Archive for November 6th, 2011
When I started this blog in 2008 I had little trouble describing it’s purpose: “Reflections on culture, politics, philosophy and world events during an era of crisis and transformation.” It was clear to me that the US and indeed the world was on the verge of fundamental change, as the technology and information revolutions made the old order obsolete.
Nearly four years later it’s clear that the world is changing and its caused confusion. Political partisans continue in their comfortable contentions that the other side is to blame for the problems and their side will get it right. Some scream the sky is falling, others worry about the rise of China, Brazil, India and newly industrializing states, and others — though surprisingly few — are still mainly concerned about terrorism and Islamic extremism.
All of these views, I think, suffer from a common flaw: extending 20th Century thinking into the 21st Century. In other words, most people use the categories and theories of the past to extrapolate into the future, trying to figure out how change will impact existing actors and interests. New thinking is required; the world is changing and old theories, ideologies and strategies are increasingly ineffective and counter productive.
Consider Iceland. I recall being in on line debates with true free market ideologues who would point to Iceland as proof that the key to success is let markets work (some tried even to claim feudal Iceland success proved pure capitalism could work which is perhaps the most bizarre argument I’ve ever encountered). They privatized their entire banking structure and opened up the country to virtually unregulated economic speculation. The result is that the country went bankrupt.
As the article notes, when a bail out plan and series of loans was “offered,” with threats of severe reprisals should Iceland default, the people rose up, wrote a new constitution, sought to arrest and punish those involved in destroying the economy, and essentially took back their sovereign and democratic rights. This is an amazing story, an example of what groups like “Occupy Wall Street” want: rejection of control over the economy by international finance.
However, I don’t think the story ends there. Iceland provides one part of what is likely to happen as this transformation continues: The people will seek to reclaim local power and resist global finance and ‘big business.’ More local authority and control is a necessary component of the change that is coming. Without it power gets amassed in the hands of a few large economic actors who can control, influence and penetrate state governments and undermine democratic accountability. It is precisely those economic actors who caused the current crisis and rendered impotent government regulators who tried in vain to put limits on derivative trade, enforce lending standards, and increase capital requirements for big financial institutions.
Yet localization alone is not the answer. Globalization is real. Iceland will be punished for not playing along, and while this is likely better for Icelanders than being stuck in a loan/debt/austerity bind, their shift from radical libertarian principles to regulation and localism isn’t the complete path to the future. Globalization is real, and it is a good thing. But it’s also new, and political and economic structures built around the notion of sovereignty and the state have to be transformed.
One reason global finance has so much power is that regulatory efforts are by definition state-centric. Big money has found a way to game the system by playing states off against each other or shopping for the cheapest tax rates, least regulation or most ineffective enforcement — the so-called race to the bottom. States aren’t impotent and have tried to respond, but usually it ends up with arrangements that cede more power to transnational enterprises and away from states.
States still have the guns, but they just don’t matter as much as they used to, especially for the most advanced economies. The monopoly on the use of force which used to be considered as granting states ultimate power doesn’t work if force isn’t as relevant. Big business doesn’t worry about the lack of a monopoly on force because such force is irrelevant to them. Their influence over governments is due to the new ultimate weapon: capital! Force is structural and economic, old fashioned violence is less effective and crude.
Money and wealth create the capacity to help or harm a state with just a few economic decisions. Besides regaining local control a way has to be found to create global accountability; the sovereign Westphalian system has to give way to a kind of post-sovereign structure of governance that recognizes and can cope with the global identity of modern transnational enterprises (or multinational corporations).
We’ve got a long way to go. The rather dramatic rise in activism globally – and literally out of the blue and unexpected — with the various “occupy” movements is powerful evidence that discontent, anger and desire for change is real and widespread. What happened in Iceland can happen elsewhere; perhaps not in such extreme form, but the long term impact of today’s new social movements is still unknown. The fact that they are global means that a network of social organizations can gather and share information on what corporations and banks are doing, and organize responses. Partnerships between first and third world states through such organization can lead to pressure to use international organizations like the WTO (which has nascent regulatory power) to build a method of holding transnational actors accountable.
We’re not there yet. Our thinking is still mired in the 20th Century world of sovereignty, states, and ideology. The new world cannot reflect any one ideological perspective — it should construct new avenues and venues for debating the path forward. It is not anti-free market to want to limit big money because there is a strong argument that such a powerful position of a few elite companies and institutions is itself a threat to the proper functioning of the market.
So hang on for the ride. It’s only just beginning, and there will be jumps and starts, gyrations to the left and to the right, emotional manipulation, fear, hope and at times anger. However, the future should not be feared. Those who scream gloom and doom lack creativity and an appreciation of what humans can and have accomplished. Those who give simple answers or promise to “fix” things and make things like they “used to be” are deluded.
It’s an exciting time to live, and it’s within our capacity as humans to use technology and our ability to communicate and interact across the globe to solve problems and build a better future. Globalization is what we make of it.