least two generations before some sort of new way of life and predominant form of production clearly take shape in the Russian countryside. An attempt to put forward another speculative model before this occurs would be, firstly, unrealistic and, secondly, dangerous. It seems that it is for this reason that leading political forces in the country are not linking themselves to any excessively binding projects and assurances right now. That is obviously the right approach.»Something will emerge of its own accord« – this may sound like »popular wisdom« but for a national consensus(at least today) it would be hard for anyone to propose something more reliable. It must be born in mind that reliance on uncontrolled market processes in forming new socioeconomic structures in our villages,(deserted and disfigured by collectivization) certainly does not mean even the simple possibility of rejecting direct state support for various forms of management that arise again in rural areas. Without state administrative, tax, credit, insurance, scientific, technical and other support, nothing would succeed – everyone understands that now. It is merely a question of the scale and criteria of such support and through which mechanisms it is to be implemented. Clearly, it would be pertinent to start discussing this now. As is known,»the devil is not in the principle, the devil is in the detail«. However, this problem is so huge and complicated that it alone is enough to keep the whole of Russian society on tenterhooks for years to come. IPG 1/2000 Shmelev, Russia: The Emerging Consensus on National Reconstruction 65

Infrastructure: The Responsibility of the State There is no need to seek a»national idea«. We have always had one: the idea of creating, developing and modernizing Russia and, correspondingly, the lives of the people inhabiting it. If completely unlimited entrepreneurial activity in all its forms is the main force behind the country’s regeneration and further progress then the key condition for such activity is a well-developed infrastructure – roads, ports, airfields, power networks, reliable communications, housing, schools, hospitals, lawenforcement agencies, and so on. Apart from the state, in today’s Russia there is no other real force capable of tackling such tasks and there can be no doubt that there will not be one for a long time to come. Surely it is obvious, notwithstanding the fierce debate about the problem of»more state – less state«, that in actual fact the limits of the dispute are set by the realities themselves and the country’s objective needs. In that sense isn’t this whole debate essentially aimless? From the point of view of common sense, there can only be one answer: the state should be as big as needed. As an illustration it is possible to cite the recent episode relating to railway tariffs for transporting freight to the country’s remote regions. An attempt was made to transfer such freight operations on a solely commercial basis and do without the traditional state subsidies. Nothing came of this. Life showed convincingly that even free-market liberals can learn a thing or two and sooner or later they too will realise what is realistically possible and what is not. Also, whatever changes take place in Russia’s political life, whatever forms of socio-economic organisation come and go, one of its main national tasks will remain from one century to the next – developing the country’s vast expanses of land and huge natural resources. It is true that in recent years views have been expressed by our society’s extreme liberal wing to the effect that we do not need such large territories and there is no point in supporting Russia’s North and Far East(regardless of its inhabitants). However, I think we ought not to take such sentiments and statements seriously. The Importance of Small Businesses Judging by many statements to the left and to the right of our political spectrum in Russia, it would seem that at last a general conviction is emerging that the greatest historical mistake committed by the Bolsheviks and by Gorbachev’s»perestroika« as well as the free-market reformers was the traditional neglect of the opportunities offered by small and medium-sized private enterprise. Throughout the world, from the USA to the People’s Republic of China, such private enterprise is now the mainstay of economic, scientific and technological progress and the main employer in all sectors of the economy. Russia, which is comparable with leading countries in terms of the size of its industrial giants, has a small and medium-sized business sector which is only about one-tenth of that in the USA . Meanwhile, this problem is more pressing for us than for probably any other country in the world. Firstly, if any sector in the Russian economy in the 1990 s has shown any signs of spontaneous survival and growth in severe market conditions, it is small and medium-sized businesses. This is despite the fact that it seemed as if the authorities were doing their utmost not to support and protect this sector but, conversely, to suppress and obstruct their activities in every possible way. The fact that recovery has taken shape and is being maintained despite all the crises in the domestic Russian market is largely due to conventional private enterprise and not to our industrial giants(perhaps with the exception of car manufacture which is sheltered under a mighty roof of tariffs), irrespective of whether they have remained in state ownership or been transferred to big business. Secondly, unemployment in Russia has already reached the official figure of 13–14 % and is estimated at 25–30 %(more than 20 million people). During the Soviet period, one in three of the country’s workforce was superfluous meaning that they were only employed artificially. It is clear that the pressure on political and social stability from such an acute problem will only grow in the coming years and this pressure has already reached a dangerous level. There are no grounds for hoping that our industrial giants can somehow cope with growing unemployment. Russia’s major 66 Shmelev, Russia: The Emerging Consensus on National Reconstruction IPG 1/2000

industries, as throughout the industrialized world, face the prospect of having to dismiss more and more workers in the 21 st century as they strive to modernize and improve. Only small and mediumsized companies in all sectors of the economy can provide employment to those who have lost their jobs and are re-entering the labor market. Ideology has no place here. There is simply no real alternative to the classic private sector in presentday conditions. It is essential for the state not to bring pressure to bear upon this sector but to support it in every way possible. This is understood today by the liberals, by the social democrats and to a greater or lesser degree by moderate communists, that is virtually everyone. Reviving the Money Economy Nowadays, there is no serious organized force on the Russian political scene that would oppose the market per se. There appears to be sound understanding of the fact that market conditions are the natural state of affairs in any normal healthy economy. However, it is unlikely that anyone would claim that what we have now is a market. What we have are the mere rudiments of the market but not the main ingredients, which ensure the market’s supremacy over all known methods of direct distribution of resources – we do not have a developed market infrastructure. It is clear that building a market with a developed and all-embracing infrastructure is one of the country’s main tasks for the foreseeable future. It is necessary to restore a normal balance in the Russian economy between the quantity of money in circulation and the mass of goods so that the artificially created chronic shortage of money would be eliminated and working assets that were lost during the years of reform would be returned to companies. The quantity of money in circulation(cash plus deposits) does not currently exceed 12–15 % of GDP whereas in other transition economies this indicator is at a level of 40–50 % and in highly developed countries, it stands at 70–100 % and even higher. Secondly, no economy can develop normally if the money in it ceases to be effective and barter increasingly becomes the preferred form of exchange. The Russian economy has, to all intents and purposes, now returned to the»Stone Age«: no more than 20–25 % of the country’s economic transactions are conducted using money whilst the remainder takes the form of barter or various kinds of monetary substitutes including employees being paid in kind. General non-payment and bartering are the top problems facing the present-day Russian economy, they are the main reasons for the »thrombosis« in the country’s economic organism. No government and no political force of whatever persuasion can expect an appreciable improvement in the country’s socio-economic situation(including its tax and therefore budgetary options) while this growing mountain of nonpayment and universal barter system continues to prevail. As experience shows, there is only one solution to this problem: the state, as the main source of non-payment, must finally start to meet all its commitments, including its debts, contracts, pensions and wages to employees. Acceptance of Moderate Inflation The Russian economy must learn to live for a sufficiently long period in conditions of moderate controlled inflation of about 25–30 % per year. There would otherwise be really no hope of an investment recovery of increased economic dynamism and of enhanced public welfare. Achieving moderate inflation(as many countries even including our own have seen for themselves) is not as frightening in practice as it is sometimes depicted in public debate. If everything is indexed(current and basic capital, debts, deposits, interest, wages, pensions) regularly in the economy in line with the price rises, there is no socially unacceptable redistribution of income and assets. The real value of liabilities is preserved and incentives to work and engage in business activity are not weakened. Prime importance is attached, of course, to keeping the budget deficit under tight control and, secondly, to effective anti-monopoly regulation because our experience shows that»cost inflation« is actually a more serious factor behind the general price rises and depreciation of money than monetary reasons. IPG 1/2000 Shmelev, Russia: The Emerging Consensus on National Reconstruction 67

Lower Interest Rates The discount rate of interest(followed by the loan rates offered by commercial banks) must be reduced to the level required for economic recovery, this means to 2–4 % above the annual rate of inflation. Long-term investment loans must finally become affordable for the economy. The extent to which the policy of unjustifiably inflated interest rates(and simply fantastical interest rates with the state’s short-dated bonds) was deliberate or forced by circumstances is a separate debate. However, it is a fact that the country’s banking system was primarily»dealing in air« throughout the reform years, not only failing to provide the real sector of the economy with additional resources but like a vacuum cleaner sucking up all the money remaining in that area. The apotheosis of this highly destructive process was the »pyramid« of state short-dated bonds that duly crashed. A realistic interest rate level, all other factors being equal, will inevitably enhance the attractiveness of the Russian share market and especially corporate securities, which will in turn allow the transfer with time to share trading as the basic means of mobilising the flow of capital both between and within industries. The unbelievably low and unstable value of corporate securities today (including that of blue-chip stocks) is determined not so much by the poor profitability of the companies issuing them as by the risk factor involved and the ultra-high level of current interest rates in the country. Another promising factor for the creation of a flourishing fund market in Russia would probably be the transition to a three-tiered organisational structure for banking comprising of the central bank, commercial banks and investment banks. It is high time to make investment business an independent sphere of activity, initially with tangible, and perhaps predominantly, state involvement. »Dedollarization« The normal and natural interests of domestic manufacturers and exporters require from the authorities not just that ruble convertibility be preserved but also that its exchange rate in relation to the world’s leading currencies be kept at an appreciably low level compared with its real purchasing power. This is only part of the issue. The reformers made a major mistake in their time: instead of launching a national convertible currency alongside the ruble as an»anchor« for the country’s economy which would have been known as the »chervonets«, they invited the dollar to assume this role. Today we have an absolutely unnatural situation where a foreign currency is playing the part of the»anchor« and to all intents and purposes the country’s chief national currency. Any serious political force in Russia today cannot but have as one of its objectives the»dedollarization« of the Russian economy – at least in the long term. Personally, I have the impression that as the Russian reforms progressed the stature of those who from the outset favored a parallel national currency actually gained in the eyes of the public. Channeling Savings Into Productive Investment The country’s priority task is generally recognized as the restoration of the investment process based on strengthening society’s ability to save and on the productive use of existing savings. It is not a matter of how much the country saves(savings are at a respectable level according to various estimates ranging from 25 to 30 per cent of GDP ) but of where and how these savings are used. Firstly, budgetary options must be increased considerably. There are many ways of doing this but taken together their consistent and decisive application can yield very good results. This means, first and foremost, conducting a tax reform, reducing the tax burden and, as a consequence, returning between 45–50 % of the Russian economy to the tax system. The share that currently pays no taxes at all(known as the black economy) would shrink dramatically. This also means correcting the huge strategic mistake of the past 15 years, namely state policy on alcohol. Even today after a number of attempts to change the situation, the illegal trade in vodka deprives the state budget of US $ 6–7 billion every year. This is roughly equivalent to 30–35 % of its current income. Finally it means improving the very technology of tax activity and management of state property, includ68 Shmelev, Russia: The Emerging Consensus on National Reconstruction IPG 1/2000

ing increasing tax discipline, working with natural monopolies, restructuring the tax debt, mutual clearing and effective control of the state package of shares. Secondly, an exemption from tax is needed for all production investment made from profits and amortization and all investment by companies when overhauling their production facilities or introducing technological innovations. What political force would object if – as in Japan or Korea – considerable state funds were to be made available on favorable long-term credit terms to the small and medium-sized business sector and especially to venture companies? Of course, new forms of bureaucratic control and corruption are inevitable in this case but everything on earth has its downside and other countries have managed somehow to reduce to a minimum the adverse social costs of this necessary cause. Thirdly, a key issue for the whole of the Russian economy and the indicator of its good health or otherwise is the level of confidence of the ordinary Russian in the country’s banking system and his national currency, the ruble. According to various estimates, the public is still keeping a serious amount of money under the mattress; a sum which is estimated to be in excess of US $ 100 billion in hard currency. The second major confiscation during the reform years of savings held in banks, which the government could not resist in August 1998 , has left this major investment resource within the country completely inaccessible for use in production. No conceivable strongarm tactics will help here. Terror on a truly Stalinist scale would be required but no one in the country has the strength for that. The only steps or rather processes that will help to restore confidence involve bringing about general political calm in the country, restoring the banking system, (which it seems will take at least 7–8 years), allowing foreign banks to operate in Russia’s money markets, an appreciable – and even better the full – indexing of the public’s lost savings and finally the adoption of a law on state guarantees to protect savings in all the country’s banks. The very absurdity of the present situation is obvious to everyone: there is money in the country but people do not deposit it in the banks. Fourthly, an even bigger investment resource is the funds that have been transferred from Russia abroad during the 1990 s. Here estimates now vary from US $ 150 billion to 300–350 billion. My own view in this case is that notwithstanding the appeal of this resource we have to simply forget about it for the time being so as not to get upset for nothing. Of course, economic blood-letting on such a scale is a tragedy for the country. However, there are no valid measures, such as an amnesty, for tackling this problem. It is possible and necessary to sharply reduce this outflow of funds(such attempts are being made), but the only way to reverse this trend is an appreciable improvement in the overall economic climate in the country, a well thought-out system of legal guarantees for investment, a high level of openness in the Russian economy and stable relations between Russia and the outside world. Of course, first and foremost is the non-material factor of simple confidence on the part of domestic and foreign investors in the Russian government generally. Defining the Extent of Regional and Local Autonomy In Russia the process of transferring tax and budgetary powers and socio-economic responsibility from the center to the regions and then onto the provinces is uncertain and to a great extent flexible. This process is not completed and not laid down in legislation even at the upper levels of the power pyramid. Take for example relations between the center and the regions, the taxes collected in the country are currently distributed roughly 50 : 50 between them, the variations being each year(and in each specific case) the object of fierce battle. The share of local government is minimal(Moscow: 1–1.5 per cent of regional tax revenue). However, modern society cannot fully develop without relying on regional autonomy and local government whose prototype is the zemstvo system from prerevolutionary Russia. But a viable and effective ladder of relations between the center, the regions and the provinces has simply not yet been built. Of course, no one can say how much time will be needed to build such a ladder. However, bearing in mind its complexity, this problem must be dealt with and no political force can shy away from this issue either today or in the future. IPG 1/2000 Shmelev, Russia: The Emerging Consensus on National Reconstruction 69

Controlled Exposure to Foreign Competition The reforms have given an appreciable impetus to the Russian economy’s integration in the world economy. But if the general vector of Russia’s emergence from lengthy international isolation at the present time is determined, many specific problems caused by the economy’s growing degree of openness are still anything but clear and require further interpretation. Firstly, it is not completely clear which geographic directions of cooperation are Russia’s priority, on which markets Russian manufacturers and consumers should focus and where, to put it simply, people are waiting for us and where people are not waiting for us. However, the impression is forming that after the short-lived euphoria of independence which was taken to absurd lengths after the collapse of the USSR, after the persistent and generally unsuccessful attempts by post-Soviet states to re-orient their economies to the markets of »third countries« and finally after a period of deliberate withdrawal by Russia from the real and potential opportunities of economic integration with the former Soviet republics, things may be brightening up somewhat. Diverse century-old links which joined together what was until recently a single state into an organic whole, cannot, it seems, be severed and replaced by something fundamentally different – at least not in the space of a few years or even decades. In these third markets no one is waiting for the new exporters(including even the oil exporters) with outstretched arms. Partners from the former Soviet states are viewed there principally from one angle; as a seller’s market. As of yet, none of the former Soviet states has had the strength to carry out radical restructuring of its economic potential and their existing production capacity can be operated at full strength only with an understanding of their mutual options and needs. Otherwise, none of these states, including Russia, will be able to maintain their basic industrial potential. It appears there is now growing public awareness of this fact in virtually all CIS states. Secondly, the events of the 1990 s showed that Russian reformers had put too much into opening up the economy to foreign competition. Russia’s economy turned out to be totally unprepared for such an influx of foreign goods and started literally to drown, unable as it was to adapt(virtually overnight) to foreign competition of such ferocity and on such a scale. In addition, the reformers did not set(obviously for reasons of prestige) a lower ruble exchange rate, as would have been fully expected in order to protect national producers and encourage domestic exporters. On the contrary, they preferred to waste tens of billions of the country’s much-needed dollars in supporting the artificially inflated(up to August 1998 ) ruble exchange rate, thus financing our competitors out of the state budget and the reserves of the central bank. Incidentally, that is how the conversion of the defense industry to civilian production was ruined, the country’s light and foodstuffs industries were dealt a colossal blow and domestic car manufacture was on the point of being severely damaged and was saved only by a timely introduction of protective tariffs by the government. As experience has shown, custom tariffs are also a double-edged sword. The Russian car industry, for example, was allowed to become totally uncompetitive under this excessive protection. Now it can only rely on modernization with direct foreign involvement. Strictly speaking, this is the crux of the whole problem for the future: where to find the dynamic»happy medium« between protectionism and openness which would allow the country to keep its own industrial base while not depriving it of the favorable impact of foreign competition. We must also bear in mind that if Russia seriously intends to enter the World Trade Organisation, it will retain only one effective form of protectionism and that would be the artificially low ruble exchange rate. Non-reliance on Foreign Capital Inflows For any political force Russia’s external debt will remain one of the most serious problems. The point is not just that it is time for the country to give up artificial stimulants in the form of chronic foreign cash injections to cover its current budget needs. It is also not just that given the present state of affairs the need to constantly prolong interest and basic payments on loans will always make the life of any Russian government extremely difficult. For Russia and its foreign creditors, the time has 70 Shmelev, Russia: The Emerging Consensus on National Reconstruction IPG 1/2000

seemingly come to try to discuss the whole problem of the present reciprocal flows of finance in principle. The outflow of resources from Russia in the 1990 s(considering the debts accrued to us by other countries in previous decades) was at least twice if not three times the total Soviet and new strictly speaking Russian debt in relation to the outside world. I think that a type of»zero option« would be of benefit to domestic and foreign investors whereby everything would be written off and no-one would owe anything to anyone, all Russia’s attempts to repatriate the funds that disappeared abroad either legally or illegally would cease and one dollar of Russian debt would to all intents and purposes be»repaid« for two or even three dollars of our debt and our money circulating abroad. However exotic such a proposal may seem, it would appear to be»mad enough to be right«. If the G 7 countries, Russia and the World Bank accepted it for debate one day, the world financial community would, I am sure, treat this not with irony but with understanding. The events of August 17 , 1998 , undermined the confidence of foreign investors in Russia so severely that it would be unrealistic to expect a quick return to the flow of private investment and especially an increased flow in line with the country’s potential needs and opportunities. Even the present fantastically cheap Russian assets, especially industrial assets, cannot overcome this fear of risk. Without doubt, a great deal of additional work and complete political calm in the country will be needed before sound investors start to view Russia as a promising and attractive area of activity. However, Russia’s swift return from the position of outcast(at best as a magnet for the most desperate speculators) into the normal even commonplace sphere of international expansion is hardly possible for the following reason. If the country’s main political forces today agree in principle that the involvement of foreign capital is desirable for Russia’s recovery, this cannot be said at all about the various oligarchies. The history of the protracted process of getting the laws on the division of production through the Duma convincingly shows that rapid progress can not be expected from that side. In such an atmosphere, it would be unrealistic to hope that the flow of foreign capital, even given the most favorable conditions, would be able to play a part in the foreseeable future that would be comparable with that of China, Vietnam or the states of Central Europe. Yet it is revealing that optimistic forecasts have recently started to emerge again(i. e. from the Ministry of Natural Resources), which presuppose that in the event of the actual coming into force of the division of production law, there would be an inflow of direct foreign investment into Russia in the next two years amounting to some US $ 10–12 billion and within 3–4 years of up to US $ 40–50 billion. This is comparable, for instance, with the Russian Federation’s total budget for 1999 , which came to about US $ 22 billion. The Social Sphere Under present conditions it would probably not be an exaggeration to say that Russia’s main social policy tasks have not much to do with ideology. They are shaped by everyday common sense that is comprehensible to everyone. The Need for Income Redistribution During the years of the current crisis, in this country and especially beyond its borders, there was a widespread view that Russians were poor workers. This is a complicated issue. In analyzing whether this is true or not, and if so then why, we cannot help but recognize one fundamental fact: after 1917 the work of virtually five generations of Russians was paid and continues to be paid at a paltry level which verges on slave labor – tens and even hundreds of times lower than the work of the relevant qualification and intensity in other industrial countries. In such conditions it would be very unrealistic to expect that with the arrival of democracy and the free market the peculiar»concordat« between Russian workers and their employers – we work when you pay – to disappear of its own accord. In fact the situation in the given area would merely deteriorate and actually it would seem that it has already become a real threat to the very existence of the Russian nation. It is essential to raise average earnings, pensions and other social benefits considerably(several times over) in Russia in the next few years. It IPG 1/2000 Shmelev, Russia: The Emerging Consensus on National Reconstruction 71

seems that all of the country’s political forces agree on that today. How can this be done and can it be done without waiting for the corresponding rise in productivity? It would be useless simply to issue an administrative order because it would be dangerous to prompt a sharp rise in inflation and relying on a spontaneous increase in incomes would take too long and be socially unjust. It would be unjust because the citizens of Russia to this day have had no clear answer from the authorities to the following question: where is all that new value added that workers are continuing to create through their labors? In the 1990 s, Russia stopped subsidizing the former Soviet republics which represented a saving of some US $ 50 billion a year; it stopped subsidizing the Comecon countries and its customers in the third world(another annual saving of around US $ 25 billion); the country’s military expenditure was reduced to about a fifth, whilst spending on science and education fell by more than 90 percent; average earnings, especially since 17 August 1998 , have declined to about one third, pensions and benefits to one fifth, but the relative burden on the economy has almost doubled. Where has it all gone? I think that if a new radical redistribution of property in Russia is unlikely, then the redistribution of income already created is not just essential but inevitable. Otherwise Russia can count neither on prolonged social stability nor on the revitalization of the nation nor on sustained economic growth. A wide variety of methods of stealing cannot be the main long-term source of enrichment in a viable society. Sooner or later the Russian businessman must get used to an annual profit rate on his capital in line with the worldwide average of 5–10 %, the Russian official to a decent salary and not various kinds of gifts and extortion and the Russian worker, in all sectors of the economy and society, to a decent living wage and social security provision to which he is just as entitled as any other worker in the rest of the world. In short, this is also a national task of top priority for the foreseeable future and also a compulsory element of the emerging national consensus in economic and social policy. Neither the traditional cynicism of left-wing extremists nor the extreme right’s cruelty and complete indifference to the man in the street have a future. The Russian man can no longer bear either camp in his state of abject poverty. The Need for Job Creation Rapidly rising unemployment in the country also calls for approaches based on pragmatism rather than on ideology. Based on worldwide experience, they can be classified into three main approaches: firstly, the Keynesian strategy of universal stimulation of demand by printing money and controlled inflation; secondly, the Roosevelt-Hitler-Stalin method of launching mass public works programs especially in various infrastructure sectors; thirdly, the Deng Xiaoping strategy of providing every possible incentive to small businesses as the most effective means of achieving a natural rise in employment with a working population of many millions. In present conditions, common sense dictates the need to use all three strategies. Indeed, with such an important issue for the country, no political force can afford just to rely on the course of events: Russian society is not stable enough to put up with the prolonged existence of such an explosive problem. Welfare State Reform Today, the need for social policy reform is accepted. But two problems give rise to doubts and protests: a) the attempt to implement these reforms hurriedly while preserving the present meager level of income of the masses; and b) by the contrast between the market-based forms of provision (housing and municipal services, the capital-based pension system, medical insurance and the social services provided by companies) and the traditional forms of social consumption. It is obvious that compromise constitutes the only solution here. The left wing will have to accept(and they already do so) the expediency and legality of the gradual development of ways to meet social needs that are based on individual responsibility. The right wing will have to come to terms(and they appear to have done so already) with the fact that in our specific conditions social reform will require, so as not to destroy society, 72 Shmelev, Russia: The Emerging Consensus on National Reconstruction IPG 1/2000

decades for its effective implementation. They will also have to come to terms with the fact that for the foreseeable future the co-existence and cooperation in Russia between market and nonmarket forms of tackling social problems is inevitable. It is my opinion that the future of Russia will resemble the future of social-democratic European countries, of course with adjustments to its national characteristics. Eliminating the Economic Base of Organized Crime The problem of crime and especially organized crime in present-day Russian society has its own and, unfortunately, growing significance. Not being an expert I will not delve into this problem. However I would like to make one comment. This problem obviously can neither be tackled by purely left-wing(administrative) nor purely right-wing (market-based) methods. Of course, it is difficult to imagine significant progress being made in this matter without the overdue resolute intervention of the law-enforcement agencies(if they have still the strength to make such an intervention). However as long as the economic basis of organized crime is not eliminated, there will be no solution. The conditions on which crime has thrived include the practice of privatization virtually for nothing, the tax system that forces businessmen into the black economy, the provision of state funds free of charge, etc. It would probably be unrealistic to halt the present total onslaught by the criminal world. Nonetheless, on this most acute of social issues a national consensus is already mapped out. Many(especially on the right wing) have criticized the government policy pursued since 17 August 1998 for its inertia. But I think this is encouraging not only because the country simply needs a respite and time to»process« the consequences of the August crisis and assess all the achievements and mistakes of the past decade, it is also encouraging because the sentiments of moderation, unhurriedness, sober judgment and consideration for the interests and preferences of the man in the street are returning to Russian social life again. If that means shifting from unbridled Jacobinism to Thermidor, then long live Thermidor. ̇ Encouraging Signs For many years now our mass media and many ordinary voters have been complaining that it is difficult and sometimes even impossible to distinguish between our political parties and their respective leaders if one goes by the content of their manifestos. They all, it is argued, write, say and propose more or less the same things. This tangible similarity across the political spectrum is in my view a positive indication that the country is gradually coming to a general or, rather, predominant view about what has to be done. IPG 1/2000 Shmelev, Russia: The Emerging Consensus on National Reconstruction 73

KENICHI MISHIMA Japan: Locked in the Discourse of National Uniqueness? Die Bevölkerung ist besser als ihre Politik und ihre Wortführer. Jürgen Habermas I n 1987 , a Japanese politician said the following at a private meeting of his party:»The position of the Tenno(Emperor) is like that of the sun shining at the zenith of the heavens.... We can therefore confidently follow our worldly pursuits, sometimes do things which are not so nice and quarrel with one another; the luminous sun rests above everything. The earthly world is our party. The LDP [Liberal Democratic Party] takes on the worldly business. We have a dual-world system.« 1 This unguarded comment, unsurprising given the circumstances under which it was made, comes from the mouth of former prime minister Nakasone who in many respects defined Japan’s neo-conservative cultural strategy. In what follows, I wish to spend some time discussing a Japanese tradition of discourse into which the above quote can be seamlessly integrated. This relates to a specifically Japanese version of ethnocentricity. Then I will touch on two important problems which will accompany us into the 21 st century. The first problem is the difficulty which many Japanese have in coming to terms with the past. The second I would like to describe as»the missing dialogue between the organs of power and the public«. For although a large section of the public is in favor of an open and fair acknowledgement of the shameful actions of the past, such voices find almost no echo among politicians. After all, the Japanese are not monolithic island inhabitants who have closed ranks against pressure from outside and who have closed their eyes to the past. Self-assertion Discourses Some readers may have been shocked by the quote at the beginning. The world’s press also reported that Nakasone visited the Yasukuni shrine in his official capacity as prime minister on 15 August 1985 , the anniversary of Japan’s surrender, to honor the fallen soldiers of the Greater Japanese Empire. But those sentenced by the Tokyo military tribunal as war criminals are also honored in this shrine. Nakasone has repeatedly tried to relativize what he calls the»philosophy and view of history of the Tokyo military tribunal«. 2 Such adventures also make clear that his policy was conceived in accordance with the well-known patterns which he shared at the time with Ronald Reagan and Margaret Thatcher. Economic modernization cum down-scaling of the social safety net. In other words, less state presence in the economic and social sector and more of it on the level of political symbolism and in the military field. Internally a reduction of the state, externally greater splendor and power of the state. It is relatively easy to see the ideological interpretation which underlay this policy: by mobilizing tradition and culture he wanted to counter the danger of drifting apart of a society which dynamically developed in an economic boom. Here he referred back very selectively to the subtle aesthetic tradition of such arts as the tea ceremony, flower arranging or Zen Buddhist gardens but also to samurai virtues such as self-discipline, steadfastness, sense of harmony, and above all loyalty and devotion. They also include mutual consideration and empathy, which the Japanese allegedly practice in their every day lives. From the perspective of this experienced politician, all these things characterize the uniqueness 1 . A summary of this speech, which quotes the above sentences among others, can be found in the newspaper Asahi of 30 August 1987 . 2. Nakasone had to give up the idea of a second visit to the Yasukuni shrine on the day of surrender because of the massive protests from neighboring countries. Since that time no other prime minister has dared to make such a visit although many of them, with the exception of the Socialist Murayama, would have liked to do so. 74 Mishima, Japan: Locked in the Discourse of National Uniqueness? IPG 1/2000

of Japanese culture. The»specifically Japanese« arts and the qualities bred in this way had been the decisive reason for the rise of Japan in the 19 th century and were also the decisive condition for the economic success, admired abroad too, which the Japanese had achieved after their military defeat at the end of the Second World War. Here I may add as an aside, that LDP parliamentarians also give Mr. Nakasone a nickname meaning essentially:»Someone who walks on the prison wall without falling in«. This is a reference to the large amount of corruption that has never been uncovered. These circles may well consider the allegedly traditional virtue of mutual consideration as something important. This political idea, which, after all, has found widespread support, reveals a mentality that crosses party lines and social groupings in Japan. For here we encounter the tradition of discourse which can be traced back to the origins of our modernization and which remains effective today having passed through various stages and changes determined by contemporary events, through all the massacres and atrocities committed during the war. It is a tradition of discourse that ensures that not just Mr. Nakasone but conservative cultural apologists of all hues see the special nature of Japanese culture in its fine aesthetics and in the classical virtues and believe that here they have found the key for an explanation of Japan’s success. Abroad, too, the image of a centuries-old tradition of aesthetic refinement and of a harmonious orientation which is somehow connected with this is maintained. And no diplomat would dispute positive images of his country even if he felt inwardly that they no longer correspond to any reality. What I mean here by a tradition of discourse is the tradition of»Nihonjinron«, which can be defined as thinking about the Japanese or about Japanese culture, discussing and holding forth about the question of who the Japanese are, what constitutes their specific Japanese culture; a discussion about identity, if you like. 3 A brief note on the history: in view of the challenge of the West and the resulting opening of the country, disputes broke out as early as the 1870 s about the cultural, spiritual and moral orientation of the country which was modernizing at tremendous speed. The discussion was internally explosive. On the one hand, there was unbridled modernization and passionate pleas to take over a western lifestyle. The slogans were:»Destroy the remains of feudal society«,»A curse on hierarchy«. On the other hand, there was the attempt to rehabilitate the traditional rules, standards and values against the influence of western egoism which from a conservative point of view exercised nothing but a demoralizing and destabilizing effect. Those who oriented themselves by the West pleaded for individualism but also for the very strict Victorian moral codes which governed Europe at the time, especially as concerns sexual prudery. The Western rules of behaviour of the time were much more rigid than the rules which were actually practised among broad sections of the population in Japan. Paradoxically, the bourgeois prudery established in Europe fitted wonderfully with Confucian moral concepts. And the traditionalists by no means wanted to turn back the wheel of history. They wanted to push ahead at full speed with industrialization, expansion of production capacity, modernization of infrastructure and, not least, the construction of a modern administrative apparatus. However, they wanted to reinstall tradition, build up a sacred power centre with a reshaped imperial system and to this end partly continue habits and customs from the ancient Edo period and partly take them over from the West in a way which would preserve what they understood as the old Japan. The patriarchal system which dominated in the West at the time was indeed very suitable for that. Hegel’s philosophy of state, the conservative version of which we can read in his»Philosophy of Law«, provides the basis for the Meiji constitution which had Lorenz von Stein as its godfather. In working out the wording of the constitution, the traditionalists – with the assistance of the above-named theoretician of post-Hegelian society – copied much from Prussia and Austria. The fronts were therefore highly complex and very unclear. Here it is important that the West should not be understood as the West in its present form. Westerners sometimes make the mistake of ignoring the extent to which western society, too, has changed. 3 . A historical stocktaking of this discourse about Japanese culture is set out in the commendable and clear account by Hiroshi Minami: Hiroshi Minami, Nihonjinron, Tokyo(Iwanami Publishers) 1994 . IPG 1/2000 Mishima, Japan: Locked in the Discourse of National Uniqueness? 75

Fundamentally, this intellectual constellation was not so different from the position of the Russian intelligentsia at the end of the 19 th century. On the one hand adaptation to the thrust of modernization with forced orientation at»western« views of life, on the other hand the desperate attempt of self-assertion, insistence on ancient aristocratic traditions, emphasis on home-grown Slavic culture and the expanse of the Russian soil – and all kinds of shades in between these two positions. Neither is this constellation fundamentally very different from the situation in Germany in the late 18 th century where bourgeois philosophers and poets tried to assert themselves spiritually and culturally against the French-speaking nobility, here also in all kinds of shades of opinion ranging from complete rejection to many forms of compromise. In Germany this discussion culminated in the famous»Addresses to the German Nation« by Fichte, which thus inaugurated the modern form of self-assertion which we meet everywhere outside Europe today. In our Japanese case,»ethnocentricity open to the world« has crystallized out over the course of time, to use a formulation by Jürgen Habermas in comments he made about Japan. 4 Habermas did not explain in greater detail what he meant with the term. But I would interpret it historically in the following way: a strong state with permanent military expansion and the construction of the industrial infrastructure required for this, authoritarian forms of rule with all kinds of repression and censorship of any attempt at free thought, and global trade with simultaneous capital accumulation for insane armament. After 1945 it manifested itself in the guise of permanent economic expansion cum institutionalization of democracy cum ever more outward-oriented trade policy designed to promote affluence at home. The arguments in the identity discussion (Nihonjinron) have accordingly changed considerably. That means that the strong belief in one’s own uniqueness is hardly shaken but the content of that belief has turned out to be subject to change. While desperate self-assertion predominated up to the end of the War, supreme self-confidence, bordering almost on arrogance, can be felt in today’s matadors of the discourses about Japan. Economic success undoubtedly plays a decisive role in this respect. While previously a romanticsubversive withdrawal into aesthetic inwardness, into the ancient beautiful Japan, was frequently evident – which was turned into aggression again in the last years of the War – the traditional refined arts are used by our current cultural apologists as the historical background for the precision engineering of our optical and electrical equipment. While earlier the tremendous gap in relation to the West was admitted in terms of wealth and standard of living, the belief now is that the West has been overtaken. While in earlier periods the Japanese spirit was wheeled out against the»materialist« West, it is precisely this tradition which is now said to have created the favorable conditions for the introduction of a materialist civilization. 5 All these self-images are based on a conviction which a large majority of Japanese share without a second thought. This is that the Japanese still have a much more intimate relationship with nature than westerners. The intensity and popularity of such self-affirmation and self-assertion discourses is evidenced by the large number of articles and books, literally filling shelves, which have been written. According to a survey(which is slightly out of date), the proud number of 698 titles have been written in relation to this identity debate in the 33 years from 1945 to 1978 , some of them selling millions of copies. 6 And individual aspects of the argument have penetrated down to the minutiae of life, into the capillaries of day-to-day living, as it were. They are so popular and widespread that one might well say that they have entered the flesh and blood of the Japanese. This can be likened perhaps to Germany where cultural figures such as the pro4. I refer to an article by Jürgen Habermas on his first visit to Japan. A translation into Japanese is printed in the newspaper Mainichi of 2 December 1981 . 5. On the complicated structure of the argument see: Kenichi Mishima, Schmerzen der Modernisierung als Auslöser kultureller Selbstbehauptung – Zur geistigen Auseinandersetzung Japans mit dem Westen.(Painful Modernisation as the Trigger for Cultural Self-Assertion: On the Intellectual Debate between Japan and the West) In: Überwindung der Moderne? Japan am Ende des zwanzigsten Jahrhunderts. Published by Irmela HijiyaKirschnereit, Frankfurt am Main 1996 . 6. Harumi Befu, Nihonbunkaron(Discourse on Japanese Culture), Tokyo(Shiso no kagaku-sha) 1997 . 76 Mishima, Japan: Locked in the Discourse of National Uniqueness? IPG 1/2000

verbial»deutsche Michel«, a plain, honest, if somewhat simple fellow, or the idea of unquestioning loyalty inherent in the term»Nibelungentreue« have imbued certain traditions. I am willing to wager that a foreigner asking about the defining characteristic of Japanese culture would be referred by at least every third Japanese to its connection and closeness to nature, although any objective assessment would have to admit that in the last five decades an incalculable amount of nature has been systematically and thoroughly destroyed in the course of rapid economic growth. A symptom of the ideological planning of the former prime minister, quoted at the beginning, is his initiative for the foundation of a research institute on which the relevant internet homepage says:»...the thought and values of the Japanese people were largely misunderstood by the international community, and lack of understanding of Japanese culture led to needless friction between nations. In such a climate, there was a growing recognition of the need to improve international understanding of Japanese culture, as well as the strong need to promote and encourage Japanese studies researchers around the world.« The state research institute, which was established in 1987 and calls itself the»International Research Center for Japanese Studies«(popularly»Nichibunken«), marks the hitherto almost obscene climax of such Nihonjinron. It is nothing but an institute of cultural navel gazing where self-assertion discourses are organized for the purpose of self-satisfaction. Perhaps it is all a belated repetition of what happened in Germany with the foundation of the Germanic National Museum in Nuremberg in 1852 . The Institute is situated in the western suburbs of – where else – Kyoto. Its establishment gave the long history of the search for the self and the specific form of»ethnocentricity open to the world« an institutional frame. One can well speak of fundamentalism here. For according to Anthony Giddens, fundamentalism starts where traditions are defended in the traditional way. If a man claims to be entitled to a certain behavior or a certain privilege on the grounds of the fact that he is a man this would constitute fundamentalism in everyday life. 7 Correspondingly, one could find in the discourses of cultural apologists an element of fundamentalism which by far exceeds»ethnocentrism open to the world«. Favorite aged colleagues of the prime minister such as Tadao Umesao, Hiroshi Umehara and Hayao Kawai were involved in its foundation. Interestingly, all three of them received the decisive phase of their training during the war and have always been based in Kyoto. Kyoto has always been a hotbed of essentialist apologists for Japanese culture, so-called, who of course chose to ignore the bloodbath which the imperial army started in Nanking for example. The mentality in Tokyo, however, is basically little different. For example, Umesao, the former director of the National Museum for Ethnology, writes in the introduction of a collection of his lectures(including five lectures at the Collège de France) that he had simply been attempting the»self-assertion of Japanese civilisation«. 8 One of his main messages ties in to the pre-war discussion to the extent that he emphasizes the homology of western European and Japanese history. The feudal Japanese Middle Ages were followed by the Edo period which, in his view of history, must be compared to the period of Absolutism in Europe. And the Tokugawa regime had been toppled by the Meiji reforms which were nothing more than a pendant of the bourgeois revolution in western Europe. As far as the conditions for modernization in Japan are concerned, they had not lagged behind Europe on the eve of the industrial revolution. This is backed up by, amongst other things, the evidence of flourishing trade with its complex system of bookkeeping and transactions, the prospering urban middle classes with their love of art, excellent craftsmen and the highest level of literacy by world standards even at that time. The only difference was that the mistaken policy of isolation of the country had resulted in the Japanese failing to link up with world standards. Otherwise the Japanese would have been fighting with the English and the French for colonial dominance in south and south-east Asia as early as the 17 th and 18 th centuries, which – and here the true face of 7 . Anthony Giddens, Beyond Left and Right. The Future of Radical Politics, Cambridge 1994 , pp. 6 and 4 . 8 . Tadao Umesao, Nihon towa nanika,(What is Japan?), Tokyo( NHK -Publishers) 1986 , p. 18 . The account given in the following sections is a summary of the lectures contained in this book which were delivered by Umesao at the Collège de France. IPG 1/2000 Mishima, Japan: Locked in the Discourse of National Uniqueness? 77

such self-assertion discourse emerges – had been made up for with a delay of a couple of hundred years in the Second World War. Umesao here implies that the Europeans are firmly convinced that the course of European history has hitherto represented the world standard. According to Umesao, they consider that only European civilisation is worth replicating. That is why he is so keen to prove a similar development in Japanese history. He is clearly convinced that he can shake the blinkered Eurocentric attitudes of the Europeans, which most certainly exist, with his homology thesis. Justified criticism of a certain self-image of the hegemonistic West is transformed into an overestimation of one’s own – a typical reaction which repeatedly occurs at the genesis of the self-assertion discourse. According to Umesao, Japanese society is characterised not only by inner homogeneity, but also by equality which has seldom been achieved in world history. 9 Umesao is even bold enough to insist that Japan had realised what socialism as it really existed had tried in vain to implement, namely equality of all citizens and true democracy. 10 He is not, however, talking about the great thrust towards equality which also took place in the West, above all after 1945 . Instead, the collective loyalty within the Japanese state bureaucracy is emphasised which was working selflessly towards creating such an egalitarian society. Perhaps Umesao has made»the essence of Japanese culture« – an expression he likes to use – his own to such an extent that due to certain virtues and aesthetics he has been able totally to ignore the elitism and corruption of his friends in the Ministry, the sacrifices which had to be made for modernization, the high price which had to be paid for industrialization, the conflicts which occur daily, the breaks and tensions within society and the way in which they are swept under the carpet. He is clearly not prepared to deal with such questions. Similar discourses of self-aggrandisement which gloss over events can be found with various emphases in the other matadors such as Hayao Kawai and Takeshi Umehara, to name but two as representative of the mighty horde of apologists. Kawai, current director of the above-named International Research Center, studied the psychoanalytic interpretation of mythology with Carl Gustav Jung in Zurich and is attempting to bring out the structure of the Japanese self or ego in contrast to that of the Europeans with the Jungian method of the analysis of mythology. The exercise comes out with the well-known theses of the undefined contours of the Japanese ego, the almost seamless meshing of self and others, a feeling penetration of the essence of nature, etc. Kawai believes that he has rediscovered these mental figurations in our ancient mythology. 11 Kawai also implicitly sets up the thesis of the universality of his own culture by repeatedly suggesting the things which were»really« needed as a solid foundation for the co-existence of people in accordance with the mental figuration which the Japanese already recount in their mythology and have since then continuously developed and differentiated further. The poor Europeans, in contrast, had done nothing more than to construct the strong, modern Cartesian ego, thus deconstructing the actual element of human interaction. The consequences were appalling social pathologies in the West. Now these pathological waves would start lapping at our shores unless we armed ourselves morally against them in the spirit of this tradition. This, then, is the tenor of his analysis of mythology, which he has developed in many variations, for an»understanding of the essence« of Japanese culture. The question which arises here is what, which methodological basis, entitles one to draw conclusions about the»essential characteristics« of present-day Japanese culture from the »foundations« of the ancient mythologies? Another colleague from this group, the psychoanalyst Bin Kimura, who has studied in Heidelberg and speaks excellent German, says something like the following: 12 The Japanese willingness to compromise, so often criticised by the European elite, the constant manoeuvring, the postponement of problems, the tactic of conflict avoidance, 9. loc. cit., p. 59 ff. 10 . loc. cit., p. 65 . 11 . What follows is based above all on: Hayao Kawai et al., Nihonshinwa no shiso(Basic Concepts of Japanese Mythology), Kyoto(Minerva Publishers) 1996 . 12. This is based on Bin Kimura’s book Hito to hito tono aida. Seishinbyourigakuteki Nihonron(Human Interrelationships – On Japanese Culture from a Psychotherapeutic Perspective), Tokyo(Kohbundo Publishers) 1972 . 78 Mishima, Japan: Locked in the Discourse of National Uniqueness? IPG 1/2000

etc. actually corresponded more closely to the human reality which has been lost in rational Europe. Kimura even speaks of»something with the character of blood relationship« that»historically« as»vital potency«, as a»way of life«, has made for the cohesion of the Japanese people and been the carrier of their Japanese identity. 13 In the Japanese context such language is not directly the language of a master race, as German readers would perhaps be inclined to think. Nonetheless, the question arises of why today this language, which immediately brings up bad memories, is still being used. Umesao and Umehara are even proud of the fact that a ceramic pot newly excavated in one of the ancient settlement ruins somewhere on the coast has turned out in scientific tests carried out with radioactive dating to be the oldest piece of ceramic ware to have been excavated anywhere in the world. This finding allows Umesao to reach the conclusion that the Japanese were from the start – don’t laugh – a high-tech oriented nation. 14 Quoted professors are all scientists who are known in Japan and taken seriously, some of whose work also exists in western languages. That Director Kawai is much celebrated as someone who has contributed to an understanding of Japanese culture and was recently made an honorary citizen of the city of Kyoto supports the contention that these discourses satisfy certain needs in the general public. Any study of the theses presented above quickly becomes boring. They are of unassailable stupidity. But there is one important point here: we encounter similar cultural self-assertion everywhere in our region of Asia, including the misuse of cultural arguments for the purpose of hiding social evils. All too often the suppression of the supporters of human rights is justified on cultural grounds. A certain role is played here of course by resistance against the universalism of the stronger, against the arrogance and high-handed manner of the West. But it is ambiguous – on the one hand it has the function to uncover the Western fusion of power politics and universalism, on the other it can easily function as a cloak of invisibility for shortcomings or simply bring collective emotions to the boil. If we want to reflect on the future of Asia, we must ask ourselves also in respect of Japan how we are to cope with this ethnocentricity, how we can strip the instrumentalization of culture of its power. For at present the constellation does not look favorable. On the one hand there are discourses justifying own shortcomings in the name of culture, on the other hand there is the unholy alliance of universal values legitimately put forward by the West and the actual economic and political power possessed by the West. Difficulties in Handling the Past Against this cultural and discursive background of »ethnocentricity open to the world« it is not difficult to see why the Japanese, no, the official Japan, has such difficulty in coming to terms with its own past. Post-war Japan is not only the legal successor of the Greater Japanese Empire but it is also a kind of metamorphosis and continuation of pre-war Japan. These initial conditions create a situation which is completely different from the position of post-war Germany whose start is characterized by a radical break with the previous state governed by injustice. The Japanese constitution which is currently in force was adopted, at least formally, in the old imperial parliament. Post-war Japan with its parliamentary democracy thus arose by shedding its skin, as it were, but keeping a redefined monarchy as its state system. Despite all the breaks with the old imperial warmongering state, despite all new beginnings, something like the core, the quintessence or the most important integral parts of the old Japan remained unaffected by all this from the perspective of those classes which played a leading role in supporting the state. Accordingly, the political elite did not change either, and the oversized, always interventionist and extensive bureaucracy remained untouched. In Germany, too, old structures initially retained their power. But the new characteristics of the state with its new values proved more effective in the long run. With us, the consequences of this false start remain serious. One of the serious consequences for instance concerns the so-called»former Japanese«. That requires explanation. On the eve of the coming 13. Kimura, loc.cit., p. 18 . 14 . Umesao, loc.cit., p. 160 . IPG 1/2000 Mishima, Japan: Locked in the Discourse of National Uniqueness? 79

into force of the new constitution, that is on 2 May 1947 (the constitution came into force on 3 May 1947 ) the final imperial decree was issued according to which Japanese citizenship continued to be formally guaranteed to the owners of Japanese passports who were of Korean and Chinese extraction living in Japan but they were accorded the legal status of foreigners. It is difficult today to reconcile these two components. These Koreans and Chinese were de facto deprived of their civil rights literally overnight. And in 1952 , once again on the eve of the coming into force of the peace treaty which Japan concluded with the majority of its wartime enemies in San Francisco, they were deprived of their Japanese citizenship. Although they had been second-class Japanese until 1945 – as Japanese citizens they had more duties than rights, for example they had to perform military service – they nevertheless enjoyed restricted rights of participation in political life and a minimum of protection by the state. They could, for example, study at Japanese universities. They were entitled to a pension as former soldiers. With these two decrees, they suddenly became a minority which no longer had Japanese citizenship. At best, they were considered as foreigners with an open-ended residence permit. New regulations for example made the hurdles for their children to go to university more complicated and higher. The right to a pension disappeared completely if they had returned home. These Koreans included many who were taken for forced labor during the war years. There are still some 700,000 citizens of Korean descent living in Japan with open-ended residence permits but without any rights of political participation. There are still more serious problems. One example is those Koreans who as forced laborers experienced the explosion of the atom bomb in Hiroshima on that 6 August 1945 and have since suffered from the consequences of being exposed to radioactivity. It took much too long for the sufferers, who had in the meantime returned home to Korea, to be issued with a document certifying them as having been injured by the atom bomb and thus entitling them to free treatment or treatment at reduced cost in Japan. The second and third generations too have problems. Graduates from Korean schools in Japan do not, for instance, have any right to take part in the university entrance examinations(the current trend is for an improvement of this situation). Until one year ago, high schools for Koreans living in Japan could not participate with their baseball teams in the national competition for the All Nippon High School Baseball Championship because they did not possess the status of a school recognized by the Ministry of Culture. In other words, a clever policy of exclusion was practised everywhere. There is by now sufficient information in the West, too, about the failure to accept responsibility for the Nanking massacre and for the Koreans that were forced to work as»comfort women« at the time. The state is currently not willing to accept liability for these criminal acts. I cannot deal here with individual aspects of the debate and with a minor, but nevertheless important, change towards a more positive attitude which the government camp, signals from time to time. On the massacre of Nanking I refer to the international debate which started up again in the spring of 1999 about the granting of translation rights to a Japanese publisher. The book concerned is called »The Rape of Nanking« and is written by an American of Chinese descent, Iris Chang. Her parents experienced all of it. Half a million copies of the book have already been sold in the USA (as of June 1999 ). Curiously, a Japanese publisher did not make use of the right once he had acquired it, probably out of fear of possible right-wing demonstrative pressure to which he would then be subject. Here I must refer to an important mindset component which has led to a certain hardening of attitudes in relation to Japan’s past. This is the enormous resentment of the Japanese establishment towards the classic colonial powers. According to often expressed opinions, many Japanese, above all those belonging to the elite, see much worse brutality and cruelty in the colonial past of the western powers than was committed by the Japanese invasion. From this perspective, the West is guilty of the destruction of whole areas and of genocide on indigenous peoples on continents such as Africa and Australia. It is certainly true that the European colonial masters of the 19 th century were not particularly nice to the indigenous peoples. An example often quoted in Japan is the Opium War ( 1840–42 ). People like to remember that it was 80 Mishima, Japan: Locked in the Discourse of National Uniqueness? IPG 1/2000

only the news of the catastrophic defeat of China by the British which alarmed the samurai of the shogunate and made them aware of the necessity of collective national defense. Since then, there has been deep-seated mistrust of the West among the ruling class. In other words, many Japanese in leading positions in the state are angry about the selfopinionated West because from their view it is not willing to discuss its own past. But they themselves are far less willing to admit that their actions in the east Asian region have left the same kind of rancor among neighboring nations as the Japanese frequently felt and still feel towards the West. Mr. Nakasone has repeatedly indicated that he distances himself from the Tokyo military tribunal view of history, as he describes it. Sometimes he also refers to the Pacific Ocean view of history, by which he means the Americans, and that he is waiting for the day when the Japanese war will be seen differently by subsequent historians instead of only from the view propagated by the victorious powers. For many Japanese – this was the result of this kind of apologism – he represented the first attempt by a non-European culture to relativize the dominance of the West. The wish for self-justification by pointing to the errors of others is clearly evident here. But the attempt to offset one’s own atrocities against the colonial crimes of the West would be incomprehensible to the victims and victimized nations of Japanese aggression. They have a much longer memory than those who wish to engage in such offsetting. Lack of Interaction Between the Rulers and the Public I have perhaps so far concentrated too much on the views of the Japanese establishment. But the state does not consist solely of representative public organs, of the parade of political symbols, of press conferences by government spokesmen and the show of international politicians – and not, above all, of the cultural apologists with their ethnocentric arguments. Much more important than all this bombast and these extravagances, than sedating and legitimizing bodies which many of our politicians and scientists clearly like a great deal, is the debating public, are all the circles, forums and groups of politically and socially alert and attentive citizens. And it would be completely wrong if readers were to draw the conclusion on the basis of my remarks so far that the Japanese were so ethnocentric that they were not willing to account for their own colonial past and for their incontrovertibly proven atrocities or if they were to draw the conclusion that the public debate in Japan was dominated by nationalistic and conservative murmurings and dull emotions, perhaps rather like an east Asian Serbia. Such a conclusion would be a complete simplification. This would lead the reader into the old trap into which Europeans have repeatedly fallen, namely of perceiving the Asians or Asian nations as a dull mass, where there can be no differentiation in the landscape of debate such as can be found in Europe since the Enlightenment. There can be no sadder and duller perception than this. A simple generalization can sometimes be more dangerous than ignorance. For there is a long and differentiated history to the discussion among the Japanese public about the subjects mentioned and the difficulties in coming to terms with the past. But despite the diversity and controversy of the debate in many media and circles of discourse, certain contours can be discerned by observers and participants: contours of a noteworthy majority of those expressing their views in public who acknowledge the guilt of the past, who try to understand the perspective of the victims and who, this is an important point, demand individual reparation from the state. This is a Japan which is open to the world, open to the world in a different sense from its willingness to export. There are at least as many groups belonging to citizens’ movements and initiatives as there are say in Germany who are fighting, for example, against the disadvantages under the law of their Korean fellow citizens. Here, too, the words which Jürgen Habermas once wrote in the context of xenophobia apply: the people are better than their politicians and leaders. However, this openness towards the world has not so far become as evident as could be wished. That is to say, there is much too little interaction between those in positions of power and the public. Those in positions of power are becoming increasingly cynical. And there comes a point when the participants in the public debate become resigned and return to their private lives. Politics IPG 1/2000 Mishima, Japan: Locked in the Discourse of National Uniqueness? 81

continues to be run on the basis of cronyism. And the culture-related discourses of self-assertion give it a patina of legitimacy. There are no doubt many reasons why the »voice of the people« is not heard. One important reason can certainly be found in the cultural hegemony which the minor and major cultural apologists have, since the 1970 s, continuously grabbed for themselves from left-wing intellectuals. That corresponded exactly to what Antonio Gramsci meant with his term»cultural hegemony«. Instead of building and expanding access to the big leftwing liberal publishers and newspapers, they tended to favour the smaller and newer ones, won private foundations to their side and built up a network of contacts abroad. Within the same period a large part of the Japanese left displayed signs of increasing sclerotisation. They took no account of the transformation which the capitalist economy underwent in the reconstruction phase and remained too true to their»alarmism«, trying to conjure up crises and even revolution. All too often they flirted with Beijing and Moscow. For a long time they could not bring themselves to declare their support of the western type of democratic institutions. A negative attitude viewing democratic institutions as nothing more than instruments of dark capitalist forces was prevalent. Accordingly, an instrumental relationship to political institutions dominated in the camp of the left as was the case in the days of Marx and Engels. With hindsight, it is easy to understand why that part of the population which is»better« than»its politicians and leaders« could and can no longer feel at home in the political parties. A left-wing liberal culture which alone can serve for the interchange referred to between those in positions of power and the public did not develop. In the face of such a constellation it is a hard and certainly lengthy endeavour to act against the hegemony of cultural essentialism and even to break it up. That will be a rocky path. But one thing is certain: only when the dull consensus on Japanese culture dissolves – by robbing the tenacious self-assertion and self-satisfaction discourse of its power – will a perspective into the 21 st century open for Japanese society. Until that happens, we will drag not only the weight of the 20 th century, but also the negative legacy of the 19 th century along with us into the next century. Much truly depends on, first, how we come to terms with our past and, second, what kind of legal and civil framework we create for our fellow citizens from Asian nations who are living in Japan. If there is no positive development in this respect, then the outlook would be rather gloomy. And not just international Japanese studies, but world public opinion would look at us as rather strange animals. They might have to make such an animal a protected species – to protect the rest of the world from it. For the mentality which has been described can run uncontrollably amok at any time. ̇ 82 Mishima, Japan: Locked in the Discourse of National Uniqueness? IPG 1/2000

MICHAEL EHRKE Germany: United, Rich, Unhappy T he timing of new centuries and millennia and the objective division of history into epochs rarely coincide. According to Eric Hobsbawm, the »short« 20 th century began in 1914 and ended in 1989 . 1 Here, Hobsbawm’s definition of 1989 as the threshold of a new epoch is more than just the judgment of a historian made after the event. Whilst only a few contemporaries probably experienced 1914 as the end of an epoch – as the end of the»long« 19 th century – 1989 was immediately seen by the whole world as a turning point which divided history into before and after. The following remarks, which are made on the occasion of a new millennium, refer more to the significance and the consequences of 1989 and aim less to assess the entire century, let alone the millennium. 1989 saw the end of the state in Germany known as the GDR and the beginning of German reunification. It is no coincidence that the whole world associates the end of the post-war order not with the electoral victory of Solidarnosc in Poland in the summer of 1989 , but with the fall of the Berlin Wall that autumn. The image of the people dancing on the Wall has become the icon of the end of the epoch. German reunification is a sort of miniature edition of that larger process of integration which started to bring the former communist countries in central and eastern Europe into the global market system and the political community of the West. It is a piece of»globalization«, and has brought changes throughout Germany. However, whilst people in the western part of Germany have only experienced or will experience these changes as a very gradual process, the citizens of the former GDR have gone through this process in a very short period – even ahead of the western Germans. German reunification resulted in the normalization of the international status of Germany, a country which had enjoyed only limited sovereignty before 1989 . It also created the preconditions for a continuation of European integration into an economic and monetary community. At the same time – and this is the point at the core of the following remarks – it overrides, distorts and intensifies the country’s internal socio-economic development as it experiences a transition from a Golden Age of economic prosperity and social consensus into something which is at most vaguely defined, which due to a lack of precise definitions we might term post-industrial society, second modern age, or knowledge-driven service society. A German Century For the western part of Germany, the second half of the 20 th century( 1949–1989 ) was a period of good fortune. There was no war, no civil war, no manifest restriction of freedom, no significant inflation, no significant economic crisis. As a result of an extremely dynamic economic development, the western part of Germany had already become the third-largest economic power and the secondlargest exporter in the world prior to reunification. People may complain about a lack of competitiveness in Germany, but German firms supply the world with high-grade machinery, telecommunications equipment, cars and chemicals. It can be said with some justification that an average German worker enjoys a higher quality of life than his Japanese equivalent, even though he works 48 days less a year on average, and that an unemployed German has a better life than one of America’s working poor. Germany’s universities lag behind the top US institutions, but the skills level of its workforce is on average higher than that in the Anglo-Saxon countries. Germany’s cities and landscapes are less damaged by industry than those of 1. Eric Hobsbawm, The Age of Extremes. A History of the World 1914–1991 , Vintage Books 1996 . IPG 1/2000 Ehrke, Germany: United, Rich, Unhappy 83

Japan, and its crime rate is far lower than that of the United States. Hardly anyone emigrates, but hundreds of thousands or millions would like to live and work in Germany – if they were allowed in. Those people who lived in West(or in the last decade in reunified) Germany were, compared with the vast majority of the population of the planet, favored by fortune. This favorable and exceptional situation is particularly striking if one compares the second half of the century with the first. Anyone who was born just a few years too early in Germany had to experience defeat in two world wars, a failed revolution, two periods of hyperinflation, a severe economic depression, three changes in the political system and, above all, probably the most thorough murderous regime in history – all in the space of the first thirty years of the»short« century. Rarely has a nation’s century been so clearly divided into two halves by one year – 1945 – the first of which will for all time overshadow the entire century as an epoch of mass murder. Germany was not only disproportionately involved in the century of mass murder, it was a leading protagonist. In wars against the rest of the world, it produced wonders of technology and organization which put all earlier wars in the shade. But above all, Germany brought a new dimension to the mass murder of civilians quite un related to the military campaign. In his economic history of the 20 th century, Brad DeLong quoted an estimate of the presumed victims of state-sponsored violence in the 20 th century(note: not as part of military action). The top twenty regimes here, according to his estimate, produced more than 155 million victims. DeLong concedes that many of these figures are just rough estimates, and can do no more than indicate the dimensions involved. National Socialist Germany only takes third place on this list, but given the brief duration of National Socialist rule, it proves to be the most murderous regime of a murderous century. Above all, for National SocialTable 1: Non-war-related victims of state violence in the 20th century Regime Soviet Union(Communist) China(Communist) Germany(Nazi Third Reich) China(Kuomintang) Japan(Imperial-Fascist) China(Communist Guerrillas) Cambodia(Communist) Turkey(»Young Turks«) Vietnam(Communist) Korea(Communist) Poland(Communist) Pakistan(Yahya Khan) Mexico(Porfiriato) Yugoslavia(Communist) Russia(Tsarist) Turkey(»Ataturk«) United Kingdom(Democratic) Portugal(Fascist) Croatia(Fascist) Indonesia(Suharto) Number of victims 61,900,000 35,200,000 20,900,000 10,400,000 6,000,000 3,500,000 2,000,000 1,900,000 1,700,000 1,700,000 1,600,000 1,500,000 1,400,000 1,100,000 1,100,000 900,000 800,000 700,000 700,000 600,000 Duration 1917–1990 1949– present 1933–1945 1928–1949 1936–1945 1923–1948 1975–1979 1909–1917 1945– present 1948– present 1945–1948 1971 1900–1920 1944–1990 1900–1917 1918–1923 1900– present 1926–1975 1941–1945 1965–1999 84 Ehrke, Germany: United, Rich, Unhappy IPG 1/2000

ism the mass annihilation was not the accepted consequence of a political program, no matter how absurd that program was(as in the disastrous starvation caused by the state in the Soviet Union and China): it was the program itself. And it took place not in a situation of backwardness, underdevelopment and disorganization, but was managed using state-of-the-art industrial technology and administrative organization; it was the responsibility of a nation at the forefront of technology and commerce – and for that reason the century of mass murders will for all time be associated with Germany. The turning points of the 20 th century – 1914 , 1945 and 1989 – are»German« years. One can debate who started the war in 1914 , but there is no denying that Imperial Germany took the lead in correcting the order of the 19 th century by force and thereby drove the world into a war which consigned to the scrapheap all the optimistic assumptions of the 19 th century about civilization and progress. The military defeat and partition of Germany in 1945 was the precondition for the establishment of a new bipolar world order, symbolized by the border between the two Germanys. The Golden Age of the post-war decades enabled part of humanity to enjoy unparalleled prosperity, but the Golden Age was also overshadowed by the ever-present threat of the destruction of civilization by a nuclear war. The bulk of humanity paid the price of the proxy wars of the superpowers, languishing in poverty, stagnation and political oppression. Finally, 1989 and the fall of the Berlin Wall placed Germany in the forefront of world history for one last time. When the current position of Germany in Europe and the world is defined, the word»normal« predominates. That cannot imply that a line can now be drawn under the past: the past will not disappear, the terrors of the National Socialist mass destruction have not faded with time; in fact, the more German society is able to describe itself as civilized in the Western sense, the more obscene these terrors become. The past does not die away with those who experienced it, be they perpetrators or victims. The historians’ dispute, the Goldhagen debate, the Wehrmacht exhibition and the arguments about compensation for slave laborers show that the debate on coming to terms with Germany’s past will not cease or die down. Normalization can therefore only be meant in a more harmless sense: Germany has become a normal Western country whose elite no longer aspires to a separate path and a revision of the world order by force. It may be that one can read fresh ambitions to become a major power into the words of German politicians or the cover stories of news magazines, but this is more a question of form than a genuine project; in any case, the country would not have the resources for such a project, even if it aspired to it. Germany is economically integrated and in a security alliance with most of its nine immediate neighbors; as former Defense Minister Volker Rühe put it, it is»encircled by friends«. In 1999 , Germany participated in a war for the first time since 1945 – a rather dubious mark of normalization – but the German involvement in the war in the Balkans was interpreted by its neighbors not as the rebirth of a military monster, but as a sign of a rejection of any separate path, even that of a pacifism legitimized by the past. The war in the Balkans was not a»German war«, and it seems reasonable to hope that the 21 st century will not be a»German century«. Before Reunification: Old and New Social Issues The second half of the 20 th century was a Golden Age for the western part of Germany. A growing economy,(generally) full employment, social security and a dramatically rising standard of living for (almost) everyone resulted in a virtuous circle which – not wholly unjustly – was presented as the »German model«. The core elements of the model were a high(by international standards) level of insurance for workers against the risks of unemployment, illness and lack of income in old age, rapidly rising wages, and a consensus resolution of industrial disputes. The social market economy of the 1950 s and 1960 s was not an egalitarian economic model, but it did at least give the justified impression that the capitalist market economy (and the inequality inevitably linked with it) was compatible with social justice. The dynamism of the prosperity – the prospect that everyone would be able to obtain more and more and better and better consumer goods – meant that the static inequality in the distribution of income and wealth was of rather secondary importance. The participaIPG 1/2000 Ehrke, Germany: United, Rich, Unhappy 85

tion of the vast majority of the population in a continuously rising level of consumption was matched on the production side by the participation(albeit subordinate) of a large minority of workers in corporate decision-making processes, either in the form of institutionalized rights of codetermination, or in the form of informal codetermination on the production site, particularly by the skilled workers. As far as the socio-economic situation in West Germany was concerned, one thing at least was clear when Germany reunified: the Golden Age was over. It is hard to tell where the cut-off point was. The first oil crisis signalled that the epoch of prosperity and social justice would not be indefinite. But a genuine turnaround only came in the early 1980 s. The change in government from a social-democrat / liberal to a christian-democrat / li beral coalition did not have the revolutionary dimensions of the neoliberal government takeovers in the United States and Britain, but it too marked a transition: the early 1980 s saw the onset of a concentration of income and wealth 2 – following years when the pattern of distribution of income and wealth in West Germany had slowly but steadily improved. Back in the days of the social-democrat / liberal coalition, the CDU had already discovered the »new social question«(Heiner Geissler had thus anticipated Tony Blair fairly precisely). The old battle line between workers and employers, as maintained by the social democrats, was, it was argued, overridden by a far more dramatic split between those who formed part of the system as workers or employers, and an underclass of the excluded without any access to the working world and the welfare state. On the Left, both inside and outside the SPD , the term»two-thirds society« was coined. Both concepts define exclusion as the status of a minority which had been shut out of an established, functioning and consensus-based majority society. They reflect a new reality for the Federal Republic: mass unemployment and, as a consequence, unemployment as a fate which, for more and more people, was no longer a more or less brief interruption between two periods of employment, but dominated large parts of active life. The»new social question«, or the excluded »one-third«, included not only the»structurally« unemployed, especially younger and older people who were unable to get a foothold in or had lost contact with the labor market, but also a growing group of people whose problems were covered by neither labor law nor the welfare state: those in precarious, temporary employment or in quasi self-employment, single mothers, large families, foreign workers, people in social ghettos, marginal groups. The treatment of the social question as a minority issue placed the majority of those in regular employment and with social security cover at least implicitly on the side of the privileged. Their organizations, the trade unions, apparently took little interest in the fate of the excluded and even fought tooth and nail to defend the privileges of their clientele against the claims of the disadvantaged minority. Since the decisive line of battle was defined not as employer against worker or rich against poor, but as the conflict between an excluded minority and a privileged majority of workers and employers, the tensions within this majority society were presented as secondary disharmonies within a generally harmonious community. It was not until later that attention focused on two parallel developments. Firstly, the involuntary social exclusion of an underclass corresponded to the increasing voluntary self-exclusion of the elites, i. e. the high-earners and the wealthy. This selfexclusion is a consequence of globalization: due to the policy of deregulation since the early 1980 s it has become increasingly easy for the possessors of capital and highly-valued skills to transfer their resources across national borders to wherever the yield is highest and the burden smallest. This is just as true of companies as it is of chemists with money to invest or of tax-evading TV stars. The motto of West German social partnership:»We are all in the same boat«, ceased to apply. Firstly, this had an impact in the companies. The»German model« had been a positive-sum game for all those involved; it could have been described as»high wages, high productivity, high profits«(one might add»high skills, high motivation, high quality«). The consensus in the 1970 s was that this was the 2. Cf. Richard Hauser, Die Entwicklung der Einkommensverteilung und der Einkommensarmut in den alten und neuen Bundesländern, in: Aus Politik und Zeitgeschichte 18 , April 30 1999 . 86 Ehrke, Germany: United, Rich, Unhappy IPG 1/2000

magic formula for the international success of German industry. But if the consensus between employers and workers starts out as something with a limited shelf life, i. e. the implicit social contract should only apply until a combination of productivity and wage costs is found somewhere else in the world which permits even higher profits, then the corporate basis for the consensus is systematically undermined. The employers would no longer need the corporate consensus. The pressure of unemployment then automatically creates the motivation for the workers who continuously face the threat of redundancy, a motivation which previously had to be generated by monetary incentives and participation in corporate decisionmaking. Secondly, the exit option for companies is not only available at any time, but can also be fed into the wage negotiations, which thereby lose their character of a contest between more or less equals(the withdrawal of larger companies from the business associations representing them in wage negotiations and thus their voluntary renunciation of the basis of conflict resolution and consensus formation is only one aspect of a process whereby companies are fundamentally distancing themselves from the community of which, in formal terms, they are still part). The more significant impact affects the political system. A democratic political order is not based on all citizens sharing the same values and convictions; it rests on a political process in which differing and conflicting interests are talked through and solutions discussed in public. The model of the social market economy started from the assumption that the market alone would not create an acceptable distribution of income and opportunities in life, and that the distribution achieved by the market could be and had to be corrected by government. A prerequisite for social cohesion was that, despite inequalities, all the participants could be convinced that the process was more or less »fair«. The definition of what is regarded as»fair« in different situations is a matter for the political process(in a wider sense, i. e. including collective wage negotiations, mass action, media debates, etc.). But if the earners of high salaries and the owners of large assets no longer need to negotiate, but can always enforce their interests by referring to the exit option and / or can withdraw their resources from common availability, the nature of the public political process changes too. In the self-referential language of politics, this is described as a»loss of scope for policy-making«. The commonweal of the social partners, who are forced to reach a consensus or to go under, is replaced by a relationship between the blackmailers and the blackmailed(and government and the media react like those being blackmailed and warned not to contact the police) – or a relationship between two groups in society which no longer belong to the same political community. It is the vast majority of people in dependent employment who not only have to bear the burdens of social solidarity(of the welfare state) and thus of social cohesion; and it was also the people in dependent employment who had to pay for the costs of German reunification(whilst companies and the wealthy profited from the tax and depreciation paradise created in eastern Germany). The self-exclusion of the elites creates two communities: a business class of the internationally mobile and a tourist class of the less privileged who continue to be reliant on their state. This is true of the second development described here: the situation of the majority of dependent employed who are(still) covered by welfare insurance. On the one hand, the owners of capital and the high earners are withdrawing their resources from the commonweal; the tax base is shrinking. Taxes on capital have been declining ever since the 1960 s, whilst taxes on labor have kept increasing. 3 On the other hand, more and more people end up – occasionally voluntarily, but mostly involuntarily – in a situation in which they are unable to pay any more welfare contributions and, sometimes, taxes. In statistical terms, this relationship is expressed in the displacement of regular jobs subject to social insurance contributions by precarious jobs and by open or concealed unemployment. The majority of workers(still) insured for welfare run the risk of firstly becoming a minority themselves, which secondly has to finance the welfare benefits for a growing proportion of the population out of its incomes, whilst thirdly the assets of capital owners or higher earners are withdrawn from the system. Those in dependent employment then also have to bear the 3. Cf. Dani Rodrik, Has Globalization Gone Too Far? Washington, Institute for International Economics 1997 , p. 65 . IPG 1/2000 Ehrke, Germany: United, Rich, Unhappy 87

costs of unemployment(for example) in more than just financial terms: they also bear all the risks resulting from rationalization and relocation by companies and, assuming they actually retain their jobs, the increasing burdens deriving from the sysystematic»downsizing« of companies. It has therefore proved impossible to reduce the social tensions of the pre-reunification Federal Republic to the problem of the exclusion of a minority(the »one-third«). And the»old social question« of conflict between workers and employers, which appeared to have been consigned to the past in the decades of the Golden Age, flared up again during the 1980 s and 1990 s. Competitiveness and Social Environment People in Germany have come to believe that prosperity, social achievements and consensus in society are under threat. Two opposing stances have crystallized out of this: on the one hand, those who think that Germany has become uncompetitive stress that the country»is living beyond its means« and needs»to tighten its belt«. In intensified global competition, the nation’s prosperity is threatened by other, better equipped countries. If it proves impossible to make Germany »fit for globalization«, the country is at risk of »being relegated to the second division«. This criticism refers both to objective data, which basically reflect the costs of commercial activity, and to collective dispositions. In nominal terms, wage costs are the highest in the world and are negotiated inflexibly at sector level rather than in line with the performance of the individual company. Nominal corporate taxation and the public-sector share of GDP are high, there are too many rules and regulations, education and training take too long, training fails to meet the needs of companies – etc. As far as the collective dispositions are concerned, a too tightly meshed welfare net rewards freeriders, inertia, inflexibility and immobility whilst penalizing performance, risk-taking and entrepreneurial vigour. The economic substance of this line of criticism is at best threadbare: national economies do not compete like private-sector companies in an international competition which needs to be seen as a zero-sum game – and if they did, Germany would hardly be on the losing side, since there are at least no indications of declining terms of trade which would reflect a deterioration in the sectoral economic structure in the international comparison. The corporate taxes actually paid in Germany are, according to the OECD , below the average for industrial countries, including Britain and the United States, the level of wages needs to be seen in relation to labor productivity, the level and length of training needs to be considered in an international comparison. The German economy has continued to grow during the last twenty years; it is richer today than at the beginning of the 1980 s. There is no empirical proof that the Germans are living»beyond their means« and need »to tighten their belts«. The phrase which keeps cropping up, that the retention of the welfare state, let alone its expansion, is impossible, since there is»no wealth left to redistribute« is daft: due to the concentration of incomes and property, there is more wealth and more poverty than in the late 1970 s, i. e. there is both more wealth to be redistributed and more demand for redistribution. The limits of redistributive justice are, in the present conditions, determined not by the absolute volume of available wealth, but by the amount its owners are prepared to leave in the country. The second critical stance is more difficult to define, since it is articulated from very different points of view and often in a very disconnected fashion, e.g. by the churches, by what remains of the intellectual Left, or by traditional advocates of the welfare state in the trade unions or the SPD . Their underlying motivation is not the concern that Germany’s economy is too inefficient, but the social cohesion of the commonweal. Social integration – and particularly the integration into society of the younger generation – cannot be achieved by the market, it is based on shared convictions and traditions handed on from one generation to the next. Phenomena like rising adolescent crime, extreme right-wing violence, disenchantment with politics and political parties, declining membership of churches and clubs, the abuse of welfare benefits, increasingly materialistic and selfish values, falling numbers of children and the precarious state of the nuclear family can be interpreted as symptoms of a gradual erosion of the common foundations of German society. This development is being accelerated by the far88 Ehrke, Germany: United, Rich, Unhappy IPG 1/2000

reaching expectations of flexibility imposed on the workers due to»globalization«, which cuts down to a minimum the amount of time and space available for common use. The reduction of collective arrangements – e. g. of working hours – and of welfare protection is pulverizing those communities – families, clubs, trade unions, friends, neighborhoods – on which social integration ultimately rests. The welfare state, it can be argued, not only protects the individuals from the risks of the market; under capitalist conditions, it is also the precondition for a sphere of community to be formed and maintained beyond the market, without which social integration would be at risk. A precondition for the welfare state is the nation state as a framework of institutionalized solidarity. If, under the pressure of globalization, both the competences of the nation state are eroded and the welfare state is reduced, the question of what glue is to hold our society together is both topical and justified. Jürgen Habermas has described the development sketched out above using the concepts of »network« and»social environment« as two competing forms of coordination of social activity. 4 Networks – here we can say: markets – are anonymous systems of relationships in which the actors take decisions on a decentralized and rational basis and which stabilize themselves via the efficiency of their results. Social environments, on the other hand, coordinate the actions of individuals via solidarity, shared traditions and common beliefs. The development of Europe since the High Middle Ages can, according to Habermas, be described as a succession of processes of opening and closure, in which discrete social environments open themselves up to overarching networks, and then close again at a higher level as a new social environment with an expanded horizon. The transition from the local to the dynastic and then the national identity, for example, can be regarded as one such succession of openings and closures. The Industrial Revolution in England was a particularly dramatic phase in this development – Habermas refers to Karl Polanyi’s analysis – as, for the first time in history, it destroyed the traditional basis of social relations and left it to the market to provide people, i. e. labor, with a living. This»revolution of the rich against the poor«(Polanyi) meant that the underclasses were deprived of their social environment and robbed not only of the material basis for their existence, but also of all other social recognition and solidarity. Since the Industrial Revolution in England treated the majority of the country’s population like the population of a colonized country, it created, according to Polanyi, an untenable social situation and sparked off the reactions – by the state, the aristocracy and the rising workers’ movement – which tried to rein in the dynamism of the market. 5 The long-term result of this uncoordinated counter-movement, which derived from very different interests, was the welfare state. The current»revolution of the rich against the poor« known as globalization is trying – albeit in a less dramatic form than in the age of the Industrial Revolution – to prune back protection in the form of the welfare and the nation state, i. e. to force people to abandon their traditional forms of coordination of social activity by subjecting them to the conditions of the market. However, there is at present no sign of an opposing movement which might close the recent opening at a higher level. 6 The welfare state removed some of the pressure of market-imposed flexibility and mobility from the employees and thus gave them a chance to form and maintain social environments. The working-class structure of the traditional industrial society is an example of this: through shared values, beliefs and traditions, as embodied in »class-based« institutions like clubs, trade unions, education or political parties, the social environment reconciled people with their collective fate of industrial labor – the prospect of spending a whole life doing hard physical work for little pay. It fulfilled an integrational social responsibility which the market(via wages) could not achieve on its own. It helped to impart values, beliefs and traditions to the next generation. In order to exist, it needed both a minimum of stability, i. e. stable working and living conditions, a certain degree of job security and a limitation of social mobility both 4 . Jürgen Habermas, Die postnationale Konstellation und die Zukunft der Demokratie, in: idem, Die postnationale Konstellation. Politische Essays, Frankfurt am Main 1999 , p. 125 f. 5. Cf. Karl Polanyi, The Great Transformation, 1944 . 6. According to Habermas, the recent opening process, called»globalization«, can lead to a new»closure« on the European level. IPG 1/2000 Ehrke, Germany: United, Rich, Unhappy 89

downwards and upwards, as well as a minimum of equality, permitting the interpretation of the individual situation as part of a collective fate(generally the same income level, the same working hours, etc.). Beyond the social structure of industrial workers in the narrower sense, the welfare state can be regarded as a complement of the collective fate of those in dependent employment. For it to function, there must be a predictable biography of those paying in and those drawing benefits, stable life-long employment, interrupted only by temporary exceptions, the nuclear family with its rigid division of labor between the sexes, and the raising of children, who then also go on to have similarly stable jobs. Those who focus their criticism on Germany’s lack of competitiveness are implicitly or explicitly demanding the renunciation of stable social environments in favor of greater reliance on markets. They assume that the integrational functions of social environments can be replaced either by growing individual opportunities or by the pressure of the market, by the threat of exclusion / repression or by the mass-media simulation of social environments(represented by TV stars, racing drivers and princesses). The advocates of the welfare state, on the other hand, defend not only existing privileges, such as the right to government assistance when removing tattoos, but also stable social environments and thus the chance to form an identity and to pass it on to the next generation, a chance which is particularly important for anyone who can expect but little recompense from the market for his / her work. 7 If there is nothing to underpin social integration and socialization in the form of at least partially stable social environments, then there will be a growing danger – particularly in Germany – that more and more people who have little chance on the market will attempt to confirm their ethnic identity by violence, by beating foreigners up with baseball bats. By destroying social structures and solidarity-based interrelationships, the neoliberal-inspired modernization creates the mob which obtains by force that which it is denied by society. 8 It should be noted that social disintegration is not a spectator sport: 9 the mud which is thrown up on the pitch will not fail to hit those who see themselves as the beneficiaries of modernization and imagine that they are well away from the scrum. The concern about the possible loss of social cohesion, due to the threat from an expansion of market relations, is not a typically German phenomenon. The American communitarians were driven by a similar motivation, but the majority of them arrived at a result – the rejection of liberal universalism in favor of specific, discrete communities – which threw out the baby of political liberalism along with the bath water of neoliberalism. Communitarian undertones can also be heard in the Anglo-Saxon version of social democratic politics, the»Third Way«. What is specific to Germany is the fact that the conflict between the market and the social environment is overarched, intensified and altered by the regional tension between eastern and western Germany. The special history of German reunification means that eastern Germany is virtually a laboratory in which we can observe the experiment of modernization as called for by the neoliberals. »Ostalgia« and Ties to the West With hindsight, German reunification is often associated with a missed opportunity: reunification was an unexpected shock, a national state of emergency, one of the few opportunities to make a fresh start. Yet we did not even see a new national anthem, let alone a new constitution. The»system« of the old Federal Republic was, as many people lament today, simply imposed on the former GDR in its entirety. There was, however, never any possibility of welding a synthesis out of eastern and western German elements. The GDR had – particularly in the eyes of its former citizens – mismanaged itself so badly that there was literally nothing which could have been rescued to survive reunification, apart from the signal with the little green man at pedestrian crossings. The rejection 7. According to Richard Sennett, the winners of globalization, too, are increasingly unable to deduct from their biography some kind of identity and pass it to their children. Cf. Richard Sennett, The Corrosion of Character, New York 1998 . 8. In her famous study on totalitarian rule, Hannah Arendt describes the dissolution of social structures and the creation of an»un-embedded« underclass as a precondition of the success of totalitarian movement and governments. 9. Dani Rodrik, op. cit., p. 7 . 90 Ehrke, Germany: United, Rich, Unhappy IPG 1/2000

of the GDR by its citizens seemed to be total. It ranged from destroyed memorials and renamed streets to the hawking of medals and other symbols of the state as junk and the refusal to eat local agricultural produce. Since nothing could be saved from the GDR , everything from pension insurance to the sex shop had to be imported from the Federal Republic. The reverse side of the collapse of the GDR was the absolute confirmation of the Federal Republic. Even if the GDR itself left nothing worth keeping, surely the opposition to the state could present experiences which should have found expression in the political structure of the reunited Germany? But the opposition was split into a minority(if one goes by the electoral results of Alliance’ 90 , a party allied to the Greens, a minority beneath the five per cent threshold) which still thought there was a chance to rescue the GDR as a state, to liberate socialism of its perversions, or to opt for»third ways« between socialism and capitalism, and a majority, which intuitively and realistically understood that there was no room for third ways of this type. The masses fleeing via Hungary to West Germany or threatening to flee to the West did not want any new experiments, they wanted a higher standard of living. The GDR did not collapse because it was a state based on injustice, but because it was unable to offer its citizens the quantity and quality of consumer goods which was the norm in the Federal Republic. And the peaceful revolution, an uprising of consumers who were prevented from consuming by their state, had little to offer towards a synthesis. The second association linked to reunification is that of disaster avoided. The collapse of the GDR itself threatened to take a disastrous turn: as the old GDR elite was no longer in a position to suppress the opposition by force, a power vacuum developed after autumn 1989 in which the basic functions of the state threatened to collapse(expressed, for example, in the loss of authority of the police force). There was a danger that a state of lawlessness would emerge with a high potential for violence, exacerbated by an out-of-control mass emigration to the West. Government felt a pressure to fill the developing vacuum quickly, and this could only be done by installing the structures which were available, rather than those which were best thought-out. In the eyes of those involved, there was no time available in 1989 and 1990 to proceed other than by»taking over« – with the approval of a majority in both East and West. Reunification in the form of a take-over probably prevented the sort of disaster that comes when states fall apart – as could and can be observed in various places on the edges of the former Soviet Union. Instead, it unleashed a different sort of disaster: for the vast majority of eastern Germans, reunification was equivalent to the total collapse of their social environment. In a socialist economy of shortages, social activity was coordinated via the authority of social environments, and this by definition outweighed any coordination via the market. Elements of social cohesion, spontaneous cooperation and improvized creativity existed not in the socialist system but in the gaps it left, and particularly in the(frequently interrupted) manufacturing process. Perhaps the social environment of many GDR citizens, those who were neither integrated into the party hierarchy nor close to the(church-based) opposition, can be described as a specific form of working-class social structure which had long been on the way out in the West(Wolfgang Engler talks of the»workingish society«). Whilst the official rhetoric about the workers as the ruling class acted as the threadbare figleaf of party rule, the coordination of manufacturing, which socialist planning was unable to achieve, was actually ensured to a large extent by cooperation between the workers themselves. In this environment, it was possible for egalitarian forms of communication to emerge on the basis of shared beliefs and values(which were not the prescribed beliefs and values of the socialist state), forms of communication which Wolfgang Engler described as follows:»No-one was to be worse off than anyone else, and better off only to the extent that this did not arouse the justified envy of the environment(...) Everyone looked enviously at those above himself, and full of genuine sympathy at those beneath, always aiming to alleviate serious differences, if possible to equal them out, even if this meant giving up one’s own advantages«. 10 The uprising of the workers as consumers signified the opening up of a more or less closed social environment, the replacement of specific and per10. Wolfgang Engler, DIE Ostdeutschen. Kunde von einem verlorenen Land, Berlin 1999 , S. 211 . IPG 1/2000 Ehrke, Germany: United, Rich, Unhappy 91

sonal cooperative relations by impersonal market relations, as part of which the worker himself came to be valued solely in terms of his market value. It was at once an act of emancipation and the destruction of the existing basis for individual orientation. This caused varying reactions. The most impressive was the refusal to demographically reproduce, the fall in the birth rate of more than 50 %, the scale of which recalled instances of colonization and enslavement. The citizens of the failed GDR did overnight what the citizens of the Federal Republic had needed forty years to do: a change in generative behaviour as a consequence of the dissolution of stable social environments. Many citizens of the former GDR responded to the loss of their social identity with the aggressive confirmation of their ethnic identity. The pogroms against foreigners were unleashed in eastern Germany. Of course, the wave of murders of the early 1990 s cannot be ascribed solely to the citizens of the new eastern Germany. There were murderous attacks in Solingen and Moelln as well, two small western German towns. But the latter were terrorist acts. Pogroms with mass participation in front of the television cameras were restricted to the east of the country. A third, more harmless reaction came later: the transfiguration (dubbed»Ostalgia«) of the old GDR , i. e. not of the state itself, but of the social environments which the former state had had to leave niches for. It is reflected in a new cult for old products, a new closing off(e. g. against incomers from the west) and in votes for the PDS , the former communist party. Even though the impact of German reunification on the day-to-day life of the western Germans was restricted to marginal changes in the general economic position, there was a parallel political movement in the west of the country too, which may only have been characteristic of an intellectual minority, but which did influence the political culture of the whole of Germany. The response to reunification of western German intellectuals on the Left in particular was a fairly emphatic confirmation that the Federal Republic of Germany was founded on its ties with the West. In the field of foreign policy, the Western ties were cited as an argument against any possibility of a separate German route; but of far greater significance were the political values associated with these Western ties, which many regarded as a counterweight to the extreme nationalist undertones which could be read into the slogan shouted at eastern German demonstrations:»We are one people«(which had replaced the insubordinate»We are the people«). Just recall Habermas’s stressing of constitutional patriotism, which was now wheeled out again as the identity-forming basis of a civilized community as a counterweight to the newly respectable ethnic-nationalist basis of identity. With this – it is fair to say, late – discovery of the Federal Republic’s Western ties, the western German Left in particular(but not only the Left) endeavored to lend a more overarching dimension of a social environment to the democracy of the Federal Republic – a democracy which had previously tended to be viewed or criticized in functional terms. The sympathy of the nation with the values set out in the constitution was supposed to reflect a treasure chest of shared beliefs and traditions which represented more than a basis of republican consensus-formation legitimized by processes and outcomes, i. e. which actually constituted a social environment arching over local, origin-based, ethnic and personal ties. East and West: the Gates to Paradise Those people, still GDR citizens, who streamed into the Federal Republic in 1989 in their stonewashed jeans, a fashion of yesteryear, and their cars from the year before that, presented the West Germans with part of their own past, the days of the 1950 s, when people were collectively poorer and more equal, consumer opportunities were still discoveries, abroad was a long way away and certainties had not been torn apart in the cultural storm of the 1968 generation. But the Federal Republic itself was standing on the threshold of the 1990 s, and the Golden Age of the 1950 s was no more than a distant memory. The tragedy of the citizens of the former GDR was that they gained admittance to the consumer paradise of the Federal Republic when it had long since ceased to be a paradise for many people – and that they entered it as a collective of already disadvantaged people. If there is an economic myth surrounding the foundation of the Federal Republic, it was the forty marks handed to each individual when the 92 Ehrke, Germany: United, Rich, Unhappy IPG 1/2000

monetary reform took place in 1948/49 . Of course, this did not affect the distribution of fixed assets, but it did create the impression of a largely equal start and was able to form the basis of a comparatively strong social consensus. However, this economic myth became less convincing to people as the initial situation of(apparently) equal opportunities was transformed into more manifest inequality (and thus the group of»heirs« increased in number – the West Germans enjoyed the historic privilege of being able to accumulate and hand on wealth for forty years without war or inflation). The equivalent economic myth of German reunification was the monetary reform of 1990 and the one-to-one exchange rate of the GDR mark to the D-mark, i. e. the citizens of the GDR were able to join the Federal Republic with an exchange of their assets(or at least part of their assets) from an internationally worthless to a highly valued currency. The one-to-one exchange rate created formal equality between the old and the new citizens – and sealed the fate of the GDR economy and its jobs. The citizens of the new Länder were and remain doubly disadvantaged: their accession to the Federal Republic integrated a people without heirs. And it integrated a people who had lost their source of earnings. The mass unemployment seen in the West for years(but which went hand in hand with an increase in employment until 1990 ) rolled across the east of Germany like an enormous wave. On top of the internal inequalities in the Federal Republic there came a regional imbalance in respective positions which would inevitably undermine the binding nature of the economic myth of monetary union very quickly. In addition, the effect of national reunification was socially disintegrational for various reasons. The fact that socialism had managed the economy so badly resulted in an ideological transfiguration of the market and of capitalist virtues – flexibility, risk-taking, initiative, greed. The mortally wounded socialism thus also infected its hostile brother, the Western welfare state. The ignominious collapse of socialism in Europe was not the reason why neoliberal business representatives and professors of economics merrily called for the dismantling of the welfare state, but it did assist their efforts. Quite apart from the fact that the burdens of reunification were also unfairly shared out in the west of Germany – they were mainly borne by the workers, whose insurance funds were plundered – the collapse of socialism seemed to remove an emotional barrier which, at least in the Federal Republic, had prevented over-enthusiastic public celebrations of capitalist dynamism and inequality. Following the collapse of socialism, there was a fresh wave of calls to roll up the welfare safety net. One cannot help suspecting that the reality of the welfare state in the Federal Republic, or its acceptance by the elites, was partly the result of the fact that, across the border, there was a second German state which claimed to represent a more just social system. It was as though there had been a minimum standard of living for workers in West Germany until 1989 – defined by the standard of living in the GDR , which had to be exceeded. This lower threshold had now gone. The social situation of post-reunification has prevented solidarity between the disadvantaged in the west and east of Germany. The eastern Germans define their situation less in welfare terms and more in terms of social environment: their collective background is the experience of the GDR , which no-one is entitled to comment on if he did not live there until the bitter end. These experiences cannot become part of the shared heritage of the reunited country, because they are based on a conscious self-exclusion. Disadvantage in eastern Germany is the fate of a collective; in western Germany, it is an individual problem. German Society and the Left It is one of the notorious ironies of history that it was in the 1960 s, a period of unprecedented prosperity and relative(perceived) social justice in the old Federal Republic, that a Marxist-inspired fundamental opposition emerged whose most extreme practitioners did not shrink from terrorism. The drama of the political action in the 1960 s and early 1970 s was in striking contrast to a social situation which – at least in an international and historical comparison – can be viewed as an era of harmony. Today, by contrast, genuinely left-wing positions have virtually disappeared in the far more divided German society of the late 1990 s. And the reunited Germany is a socially divided nation; the fault-lines are deeper and sharper than they were in the old Federal Republic, let alone in the failed IPG 1/2000 Ehrke, Germany: United, Rich, Unhappy 93

GDR . To summarize:( 1 ) There is an east-west conflict within the country – between a poorer east, a country without heirlooms and jobs, and a classdivided, but generally wealthier west.( 2 ) Since at least the early 1980 s there has been a process of concentration of income and property in West Germany and simultaneously( 3 ) the exclusion of an underclass of the unemployed and the working poor; this corresponds to( 4 ) the self-exclusion of the elites and( 5 ) the increasing burden on the worker(still) in regular employment who has to bear the costs of social insurance, unemployment and poverty, as well as the risks and burdens of economic restructuring. The outstanding feature in the political sphere at the end of this century is the fact that, despite the heightened»objective« social conflicts, the political Left seems to have disappeared. Trade unions and traditional social democracy have gone on the defensive. The modernizers of social democracy, using slogans like the Third Way or the New Centre, have basically given up viewing the inequalities that are now appearing again as a »political challenge«; by confirming – resignedly or cheerfully – that redistributive justice is not an issue under the given conditions, they have departed from the core of social democratic and left-wing identity. What remains is an intellectual Left of individuals inside and outside the political parties and trade unions which often tends, out of disappointment over the way the world is going, to renounce any sense of political reality. The weakness or the lack of a left-wing project reflects the peculiar lack of alternatives in the present system. Along with the socialism of the Eastern bloc, the idea that a different system than the present one is conceivable has collapsed. Criticism of capitalism seems to have been left to the Vatican and the Taliban. Francis Fukuyama, whose argument that history had come to an end was ridiculed at the time, has been proved right in a certain sense, even if the triumphant undertone with which he celebrated the victory of market economics and democracy was misplaced. It is this paralyzing lack of alternatives that makes it so difficult – even on the occasion of a new millennium – to point to prospects which are more than the continuation or acceleration of what is already in place. It is probably correct to presume that the future will bring the dissolution of protected spheres which currently still shelter us to some extent from the impositions of the market. In the past, we made a large number of implicit economic decisions, without always having to act as calculating market actors. The choice of our place of residence, our life-long partner, our way of life, our circle of friends, the number of children, etc. is, at least in the majority of cases, not yet determined solely by economic factors – but an increasingly unrestricted market could force us to become the all-embracing and exclusive economic actors which we theoretically always were. This would mean that no space and time would remain in which social identities could be formed to be passed on to the next generation. What we currently interpret as manifestations of the disappearance of social cohesion might then prove not to be a deviation from the norm(whatever that norm might be), but to be the norm itself. The»terror of economics« is not that we have to make a large number of decisions in terms of costs and benefits, but that economics is threatening to force its logic on society as a whole. Under these conditions, a political project of the Left which endeavored to retain or even expand spheres offering protection from the market would gain plausibility. In the past, the Left perceived itself as the avant-garde of modernization. Therefore its ambiguous perception of capitalism, which was fundamentally rejected, but at the same time, because of its enormous creativity, seen as the precondition for the emergence of a socialist society. This historical and philosophical optimism has been disproved by the 20 th century – by two world wars, the denial of civilization in the holocaust, and the miserable failure of socialism in the Eastern bloc. Today, it would be right to take the view that the ability of people to live together is a finite resource – and therefore one which must be conserved – and to make it into a political program. ̇ 94 Ehrke, Germany: United, Rich, Unhappy IPG 1/2000

CHARLES F. SABEL USA: Economic Revival and the Prospect of Democratic Renewal T he US begins the millennium looking for all the world like a New Rome, only grander and more authoritative than the original: Since the fall of the Berlin Wall, no»limes« marks limits of its power. Nations that once stood hostile across the fortified line now jostle for a place in the American protectorate, mingling their armies with NATO ’s legions and subjecting their commerce to the lex mercantorum of the World Trade Organization. Along with the boundless might of empire, it seems, goes an imperious adulation of material success, and a corresponding corruption of the Republican virtues that once placed respect for the common good and the fate of fellow citizens before selfish satisfactions. Historical magnitude aside, the current US triumphs are surprising for two reasons. The first, obvious to all, has to do with their sheer economic improbability; the second, just now being remarked among Americans, concerns the possibility that these successes bear with them the seeds of a democratic renewal. We all know the story of the economic turnaround: A decade and a half ago the US economy, and political influence born of it, seemed fragile and spent. Giant firms that pioneered and perfected the methods of mass production during the last century were prisoners of earlier successes. The techniques that won mastery of steadily growing markets for standardized goods obstructed adjustment to a volatile world economy rewarding speed in design and flexibility in production. For Japan, Western Europe and the developing economies, with less experience of mass production and more of serving niche markets, and condemned to flexibility by the need to rebuild again and again to catch the US , leadership was only a matter of time. The ancient story of the decline of empires from Rome to Great Britain, reveling in the enjoyment of dominions that sap their strength, was inexorably to be re-enacted. Today, of course, in many industries the former challengers fight to stay competitive, let alone dominant, and in such advanced sectors as microprocessor design, network architectures, software engineering, and biotechnology, US firms dispute questions of leadership largely among themselves. For the economy as a whole these successes and more like them have brought sustained growth, near full employment, the lowest welfare rolls in three decades, and nearly 20 million new jobs in the last TK years alone. The striking increases in disparities in wealth and income accompanying all this seem broadly tolerable so long as they continue to promise something for everyone now and more eventually for all. The common explanation, given the patina of dogma by ceaseless repetition, attributes the resurgence of the US economy to the revival of individualism under the aegis of President Reagan’s neo-liberal revolution. Freed of the ties of fellowship, and in particular the bonds of trade unions and the welfare state, entrepreneurial spirits remake the economy, scarcely aware they are overturning entrenched institutions as they seize new opportunities. Such is the hold of this interpretation that European Social Democrats often despair that US success issues from and advances a worldwide integration of markets and their insurgence against politics – globalization. Caught in the maelstrom of inevitability, the European Union will have to sacrifice its ideals of social solidarity to preserve its standard of living. As this analysis suggests that there are hard choices to be made, but nothing of principle to discuss, it is perhaps not surprising that exchanges among European Social Democrats and their interlocutors on this side of the Atlantic nowadays often stop at mutual consolation. The reality of the US revival is more complex. In adapting and innovating upon Japanese leanproduction methods(originally conceived themIPG 1/2000 Sabel, USA: Prospect of Democratic Renewal 95

selves as an improvement of US mass-production techniques) US managers and workers are creating new forms of cooperation as well as competition. Work teams – often with broad discretion over how to do their jobs and sometimes with the power to set goals as well – flourish within firms; project teams and joint ventures link companies more intimately than before. It remains to be seen how and in what measure this new cooperation results in security for individuals, families, and communities. That it will produce none is hardly likely, except on the off chance that the only workable forms of workplace-related solidarity are the ones we know from the heyday of the welfare state. The Prospect of Democratic Renewal But the complex interplay of cooperation and competition in the US economy and the emergent solidarities within and among firms that it may produce are a story for another day. Here the focus will be on the second surprising aspect of the US revival: the possibility that a decade from now the most noteworthy feature of this epoch will not be the improbability of the economic turnaround on which it was based, but the breath and depth of the renewal of democracy which it made possible. The mere prospect carries us beyond the shadow of Rome. Imperial Rome, like many empires, survived long enough for several revivals. But none restored and renewed its original democracy.(To gauge how unrecognizably Roman history would have been transformed by such a renewal, try to imagine what would have happened if the Gracchi had restored to the citizens the public lands expropriated by the aristocracy, instead of being clubbed to death for urging redistribution.) By this or any other standard, renewal of democracy in the US would be one for the history books. Democratic renewal? How can anyone make such a claim when, for starters, US party politics is as paralyzed and corrupt as advertised? In electing a Republican majority to Congress, the voters rejected the Clinton Administration’s vision of a second New Deal extending the welfare state (initially by a vast reform of health insurance.) In re-electing Clinton as President, the voters rejected the Republican’s bluntly named Contract with America, which repudiated the modern administrative state in favor of a return to laissez faire. Their core constituencies and the principles they stand for thus disavowed, leading candidates for both parties began to run against their traditional party platforms, lunging to occupy a neutral center where partisanship might claim to yield to sober dedication to the nation’s problems: the decline of the school system, the severe strains on the family, the causes and consequences of criminality, and so on. With little to distinguish what they say, the candidates ingratiate themselves by the art of their delivery and the appeal of their persons, spending millions on electoral campaigns that make them out to be natural captains of the people while vilifying their opponents as cunning and corrupt politicians. The open scandal, of course, is that the hundreds of millions of corrupting dollars flowing into political campaigns and party organizations are(nearly all) legal under the arcana of US electoral law. Worse yet, the vagaries of constitutional jurisprudence and the self-serving reflexes of the powerful cartel of political incumbents of all parties make change unlikely. Nor are the courts nearly as disposed as they on occasion have been to animate our democracy when the political system is unable to dis-entrench interests and institutions that stifle it. In the 1950 s and 60 s they famously attacked racial segregation in schools and elsewhere; in the 1970 s they helped open to the public the iron triangles of regulated interest, regulatory agency and congressional oversight committee. Part of their current inaction is owed to conservative appointments to the bench, part to the entanglements of rights jurisprudence itself.(Decisions protecting certain campaign spending as an expression of free speech, for instance, make the Court an obstacle rather than an agent of electoral-finance reform.) Much is fairly explained as the self-protective caution of a an institution that has learned through the mixed results of earlier activism both the limits of its own powers to direct reform and the dangers to itself of commanding what it cannot direct. But the result is that the Supreme Court mostly ratifies the politicians’ stalemate by inaction of its own.(State courts are in some regards a different matter, as we will note below.) But still and all, yes, democratic renewal. Beyond the political stagnation and judicial quies96 Sabel, USA: Prospect of Democratic Renewal IPG 1/2000

cence at the center there are vast changes in public institutions. After decades of querulous tinkering, the public schools in cities as large as Chicago and states as large as Texas are being successfully reorganized. Complex habitats are being restored and the»non-point-source« effluents that run off from countless farms and households to poison vast stretches of coastline are being reduced. Substance abusers are getting treatment tailored to the specifics of their life situations, and policing increasingly links the effort to stop crime to larger projects of community reconstruction. None of these changes, and many more like them, result from the mobilization of political parties in classic legislative battles or from the mobilization of citizens in traditional social movements. None subordinates the authority of the government to the values of particular communities or makes it hostage to the purely voluntary decision of private parties to regulate themselves. Yet all are the product of extensive involvement of concerned publics, and all reorder the workings of government and open manifold chances for participating in its continuing redirection. Together these changes are the sign and building blocks of a new kind of directly deliberative democracy that involves citizens in the determination of changes that affect them, changing in turn their preferences and their understanding of what we can do together. Or so I will argue in what follows. The body of this essay presents a sufficiently detailed account of two of the reforms in progress to lend initial plausibility to an apparently outlandish thesis. One is the reform of public schools, with the focus on Chicago; the other is the transformation of environmental regulation reflected especially in Habitat Conservation Plans( HCP s) for ecosystem restoration. In both cases, after decades of skirmishing, inveterate antagonists (school administrators, teachers and parents in the one case, developers and environmental groups in the other) exhaust confidence in their respective strategies and relax doctrinal commitments (stricter environmental laws and enforcement as against deregulation, more resources for the public schools as against privatization). Facing urgent problems(crumbling schools and disastrous dropout rates, vanishing species and fear for human health) the actors agree to explore new solutions, without agreeing to put aside differences in values that originally divided them(whether government is in principle good or bad, preservation of the environment a sacred trust or a luxury for the rich). As they institutionalize their experimental efforts they stumble on architecturally similar arrangements that permit the piecemeal re-elaboration of complex wholes through the reconsideration of their parts: Local actors(individual schools and the parents, teachers and students that constitute them, local governments, developers, environmental groups and the ecosystem monitoring institutions they create) are given substantial liberty to set goals for improvement and the means for accomplishing it. In return they must propose measures for assessing their progress and provide rich information on their own performance. The center(the municipal or state school department, or the Department of the Interior) pools the information provided by local actors and ranks them according to(periodically revised) performance measures that give substance to standards of excellence and definitions of inadequacy. In the best cases the center provides assistance to those that are not improving as quickly as their likes. At all events it eventually sanctions those whose continuing failure seems incorrigible. The system increases local innovation by allowing those on the spot to test, within broad limits, their assumptions of what works best, while making the exercise of local discretion sufficiently transparent to assure public accountability and to move each locale to learn from the experiences of the others, and the polity as a whole to draw lessons from the experience of all. Thus is created a framework for establishing what is currently feasible, how those who fall short can work to achieve it, and those doing well can do better still. These arrangements allow the parties to get a grip, in a way to be specified in a moment, on problems whose complexity once seemed to put them beyond the reach of public action. They create new possibilities for citizens to steer public institutions that affect their vital interests by involving them in forms of problem solving that unsettle encrusted beliefs. Because this architecture takes its own starting points as arbitrary, and corrects its assumptions in the light of the results that they produce, I will call it experimentalist. It stands in a line with and in some cases has been directly influenced by the pragmatism of Pierce and IPG 1/2000 Sabel, USA: Prospect of Democratic Renewal 97

Dewey. Together the new forms of experimentalist problem solving suggest the feasibility of a shift of democracy – incremental but cumulatively transformative – from representative to direct and from aggregative to deliberative. Indeed we will see that these successes raise pressing questions about the relation between the new institutional armature and the traditional frame of democratic representation. To get some purchase on these last, large questions, and to sharpen the notion of a directly deliberative renewal of democracy, the conclusion gives two general and complementary interpretations of the reforms in course: as a Neo-Madisonian re-elaboration of US constitutionalism and as a means to develop supranational forms of solidarity in response to globalization. I do not of course mean to suggest that the reforms in progress have already accomplished all that might reasonably be attempted in their name, or that some inexorable logic of social development assures they will. The purpose is rather to illustrate how, imperial appearances notwithstanding, current US experience grows from and can contribute to that popular re-imagining of democratic self-determination begun with the rebirth of the ancient freedoms in European cities, brought to American shores by the British colonists, and ever since the bond of political discourse on both sides of the Atlantic. More than an Example, Less than a Demonstration: Two Cases of Directly Deliberative Democracy School Reform in Chicago For 30 years educational reform in the United States has been dominated by debate between proponents of the traditional model of locally financed and governed, but bureaucratically organized public schools and opponents who would replace public schools with privately controlled ones. Advocates of the traditional system see the open insufficiencies of public schools, particularly in the inner cities, as the result of the partly deliberate, partly inadvertent misallocation of resources: Because of the legacies of racism, and the intrinsically limited capacities for self-financing of poor communities, schools for disadvantaged lack the wherewithal to provide an adequate education. They tried to compel states or large metropolitan school systems to redistribute students from minority to non-minority schools, to redistribute resources from rich to poor schools, or to compensate students for the states’ or districts’ malpractice in failing to educate them. Advocates of private schools hold public control of schools – like public control of nearly any institution – to be itself a fundamental and irreducible source of inefficiency. Because of the opportunities that public control inherently provides for self-dealing by entrenched interests, the public schools on this view waste the resources they have, and would only be encouraged in their profligacy by the provision of more. The remedy from this point of view is privatization. Broadened educational markets might be achieved in a roundabout way by paying private management companies a fee to operate public schools, but only if certain performance goals are met. Or tax funds could be used to subsidize the tuition payments of pupils who could not otherwise afford the costs of private and parochial schools. But even as these ritual exchanges preoccupy public discussion of education reform, each side’s partial successes in achieving its goals have cast substantial doubt on the fundamental assumptions of its larger program. The progress of new reform movements of a type foreseen by neither camp, and inexplicable in their contrary categories, has reinforced the doubts raised by these discrediting successes. For advocates of public schooling, the disconcerting victories have come primarily in the form of court desegregation orders transferring minority children to nonminority schools, or redistributing resources to poor and minority schools. But transfers of children have proven too politically explosive to survive, both because majority families abandon public schools unless they can choose ones that draw pupils like their own, and minorities refuse to accept the idea that their children can progress only in proximity to white children, at the cost of their cultural cohesion. Transfers of funds, to the extent they are any less politically explosive, have seldom, if ever, produced anything like the promised benefits to improved student performance. The privatizers’ discomfit results from the repeated failure of school-management companies 98 Sabel, USA: Prospect of Democratic Renewal IPG 1/2000

to meet the goals agreed in their contracts with public authorities, and of advocates of privatized education to provide compelling evidence that private schools can outperform public institutions without handpicking their students. On top of these complementary reverses, and overtrumping the sense of limitation and failure that they might by themselves suggest, are several distinct but related clusters of promising innovations in school reform – all improbable, and evidently contradictory, given expectations framed by the dominant debate. One such cluster is the movement to set standards for school performance at the state and federal level, and to rank schools accordingly. A second and closely related movement is to establish procedures by which schools that fail repeatedly to meet the prevailing standard, or to show signs of increasing ability eventually to do so, are removed from local control and placed in receivership under the authority of some higher entity until they can demonstrate the capacity for autonomous reform. A third cluster of reforms, apparently pulling in the opposite direction, devolves responsibility for governing schools from state commissioners, district superintendents, and school principals to school-based management teams of parents, students, teachers, and business and community leaders. Running still more in the direction of local option and away from standardization is a cluster of efforts to expand the choices available to public-school students by allowing for the creation within existing districts of charter schools offering specialized curricula or innovative teaching methods(language immersion, theater, situated or project-based learning), and allowing students to choose to attend one of these rather than accept assignment by place of residency. All of these movements dis-entrench established interests and raise the accountability of school officials by exposing poor performance to public scrutiny and criticism(in the case of rankings) or corrective action by public institutions(receivership) or users(parents taking over the management of their schools, or sending their children to charter schools with good reputations as opposed to local schools with bad ones). They thus effect changes in the model of public schooling that its advocates have often suggested were unnecessary, and that critics of the model have held to be impossible. The enthusiasm that these and related measures are currently winning from educational professionals, school administrators, legislators, courts, federal regulatory authorities, and involved citizens – many of them long partisans of one or another of the familiar positions – is thus a measure of the extent to which the assumptions embedded in current debate divert reform effort from the actual course and possibilities of renewal of the schools. School decentralization in Chicago in the last decade suggests how these movements could cohere into an effective and directly deliberative model of school governance. The core idea, anticipated above, is to give schools units districts autonomy to develop and act on reform plans, on condition that they provide information on performance sufficiently rich to allow evaluation of their efforts by higher level(municipal, State, federal) entities. This division of labor allows discovery of workable reforms and transition paths to them, as well as improvement of the capacity to measure performance, for example through still better standards. Standards in turn allow courts and superintending agencies to make judgments about the acceptability of educational outcomes – what results schools can be expected to produce – that reflect an informed consensus of possibilities, not the idiosyncratic expectations of particular judges or administrators. Likewise, the demonstration of workable reforms and transition paths allows for credible(because empirically defensible) judgments of how quickly failing schools can be expected to correct shortfalls in performance. Given local experimentation and information pooling, outside officials in this revised setting – courts included – can help coordinate a process of reform that, unaided, overwhelms them. The Chicago reforms in particular compel attention for three reasons. First, their scale and complexity makes them a microcosm of the changes that could be scaled up to embrace schooling in the nation as a whole: Although the decentralization movement is largely municipal, concerning first and foremost the 560 elementary(K– 8 ) and high( 9–12 ) schools in the city limits and district authorities that supervise them, key aspects of the new relations between local schools and superintending center established in Chicago could be the model, in a fully fledged experimentalist IPG 1/2000 Sabel, USA: Prospect of Democratic Renewal 99

system, for relations between states and their school districts, or between the federal government and states in some circumstances and school districts in others. Second, the progress of reform in Chicago manifests basic features of the process by which reform is advancing in the nation at large. Not that reforms in Chicago have followed a sequence of steps or stages that must be repeated if efforts at change are to succeed elsewhere, or that reform there enacted a concept of renovation whose outlines were clear at the outset. On the contrary: Reform in Chicago shows that it is possible to advance by deliberately disruptive half measures or bootstrapping: taking a step that both loosens the grip of the old system and prompts an exploration of alternatives, from which emerges a next step that does the same. Thus school reform in Chicago, as in the nation, has been deliberate but not planned. The protagonists had good reasons for their actions every step of the way, yet came to understand the architecture of their new system only as they advanced quite far in its construction. Above all, they persistently tied to escape the apparently inevitable choice between bureaucratic centralization and market-mimicking decentralization until – by innovations that were unanticipated until accomplished – they succeeded. Finally, the Chicago reforms are exemplary in their results so far. They demonstrate that large school systems can be made manageable in the sense that particular schools can say what they intend to do by way of reforms, and then actually do what they intend(or be held to account if they do not). The story of decentralization of the Chicago schools can be divided into three periods, of which the first and longest, stretching from the early 1960 s through the mid 1980 s, is marked by institutional inertia, punctuated by increasingly urgent and broader based criticisms of centralized administration along with more and more detailed proposals to reform it. A study commissioned by the school board in 1963 found that major reform of central procedures would be required to make even modest local reform possible. In 1981 another report repeated the core elements of the familiar objections to centralization, and proposed 253 specific measures as correctives. Six years later a follow-up study found that the most important, decentralizing recommendations had not been implemented. By then, however, school reform in general, and decentralization in particular were taking on the trappings of a social movement that included, besides representatives of business, purely local groupings focused on problems in particular schools, broadly groups, such as Designs for Change, that arti-culated detailed programs for decentralizing authority to local school councils, and built networks of supporters in dozens of schools through discussion of the ideas. The second phase of reform, running from 1987 through 1996 , produced a first, deeply disruptive break with the old system through what seemed at the time a radical, but still largely conventional, form of decentralization. The immediate impetus to change was a teachers’ strike – the ninth in the preceding nineteen school years. To the broad public interested in school reform and frustrated at the meager results, the logjam came to symbolize the paralyzing self-absorption of the system as a whole and seemed to authorize, indeed require, decisive engagement by wider circles. The result was an alliance between Designs for Change and reformers in the business community in favor of state legislation providing for site-based governance: Each school in the Chicago system was to be governed by an elected local school council( LSC ) composed, for elementary schools, of six parents, two teachers, two community members, and the principal. High school LSC s were to add a twelfth, student, member. The LSC s were given the power to hire and fire the principal, prepare the budget, and develop comprehensive three-year school improvement plans. As part of the compromise with business interests, proponents of decentral-ization agreed to accept system-wide monitoring of results, and a central office was created to this end. Early results were mixed: Some school councils made wise use of their powers, others did not. There were cases of corruption. The actuality of decentralization burnished again the virtues of centralized administration. The third and decisive phase in the development of reform came in 1995 , with the passage of further legislation that clarified the relation between local and central governance institutions and finally made manifest the novel division of labor emerging between them. The new law simul100 Sabel, USA: Prospect of Democratic Renewal IPG 1/2000

taneously increased the powers and capacities of local school councils to pursue their own course of action, and the powers of the central office to intervene in case the results of local decisions are unsatisfactory. For example, to increase local autonomy and capacity, monies previously passed from the central office to the schools for use for specific purposes – such as the construction of playgrounds – would now be available to them as block grants to be spent as changing local circumstances suggested. Determination of class size and the schedule of the academic year were excluded as subjects of central bargaining between the Chicago public schools and the teachers union, and thus left to local negotiation. The law required additional training in the technicalities of school budgets, in the selection of principals, and in the preparation of school improvement plans. Funds for the additional training are to be provided by the central office. To increase the accountability of local schools the law authorized the central authority to intensify scrutiny of poorly performing units – those where fewer than fifteen percent of the students tested met national standards – on probation or remediation lists. Listed schools would be inspected by an»intervention team« that advised the LSC and school staff on instructional, administrative and governance matters. A brief canvass of the LSC s and central intervention teams in practice suggests that the autonomy of the former is broad enough to allow fundamental reorganization of local school programs, while the remedial capacities of the latter are sufficient to establish accountability and – just as important – are exercised in a way that is unlikely to provoke a reversion to the habits of centralized control either at the school level or above. Thus, in their three-year school improvement plans the LSC s can, as a matter of course, propose specialized programs in subject areas such as dance or business, as well as programs for the introduction of innovative methods of teaching particular disciplines, such as mathematics, or new, projectbased, collaborative pedagogies. All of these, of course, require reorganizations of the school day, budget reallocations, and re-disposition of staff that were nearly inconceivable under the previous system. By the same plans the LSC s can as well propose, and obtain financing for, construction projects that facilitate curricular reforms. At the most ambitious, an LSC can undertake a comprehensive reorientation of the school and its methods that puts learning at the service of a social project and vice versa. An example is the rededication, at the urging of an LSC , of the public school under its control as an academy teaching an Afro-centric curriculum by drill methods(Direct Instruction) thought by the principal and the LSC (but only a small minority of education experts) to be especially suited to the needs of the disadvantaged student population. So far, indeed, reviewers from the central office have questioned school improvement plans because of the imprecision of the administrative or budgetary arrangements proposed. But no area of study or method of teaching has been ruled out of bounds. For their part, officials in what has become the new center exercise their authority so as to complement, not challenge, the autonomy of the local schools. The clearest sign of this is that even when particular schools are failing, and the prospect of their dissolution is immanent, the new center does not issue directives for reconstruction. The reaction to all but terminal failure is, rather, to intensify monitoring of the troubled facility in a way aimed to helping the local actors to formulate and enact their own plan for redress: The chief purpose of the intervention teams, for instance, is to help the LSC prepare a»remediation« plan which removes the blockages to local discussion and decision-making that prevented progress within the framework of the normal school improvement plans. Only if these turnaround plans produce no forward motion is the school finally»reconstituted,« with the requirement that teachers and the principal reapply for jobs. This means that the intervention consists far more in analyzing with the local participants the causes of their past difficulties than proposing, let alone imposing, concrete measures for reorganization. Cumulatively this means that there is no centrally approved plan for the reorganization of distressed schools, and hence no general document that failing, or potentially failing, schools can adopt in the hopes of immunizing themselves, through conformance to rules, against the consequences of poor performance. Accountability in the form of remediation plans and, eventually, reconstitution, does not, in other words, plant the seeds of recentralization. IPG 1/2000 Sabel, USA: Prospect of Democratic Renewal 101

Given that the core elements of the division of labor between local schools and new center were fixed only in 1996 , it is plainly too early to draw a comprehensive balance of effects of decentralization in the Chicago public school system. The institutional machinery appears to work: One crude measure of the interest and participation of local parents in school reform is that elections to LSC s are orderly and attract competent candidates in sufficient numbers. Surprisingly(given the expectation that institutional performance correlates with the resource endowments of the participating community), poor communities have been able to make as good use of the new possibilities for local control as better off ones: Studies that rank LSC s by the effectiveness of their use of school improvement plans find that the best performers are as likely to be located in poor catchment areas as middle class or rich ones. Test scores are rising, but not, so far, in a pattern that can be connected to the effects of decentralization. The one incontestable achievement so far is the restoration of manageability of the local schools. Reform plans are being made and enacted. Manageability is not, to be sure, a sufficient condition for effective reform. But it is just as surely a necessary condition. In making the schools manageable, therefore, Chicago decentralization creates a foundation on which further reform can be built, and solves a governance problem that seem intractable to our institutions – courts and federal authorities above all. A more complete account would have to be at once more expansive and more cautious: It would have to show how many aspects of the Chicago innovations are being emulated or elaborated independently in other large cities: Memphis, Tennessee, for example, where the municipal school district obliges local schools to begin reform by choosing as a reference point for their own efforts any of some 20 well elaborated models of school reorganization, and then adjusting the chosen schematic to local needs. A fuller account would have to show as well how states such as Texas, Kentucky, and Florida are developing elaborate institutions for assessing performance of schools and pupils, and how state courts – often relying on the state’s obligation under its own constitution to provide pupils with an»adequate« education – are using these institutions to define the burdens they place on public authorities. But the fuller account would have to be more cautious as well, underscoring the ways that old antagonisms – between, say public-school advocates and privatizers – can be fought out in new settings: By making standard tests sufficiently demanding, failure a bar to promotion and graduation, and refusing to provide aid to students who fail or their schools, opponents of public education can precipitate an immediate crisis of the schools, and hope that the privatization movement profits from the resulting frustration. Such may be the strategy of several conservative appointees to the Massachusetts school commission, for instance. But while it is still possible to revive the old conflicts, it takes increasingly unlikely alignment of the political stars to do so. That is itself a crude measure of the extensive change already accomplished. This same measure yields a similar result when applied to changes in environmental regulation, to which we turn next. Habitat Conservation Plans and the Re-Orientation of Environmental Regulation Environmental regulation, too, in the United States is rapidly shifting toward a new performance-based architecture that promises to be at once more effective and flexible than current arrangements, yet also more democratic. As in the case of schooling the emergent regime moves away from centralized, bureaucratic direction in search of novel governance mechanisms that aim to combine the virtues of localism, decentralization, and direct citizen participation with the discipline of broader coordination, transparency, and public account-ability. One example is the governance regime of the Chesapeake Bay, the largest estuarine system in the US . At the center of this regime is the Chesapeake Bay Commission, representing and answering to the states of Maryland, Pennsylvania, and Virginia, which lie on the Bay. The regime’s local units consist of entities like tributary teams: groups of neighbors living on the same water course who together monitor and plan to reduce the levels of effluents they expel into the Bay. The Commission oversees a web of institutions that pool local monitoring into hydro102 Sabel, USA: Prospect of Democratic Renewal IPG 1/2000

logical models of the Bay, and using these creates framework rules for the next round of monitoring and effluent reduction. Another example is the toxics use reduction regime in Massachusetts. The local units are firms, which, acting often through pro-ject teams composed of engineers, managers and production workers, are required to give an extensive account of amounts of listed toxic substances they use as inputs, and the proportions in which these starting materials are transformed into products or result in waste that is captured for secure storage or simply spilled into the environment. In addition, firms must formulate(but are not obligated to execute) plans for the reduction of the toxics they use or produce. Again a network of public institutions pools the results and uses the pooled knowledge to help firms to accomplish and eventually redefine the goals they set. None of these programs should be confused with mere voluntarism, understood as the abdication of public authority and responsibility to private actors. All penalize non-compliance with reporting obligations. Most operate against the backdrop of minimum standards for, say, clean water, as defined by traditional regulatory legislation, although, as we will see, the operation of the new architecture is transforming the meaning of the background rules. Finally, while all the programs taken together are recognized as a new model of environmentalism, none is itself a fully formed prototype of the new regime, equally adept at local monitoring and central pooling. For our purposes the most illuminating of the new environmental programs is the system of habitat restoration emerging in Habitat Conservation Plans( HCP s). For one thing, the evolution of the HCP s clearly demonstrates the insufficiencies of the familiar form of regulation and the possibilities of the new. For another, the insufficiencies of the current HCP s suggest the need and possibility of reshaping the institutions of representative democracy to accommodate public action by direct deliberation. HCP s are the descendents of one of the most famous pieces of the centralized or commandand-control legislation that defined early environmentalism in the US and elsewhere: the Endangered Species Act( ESA ). Section 9 of the ESA prohibits the»taking« of listed wildlife species.»Take« includes both direct injury and habitat modification that»kills or injures wildlife by significantly impairing essential behavior patterns, including breeding, feeding or sheltering.« Like commandand-control legislation in general, ESA regulates too much and too little. It regulates too little because it provides next to no protection for species in the fragile state when they are not yet unambiguously in danger of extinction, but when the circumstances endangering them are still fluid enough to be undone without enormous exertion. It regulates too much because once a species is in danger of extinction, it stops additional harm by direct human intervention, but says nothing about how to restore the habitat so as to prevent the damage already done from finally extinguishing the species. Because of these limits the law was for a long time erratically applied. When it was, landowners, industries, and communities unsurprisingly complained that they were unfairly singled out under a harsh and arbitrary rule of dubious benefit to the protected species. In 1982 , Congress responded by authorizing the issuance of permits to»take« listed species when taking is»incidental to, and not the purpose of« an otherwise lawful activity. To secure a permit, the applicant must produce an HCP and demonstrate that the associated take will not appreciably reduce the likelihood of the species’ survival and recovery. Little use was made of the exemption until Bruce Babbitt’s appointment as Secretary of the Interior in 1993 under the Clinton Administration. Babbitt and his staff saw the HCP process as a way to reconcile development and ecosystem protection. Opportunities to demonstrate the workability of this approach arose in San Diego and Orange Counties, where urban sprawl endangered species like the California gnatcatcher songbird by encroaching on its coastal sage scrub ecosystem. When the gnatcatcher was proposed for listing under the Endangered Species Act, development interests were so alarmed at the prospect of a Section 9 ’s prohibition against»taking« that they were willing to entertain almost any alternative to ESA listing. Under the auspices of the California Natural Communities Conservation Planning Act( NCCP ) and Federal HCP provisions, landowners, state and local officials, conservationists, and other parties negotiated the first of a new generation of participatory and performance-based integrated, multiIPG 1/2000 Sabel, USA: Prospect of Democratic Renewal 103

species, regional HCP s in San Diego, Orange, and Riverside Counties. The innovation spread rapidly. By April 1999 , 254 Plans – regulating more than 11 million acres – had been approved and 200 more were in various stages of development. The Plans obligate landowners to dedicate large blocs of land for exclusive use as habitat reserves for unlisted as well as listed species and restrict development in adjacent buffer zones. They also specify biological and environmental monitoring regimes, governance institutions, and funding mechanisms as well as a range of»adaptive management« measures that allow adjustments based on the results of monitoring, new scientific information, and changes in conditions. In return, landowners receive»incidental take« permits to develop remaining lands in accordance with the overall plan. The agreements are controversial among environmentalists, some of whom prefer strict application of Section 9 , and among landowners and developers, some of whom see the HCP process as legalized extortion. But many leading environmentalists, landowners, public officials, and scientists contend that, on the whole, these agreements produce more, better, and more sophisticated ecosystem management regimes than would emerge from even the strictest application of Section 9 . Increasingly, HCP s are formulated by diverse affected parties and move beyond basic land use planning approaches to embrace water quality and stream flow measures, ecosystem restoration projects, forestry and agricultural»best management practices,« and a variety of other implementation measures. But the Southern California successes are slow to diffuse to all HCP s because the emergent nationwide HCP regime still does poorly at pooling the information generated by local projects or at systematically learning from successes and failures. The result is nearly unsupervised local autonomy with correspondingly wide variations in the performance of HCP s from one place to another. Thus local circumstance, seldom corrected by national discipline, determines whether an HCP monitors its progress well or poorly, or whether its decision-making is accessible not only to local dealmakers, but also to independent scientists, conservationists, and generally informed citizens. Often, in fact, HCP s amount to an agreement between a permit seeker and a Service field agent. Where the experience of the Chesapeake tributary teams shows that open participation and good science may be mutually reinforcing, this kind of involution can lead to self-deluding celebrations of expert powers and so to underestimation of the combined poli-tical, scientific, and practical complexity of large-scale ecosystem management. At the worst it can undermine the democratic legitimacy of HCP s by transforming them into unprincipled backroom deals between regulators and the regulated. In response to such concerns, two measures – a new Fish and Wildlife Service guidance and the Endangered Species Recovery Act of 1999 (the »Miller Bill«) – have been proposed to create a minimal informational infrastructure for the coordination of HCP s, and thereby to improve performance of individual plans with respect to monitoring and public participation. As concerns monitoring, the guidance directs the Service to create a database that tracks basic plan features such as permit duration, acreage covered, species and habitat details, authorized take, and permitted activity. Similarly, under the Miller Bill, permit holders would be required to report publicly on actions taken in accordance with the plan, the status of jeopardized species, and progress toward objective, measurable biological goals. The Secretary would be required to report on the implementation and quantitative biological progress of each plan every three years. As concerns participation, the Fish and Wildlife Service guidance does little more than gesture at improvement. The Miller Bill goes further, instructing the Department to take steps to ensure balanced public participation in the development of large scale, multiple landowner, and multispecies plans. These concerns about the public accountability of HCP s shade into a broader concern that these designs may foster a parallel government in tension, if not outright conflict, with the established constitutional order. HCP s, by continuously reinterpreting ends in the light of new experience with means, and vice versa, combine legislative, administrative and judicial functions so as to soften those familiar rivalries between coordinate branches of government which, in the US constitutional tradition, are thought to prevent abuses of public 104 Sabel, USA: Prospect of Democratic Renewal IPG 1/2000

power. Nor are they currently subject to regular, sharply focused legislative review. Finally, since they are suffused with deep public-private collaboration along the full spectrum of regulatory action from definition of goals to selection of means and enforcement of standards, they tend to erode the sharp lines that customarily divide public regulatory authority from the sphere of private activity. The conflict between directly deliberative, problem-solving regimes and the institutions of pluralist democracy is especially visible from just outside the circle of immediate participants in experimentalist regulation. To a municipal or county official accustomed to a free hand in matters of zoning and land-use planning; to the officer of a national environmental organization, habituated to the idea that the best way to protect endangered species is from a seat at a hearing in the nation’s capital; to a legislator with independent ideas of what counts as too much or too little regulation, or too much or too little federal intrusion – to all of these, directly deliberative decision-making may sooner or later seem a circumvention of rights and prerogatives owed to them by the administrative state. From their perspective, the advocates of environmental experimentalism look suspiciously like a league of mutually protective colluders, willing to gloss over one another’s overreaching on the charitable grounds that all experiments entail mistakes or out of the cynical expectation that in case of difficulties one hand will wash the other. A way to resolve this ambiguity without sacrificing the regulatory innovations is to make reform of administrative agencies on experimentalist lines one of the conditions for the legitimate decentralization of authority to local actors. The Miller Bill suggests the elegant simplicity with which this can be done. By requiring that the Secretary of the Interior review each HCP triennially, recommend such adjustments as may be necessary, and publish an annual report on the status of all HCP s, Congress can see how well the Department is observing HCP s even as it observes how well the latter are monitoring themselves, and whether they are benefiting from national information pooling. Notice that Congress, if it passed the Miller Bill, would subtly modify both its own legislative role and that of the administrative agency. Congress’s role would shift from the familiar one of setting some relatively circumscribed public goal – protecting endangered species – and delegating responsibility for achieving it to a federal rule maker, to the novel role of authorizing and conferring pluralist political legitimacy on the constitutive framework under which citizens as local agents can experimentally determine how to pursue a presumptively broad and changing project – protecting and restoring habitats. The role of the Department of the Interior would shift from relying on its own expertise and judgment to help craft the agreements and determine their acceptability, to rigorously policing a framework within which a broad and open circle of participants, local and national, can determine for themselves how to meet the goals it sets for itself. Political Implications of Experimentalism As before, the trajectory of analysis has taken us from the breakdown of an old order housed in the familiar regulatory state, to fumbling adjustments of traditional solutions to changing circumstance, to halting elaboration of what I am calling experimentalist alternatives, and finally to realization that this alternative will entrain further changes in the background institutions that frame it. From here the way forward branches. Some readers might wonder why experimentalism emerged with particular clarity in the areas presented, and not, say, in health care or labor relation?(There are signs of a change in this direction in both; but developments in these areas have not proceeded as far as in the examples I chose, and it is certainly pertinent to ask why.) Such readers will think that the best way to learn more about experimentalism is by investigating why it emerges in some places rather than others. For other readers the cases of experimentalist success will not prompt questions of why experimentalism emerged in this or that context. Every new thing, after all, arises in some places before others. What they will find remarkable is that experimentalism could succeed at all, given the apparent intractability of the problems it addresses and the way its operation violates familiar assumptions about the impossibility of direct participation, the organizational superiority of hierarchy, IPG 1/2000 Sabel, USA: Prospect of Democratic Renewal 105

and so on. They will wonder accordingly how its success changes our sense of our possibilities for acting together through politics. Ultimately both lines of inquiry have to be pursued; indeed, insofar as they are both concerned with aspects of the generalizability of the new innovations, they converge. For now I focus on the second, because it offers two immediate gains. First, reflections on the broadly political implications of experimentalism helps connect bottomup discussion of problem solving to large current worries about the efficacy and legitimacy of modern democracies formulated in different ways at the heights of political and theoretical debate in the US and the European Union. Unless these connections are established it is easy to dismiss the reforms considered, and many others, as irrelevant to the proverbial big picture. Second, establishing these links helps in turn connect the apparently disparate US and EU debates on these themes: As we will see next, the combination of local innovation and public accountability, characteristic of experimentalism, speaks to the monitoring of public institutions emphasized in the US on the one side and to the need for social learning increasingly key to EU debates on re-imagining solidarity and justice on the other. Experimentalism as the Neo-Madisonianism It is an historical fact that in the US , innovations in democratic governance, however effective they promise to be, must be reconciled with our Madisonian tradition to be legitimate. Power in the Madisonian scheme is carefully parceled out among rival branches and levels of government. Deliberation – preference-changing reflection in the service of the public interest – is the province of a senatorial elite buffered from the immediacies of everyday concerns. The rivalry among branches and levels of government safeguards liberty by providing checks and counterweights to the excessive ambitions of any part of the machinery of government. By blurring the division of labor among the branches and levels of government and tying the ultimate resolution of large questions of policies to daily collaborative problem solving, experimentalism seems to repudiate this Madisonian legacy, perhaps putting our liberties at risk. And yet the experimentalist accountability established by problem-defining legislation and the broad grant of problem-solving authority to local entities could nonetheless be considered a neo-Madisonian generalization of the original design for three reasons. First, it too harnesses a form of competition among institutions to ensure that they all act in the public interest. Where the design of the 1787 Constitution relies on the rivalries among specified branches and levels of government, the emerging»constitution« of experimentalist institutions like HCP s combines the mechanisms of strict performance monitoring, comparative benchmarking, and the pooled experience of diverse, often rivalrous jurisdictions into an engine of accountability that disciplines state action regardless of the precise subdivisions of government. Second, instead of seeing deliberation as possible only in the exceptionable circumstances of insulated chambers, neo-Madisonianism emphasizes the capacity of practical problemsolving activity to reveal new possibilities in everyday circumstances. It thus opens the way for solutions that are as different from the vector sum of current interests as those achieved by senatorial deliberation, but sees these solutions as the result of the activity of the many, not the repose of the few. Finally, in an era in which the sub-national governments themselves have responsibilities and apparatuses larger than those of nineteenthcentury nation states, the emerging architecture of monitored local experimentation disassociates »central« and»local« from familiar jurisdictions of government, and allows their meaning to vary as problem-solving within the emergent design of coordination suggests. Like the older federalism, neo-Madisonianism lays the foundation for a resilient mutual accountability between center and locality, dispassionate expert and engaged citizen. But it makes the division of labor among territorial units the provisional and corrigible result of the work they do, not the expression of historically entrenched responsibilities. Put another way, neo-Madisonianism simultaneously de-naturalizes our frame of government – because the boundaries of mutually accountable, problemsolving units are no longer taken as given – while connecting it more directly to the surprising contingencies of citizens’ lives – because the problemsolving units are shaped and reshaped by practical 106 Sabel, USA: Prospect of Democratic Renewal IPG 1/2000

deliberation directed to uncovering and making sense of these surprises. Reconfirming and Extending Solidarity Through Collaborative Exploration Europeans, and European social democrats in particular, are likely to take all this worry about protecting the government from the people and the people from the government as a parochial affair: a legacy of the Tudor polity that the US inherited from Great Britain, and another demonstration, as though one were needed, of the American inability to understand the concerns for social and universal justice that animated the welfare state and the Enlightenment. From this point of view experimentalism, regardless of any possible fidelity to US constitutional tradition, must address two pressing problems if it is to be more than an administrative or managerial curiosity. The first has to do with solidarity. Those who press it most urgently stand in the tradition of reform tied to the social welfare state. In retrospect the success of the welfare state depended on the common ethos or ethical identity of its citizens: Only if citizens recognize one another as fundamentally alike will they agree to redistribute resources in favor of those who fair poorly in market exchanges. As heterogeneous peoples are forced to amalgamate into composite polities under the pressure of globalization, the common basis of redistributive solidarity is jeopardized. Because there is no»European« people, this worry goes, the harmonization of law that makes an efficient common market will typically lead to regulatory races to the bottom, as each national group abandons costly protective rules so domestic producers can keep up with less regulated competitors. How can experimentalism contribute to the reconstitution of solidarity under conditions of radical diversity? The second concern is with norms of justice, broadly conceived as obligations we owe our fellow human beings; those most ardent in urging it continue the Enlightenment tradition of universalizing reform. They too fear that democracy may be reduced to an economic constitution under the pressure of competition. But they also fear that any people that identifies justice with the way it lives may oppress dissidents within its midst and turn bellicose against other nations that live differently. They look instead to the capacities we share as reasonable beings or as speakers and hearers bound – as conditions of mutual intelligibility – by norms of veracity and probity that make communication itself an occasion for selfreflection. Their hope is that these capacities, shaping and reshaped by the history we make, can give rise to ties of fellowship as powerful as those rooted in sentiments of solidarity, but less easily perverted by parochialism. But the recrudescence of group conflict of many kinds and the erosion of life worlds sheltered enough from strategic market exchange to admit of self-reflective communication give pause. Perhaps even universal conceptions of justice depend on widely diffused but historically shared values? Habermas, whose life work shows how theories of the moral constraints inherent in human capabilities can guide and be guided by effectively radical democratic politics, calls this substratum»constitutional patriotism«. The worry is that the same forces undermining the ethics of national solidarity are sapping the moral capabilities as well. Can experimentalism rekindle solidarity, while connecting it to respect for broad principles of justice? To see how experimentalism responds to both these concerns – and in a way that helps resolve the tension between them – it is necessary to return to the relation between values, strategies, and programs from which experimentalism arises, and which it in turn helps make politically and institutionally tractable. Experimentalist programs, recall, emerge where actors, having lost confidence in long-standing, broad-gauge strategies(more market, more state), and without agreeing on deep values(the primacy of the individual as against the group, or vice versa), are nonetheless convinced of the need to respond to urgent problems. This condition itself bespeaks a kind of interdependence born of radical indeterminacy or complexity. If the actors had workable projects, they would act alone or in concert to realize them. Because they do not, they must collaborate with others whose orientations and general goals will differ from their own to uncover new possibilities and discover dead ends before incurring ruinous costs. In such a world,»strong« actors cannot rule out the possibility that they will come to IPG 1/2000 Sabel, USA: Prospect of Democratic Renewal 107

depend on solutions discovered by»weak« ones. Even the strongest favor some division of investigative labor to going it alone. Homogeneity is here more nearly a threat than a buttress to this solidarity of uncertainty. Experimentalist search in turn strengthens these incipient ties. It institutionalizes the commonality of initial uncertainty in the very process of creating a common language for expressing the results of joint exploration. With the articulation of this language comes deep familiarity with others that creates a kind of intimacy precisely because it facilitates surprising discoveries about oneself. Such collaborative exploration, finally, occupies a middle ground between the exfoliation of common values in the historical ethos of a nation state and the evolution or discovery of norms of universal justice through the exercise of the capabilities of reasonable, communicative beings. Unlike the first, which is a form of self-explication indifferent to alien viewpoints, the experimentalism of directly deliberative democracy invites evaluation of one’s own choices with the choices of others. Although comparison focuses on broad but concrete problems, and not explicitly on values, the result is to change the parties’ sense of possibilities in a way that cannot but change their ideas of how it is good to live, and so, indirectly, their deep criteria of evaluation. Unlike the second, this discovery procedure and the self-reflection it occasions cannot claim to be an algorithm for hitting upon(nearly) universal truths. Its promise is to spare us the parochial, not to deliver the(nearly) transcendent. To be more than a jeu d’esprit this sparest sketch of directly deliberative democracy would have to be extended in two directions. First, beginning responses to such currently pressing problems as the harmonization of the EU laws, does the emergent regime give evidence of providing a web of rules and related services that together give its citizens protections against untrammeled market operations arguably equivalent to those enjoyed under the welfare state? Second, it would have to be shown that this link or entanglement leads not to the recognition of a solidarity of sentiment, but to an institutional acknowledgement and commitment to sustain a commonality of capabilities. Of these the ability to engage, as citizens, in common forms of problem solving that underpin, and render mutually intelligible, the efforts dedicated to separate projects would be especially important. The resulting web of connections might(indeed very probably would) redistribute resources from one group to another. But redistribution would be the consequence of a solution adopted first and foremost to address broad common problems(above all, the problem of maintaining the ability to address together, as a democracy, unforeseen problems), not to correct social or economic imbalances. Standards requiring that citizens be provided with adequate levels of environmental protection, workplace health and safety, and education and vocational training, where»adequate« is continuously redefined in the light of experimental advances in the respective areas, would have this result. A look at the vast literature on EU harmonization suggests that there is quite arguably motion in this direction. In policy arenas such as health and safety, environmental regulation of products and production processes, competition policy, telecommunications standards, and others, there is no race to the bottom as feared. Are the reasons to be sought in some lucky and limited accidents of the administrative structure of the EU and member states that allow public-minded actors to prevail over selfish ones? Or, without forgetting the caprices of the Brussels bureaucracy, the limits to parliamentary supervision and the other elements of the»democratic deficit« in the EU , can it be that directly deliberative structures, analogous to those emerging in the US , are taking shape behind the screen of»comitology«? If one inchoate democratic renewal, why not two? For now all we Americans can say for sure is what we say whenever the winds of change are rising: We are not in Kansas anymore. Nor are we in Rome. Perhaps, though, we can hope that the politics of the coming decades renews the tradition of practical democratic experimentation that defines us as part of the Atlantic community, and opens that community to the world. This essay is the product of teamwork done in collaboration with Joshua Cohen, Michael Dorf, Archon Fung, Oliver Gerstenberg, Brad Karkkainen and Dara O’Rourke. ̇ 108 Sabel, USA: Prospect of Democratic Renewal IPG 1/2000

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