Globalisation is producing a major impact upon our world, not only in economic terms, but it is encroaching upon the traditional functions of the State, government and supranational institutions. In short, with globalisation, which is not just an economic phenomenon, the main arena of political action - the State, public activity, reforms that we can undertake through our institutions - requires thoroughgoing change.
This is change which our political organisation must be able to tackle. We must be able to analyse and act upon what is happening in the world economy. But I think that we must say that our political action, our political reply, in our work as an organisation as well as in government and in supranational institutions, has been lagging behind events, lagging behind the changes, which are happening around us.
Above all, this lack of politics behind economic and social change is clear on the world stage. As we increasingly talk of globalisation, we are more and more aware that our capacity for intervention, for managing, for directing and for regulating the impact of globalisation is not in line with circumstances. We have seen once again, and we are seeing this now with the crisis unleashed within the Asian economies which has led to a worldwide downturn.
Before considering the crisis and the way to respond to it, I would like to reflect even more globally. The failings of government and supranational organisations are not only due to the lack of instruments with which to intervene in these financial and economic concerns. But rather some of the foundations of the nation-state, of the instruments used to transform social reality of the twentieth century, have been eroded by the degree of opening up of national economies and the integration of these economies in a global system.
In fact the very concept of what constitutes national sovereignty is changing. International financial markets are more able to oversee and judge the economic policies of governments than the voters themselves. The sanctions of markets against what they consider to be a wrong policy is swifter and more resounding than anything voters can inflict on governments. But on the other hand, it is easier to recover the support of the electorate than the confidence of the markets with a particular policy or government action. Just a few financial analysts or financial operators in the world economy have more say in deciding the fate of citizens in the world than the vast majority of governments.
Furthermore, the development of advanced communication technologies, the rapid exchange of information around the planet means that it is increasingly difficult to base political legitimacy on the traditional elements of constraints of each of our countries. Simultaneously we are finding trends towards supranationality which necessarily require the creation of platforms of supranational action in finding political answers to the changes and to the transformations which are taking place. At the same time in many of our countries we see trends towards political decentralisation, bringing political power much closer to the ordinary citizen.
The way in which we traditionally safeguard national security is also changing with globalisation. We are seeing that no State, no country can face alone the major threats or risks to our citizens' security. Neither can one fight alone against terrorism, against the drug trade, against crime or against the deterioration of our environment.
Despite all this we have still not found a satisfactory response to that basic question which so many people put to us: `How are you going to govern into the next century, and into the next millennium given the changes ahead?' And one must acknowledge that neither democratic socialism, nor any other political family, has been able to come up with a complete response. But we are trying, although we also know that there is a long way to go in terms of coming up with viable answers in this area. Nor do we have proposals on the table to deal with the environmental problems which go far and beyond the capacity of individual governments. Nor do we have answers in the face of a growing international crime rate. We do not have a solution for what type of model of collective safety would give a better alternative to the old division of the world into two blocs as we saw with the Cold War, which finished at the end of the 1980s with the fall of the Berlin Wall and Communism. But what alternative do we have? And yet again we have seen how impossible it is to come up with a way of responding to a crisis like that of Iraq or that of former Yugoslavia which suits the positions of many governments in the world, as well as the legitimacy and the legality of the international community, where models of prevention and conflict resolutions have been adopted, as enshrined in the principles of the United Nations and the international community.
The Socialist International has the obligation, as do all members of this political family, to draw ideas from our political philosophies in order to give answers to these major problems which give rise to concern and insecurity among our citizens.
Faced with the neoliberal model which tried to reduce all social reality to economic flows, society replaced by market, and globalisation to movements of capital, we must have a broader vision of what is happening with globalisation. We cannot allow international financial markets to operate as they are today whilst markets of goods and services are not achieving the same speed of integration. And at the same time we see that in labour markets, where what is traded is not goods, not services but rather the work of human beings, neoliberals are proposing liberalisation which is only applicable within the frontiers of our countries. But neoliberals and the right say over and over again that they want more and more restrictions, frontiers and obstacles to the free movement of people and workers. Therefore we must come up with a concerted and shared vision of what to do vis-à-vis globalisation. Proposals for the regulation of financial markets cannot ignore the necessity of regulating at world level goods and services, or labour markets. The need to re-organise the International Monetary Fund and the World Bank is quite clear, nobody now opposes that idea, but this cannot be taken on board without considering the need to draw up reform of the World Trade Organisation and the International Labour Organisation.
We must also say that the end of those ideologies dominant in the twentieth century which tried to follow a utopian ideal for all societies, obviously affects, and this has become increasingly clear in the last few months, the neoliberal idea of globalisation. The ultraliberals propose total liberalisation and deregulation, and their unswerving faith in their own dogma makes them say that all current sacrifices and ravages where their policies have been put in practice will make a better future, but it is a better future which never arrives. All casualties along the way towards globalisation are merely unfortunate. What should be done about the crisis in Asia? More liberalisation. Why is Russia in crisis? Because there was not enough liberalisation. They are enclosed in a vicious circle of their own dogma and we are seeing increasingly today in the media and daily contact with the reality of the situation that this cannot continue to work.
It is time to speak out and say that the loss of legitimacy of the State, of public activity, are not acceptable formulas when we are trying to find an answer to globalisation and its consequences. We need to give legitimacy back to the State and public activity. We need to throw out the objections of those who think that any regulation is synonymous with inefficiency, and any deregulation will solve all problems. There are optimal degrees of regulation and liberalisation that one can achieve, and it is indeed the Socialist International which is best able to define these at an international level on the basis of our values.
We continue to discuss the economic and financial problems of globalisation and we do so bearing in mind the rapid downward spiral of the Asian economies which was until recently the model of reference that ultraliberals tried to sell us in the past. The crises in Asia and in Russia have led to a decrease in the amount of risk which international investors are prepared to take. These crises have eliminated access of emerging countries to international capital markets, reduced growth expectations and destroyed a significant part of the financial wealth of developed countries. We know today that 1999 will be a lost year for the majority of our countries in terms of any chance to improve growth and desired levels of creation of jobs and hope for the future.
However beyond the specific and concrete effects of the crisis in each one of our countries, we must say that there is a clear conviction that the lack of well defined rules of play and accountability of those operating capital markets has created an intolerable economic risk. This is also a political reality of the highest order and for the first time in many years the ultra-liberal tenets of the deregulators who have been dominating economic thinking over the past twenty years are now in crisis. We know the case presented by Amartya Sen, and I think that socialists and social democrats should be very happy that finally a Nobel prize for economics has been given to an economist who cares about human beings and not simply about exchange rates and the exchange of goods and services.
Do we have the right and proper political institutions to help us face these challenges? Well, we know that we do not and we also know that there are no easy answers, neither in correcting imbalances, nor in overcoming inefficiencies and the undesired effects of the workings of the markets, not to mention in the architecture of supranational organisations and indeed in the relationships between governments and States which should permit answers to the dilemmas we have before us.
Therefore we need to focus on defining new economic rules of play. It is not enough to just propose checks and balances for capital flows, although we probably need to think what type of procedures we need in order to put a brake on total freedom of capital flows, which has been the case until today. We also have many proposals and we need to come up with an answer for the insufficient capabilities of the Bretton Woods institutions, International Monetary Fund and the World Bank. We need to see how we can develop and improve their roles so that they do not just compensate the financial players, bailing them out as opposed to channelling resources where they are really required.
And finally we need to think about what our role as socialists and social democrats over the next few years needs to be. We need to define what we are going to do, we need clear proposals, which we are working on now, and we need to make sure that they are taken up by governments, by governments of parties outside our International, and particularly by governments where our International has a lot say. We continue to see the potential of the presence of social democratic and labour parties within the European Union. Perhaps we are the only socialist party in the European Union who are not in government. But as we have said on so many occasions before: being in government in a European country is not the same as governing Europe. We need a supranational political will, a global political will, and articulating this will, and putting it into practice, is the serious responsibility of the International.
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