WHAT IS GLOBALIZATION?
Virtual taxpayers
With the peaceful fall of the Berlin Wall and the collapse of the Soviet empire in 1989, many thought that the end of politics was nigh an we entered an age beyond socialism and capitalism, utopia and emancipation.
In the years since then, however, the ceremonial farewells to politics have become rather more subdued. The current scare-word 'globalization; seemingly unavoidable in any public statement, points not to an end of politics but to its escape from the categories of the national state, and even from the schema defining what is 'political' 'nonpolitical' action.
For whatever the referent of the new globalization rhetoric (economy, markets, job competition, production, goods and services, financial flows, information, lifestyles), the political consequences of the stagemanaged economic globalization risk stand out in sharp relief.
Institutions of industrial society which seemed shut tight can be 'cracked' and opened up to political intervention. The premises of the welfare state and pension system, of income support, local government and infrastructural policies, the power of organized labour, industry-wide tree collective bargaining, state expenditure, the fiscal system and 'fair taxation' - all this melts under the withering sun of globalization and becomes susceptible to (demands for) political moulding.
Every social actor must respond in one way or another; and the typical responses do trot fit into the old left-right schema of political action.1
We may say that what used to be the class question for the workers' movement in the nineteenth century is the globalization question for transnationally active enterprises at the turn of the twenty-first century-but with the crucial difference that the workers movement acted as a countervailing power, whereas global enterprises have for a long time not been challenged by any other (transnational) power.
Why then does globalization mean politicization? It means this because the staging of globalization permits employers and their associations to disentangle and recapture their power to act that was restrained by the political and welfare institutions of democratically organized capitalism.
Globalization makes possible things which, though perhaps always there, remained hidden during the stage of the welfare-democratic taming of capitalism.
It means that corporations, especially globally active ones, can play a key role in shaping not only the economy but society as whole if 'only' because they have it in their power to withdraw the material resources (capital, taxes, jobs) from society.
The global operation of the economy is sapping the foundations of national economics and national states, unleashing subpolitics on a quite novel scale and with incalculable consequences.
The next objective will be to shunt the old adversary, 'labour' , out of harm's way, but above all to serve notice on the 'ideal aggregate capitalist' (as Marx called the state) so that it is freed from the entanglement with labour and state that developed in the course of the nineteenth and twentieth centuries.
'All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away' - Marx, already in the Communist Manifesto, hardly kept secret his celebration of the revolutionary potential of capital.
Today the 'fixed and fast-frozen' is the welfare-state and trade-union organization of labour, while the 'ancient and venerable' are the bureaucratic prescriptions and fiscal exaction., of the (national) state.
Efficiency and neatness, then, will result from a novel politics based upon the 'material constraints' of globalization.
All around, one hears the assertion that it is not corporate interests but 'globalization' which forces this or that painful break with the past.
One of the 'laws' of the global market is for example, that jobs must be axed or relocated in order to keep jobs safe where they are. Precisely because labour can and must be downsized to boost profits, current policies are twisted until they appear as their opposite.
Thus, 'All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away' - Marx, already in the Communist Manifesto, hardly kept secret his celebration- of the revolutionary potential of capital.
Today the 'fixed and fast-frozen' is the welfare-state and trade-union organization of labour, while the 'ancient and venerable' are the bureaucratic prescriptions and fiscal exaction., of the (national) state.
Efficiency and neatness, then, will result from a novel politics based upon the 'material constraints' of globalization.
All around, one hears the assertion that it is not corporate interests but 'globalization' which forces this or that painful break with the past.
One of the 'laws' of the global market is that not-A must be done in order to achieve A: for example, that jobs must be axed or relocated in order to keep jobs safe where they are. Precisely because labour can and must be downsized to boost profits, current policies are twisted until to stimulate economic growth is ultimately to 'produce' unemployment; and to cut taxes so that profit opportunities improve might possibly also 'produce' unemployment.
The political and social paradoxes of a transnational economy - which must be lured and rewarded with the 'removal of barriers to investment' (meaning the removal of ecological, union, welfare and fiscal constraints), so that more and more labour can be shed and output and profits simultaneously increased - still have to be scientifically analysed and politically tackled.
Globalization policies featuring an orchestrated global scare are thus intended to shake off the fetters not only of trade unions but also of the national state, to deprive national politics as such of its power.
The rhetoric hurled at welfare-state policies by major figures in the economy makes it as clear as one could wish that the final aim is to dismantle the existing responsibilities and apparatus of the state, to bring about the anarchistic market utopia of a minimal state.
Paradoxically, however, it is also the case that globalization is often answered with re-nationalization.
Politicians from various parties do not realize that the very substance of politics and the state, as well as of the trade unions, is at stake in the globalization campaign.
Surprised and fascinated by the power of globalization to 'soften up' institutions, they are only just beginning to suspect that - as Marx put it long ago - they are supposed to become their own gravediggers.
It cannot but seem ironical, to this author at least, that some politicians call for ever freer markets without even noticing that this threatens their own lifeblood, the very source of their money and power.
Has such gay abandon ever been seen before at an act of public suicide?
What is the basis of the new power of the transnationals? How is it that their strategic potential is growing larger?
Without a revolution, without even any change in laws or constitutions, an attack has been launched 'in the normal course of business', as it were, upon the material lifelines of modern national societies.
First, the transnational corporations are able to export jobs to parts of the world where labour costs and workplace obligations are lowest.
Second, the computer-generation of worldwide proximity enables them to break down and disperse goods and services, and to produce them through a division of labour in different parts of the world, so that national and corporate labels inevitably become illusory.
Third, they are in a position to play off countries or individual locations against one another, in a process of 'global horse-trading' to find the cheapest fiscal conditions and the most favourable infrastructure. They can also 'punish' particular countries if they seem too 'expensive' or 'investment-unfriendly'.
Fourth and last, in the manufactured and controlled jungle of global production, they are able to decide for themselves their investment site, production site, tax site and residence site, and to play these off against one another.
As a result, top executives can live where it is nicest to live, and pay taxes where it is cheapest.
All this has come to pass without any complaint or discussion in parliaments, without any decision by governments and without any change in the law; nor has any public debate been necessary.
This justifies us in speaking of a 'subpolitics' - not to suggest some conspiracy theory, but to indicate that corporations acting within the framework of world society have gained additional scope for action and power beyond the political system.
Over the heads of government and parliament, public opinion and the courts, the balance-of-power contract that characterized the first modernity of industrial society is now being terminated and transferred to the independent realm of economic action.
The transition to a politics of globalization has crept in on velvet paws, under the guise of normality, rewriting the societal rules of the game with the legitimacy of a modernization that will happen come what may.
The national state is a territorial state: that is, its power is grounded upon attachment to a particular place (upon control over membership, current legislation, border defence, and so on).
The world society which, in the wake of globalization, has taken shape in many (not only economic) dimensions is undermining the importance of the national state, because a multiplicity of social circles, communication networks, market relations and lifestyles, none of them specific to any particular locality, now cut across the boundaries of the national state.
This is apparent in each of the pillars of sovereignty: in tax-raising, police responsibilities, foreign policy and military security. Let us take the example of taxes.
The levying of taxes concerns not just one principle but the principle underlying the authority of the national state.
This right to levy taxes is linked to the supervision of economic activities within a certain territory, but it is becoming an ever more fictitious basis as the scope increases for operations at the level of world society.
Companies can produce in one country, pay taxes in another and demand state infrastructural spending in yet another.
People too have become more mobile. If they are rich, they prove more adept at exploiting holes in the fiscal nets of the state; if they have sought-after job skills, they deploy them where they stand to gain most; and if they are poor, they set off for places where milk and honey beckon.
On the other hand, national states become increasingly entangled in contradictions if they try to shut themselves off from the rest of the world.
For they must all attract capital, people and knowledge in order to survive the competition in world society.
The gladiators of economic growth who are so courted by politicians erode the authority of the state by demanding its services whilst denying it tax revenue.
The point is that it is precisely the super-rich who become virtual taxpayers, and their riches rest not least upon this virtue of the virtual. In ways that are (mostly) legal yet illegitimate, they undermine the democratic public good of which they take advantage.
Fortune magazine, which regularly publishes a league table of the world's top 500 companies, jubilantly reports that these have been 'pushing across frontiers to capture new markets and swallow up the local competition. Their guiding idea is: the more countries, the greater the profits. And indeed the profits of the top 500 have risen by 15 per cent, with an increase in turnover of only 11 per cent.'
'Profits up, jobs out,' runs an article title in Der Spiegel: 'A special kind of economic miracle is striking fear into the nation.
A new generation of corporate bosses have taken over and are embracing American-style share worship. Worst of all, the stock market is rewarding job killers.'
Businessmen have discovered the road to riches. The new magic formula is: capitalism without work plus capitalism without taxes. Between 1989 and 1993, the tax yield from corporate profits fell by 18.6 per cent, and by nearly a half as a proportion of total fiscal revenue.
Andre Gorz argues:
The social security system must be reorganized, and new founda-
tions put in its place. But we must also ask why it seems to have
become impossible to finance this reconstruction. Over the past
twenty years, the EU countries have become 50 to 70 per cent richer.
The economy has grown much faster than the population. Yet the
EU now has twenty million unemployed, fifty million below the poverty line and five million homeless. What has happened to the extra wealth? From the case of the United States, we know that economic growth has enriched only the best-off 10 per cent of the population. This 10 per cent has garnered 96 per cent of the additional wealth. Things are not quite as bad in Europe, but they are not much better.
In Germany since 1979 corporate profits have risen by 90 per cent and wages by 6 per cent. But revenue from income tax has doubled over the past ten years, while revenue from corporate taxes has fallen by a half. It now contributes a mere 13 per cent of total tax revenue, down from 25 per cent in 1980 and 35 per cent in 1960. Had the figure remained at 25 per cent, the state would have annually netted an extra 86 billion marks in recent years.
Developments have been similar in other countries. Most transnational corporations like Siemens or BMW no longer pay any taxes at home. [. . .] Unless there is some change here [. . .] people will rightly not accept cuts in their social services, pensions and take-home pays
Transnational corporations (TNCs) are securing record profits and a massive downsizing of labour. Chairmen's annual reports present one dream balance after another. But politicians who have to justify scandalous levels of unemployment push for further tax cuts, in the mostly vain hope that at least a few jobs will be squeezed from the new wealth of the rich.
The social barometer is therefore showing a rise in conflicts, including between virtual and real taxpayers. Whereas TNCs can escape the clutches of inland revenue bureaucracies, small and medium-sized companies (which create a large share of new jobs) have to cough up more and more as the screws are turned on them.
t is an irony of history that the very losers of globalization will in future have to pay for everything - from the welfare state to a functioning democracy - while the winners of globalization post dream profits and steal away from their responsibility for future democracy. It follows that, in the age of globalization, the major issue of social justice will have to be handled in a new way, both theoretically and politically.
But the contradictions of 'jobless capitalism' are also becoming easier to perceive. Managers may transfer the administration of transnational companies to southern India, yet send their children to the top publicly funded European universities. It never crosses their mind to move to where they are building up jobs and paying low taxes.
For themselves they demand high-cost political, social
and civil rights as a matter of course, while torpedoing the public finances that support them. They go to the theatre. They enjoy well-cared-for nature and landscape. They romp around the still relatively crime-free cities of Europe. But their profit-oriented policies are doing a lot to ensure that this European way of life will fall apart. Might we know where they or their children want to live when the state and democracy can no longer be paid for in Europe?
What is good for the Deutsche Bank has for a long time not been good for Germany. The TNCs are bidding farewell to the framework of the national state and refusing further loyalty to its actors.
This, however, lowers the degree of internal social integration, all the more so as its basis was purely economic. It is precisely the well-endowed welfare states which are facing the worst predicament.
They have to provide statutory benefits for an ever higher number of registered unemployed (fast approaching five million in Germany), and at the same time they lose control over taxes because the TNCs deal themselves a quite unparalleled hand in the poker game over their local ties and obligations.
Or, to change the metaphor, they have four bites at the cherry: first, by gaining the best possible access to quality infrastructure; second, by picking up various subsidies; third, by reducing their tax burden to a minimum; and fourth, by externalizing the costs of the unemployed.
The downward pressure on the welfare state, then, results not only from a combination of dwindling resources and rocketing expenditure, but also from the fact that it lacks the means to satisfy demands upon it at a time when the gulf between rich and poor is growing ever wider.
As the national framework loses its binding force, the winners and the losers of globalization cease to sit at the same table. The new rich no longer 'need' the new poor. And so it becomes increasingly difficult to even out the differences between them, because there is no framework in which this overarching conflict could be represented and regulated.
It is not hard to see what this entails. The conflictual logic of the capitalist zero-sum game has been re-emerging and growing sharper, while the state has been losing its customary means to pacify and conciliate by increasing the size of the economic cake available for distribution.
A question mark thus appears over the model of the first, national modernity, which was conceived and organized within a particular cultural identity (a 'people'), a territory and a state.
At the same time, however, no new unity of humanity, planet earth and world state has become visible or even desirable to large numbers of people.
The national state caught between world economy and individualization: what is to be done?
The conclusion seems to suggest itself that the project of modernity has failed. The philosophers of 'postmodernism' were the first to issue a spirited death certificate for the rationality claims of science, arguing that what passed itself off in the West as the universalism of Enlightenment and human rights was nothing other than the voice of 'dead old white males' who had trampled on the rights of ethnic, religious and sexual minorities by absolutism of their own partisan 'meta-narrative'.
It is further argued that the social cement has grown porous through the secular trend of individualization, that society has been losing its collective self-consciousness and therefore its capacity for political action. The quest for political responses to the great issues of the future no longer has any subject or any locus.
In this pitch-dark view of things, economic globalization merely completes what has been driven forward intellectually by postmodernism and politically by individualization: namely, the collapse of modernity. The diagnosis points towards a capitalism without work that will create unemployment on a huge scale; the historical association between market economy, welfare state and democracy, the Western model that integrated and legitimated the nation-state project of modernity, is thus destined to break down.
According to this scenario, neoliberals are the liquidators of the West - even if they set themselves up as its reformers. As far as the welfare state, democracy and a public sphere are concerned, they are pursuing a course of modernization to the death.
But decline begins in the head. Fatalism is also a language disorder. And before jumping off the Eiffel Tower, one really ought to consult a language therapist.
'Concepts are empty: they no longer grip, illuminate or inflame. The greyness lying over the world (...] may also come from a kind of verbal mildew.'? What appears as collapse might, if it succeeds in overcoming the fatal orthodoxies of the first modernity, open out into a second modernity.
Nevertheless, it is difficult to speak out against the world power of the world market. This is possible only by destroying the image of an all-powerful world market that rules in people's heads and cripples all action. In this book I would like to oppose that megaspectre haunting Europe, and to do so with the slingshot of a distinction between globalism on the one hand, and globality and globalization on the other.
This distinction is designed to break up the territorial orthodoxy of the political and the social, posed in absolute institutional categories, which arose with the national-state project of the first modernity.
By globalism I mean the view that the world market eliminates or supplants political action - that is, the ideology of rule by the world market, the ideology of neoliberalism. It proceeds monocausally and economistically, reducing the multidimensionality of globalization to a single, economic dimension that is itself conceived in a linear fashion.
If it mentions at all the other dimensions of globalization - ecology, culture, politics, civil society - it does so only by placing them under the sway of the world-market system. Of course, there can be no denying the central importance of economic globalization, also as an option and perception of corporate players.
But the ideological core of globalism is that a basic difference of the first modernity is hereby liquidated, that is, the difference between politics and economics.
The central task of politics, which is to define the basic legal, social and ecological conditions under which economic activity first becomes socially possible and legitimate, drops out of view or is suppressed.
Globalism implies that a complex structure such as Germany - its state, its society, its culture, its foreign policy - can be run in the way that a company is run. But this involves a veritable imperialism of economics, where companies demand the basic conditions under which they can optimize their goals.
The striking thing is that globalism, understood in this way, casts its spell even over its opponents. Along with affirmative globalism, there is also a 'negative' globalism which, having been convinced of the inescapable dominance of the world market, takes refuge in various forms of protectionism.
Conservative protectionists bewail the collapse of values and the declining significance of the national dimension, but rather contradictorily also pursue the neoliberal destruction of the national state.
Green protectionists see the national state as a political biotope threatened with extinction, which upholds environmental standards against world-market forces and is thus as deserving of protection as nature itself.
Red protectionists don for every case the dusted-down costume of class struggle; globalization is another word for 'right after all' as they celebrate their Marxist feast of the resurrection. However, it is a 'being right' that is afflicted with utopian blindness.
These pitfalls of globalism should be distinguished from what I would like to call - in tune with Anglo-American discussion globality and globalization.
Globality means that we have been living for along time in a world society, in the sense that the notion of closed spaces has become illusory.
No country or group can shut itself off from others. Various economic, cultural and political forms therefore collide with one another, and things that used to be taken for granted (including in the Western model) will have to be justified anew.
'World society', then, denotes the totality of social relationships which are not integrated into or determined (or determinable) by national-state politics. Self-perceptions, as staged by the national mass media, here play a crucial role, so that world society in the narrower sense - to propose a still politically relevant operational criterion - means perceived or reflexive world society.
The question of how far it exists may therefore (in accordance with the Thomas theorem that what people believe to be real becomes real in its consequences) be empirically turned into the question of how, and to what extent, people and cultures around the world relate to one another in their differences, and to what extent this self-perception of world society is relevant to how they behave.9
'World' in the combination 'world society' thus means difference or multiplicity, and 'society' means non-integration, so that we may (together with M. Albrow) conceive world society as multiplicity without unity.
As we shall see, this presupposes a number of very different things: transnational forms of production and labour market competition, global reporting in the media, transnational consumer boycotts, transnational ways of life, as well as 'globally' perceived crises and wars, military and peaceful use of atomic energy, destruction of nature, and so on.
Globalization, on the other hand, denotes the processes through which sovereign national states are criss-crossed and undermined by transnational actors with varying prospects of power, orientations, identities and networks.
One essential feature distinguishing the second from the first modernity is the fact that the new globality cannot be reversed.
This means that the various autonomous logics of globalization - the logics of ecology, culture, economics, politics and civil society exist side by side and cannot be reduced or collapsed into one another.
Rather, each must be independently decoded and grasped in its interdependences.
The guiding supposition is that only in this way can the perspective and the space for political action be opened up. Why? Because only then can the depoliticizing spell of globalism be broken; only with a multidimensional view of globality can the globalist ideology of 'material compulsion' be broken down. But what is it that makes globality irreversible? Eight reasons may be given under the following headings:
1 The geographical expansion and ever greater density of international trade, as well as the global networking of finance markets and the growing power of transnational corporations.
2 The ongoing revolution of information and communications technology.
3 The universal demands for human rights - the (lip service paid to the) principle of democracy.
4 The stream of images from the global culture industries.
5 The emergence of a postnational, polycentric world politics, in which transnational actors (corporations, non-governmental organizations, United Nations) are growing in power and number alongside governments.
6 The question of world poverty.
7 The issue of global environmental destruction.
8 Transcultural conflicts in one and the same place.
In these circumstances, sociology acquires new significance as an exploration of what human life means in the trap that the world has become.
Globality means that from now on nothing which happens on our planet is only a limited local event; all inventions, victories and catastrophes affect the whole world, and we must reorient and reorganize our lives and actions, our organizations and institutions, along a 'local-global' axis.
Globality, understood is the second part of modernity In the dizzying annus mirabilis of 1989 people still said: 'What belongs together is growing together' (Willy Brandt).
But now the message of the globalization debate is that those hopes - and their disappointments - rested upon an obsolete image of the national idyll. If the traditional model of the national state is to have any chance of survival at all in the new power structure of world market plus transnational actors and movements, the globalization process will have to become the criterion of national politics in every domain (in economics, law, military affairs, and so on).
It is not up to the individual, or to social and political actors, whether they recognize this or not.
The new developments
in world society, which are making the idea of 'national' products, firms,
technologies, industries or even sports associations increasingly fictitious,
compel them on pain of economic, political and cultural decline to open their
eyes to the possibilities, ideologies, paradoxes and hysterias of the global
age - and above all, to the new power game to which everyone is to a greater or
lesser degree subjected.
To put it in another way, globality is an unavoidable condition of human intercourse at the close of the twentieth century.
The bases of the first modernity must therefore be renegotiated. What does tolerance mean? What do supposedly universal human rights involve in a context of cultural difference? Who will uphold human rights in a world that has left behind the national state? How can social safeguards that have been overwhelmingly guaranteed by the national state be redrawn and preserved amid increasing world poverty and a decline in paid employment? If national states crumble, will new wars of religion ensue, perhaps intensified by ecological disasters? Or are we heading towards a world without violence, finally at peace after the triumph of the world market? Are we perhaps even on the threshold of a second Enlightenment?
All this comes up in the wake of the globalization debate. But no one knows, or can know, how such questions affecting the core of civilization can be answered across the trenches that divide rich and poor, ethnic groups, continents or religions, each with their complex histories of violence.
From What Is Globalization? By Ulrich Beck. Polity Press, Cambridge: 2000