Changes in the contemporary world and the role of politics (Part 2)

Although the real amount of room for manoeuvre has been much reduced, there are elements which differentiate between one government and another. On the one hand, if we cannot differentiate them on the basis of questioning the need for a healthy macro-economy, it is equally certain that there is, for example, no deficit index which defines the macro-economic health of a country. Everything will depend on savings rates. In Chile, savings have grown a great deal, which means that the healthy deficit margin will be substantially different from that of any of its neighbours who have half its savings capacity. On the other hand, and this is essential, the difference between certain policies and others will be found in income and spending policy. If we accept the macro-economic objective of equilibrium and stability, our assessment on the fairness or unfairness of government action must rest on the sources of income chosen and what that income is spent on: that is who pays, how do they pay and how much do they pay, and who are the beneficiaries of the way in which that revenue is spent. Here there are differences indeed! And it is on this difference that I propose we focus debate and concentrate our thinking if, as I believe, we have certain areas of consensus.

On the other hand, I am concerned, in the midst of all these phenomena which we are living through, about how we define our room for political manoeuvre and what the role of the state should be. In fact, areas of consensus apart, we are facing collision between liberal democracy and the juggernaut of economic liberalism, understood as fundamentalist liberalism which excludes the role of the state and is irritated by the existence of political authorities. Let me put it this way, there are liberals in the field of economics, or liberal economists, who may be a danger both to the liberal democracy and the open society to which, for all their imperfections, we aspire and have the good fortune to belong. It is as though those liberals were seeking to achieve some sort of complete breakdown of all the rules of the game, excluding regulation and political intervention of any kind, on the pretext that ‘the market will sort out the problems’. But let us think about deregulating health, for instance. We Europeans have the example of the ‘mad cow crisis’ fresh in our minds; that crisis showed how the market does not sort out everything. As a result, we cannot resign ourselves to a collision between something that strikes us as positive – namely liberalizing the economy and opening up national economies to the world – and something that would strike us as negative, namely abandoning social cohesion and the degree of integration which we have achieved within our societies. No-one should forget that the social legitimation of liberal democracy, over and above voting, is precisely the fact of social cohesion. And we cannot resign ourselves to letting this collision happen between the two sides of a type of organized co-existence which I describe as liberal democracy, the one I like best out of all those experimented with in the course of history, fed up as I am with saviours and revolutions that produced one day of flame and 50 years of smoke, as Malraux used to say.

For that reason I suggest that we think about the role of the state, in full awareness of the fact that the nation State is in crisis.

We have, on the one hand, what I would call a supranationality crisis. The European Union, like Mercosur, is a model within which the symbols of sovereignty, as understood in the 19th Century, are starting to fade. In Europe, there is going to be a single currency, which will put an end to the idea of marking territorial boundaries by minting money; and there will also be integrated armed forces and a common defence policy, which will get rid of the spectres of war that have haunted 20th century Europe. In short, the supranationality crisis, which encourages us to put the genuine nationalist crises of the past behind us, has very positive sides to it.

On the other hand, the nation state is caught in what I would call the internationality crisis. Even in little countries, citizens feel central government to be remote, giving rise to demands for some kind of approximation to achieving representation for local areas, going further than clearly identifiable differences such as those which we know in Spain in the case of Catalonia or the Basque country. Ordinary citizens want the representation of their interests to be closer to them. The centralist state model is now in crisis, just as – mercifully – the communist-type totalitarian interventionists’ state model was, or that of the national populist state.

How should we define the model that we are putting forward? We can have a state – one without fat, a muscular state properly designed to do its job. But we cannot a gross, bloated state, laying down social policy according to the criteria of populist ‘clientelism’, which we have seen so often, nor can we have a purely skeletal state that bows to whatever interests are pushing it. We need to get beyond the model of the populist and clientelist state, but we cannot except the watering down of politics and the public interest in favour of the interest of market economy, which sometimes confuses the interests of the consumer, and we are all consumers, with the interests of the big economic groups. The latter, of course, loudly demand total freedom, and above all, captive markets. Businessmen are always more liberal when it comes to other businessmen than they are when it comes to themselves. They demand liberal measures from other businessmen and from other countries, but they also demand that if at all possible, their own market should be a captive one and that they should be allowed to carry out mergers which will eliminate the competition.

We need to look for a role for the public authorities. Not an entrepreneurial role, but perhaps a managerial one. To put it succinctly, we could say that the task of the state would be to endow countries with physical capital and human capital. Although the language I am using here may seemed to be aimed more at businessmen than at listeners on the Left, I genuinely want the other side to listen to us on the Left and understand us. For that reason, I am not speaking about social spending. That would be using terminology familiar to us. If we want our reasons for believing fairness to be a necessity if a growth model is to be sustained to penetrate the conceptual world of our partners on the other side – i.e. businessmen above all – I would prefer them to view educational or health spending not as ‘social’ expenditure, but as an investment in human capital. No more and no less than capital essential if they are to sustain their growth model. Their model. And sustain it tomorrow and the day after tomorrow.

We ought to speak clearly to the business world, and we ought to be clear in our own minds: if we take as our example the whole of Latin America and its educational systems, the development model which they want to practise is not sustainable. Not only is it not fair – that goes without saying. It is also not sustainable. In terms of time spent in education, Latin America scores less than half of what the developing countries of South East Asia enjoy, and only a third of their school uptake. We should think about this, and should the business world: how are we going to be in a position to contract and take on properly trained young people within the next ten years? I am not speaking about big businesses which might even decide to provide the vocational training themselves; I am thinking of the 50 million small and medium sized undertakings – who are they going to take on? Twelve percent of the workforce? It is not just that these undertakings do not offer training for their workers; the businessmen themselves fall short in terms of human capital levels: they have no information, they have no training, and, most alarmingly of all in this climate of market-worship, they have not access to credit, because they are not reliable. And we will find it very difficult to improve their situation by means of fiscal measures, because a large number of the SMEs lie outside the tax circuit.

Our efforts to define the role of politics and political matters should go hand in hand with putting a break on a fashionable worldwide phenomenon that seems to me to meet to be rooted in a kind of subconscious fascism. I refer to the image of the corrupt politician, the useless politician, the speech-spouting politician unconcerned with reality. This image prevails in many of our societies. Undoubtedly, certain positions have earned this reputation. But it is worth taking a rather harder look at the phenomenon, and there is no better way of doing so than to look at the example provided by a survey carried out by a Spanish television company. Seventy-five percent of those questioned claimed that being a politician meant having all the advantages and being able to take advantage of everything. Here, we should note the very interesting answers to a second question. Seventy-five percent of those interviewed said that they did not want their children to become politicians. Any other career or job was regarded as more prestigious than entering politics.

To conclude this presentation of the ideas that we are dealing with and the frame of mind in which we are tackling the work of the ‘Global Progress’ Commission, I would like to leave you with one last thought. After the Cold War, we found that we had inherited a certain amount of ‘world dis-order’. We need to organize this relative dis-order, and there are tremendously exciting developments there to help us do so. Let us stay here in Latin America for the moment. The USA did not believe that there was any future for Mercosur. But Mercosur continues on its way, not without difficulties. The USA did not think it was feasible for Chile to reach an agreement with Mercosur. And Chile an agreement with Mercosur. The US view of this subregional body has changed. All the agreements achieved then the Mercosur framework are liberalizing and, on the contrary, we hear voices from the north talking about ‘fortress Mercosur’. These integration developments show ways forward, encouraging us to advocate that a good way of organizing the new unipolar world might well be what I term ‘open regionalism’, as a realistic attempt to rebalance international relations.

With your permission, one final thought, or rather a further underlining of what I think is a vital point. Different political and economic models have produced results as far as economic growth is concerned. But as Héctor Aguilar Camín says, ‘for decades Mexico has been growing at an average rate of 6 or 7% and, nonetheless over half of the Mexican population has never found about this growth’. It was the Keynesian period following the second war and during the war. That period has ended, but now we are witnessing another phase of growth, and large scale growth at that. Here in Latin America too. I share the view of the liberals that our responsibility is to encourage conditions for growth and I am not ashamed to say so. That is why I began by referring to macroeconomic stability. On the other hand, I do not share the liberal view that everything else – fairness, social cohesion and solidarity – will simply happen by itself. Because that has not been the case, it is not the case, and it never will be the case. For that reason we need to find the path of social cohesion, not just because of fairness, or some heartfelt emotional impulse towards solidarity, but because the model of coexistence and growth in which we are currently living – let’s call it liberal democracy – will not indefinitely hold out against the development of an ever widening gap between the richest and poorest members of society. It anyone selfishly follows this model of growth without fairness, they will jeopardize there own model, and there will always be some populist demagogue ready to smash it in six months. Or a saviour of the motherland. Who knows. Thank you.


Changes in the contemporary world and the role of politics. Part 1

Major changes in human history have always been accompanied by revolutions in the way human beings communicate with each other. What some people call the discovery of America, and others the meeting of two worlds, should be considered as a communications revolution. In our own day, we are taking part in the great communications revolution that allows us to know in real time terms what is happening anywhere on the planet. And it is a worrying fact that information saturation means that we pay relatively little interest to what is actually going on in any given part of the world, unless CNN draws our attention to it. There may be events just as serious and dramatic going on in another country, but our dependence on the media is so appalling that all we will know about is the particular country that CNN happens to train its cameras on; our dependency actually determines our responses and feelings, and even our ability to think.
We are in the midst of a technical revolution which affects industrial relations, the way people co-exist with each other and, most definitely, social relations. More specifically, this revolution is affecting concepts like solidarity. In the first and second industrial revolutions, solidarity was a shared living experience. With the disappearance of the major industrial complexes and production lines and their replacement by semi-intelligent machinery, it looks as if man has gone back to his primitive way of life as a shepherd – a shepherd of machines. He is no longer part of the machine, as in the first and second industrial revolutions. What consequences will this change have for solidarity, over and above the emotion and sentiment which nestle within any relationship built on solidarity? The impact is going to be simply incalculable. Developed societies are already experiencing a transformation which is shattering the living experience of coexisting in a spirit of solidarity within companies, families or urban districts. Today, the urban districts are empty, while companies are no longer companies where men and women form part of the production line, but companies where far fewer men and far fewer women run or monitor the machine – I repeat, they are shepherds looking after herds of machines. These changes improve working conditions, but they create a shocking employment problem, and they are shattering the experience of solidarity as a shared and living thing, the experience which characterised the first and second industrial revolutions.

Alongside the communications revolution and the breakdown of solidarity in the classical meaning of the word the third characteristic of the globalized world, from an economic point of view, is the explosive freedom of movement of capital. Now, while it is certainly true commercial transactions have increased in volume, they also increased at similar rates following the First World War, and indeed, there have been various historical periods when the growth rates of international trade have been as high as they are today. So where is the novelty of the phenomenon today? The novelty resides in the fact that what is increasing is not merely trade in goods and services, or investment in production; the movement of capital is also increasing at dizzying speed more as a virtual reality than one in which actually transfers of money take place. We all have the data burnt into our brains: every day the exchange markets of the world see 1.3 to 1.4 billion dollars in circulation, i.e. the entire value of the annual GDP of Latin America. And, this ‘dragon’ that makes its daily tours it way round the exchange markets comprises less than 10% of real trades, the remaining 90% being money that is looking for money in the exchange markets. That is the new phenomenon.

Now that we have a clear grasp of these realities, the first question which arises is: what real room for manoeuvre do governments have? Or to put it more bluntly, can a left wing government have any room for manoeuvre to implement domestic macro-economic policies which are not concerned to achieve equilibrium? These issues are worth discussing; but I would say that healthy macro-economic policies are a sine qua non for growth on a solid foundation, without inflation and without compromising the system’s distributive capacity.