This was written in late 2006. I couldn't persuade anyone to publish it, although a summary version appeared on Comment is free.
Thanks to globalisation, the world now struggles under a dichotomy which is both obvious and routinely ignored: While the nation state remains the principal vehicle for political decision making, citizens of all nation states are now participants in, and reliant upon, a single global economy.
For individual nations, the price of access to the undoubted benefits of global economic convergence has been a loss of control over domestic economies. As a consequence, national governments are now less able to respond to the demands of their electorates than was previously the case. This would not be an issue were the benefits of economic globalisation being felt universally, or if the new regime was proving adequate to the particular challenges of the twenty-first century. But the new global order is failing on both counts, and questions have to be asked in respect of two key issues: First, is the current model of globalised capitalism likely to be able to address the problem of the distribution of wealth, and of equity in access to viable economic opportunities, with the same success as it has addressed the problem of wealth creation? If not, will it permit intervention by national governments or transnational bodies to tackle poverty and social exclusion? Second, is the free market likely to respond effectively, and with sufficient urgency, to the problems posed by global warming. If not, will it allow a concerted, collaborative effort among national governments to take steps to avert a catastrophe that seems to be bearing down on us with frightening speed? If, as I believe, the answer to each of these questions is no, then we need to find other means to address these issues; ideally ones which build on what is valuable in existing political and economic structures and consolidate the gains of the last thirty years.
Contrary to the impression given by some politicians and campaigners, there is no easy way to tackle the endemic poverty affecting many parts of the world. As for global warming, few scientists any longer doubt the gravity of threat posed, or the urgent need for action. Effective solutions to both problems require structural change and will be costly. Those costs will inevitably be felt most by those nations and individuals which currently benefit most from prevailing economic arrangements. This is why the financial markets, which nowadays sit in judgement on all decisions which have economic ramifications but which are not made by the market, react negatively to attempts to address the twin evils of poverty and global warming.
The financial markets cannot be blamed for lacking moral integrity, or caring nothing for the fate of the planet. The market is a value-free mechanism through which the competing preferences and desires, and the relative financial muscle, of billions of people are mediated and reconciled. That mechanism is currently not configured to factor in non-financial considerations. It could be reconfigured to factor in moral or environmental considerations, but such a reconfiguration could only come about from the proper working of another mechanism: the democratic process, the function of which is to mediate and reconcile the competing political beliefs and social aspirations of populations, or of competing interest groups within populations. But under a single global economy, democracy cannot modify the context in which the market mechanism works because there is no single global democracy. Increasingly, democracy is unable to promote the interests of majorities within nations because it cannot influence the wider economic context; and it fails to promote the interests of the majority of citizens globally, because there is no democratic forum through which the global population can make their wishes known.
Our commitment to free markets is not the cause of everything that is wrong with the world, as many on the left suggest: It is the separation of democracy from the economy which leaves politicians impotent and electorates frustrated. On current evidence it is clear that without an effective global forum for democratic decision making, little progress can be made towards the adoption of effective policies to tackle either poverty or global warming. For this to happen, we must find a way of reconciling our twin commitments: to democracy as the preferred means of social decision making, and to the free market as the preferred means of ensuring economic efficiency and optimal resource use. As long as these two fundamental forces in human social relations operate at different levels, one national and the other global, we will be unable to confront two of the most pressing issues of our time.
This separation of democracy from the economy is the inevitable consequence of the final phase of the globalisation process which began with the abandonment of controls on capital movements by the United States in 1974. It was a policy taken up with varying degrees of enthusiasm by other countries once Margaret Thatcher assumed control of the process in 1979. Since then, new markets in all kinds of financial products have come into being. Many of these have nothing to do with facilitating trade and investment in the real economy upon which most people depend for their livelihoods. These new markets have been devised by the financial services industry to provide vehicles through which those with surplus wealth can make speculative investments with a view to further increasing their wealth. They are, however, sufficiently connected to the real economy to hold great power over it. While the market mechanism may be value free, those who set the rules under which the financial markets, and other elements of the global economic infrastructure operate, clearly do have values. Unfortunately, their idea of what constitutes a successful economy often has little to do with the needs of poor people or with the fate of the planet.
Under current arrangements, the financial markets have one objective: to maximise short-term returns. If a government’s domestic policies create conditions which reduce those returns, fund managers will take their clients’ cash elsewhere, usually with negative consequences for the real economy. If, for example, an elected government proposed a tax-funded programme of massive investment in transport infrastructure which did not promise substantial profits to the private sector – the kind of policy that was commonplace until the late 1960s on both sides of the Atlantic – the subsequent modest reduction in short-term returns on private investment would drive many investors to seek more profitable opportunities abroad. As things stand, no such policy could be implemented, because no ambitious politician would dare pursue it: the markets would cry foul, the media would have a field day, and the wishes of the electorate for improvements in transport infrastructure (which the private sector had been unable to deliver) would be disregarded.
This example describes the context of the argument between old and new Labour: Tony Blair and Gordon Brown, both of whom appear committed to social justice, recognise the implications of the new global economic order for domestic policy. They therefore pursue a strategy of economic success on the terms of the current model in the hope of maximising the possibilities for redistributing wealth without compromising economic efficiency or competitiveness. It is a strategy that has met with some success. Old Labour, on the other hand, sees only a lost opportunity: much more should have been achieved after a decade in power, its supporters argue, but they fail to explain how, given global economic realities, the Government could have finessed a greater redistribution either of wealth, or of the economic opportunities that beget wealth, without incurring the wrath of the markets.
Since the stabilising but otherwise limiting mechanisms of the post war economic consensus were swept away, and national governments were forced to give up the tools of Keynesian economic management, the rules by which the global economy operates have remained largely unchanged. Attempts to modify the context in which the markets operate – like the Doha round of trade negotiations, or the Kyoto protocol on carbon emissions – generally fail because the competing interests of the various protagonists are irreconcilable within the current global framework. We have ended up with a ‘best-fit’ economy, one that most closely matches the pre-existing balance of wealth and power in the world, and one that is quite unable to make poverty history, or to take effective measures to combat global warming.
Moving the economy onto a global platform was a carefully planned and executed strategy by economists and politicians who wanted to create optimal conditions for the accumulation of private wealth. Many advocates argued that this was the best way of ensuring the economy would deliver opportunities and prosperity for all. No doubt some were sincere in this belief, but despite considerable success in bringing unprecedented prosperity to sections of the population in countries such as India and China, there has been little impact on poverty in Africa. And the short-lived achievements of Indonesia and Argentina suggest that the opportunities for economic advance provided by globalisation are not easily made permanent in countries which missed out on earlier key phases of economic development.
If the changes of the last three decades were deliberate, and driven by the wishes of established democracies, then surely they were legitimate? If electorates voted into power governments that promised to radically alter the basis of global economic relations, and those governments did exactly that, then can we really complain? These questions go to the heart of the matter. Over the last three decades, the democratic will of electorates in a handful of the richest nations has succeeded in shaping the economic structures under which all the world’s people have to live, but at no point was any attempt made to consult most of those affected.
Not only were the majority of nations denied input into decisions about structural economic changes, the effects of which they could not avoid; but the nature of those changes has placed control of the economy beyond the reach of all national governments. As the economy is the key determinant of social outcomes which impact on the citizens of nation states, then democracy is no longer able to fulfil its purpose. It seems rather perverse that we are trying to sell the merits of democracy to poorer, politically less mature countries at precisely the moment that democracy has been neutralised as a force for social progress by economic globalisation.
There is growing disillusion with globalisation and frustration at the inability of politicians to influence the direction of ongoing change. Millions of people believe we should be doing more about poverty in the developing world, but despite massive publicity, and the well-intentioned efforts of the Global Justice Movement, nothing much changes. Those who believe in the possibility of a more equitable world, or in the need to balance economic considerations with ecological imperatives, currently have no means through which to realise their moral ambitions. Opponents of the current order may lack an effective strategy for change, but they refuse to accept that there is no alternative, and they are fully aware that the supposed lack of an alternative has nothing to do with immutable laws of economics and everything to do with defending the interests of a wealthy elite that appears to hold some mystical power over democratically elected politicians.
The problem facing national governments is that policies aimed at creating a more inclusive economy, or a more environmentally sustainable society, risk an unacceptable loss of competitive advantage. The unilateral implementation of such people- and planet-friendly policies would have consequences for the domestic economy and therefore for the electoral prospects of any government attempting them. It follows that for any policy initiative to succeed in tackling poverty and global warming, it must be planned and executed simultaneously by all, or at least most, nation states. Only this way can the threat of competitive disadvantage be avoided.
A few years ago, London businessman John Bunzl was struggling with this very thought. It led him to conceive the Simultaneous Policy Initiative, a scheme through which policies that carry unacceptable electoral risks could be developed and implemented simultaneously by nations working together towards common goals. Since then, the idea has been developed by a growing band of articulate supporters who have come up with a political strategy for its implementation which makes use of existing democratic institutions: People are invited to become ‘adopters’ of Simultaneous Policy (SP). Adopters pledge either to vote only for candidates who have also signed up or alternatively to lobby candidates of their preferred political party to adopt SP. There is no SP Party: supporters and candidates of all parties are invited to become adopters, and there is nothing in the movement’s guiding principles to discourage people of any political persuasion from signing up.
In theory, getting MPs and parliamentary candidates to adopt should not be difficult, as supporting the principle of SP carries no electoral risk. Simultaneous Policy would only have an impact in terms of policy decisions if a majority of elected representatives in the vast majority of countries were to sign up. For the time being, any candidate can adopt SP without risking electoral support. What this means, however, is that just a small number of adopters in each constituency could have a considerable impact. If one candidate signs up during an election campaign, the others would be foolish not to for they may lose votes. This strategy may not alter the election result but it would ensure that gradually more SP-supporting MPs were returned until a critical mass was reached. If this success were to be replicated in many countries, SP could rapidly become a major factor in global politics.
If it sounds rather convoluted and improbable, among the thousands of adopters already to have taken the pledge are fifteen sitting MPs. They include Labour Campaign Group Chair, John McDonnell, Tories Andrew Pelling and John Penrose, several Lib-Dems and Adam Price of Plaid Cymru. Green Party MEP Caroline Lucas is also an adopter, and the movement boasts endorsements from Noam Chomsky, Polly Toynbee, Tony Benn, Jose Ramos-Horta, Diana Schumacher and Sir Richard Body, the former Conservative MP and noted eurosceptic.
The idea that global problems demand global solutions which in turn require simultaneous implementation in order that no nation suffer any loss relative to others is not difficult to grasp. Work published under the SP umbrella indicates that most adopters share commitments to global economic justice and to saving the planet. SP makes the obvious point that in order to solve global problems, cooperation, rather than competition, has to become the defining characteristic of relations between nations.
Debate so far among SP adopters is remarkable for its lack of traditional left-right party political influence. Although SP rejects socialism and embraces the free market, its principal concerns are social justice and environmental sustainability. As Bunzl says, "it provides a global regulatory and governance framework within which global free markets can operate freely, fairly, and within sustainable environmental limits". It recognises, for example, that the quickest way to address global warming is to impose and enforce tough limits on carbon emissions worldwide. This becomes feasible only if no country need worry about suffering the loss of competitive advantage that would inevitably follow from unilateral action.
As well as addressing the problem of first-mover disadvantage, SP also insulates against adverse market reactions by removing the means through which speculators are able to play national economies off against each other. The impact of uncontrolled capital movement across borders for speculative motives, rather than for investment in tangible wealth creating enterprise, and the subsequent effect on the ability of local populations to access viable economic opportunities, is another focus for simultaneous policy development. Through sensible and coordinated regulation, the financial markets could return to their original purpose of supporting the real economy instead of frequently undermining it.
But how would policies for simultaneous implementation be developed and decided upon? According to the constitution of the International Simultaneous Policy Organisation, they would be proposed and voted upon by all SP adopters. Local policy development groups would feed into national fora in each country. These would then submit proposals to a global policy forum comprising elected representatives of all national groups. If one nation, or a group of SP adopters from many nations, come up with a policy proposal for debate, they would need to convince all other nations that it is mutually beneficial, otherwise it will not be implemented. Once the structure was in place, mutually beneficial economic advance, based on cooperation and a universal recognition of common interests would become the norm. The decision making process advocated by SP necessarily encourages policy proposals motivated by the values of cooperation, sustainability and global justice. Competitive, exclusive or self-interested policies would not get a hearing.
Simultaneous Policy offers the possibility of change and reconstruction without dismantling existing nation-state based political structures. It works through national democracies and should therefore hold no fears for those who believe the preservation of national sovereignty to be paramount. It could be a stepping stone to a post nation state world, but nothing about SP implies or demands this. It does not require the aggregation of individual democracies into larger units (like the European Union) nor does it threaten cultural diversity. Indeed it may well preserve cultural diversity: If simultaneous policies were to succeed in levelling the economic playing field, promoting greater economic justice and increasing opportunities and prosperity in poorer countries, then the main motivation for economic migration would be removed.
The problems facing the world today are not a consequence of its division into nation states. The underlying cause of our failure to address the environmental threat or to eradicate poverty is the competitive basis of relations between nations. Given the cool response that generally greets calls for world government, SP offers a workable and acceptable alternative; a means of forcing nations to cooperate on matters of grave global concern which safeguards national sovereignty, entrenches the nation state as the principal unit of democratic decision making, and facilitates the taking of difficult but necessary decisions which, under current arrangements, cannot be taken.
There are several obstacles to this idea gaining the widespread support it needs to make headway. First, although most people value democracy, few see how it can be a useful tool in solving problems which arise from the competitive nature of relations between nations. Second, it may well be that humankind is not yet ready to confront the challenges it faces: historical progress often occurs only after the collapse of one civilisation or culture and its replacement by another, slightly wiser, one. Third, we are clearly suffering from a bout of collective denial in respect of the likely consequences of failing to address economic exclusion and environmental breakdown. Too many people are reluctant to engage seriously with reality, among them many politicians. This is, perhaps, an understandable psychological response on the part of individuals whom, in the absence of obvious solutions, choose to fall back on an irrational belief that things will somehow turn out all right in the end. But denial is a luxury we call ill afford.
Each of these obstacles can, and must, be overcome. Although few people realise it, established democratic institutions already provide a mechanism through which ordinary people can force change in pursuit of a more equitable and sustainable world. If electorates choose to reject the opportunities provided by SP, then the idea will die, but they should first be given the opportunity to make an informed decision.
Too many politicians, economists and opinion formers argue that globalisation on current terms is the only game in town. Their lack of ambition fails to acknowledge that we can choose the kind of globalisation we want. It does not have to be the kind that destroys the planet and enriches only a minority. If people want to save the planet, to bring about a fairer global society, and to solve the problems that arise from economic migration in a world that never has enough jobs to go around, then gradually moving the basis of international relations from competition to cooperation is crucial. If SP offers a democratic mechanism for the incremental achievement of that goal, then it deserves a hearing.
All great evolutionary leaps forward result from new levels of cooperation among groups which had previously assumed competition to be the natural order of relations between them. The Simultaneous Policy Initiative appears to offer a framework for the next such paradigm shift, and with it an opportunity for democratic renewal: to create conditions in which people can once again engage enthusiastically with politics towards mutually beneficial ends.