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?= =?utf-8?Q?=C2=A9=20Friedrich-Ebert-Stiftung?= Date: Wed, 7 May 2025 14:31:18 +0200 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----MultipartBoundary--athQi98zAkZvq7CXOFdLDvCyEjq8nC9eYERaNGcNJg----" ------MultipartBoundary--athQi98zAkZvq7CXOFdLDvCyEjq8nC9eYERaNGcNJg---- Content-Type: text/html Content-ID: Content-Transfer-Encoding: quoted-printable Content-Location: https://library.fes.de/fulltext/id/01193.htm Upholding democracy in the globalized world : three fundamental policy opti= ons / [Alfred Pfaller] - [Electronic ed.] - Bonn, [2002 - 2] Bl. =3D 20 KB, Te= xt . - (Policy information / International Policy Analysis Unit) <br>Electronic ed.: Bonn : FES Library, 2002 <br><br><font size=3D-1><i>=A9 Friedrich-Ebert-Stif= tung</i></font>
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Upholding democracy in the globalized world : three fundamental policy opti= ons / [Alfred Pfaller] - [Electronic ed.] - Bonn, [2002 - 2] Bl. =3D 20 KB, Te= xt . - (Policy information / International Policy Analysis Unit)
Demokratie erhalten in der globalisierten Welt
Electronic ed.: Bonn : FES Library, 2002

=A9 Friedrich-Ebert-Stiftung


Between t= he Dictate of World Markets and Undemocratic Global Governance

=20

The global integration of markets for goods, services and finance th= reatens to diminish the scope for democratic decision-making. If "the marke= ts" disapprove of a decision they can punish the country and its people muc= h more easily than was the case when markets could be subjected to national= rules. The decision about what is acceptable and what is not is no longer = taken by the majority of the citizens, but by those who control the product= ion apparatus: the companies (i.e. their owners or their managers). If nece= ssary, they will shift production =96 and thus the sources of income of man= y citizens =96 across to where profitability is higher. The will of the maj= ority is replaced by a sanctioning power deriving from international mobili= ty. Those who cannot move are forced to give way.

But the companies themselves are exposed to the pressures of the glo= bal markets and have to obey their "dictate". So who are the new lords to w= hom the democratic sovereign, the people, yields its decision-making power?= Ultimately, they are the consumers at home and abroad. It could be said th= at they "cast their vote" via the market =96 a different sort of democracy.= But there are two reasons why the concept of the consumer democracy does n= ot hold water. Firstly, the voting rights are weighted by purchasing power.= Secondly, the consumer is =84structurally myopic". He is not usually bothe= red about the social consequences of his choices. And if he wants to make "= social" choices, he has to go against his own direct interest in an optimal= purchase price. So giving the market power to determine developments means= relinquishing societal control over them and a priori always accepting the= cheapest "solution".=20

However, not even the global market moves in an apolitical space. It= takes up the room that is granted to it politically. When decisions= are taken on the integration of markets, common rules are always stipulate= d to =84govern" the integrated market. They determine, inter alia, the exte= nt to which the individual state may intervene on the market. There is no m= arket without a politically stipulated market regime. In this respect, gove= rnments have not relinquished control. But the powers which build the frame= work within which the market can operate and impact on society are not the = constitutionally anchored democratic decision-making processes. Instead, th= e processes involve very different majorities than those who decide within = democratically organized states. Often, a few powerful states impose their = views.

The scope for democratic decision-making is curtailed not only by gl= obal markets and their governing rules, but also by other international agr= eements which co-ordinate the actions of states and people on a transnation= al basis and thus subject them to rules. This sort of global governance is = coming to impinge on more and more aspects of life, because problems which = need supranational =96 and, in the extreme case, global =96 solutions gain = in importance.

The loss of sovereignty by the nation state in the wake of globaliza= tion represents a loss of democracy, since it shifts decisions to levels at= which the democratic sovereign, the people, has little or no say in what h= appens.


Democrati= c Globalization rather than Disintegration of Global Markets

=20

So do we simply need to accept the fact that anonymous market proces= ses, blackmailing by the internationally mobile winners of globalization, a= nd international sets of rules are increasingly depriving the people of its= democratic rights? One answer would be: the citizens will demand th= e return of the lost political power. People's desire for political self-de= termination will impose limits on globalization. Some people take comfort i= n this idea. Others find it worrying. For them, a chain reaction of protect= ionist isolation would be an economic disaster which might easily be follow= ed by political disaster. The world economic crisis of the 1930s provides t= he corresponding paradigm. So the advocates of globalization must have an i= nterest in taking the edge off the conflict between the global market and t= he democratic principle.=20

Optimists might expect that the prosperity deriving from globalizati= on is valued more highly than the loss of a few political options. Globaliz= ation would then be justified by the output (prosperity) rather than by the= input (democratic processes). To date, however, the advantages of globaliz= ation are not sufficiently manifest to exclude the danger of a general back= lash. On the contrary! But neither should those who are skeptical about glo= balization simply rely on a protectionist disintegration of the world marke= ts. The better alternative is the "democratization of globalization", the f= ormation of democratic decision-making structures for the globalizing world= . Here, progress is possible on three fronts:

  • National decisions can be made more resistant to globalization.

  • The options for partial withdrawals from globality can be e= xtended (=E0 la carte globalization).

  • Supranational democratic decision-making processes can be d= eveloped.

Advances on these three fronts would complement =96 not replace =96 one = another: they address separate aspects of the problem.=20

=20

=20


Making Na= tional Policy Decisions (World) Market-proof

=20

=20

Globalization enables the rich to escape the decisions taken by nati= onal majorities on the redistribution of wealth. The only way to stop this = is for the powerful countries to act together.=20

But there is another fear: that globalization will result in a gener= al =84race to the bottom" and will thus destroy the welfare state. This fea= r is unfounded since, if well organized, the welfare state does not represe= nt a burden in terms of international competitiveness.

The various security systems known collectively as the "welfare stat= e" imply a decision on the subdivision of the wage, not its level: p= art of the wage is available for direct individual consumption, part goes i= nto provision for old age, sickness, unemployment, invalidity. Another part= =96 by far the smallest in all welfare states =96 is used for solidarity w= ith less well-off fellow citizens. How the overall wage, the level o= f which is determined via the labor market and its negotiating structures, = is divided up between these three purposes is a political decision m= ade independently of the level of the wage. If the political will is there,= it is possible to divert part even of very low average wages for welfare p= rovision and solidarity. But it is also possible to involve all citi= zens, not only those who earn a wage income, in the financing of welfare-st= ate-based provision and solidarity by means of the various taxes that they = pay into the general state budget.=20

It is important for the political question of how to divide i= ncome between free disposition, obligatory welfare provision and contributi= on to public tasks (which include solidarity with the economically weak) to= be kept separate from the economic question of what wage lev= el the market will bear. It should be clear to the citizens that welfare-st= ate protection is a matter of setting priorities, not of being able to affo= rd certain expenses. The concept of employers' welfare contributions (basic= ally a fictitious variable) tends to confuse the question of labor costs an= d the subdivision of income. And this can then mean that the costs o= f the welfare state do conflict with competitiveness.=20

All the expensive rules benefiting workers =96 holiday, parental lea= ve, etc. =96 can be expressed as a component of the effective averag= e hourly wage. Correspondingly, it is possible to take political dec= isions about them irrespective of how the country is faring in terms of int= ernational competition. There is no immanent conflict here with the interes= ts of capital and thus there are no unavoidable grounds for internationally= mobile companies to "outvote" the will of the majority.=20

The same goes for a large part of the costs to preserve the environm= ent. If the citizens feel it is worth spending something on the environment= , they can do so by using tax-payers' money to subsidize the production cos= ts down to the level of the less "environmentally aware" world market, and/= or pay the higher prices for "cleaner" products as consumers (with a corres= ponding levy along the lines of value-added tax being imposed on imports). = Of course, they can also permit particularly highly polluting industry to s= hift its production abroad.=20

As a footnote, it is worth saying that intact social security system= s increase people's readiness to face up to the unpredictabilities of the o= pen world market. They protect globalization from a citizens' revolt.=20


Providing= for Exit Options

International market regimes (in particular the world trading system= ) oblige the individual country to accept market results which do not alway= s correspond to the will of its citizens. However, each international marke= t regime in principle provides an exit option. No country has to tak= e part. Rather, the unrestricted right to intervene politically in the mark= et has been deliberately relinquished in order to safeguard the long-term a= nd comprehensive advantages of a universal and reliable market system. The = disadvantages of staying outside are regarded as worse than the restriction= on scope for policy-making under the discipline required by the regime.=20

However, this in itself is not enough. From the vantage point of the= regime and all its beneficiaries, it is necessary to ask whether the disci= pline may not be too strict, in order to prevent a revolt by the national e= lectorates/parliaments/interest groups in the long term. From the vantage p= oint of the individual countries and their citizens, it is necessary to ask= whether the sanctions incurred by breaching the discipline cannot perhaps = be reduced in order to enable greater scope for policy-making. The first va= ntage point is concerned with the future of globalization, and the second w= ith democracy in the globalized world.

The extent to which breaches of discipline are sanctioned depends pa= rtly on how the regime is shaped. For example, it could be left up to the m= ember states to decide the extent to which they wish to subject them= selves to the regime. The privileges offered by the regime to its members w= ould then have to be graduated correspondingly. A relatively flexible regim= e which offers options for partial withdrawal impinges less on the scope fo= r domestic democratic decision-making. It may be that such flexibility can = increase public acceptance of relatively open global markets.

Beyond that, there is the question of how immune a country is to the= sanctions imposed by the regime =96 in the extreme case, exclusion from th= e regime. Here, large countries (the US!) are generally at an advantage. Si= nce they are less dependent on the world market, trade disadvantages play l= ess of a role in the cost-benefit comparison behind domestic decision-makin= g than in the case of small countries which are highly dependent on the wor= ld market. Viewed in these terms, the association of states to form larger = state units (the EU) would be one way to maintain scope for democratic deci= sion-making in the globalized world.=20

Whether or not this makes economic sense is another question. The ca= ll for the widening/safeguarding of scope for democratic decisions can be s= et against the argument that enforced discipline from the market ensures th= e highest level of prosperity in the long term. The related political posit= ion requires the self-disciplining of government by subordination to a =96 = good =96 market regime. But anyone maintaining this argument should disting= uish between temporary unpopular adjustment costs which need to be implemen= ted in the interest of long-term welfare, and genuine political preferences= (e.g. for a clean environment or for greater equality). The global market = regime should allow as much scope as possible for the latter (e.g. by permi= tting a compensatory tax on pollution-intensive imports).

=20


Developin= g Supranational Democracy

=20

Still, the problems which cannot (any longer) be resolved at nationa= l level are increasing in significance. This is not readily compatible with= the democratic principle that power rests with the people. The customary a= pproach to international agreements grants national parliaments the right t= o veto solutions, but not really to shape them. International negotiations = aim at consensus, and where this is lacking, the problem tends to remain un= resolved. An odd combination of relatively uncontrolled government action (= undemocratic) and a relative inability to make decisions (ineffective)!=20

The solving of problems needs majority decisions. But the principle = of =84one state, one vote" is not compatible with the basic concept of demo= cracy. On the other hand, the principle of =84one person, one vote" means t= hat people will have to accept being outvoted by foreign majorities. How ca= n this willingness be developed?=20

Certainly, undemocratic governments cannot be allowed to vote on beh= alf of their populations in international arenas. National democracy is a p= recondition for participation in international democracy. But beyond that, = there must also be a feeling of communality.=20

We are unlikely to see a world =84demos" for a long time. But the sh= ared destiny, the communality that is invoked by the concept of a nation fo= rming a democratic citizenry can also be understood as partial, to m= ean e.g. that one is =84sitting in the same boat" in terms of certain probl= ems, that joint solutions are needed and that the insistence on sovereignty= (i.e. the refusal to accept being outvoted by foreigners) will mean that u= rgent problems are left unresolved. With regard to such problems =96 and on= ly in this regard =96 democratic governments can agree on taking the inevit= able, but nonetheless contentious, decisions in a democratic manner.=20

The European countries have started out along this very path. They a= re benefiting from the fact that not only can they mobilize the abstract co= mmunality of new problems which exceed the power of the individual country,= but that they also have a deeper feeling of sharing a common culture, of b= elonging to a community of values, to a historic community, or whatever one= may wish to call it.=20

But the European example also shows how difficult it is to make prog= ress along this path. The nations are very hesitant to relinquish even a pa= rt of national sovereignty. The inevitable consequence is, however, that th= e solution of problems regarded as pan-European is left to intergovernmenta= l negotiation processes and all their democratic deficiencies.=20

But it is not only the national =84sovereignty reflex" which hampers= progress towards the supranational democracy that would be appropriate in = view of the supranational problems. The powerful nations (the G7) have an i= nterest in the existing decision-making structures, which ensure that their= influence is greater than would be the case under democratic procedures.= =20

=20

=20

=20


The Direc= tion for the Future: Superstate and Subsidiarity

=20

=20

In many questions, and particularly distributive questions, the nati= on states can, if they go about it properly, realize the will of the majori= ty even in the context of integrated world markets. Nevertheless, the deman= d for supranational decisions is growing (this includes international regim= es to which states subordinate themselves and which can be designed in vari= ous ways). These decisions can only be taken in a democratic manner if sove= reign rights which are traditionally allocated to the state are selectively= transferred to supranational bodies. Seen in this way, the preservation of= democracy in the globalizing world is tied to the formation of supranation= al statehood. But that is far from implying the demise of the nation state.= Different groups of people will continue to be able to give their own answ= ers to most questions, even in the globalized world. The symbols of identit= y, too, can well remain at the level of the nation state, i.e. of relativel= y small political entities. This concept of subsidiarity would need to be s= trengthened simultaneously with the development of global governance struct= ures.=20

=20

Alfred Pfaller

Friedrich-Ebert-Stiftung, 5310 Bonn, fax: 0228 / 883 625, e-mail: PfallerA@fes.de

=A9 Friedrich Ebert Stiftung | technical sup= port | net edition=20 fes-library | Februar 2002
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