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The Globalization Trap: The 20-80 Society

"Social expenditures in Germany have in no way exploded. In 1995 their share in the gross domestic product was even less than 20 years ago.. Deregulation instead of state supervision, liberalization of trade and privatiza-tion of state enterprises were the strategic weapons.."
Globalization: The 20-80 Society

World Leaders Underway to Another Civilization

By H.P. Martin and H. Schuhmann

[This excerpt from "The Globalization Trap" (1997) by H.P. Martin and H. Schuhmann is translated from the German on the World Wide Web,  http://www.systemfehler.de/global.htm.]

... The pragmatists in the Fairmont Hotel reduce the future to a pair of numbers and a term: "20 to 80" and "tittytainment".

20 percent of the working age population will be enough in the coming century to keep the world economy going. "More workers will not be needed", said magnate Washington SyCip. A fifth of all jobseekers will be enough to produce all the goods and perform all the top-flight services that the world society can afford. This 20 percent will actively participate in living, earning and consuming. One or two percent may be added, the discussants admit, perhaps wealthy heirs.

What about the others? Will 80 percent of those willing to work be without a job? "Certainly", says the US author Jeremy Rifkin, author of the book "The End of Work". "80 percent will have enormous problems." Sun manager Gage puts some more coal on the fire and appeals to his boss Scott McNealy: The question in the future will be "to have lunch or be lunch", to eat or be devoured.

As a result, the top-flight discussion circle on the "future of work" focuses on those who without work. According to their firm conviction, dozens of millions of people worldwide may feel nearer the pleasant everyday life in the San Francisco Bay area than the struggle for survival without a secure job. In the Fairmont, a new social order was sketched: rich countries without an appreciable middle class and without opposition.

The term "tittytainment" makes the rounds. This term was coined by the old war-horse Zbigniew Brzezinski. The native Pole, National Security advisor of US president Jimmy Carter, has been occupied with geo-strategic questions. "Tittytainment", Brzezinski explains, is a combination of "entertainment" and "tits", the American slang for bosoms. Brzezinski thinks more of the milk streaming from the breast of a nursing mother than of sex. The frustrated population of the world could be kept happy with as mixture of numbing entertainment and adequate food.

The managers soberly discuss the possible doses and reflect how the wealthy fifth can employ the superfluous remnant. Given the global competitive pressure, social engagement of businesses is unreasonable. Others must worry about the unemployed. The discussants expect creative meaning and integration from a wide field of voluntary community services, neighborhood assistance, sports activities or all kinds of associations. "These activities could be upgraded by a modest salary that would promote the self-esteem of millions of citizens", Professor Roy remarked. People will clean the streets for almost nothing or work as house servants in the industrial countries, the corporate leaders imagine. The industrial age with its mass prosperity was no more than a "blip in the history of the economy", future researcher John Naisbitt concludes.

The organizers of the three memorable days in the Fairmont imagined themselves underway to a new civilization. However the direction envisaged by the assembled experts from the executive floors and science leads directly back into the pre-modern age. The two-thirds society, feared by Europeans since the 1980s, no longer describes the future distribution of prosperity and social positions. The world model of the future follows the formula 20 to 80. The one-fifth society is brewing in which the excluded will be immobilized with "tittytainment". Is all this a vast exaggeration?

"The Real Hurricane"

In Germany 1996, more than six million persons willing to work cannot find a steady job, more than ever since the founding of the German republic. The average net income of West Germans fell for five years. This was only the beginning according to pundits from the government, science and business. At least 1.5 million additional jobs could be eliminated in industry in the coming decade alone, the prominent German business advisor Roland Berger predicts. "On top of everything, every second job in middle management is endangered." His colleague Herbert Henzler, head of the German branch of the McKinsey consultation firm, goes even further: "Industry will go the way of agriculture", he forecasts. Goods production will only offer wages and bread for a few percent of the working population in the future. In Austria the authorities announce increasingly modest trade figures. Every year 10,000 industrial jobs fall away. In 1997 the unemployment rate was eight percent, nearly twice as high as in 1994.

The explanations for the decline advanced by economists and politicians always culminate in one word: globalization. High-tech communication, low transportation charges and boundless free trade allow the world to fuse into a single market. This also creates severe global competition even on the labor market. German businesses will only create new jobs in low-cost foreign countries. Leaders of the German republic from corporate executives to the Labor minister know only one answer: adjustment downward. Citizens are incessantly exposed to a cacophony of renunciation demands. Germans and Austrians work too little, draw e4xcessively high incomes, take overly long vacations and are sick too often, a chorus of officials, economists, experts and ministers claim. Press and television help in the cacophony. The "western claimant society collides with ambitious Asian renunciation societies", the Frankfurter Allgemeine newspaper writes. The welfare threat has become "a future threat". "More social inequality is inevitable." Austria's dominant mass paper, the Neue Kronenzeitung, marches into the tabloid battle: "The Continent Lives Beyond Its Means - New Austerity Wave Shocks Europe". Even the President of Germany, Roman Herzog, seconded this. Change is "unavoidable. Everyone must make sacrifices."

Reality is sometimes misunderstood. Necessary sacrifices for everyone in times of crises are not possible. Cuts in continued pay (in case of sickness), suspension of termination protection, radical cuts in all social benefits and wage reductions despite increasing productivity are not crisis management. Rather the reformers in the sign of globalization announce the unwritten social contract of the republic that keeps social inequality tolerable by redistribution from top to bottom.

The model of the European welfare state has had its day, they proclaimed. In the worldwide comparison, the welfare state is now too expensive. The marginalized understand all this very well. Unions and welfare associations send a cry of indignation through the republic. The usually conservative IG chemical union threatens with an industry-wide strike. Dieter Schulte, chairperson of the German union alliance, warns of "conditions" that will make the mass French rebellion in December 1995 seem like "a mild prelude".

Still the defenders of the social state are fighting a losing battle. Many arguments of their opponents are simply false. On balance, Germany's corporations abroad hardly create additional jobs. They mostly only buy businesses there, thin out the personnel and supply regional markets. The social expenditures in Germany have in no way exploded. In 1995 their share in the gross domestic product was even less than 20 years ago. What is true is the constant reference to the policy of other formerly industrial countries. In its core the program is the same from Sweden and Austria to Spain: cutting state spending, lowering wages and canceling social benefits. Everywhere the protest ends in resignation.

In a global pincer-movement, the new international of capital unhinges whole states and their past social structures. On one front, capital flight is threatened here and there. A drastic tax discount, billions of subsidies or free infrastructure, is forced. Where this doesn't occur, tax planning on a large scale helps. Profits are only show on the books in countries where the tax rate is very low. The share contributed by owners of capital and owners of assets to financing state expenditures falls worldwide. On the other side, the leaders of global capital streams continuously drive down the wage level of their tax-paying employees. The wage rate, the share of wage earners in the social wealth, declines in the world standard. No nation alone can resist this pressure. As the US economist Rudiger Dornbusch comments, the model Germany is now "regularly cooked" in the transnational competition.

Stock prices and corporate profits rise at double-digit rates while wages and salaries sink. At the same time unemployment grows parallel with the deficits of the public budgets. No one needs special economic knowledge to understand what is happening.

113 years after the death of Karl Marx, capitalism again drives in that direction that the revolutionary economist described so correctly for his age. "The general tendency of capitalist production is to lower not raise average wages and to force the value of labor to its minimum level." So he lectured in 1865 before the 1st International in London without imagining that primitive capitalism could be tamed democratically one day. A counter-reform of historical dimensions is now initiated after the reforms of the social democratic century. This counter-reform goes backwards into the future. Winners like Heinrich von Pierer, the head of the world corporation Siemens, gloat: "The competitive wind has become a storm. The real hurricane is approaching."

The choice of words of Pierer and other standard bearers of the new globalism should convince people that a natural process is involved, the result of an irresistible technical and economic progress. That is nonsense. The global international interlocking is by no means a natural process but was consciously brought about by a single-minded policy. In treaty after treaty, law after law, resolutions of governments and parliaments removed barriers for the border-crossing traffic of capital and goods. From the decontrol of currency trading on the domestic European market to the continuous expansion of the world trade agreement GATT, government politicians of western industrial countries systematically decry that state that they no longer accept.

Democracy in the Trap

Global integration is accompanied by the ascent of an economic doctrine of salvation continuously brought into politics by a host of economic advisors: neoliberalism. Their basic thesis is that the market is good and state interventions are bad. Starting from the ideas of the leading representative of this economic school, US economist and Nobel Prize winner Milton Friedman, the majority of the governments of the West made this dogma into the guiding principle of their policy during the 1980s. Deregulation instead of state supervision, liberalization of trade and capital transactions as well as privatization of state enterprises were the strategic weapons in the arsenal of market-fundamentalist governments and the international economic organizations supported by them, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO). With these instruments, they fought a struggle for independence for capital that continues up to today. Nothing and no one should evade the law of supply and demand, whether air transport or telecommunications, banks or insurances, the construction industry, software development or the labor forces.

The collapse of the party dictatorships of the Eastern block gave a further impetus and global force to this belief. Liberated from the threat of the dictatorship of the proletariat, establishing the dictatorship of the world market has been a priority. Suddenly the massive participation of employees in the general value creation only appears as a concession in the Cold War to take away the base from communist agitation.

Nevertheless the "turbo-capitalism" whose worldwide enforcement now seems irresistible destroys the foundations of its own existence: the functioning state and democratic stability. The speed of the change and the redistribution of power and prosperity erode the old social units faster than the new can develop. Countries prosperous in the past consume their social substance faster than their ecological substance. Neoliberal economists and politicians preach the "American model" to the world. However this slogan is just as frightening as the propaganda of the East German government that up to its end wanted to learn victory from the Soviet Union.

Social disintegration is nowhere clearer than in the country of origin of the capitalist counter-revolution, the US. Criminality has reached epidemic proportions. In the state of California, in itself the seventh largest economic power of the earth, spending for prisons exceeds the entire education budget. Already 28 million Americans, more than ten percent of the population, have entrenched themselves in guarded skyscrapers and housing estates. US citizens spend twice as much money for private armed guards than their state spends for its police. Europe and Japan, China and India are also divided in a minority of winners and a majority of losers.

The globalized progress is not an advance for many hundreds of millions of people. The formula that the heads of state from the seven leading industrial nations raised as the leitmotif of their G7 summit at the end of June 1996 must sound like a mockery to them: "Make success from globalization benefit everyone".

The protest of the losers is directed to governments and politicians whose creative power continuously shrivels. The individual nation state is always overstrained, whether in producing social justice, protecting the environment, limiting the power of the media or combating internationalized criminality. The international concert also regularly fails. But when governments only stress the overpowering practical necessities of the transnational economy, all politics congeals into a spectacle of powerlessness and the democratic state loses its legitimacy. Globalization becomes a trap for democracy.

Only na´ve theoreticians or shortsighted politicians believe that millions of people could gain jobs and social security year after year in Europe without paying the political price sometime. Contrary to the operational logic of corporate strategists, there are no "surplus people" or unnecessary citizens in democratic societies.

The losers have voices and will use them. There is no reason for reassurance. The political earthquake will follow the social earthquake. Social democrats or social Christians will not quickly celebrate any new triumphs. Instead more and more voters take seriously the stereotyped formulas of the globalizers. In every second news broadcast of those who should represent his interests, the citizen learns that foreign competition is responsible, not us. From this economically false argument, it is only a small step to open hostility toward everything foreign. Millions of alarmed middle class citizens have long taken flight in hatred of foreigners, separatism and screening from the world market. The excluded answer with exclusion.

In 1992 the national-authoritarian populist Ross Perot gained 19 percent of the votes in his first attempt in a presidential election. The French preacher of national rebirth Jean-Marie Le Pen and the Austrian radical rightwing populist Jorg Haider achieved similar election results. Separatists have enjoyed increasing popularity from Quebec and Scotland to Lombard, Italy. Separatists supplement the canon of hatred of foreigners with anger toward central governments and separation from alleged boarders in poorer parts of the country. Simultaneously the multitude of vagabond migrants seeking to escape abject poverty grows all over the world.

The 20-80, one-fifth society, as the elitist visionaries in the Fairmont hotel envisioned the next century, follows the technical and economic logic with which corporate leaders and governments push global integration. However the world race for the greatest efficiency and the lowest wages opens the gates to the irrationality of power. The persons who are rebelling are not the persons who are truly distressed. Rather incalculable political explosiveness arises from the fear of degradation that is now spreading in the middle of society. The fear of poverty endangers democracy, not poverty itself.

The economic suspension of all politics already led to the global catastrophe. In 1930, a year after the great stock market crash, the British magazine The Economist that is always friendly to capital commented: "The greatest problem of our generation is that our successes on the economic plane exceed the success on the political plane. The economy and politics cannot keep pace with each other. Economically the world is a comprehensive unity of action. Politically the world remains cut up in pieces or dismembered. The tensions between the two opposite developments have caused shocks and breakdowns by the dozens in the social life of humanity."

History does not repeat itself. War is still the most likely outlet when social conflicts become unbearable, whether in the form of civil war against ethnic minorities or breakaway regions. Globalization need not lead to belligerent conflicts. However this can happen if the de-controlled forces of the transnational economy are not socially restrained. The long formulated political responses to the economic interlocking of the world deny that this process can be controlled. Still there are instruments and ways that put control into the hands of elected governments again without setting the nations against each other. Some of these ways are presented and discussed in this book ("The Globalization trap").

The most urgent task of democratic politicians at the threshold to the next century will be the renovation or repair of the state and the restoration of the primacy of politics over the economy. If this does not happen, the dramatically rapid fusion of humanity through technology and trade will soon capsize in the opposite and lead to the global short-circuit. Our children and grandchildren will then only have the memory of the golden nineties when the world still seemed ordered and redirection was still possible.

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European Union 19.Feb.2004 09:11

against Europeans

Interesting points raised in this article. My overriding feel for this issue is the problem was created by the same group trying to explain and frame the debate and they will be the same group that push the "solution" forward.
It is refreshing though to have an open forum to question some of the issues.
My first question is did any of the populations currently being impacted by these developments ever have any decision making capacity in the implementation of these policies that are adversely affecting them?