Introduction

excerpted from the book

Globalization
and the Decline of Social Reform

by Gary Teeple

Garamond Press / Humanity Books, 2000, paper

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Introduction

The 1980s was a watershed decade, a turning point in the history of capitalism. It was a period that witnessed the beginning of the end of a vast system of collective or state property in the so-called socialist countries, the establishment of computer-aided modes of production and distribution, the arrival of the global economy, and the adoption around the world of neo-liberal policies whose principle was the unrestrained economic power of private property. The decade signified the beginning of what has been called the triumph of capitalism.

For every triumph, there is a defeat. Visible in this decade was the apparent end of the achievements of the preceding decades, in which rebellion, revolution, and reform had sought to rectify injustices inherent in capitalism. The dismantling of the social and economic reforms to the laissez-faire economy, which had brought degrees of "distributive justice" and class "harmony" and had assisted in the consolidation and expansion of national capital formations over many decades, began in earnest.

These reforms, which culminated in the post-World War II period as the Keynesian welfare state (KWS), rested on certain economic and political conditions that had made their continued improvement possible. By the end of the 1970s the erosion of these conditions, a consequence of the internationalization of capital, new means of production, and declining national growth, had undermined the continuing expansion of reforms. Economic stagnation and inflation appeared in most of the industrial countries as the continuing expectations of the Keynesian era clashed with the new imperatives of the coming global economy. In the 1980s capital moved decisively beyond its historic political shell, the nation-state and its associated mitigating forces and influences.

The conditions allowing for social and economic reforms from the late nineteenth century to the 1970s also produced a corresponding political phenomenon in the shape of social democracy. Parties of this persuasion gave political voice to social strata within the working class whose immediate interests, while not those of capital, were tied to the success of capitalism and were embodied in reforms. By the 1980s, as these strata began to be levelled and the economic and political conditions permitting reforms went into decline, social democracy began to lose its social base and political purpose, and everywhere adopted policies and programs similar to those of parties representing the corporate sector. From a choice of more or less reform to the system, politics became mainly a choice of style.

By the 1970s this same economic transformation had called forth neo-liberal political and economic theories and public policies, directly challenging the social and economic reforms of the postwar era. Now introduced into almost every country of the world, neo-liberal policies are the hallmark of the transition between two eras. They are the policy changes that will "harmonize" the world of national capitals and nation states, creating a global system of internationalized capital and supranational institutions. Such global organization represents- the coming demise of long-established social and political institutions in the industrial nation-states.

Neo-liberalism as economic theory had a long period of gestation in the works of Ludwig von Mises, Friedrich Hayek, and Milton Friedman, among others. It was in 1973, however, that the theory received its first opportunity to be applied, to become the subject of an experiment in a given nation. In that year, the military coup d'etat in Chile put an end to democracy, to the reforms of the welfare state, to the trade union movement, and to civil liberties. For several years after, the regime tortured and put to death many thousands of people. Into this Washington-inspired dictatorship came the "Chicago Boys," "free marketeer" economists hired to restructure Chilean society, attempting to place it on a foundation of "market forces" with a minimal state.' The coup d'etat, as well as the subsequent military-police state and the abrogation of all aspects of democracy and reform, made for optimal conditions for this first attempt to create a resolutely market society, for this experiment to minimize the role of the state in social and economic life.

By the mid-1970s, neo-liberalism had become a distinctive influence in most existing conservative parties around the world; and it soon became, though not without internal struggle, the mainstay of party policy. Yet overall it appeared as only one party platform among others. As Thatcherism or Reaganism or monetarism or neo-conservatism, moreover, it seemed then to be a form of anomalous political extremism, a modern caricature of pre-nineteenth-century social contract theory. By the early 1980s its proponents had taken over most conservative parties and then increasingly won political power.

The opposition parties - liberal or social-democratic - at first decried the "free market" vision and the attack on social reforms. Yet, within a short time they gradually began to adopt similar policies or openly to declare no intention of reversing legislation designed to implement the vision of the "new right." Even where the electorate replaced conservative parties in power with liberal or social-democratic parties with a certain expectation of maintaining or protecting the reformist gains of the postwar period, the new governments proved eventually to be at least as committed to neo-liberalism as their political opposites. Such has been the case more or less around the world: in New Zealand, Australia, France, Portugal, Spain, the United Kingdom, and in the Canadian provinces of Ontario, British Columbia, and Saskatchewan. Even where social-democratic parties have been in power for long periods, as in the Scandinavian countries, they have had little choice in recent years, given their commitment to capitalism, but to adopt such policies.

Neo-liberalism has increasingly come to appear as a set of ideas "whose time has come," while social democracy, trade unionism, and the Keynesian welfare state have begun to appear more and more anachronistic. As the conditions for the postwar expansion of capital gradually waned, and as the great compromise between labour and capital in the industrial world began to come apart, the state was portrayed as a behemoth strangling the efforts and initiatives of the market, and the reforms of the welfare state came under attack in theory and practice. The vaunted "reformed capitalism" of the postwar period appeared to be increasingly "unworkable," its political proponents naive, and its costs "unaffordable."

At the same time the political options for government seemingly narrowed, with a corresponding growth in political apathy and cynicism about politics and politicians. The idea that politics determines national policies has gradually dissipated, and in its place has come the open assertion that economics is the deciding factor in more and more aspects of society. As two business commentators put it, "Economics is, au fond, the driving force behind politics in the modern world." The social and political possibilities and illusions built on postwar economic prosperity within the industrialized nation-state had begun to disintegrate.

Although the new right agenda reflects the interests of internationalized capital and goes far to advance the possibilities for accumulation on a global scale, it also accelerates the consequences of this consolidation of the rule of capital. The general trends of capitalist development in the industrial nations are hindered less and less by national social and economic reform. As a result, there is a progressive increase in economic inequality, with structural unemployment and poverty growing continuously; the trends in planetary pollution and environmental destruction continue to deepen; there is a decline in national sovereignty, with autocratic rule and coercive social control gradually becoming more common and alternations of the party in power increasingly meaningless; and there are widespread legislative assaults on wages, trade union rights, and labour standards. The victory of capital hastens its own very visible limitations.

These consequences have not gone unchallenged, for at the same time counter-movements, opposition, and challenges of all sorts have been expanding, both outside and inside the mainstream economic and political systems. While these alternatives and resistance are growing, the odds they face are enormous. The continuing legitimacy of the system, the persistent national "mind-set," hegemonic corporate control over the mass media, the conservatism of the trade unions, the concerted counterattacks by the state and representatives of capital, the paucity of financial resources, the growing sense of disillusionment, cynicism, and impotence, and the inadequate analysis of the present situation have all conspired to limit the growth of resistance and alternatives. The opposition, however, is far from moribund or non-existent, and much of it remains latent.

The profound and dramatic changes of the past decade or so raise many questions about all aspects of the post-World War II status quo. What is the nature of reforms, and why has social change in the industrial nations taken the shape of reform and not revolution? Why has the political voice of the organized working class taken the form of social democracy and not more radical political parties? Why do reforms and social democracy no longer seem viable as solutions to a host of growing problems? Why is the "reformed capitalism" we have taken for granted coming undone, and a new set of principles in the form of neo-liberalism gaining currency in theory and practice? What will a system of reproduction based primarily on the principles of the market mean for the future?

The pivotal point of the following argument is that we have entered a transitional era between two phases in the development of capitalism. In this period there has been a profound shift from a mode of production based on semi-automated processes, sometimes referred to as advanced Fordism, to a more automated mode based on microelectronics and computer applications. In this transition, in which nationally based economic development has been more or less transfigured into a self-generating global economy, all the social and political institutions associated with the national economy come into question and indeed begin to undergo a commensurate transformation.

Central to this transition are the neo-liberal policies and programs now being introduced around the world. These current changes in public policy are no mere ideological impositions, able to be reversed with the election of different political parties; they are, rather, the political reflection of the present transformation in the mode of production and the decline of nationally based economic development. They reflect the demands of new forms of production and the global market, accompanied by the undermining of modes of resistance to national capital by working classes and the change of conditions that once allowed for national compromises between capital and labour. In short, they represent the conscious retrenchment of national state intervention in the spheres of social reproduction. The neo-liberal agenda is the social and political counterpart to the globalization of production, distribution, and exchange.

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The triumph of capitalism, or the unmitigated rule of corporate private property, is unlikely to be benign, as attested by the example of Chile, among other nations, by the structural adjustment policies of the International Monetary Fund and the World Bank, and by growing disparities in wealth everywhere. It is now apparent that the social and political consequences of a single world market ruled by the coercive force of "economic justice" will be marked by increasing fear, poverty, and unfreedom. For that reason, resistance and alternatives to it should not be left merely to evolve. They must be made the subject of another conscious but counter agenda that is international in scope.

Globalization and the Decline of Social Reform

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