BEYOND THE NATION STATE

BEYOND THE NATION STATE?

The Vilhelm Aubert Lecture at the University of Oslo, September 1997.

J. HABERMAS. From the Peace Review, 1998, 10(2):235-239.

Ironically, developed societies at century's end must confront the return of a problem that they seemed, under the pressure of system rivalry, to have just solved. It is a problem as old as capitalism itself. how to exploit the allocative functions of self-regulating markets effectively without incurring unequal distribution and social costs that undermine the integration of liberal societies. In the West's mixed economies, the state--with much of the national product at its disposal--had gained a certain latitude for making transfer and subsidy payments and, on the whole, for establishing efficient policies for employment, infrastructure and social security. The state could influence the overall conditions of production and distribution, with the aim of achieving growth, price stability and full employment. In other words, the regulatory state could, through growth inducements on the one hand and social policy on the other hand, simultaneously stimulate the economy and guarantee social integration.

To guarantee both economic efficiency on the one hand and political freedom and social security on the other hand--that is, to fit capitalism to democracy--a welfare state had to be constructed that ensured, at a high level of employment, a relatively high average living standard and widespread prosperity. Despite their differences, the social policy sectors of countries like the U.S., Japan and the Federal Republic of Germany all expanded until the 1980s. But now this trend is being reversed: benefits drop, while access to social security systems is toughened, and pressure on the unemployed increases. The welfare state's reduction has resulted from a supply-side economic policy that seeks to deregulated markets, reduce subsidies and improve investment conditions. This approach has featured anti-inflationary monetary and interest-rate policies, a reduction of direct taxes, the transfer of state-owned enterprise into private ownership, and other similar measures.

Revoking the welfare-state compromise invites the very crises welfare had been designed to counterbalance. Social costs are rising to levels that might exceed the integration capacity of liberal societies. Growing poverty and social insecurity have emerged as a corollary of growing income disparities, and social disintegration has followed. The gap widens between the living conditions of the employed, the underemployed and the unemployed. And the employed now have a much more differentiated status: according to their segment of the labor market, the type of labor contract (core versus short-time staff), the degree of job stability (main companies versus subcontracted suppliers), their origins (nationals versus immigrant labor), and their legal versus illegal status. The "risk groups" of the laboring population--those considered "hard to place in jobs"--can easily be classified by age, gender, ethnic origins, health handicaps, degree of education, number of children, and so forth.

Facing the collective fate of becoming "superfluous" has little to do with individual qualifications and dispositions. "Underclasses" emerge from exclusions: from the employment system, from further education, from transfer payments, from the housing market, from family resources, and so forth. These heterogeneous groups, largely segmented from the rest of society and left to immiscration, can no longer change their social situation by their own efforts. This cumulative exclusion distinguishes an "underclass" from traditional "lower classes."

In the long run, this de-solidarization will inevitably destroy a liberal political culture. Democratic societies depend precisely on those shared beliefs, attitudes and practices that articulate universalistic principles. While perhaps procedurally correct, majority decisions increasingly emerge as self-defense reactions by those who fear a loss of status. These increasingly right-wing populist sentiments erode the legitimacy of the very democratic institutions they apparently follow. Neoliberals accept a higher degree of social injustice; they find inherently "fair" the manner by which the world's financial markets "evaluate" the economies of competing countries. They assess the present situation differently from those who still advocate "social democracy" and who regard equal social rights as the mainstay of democratic citizenship. Both sides, however, describe the dilemma similarly. They see national governments being forced into a zero-sum game where inescapable economic imperatives can be followed only by risking important social and political objectives. With the globalized economy, nation states can be internationally competitive only through self-inflicted restrictions on their capacity to act. This rationalizes their restrictive policies at home, which erode social cohesion and test democratic stability.

This dilemma boils down to two issues. First, the economic problems of affluent societies can be explained by structural changes in the world economy, now commonly known as "globalization." Second, this transformation restricts national governments, rendering them less able to "cushion" undesirable social and political side-effects of transnational economic transactions.

We must be more precise about the now fashionable talk of the "globalization of markets." Naturally, there is no such thing as the universal market. In this context, "globalization" has several characteristics. First, the expansion and increasingly dense interaction of international trade in various markets, especially in industrial goods, has been transforming "national" economics into dependencies of the world economy. The composition of trade has also been changing: as a consequence of new communications technologies, services can now be traded that are produced, stored and then consumed at different locations far removed from one another (consider the outsourcing of software tasks to developing countries).

Second, the global networking of financial markets encourages short-term investments and accelerates capital flows. Capital, now more mobile, can more readily slip through the fingers of national fiscal authorities. Speculation in foreign exchange generates a kind of independent "symbolic economy." On the other hand, governments feel pressure from international stock exchanges, which swiftly react to interest rate policies and budgetary measures, thereby "evaluating" national investment conditions.

Third, increasing direct foreign investment results from multinational corporate activities, whose decisions become ever more independent of local concerns, as they increasingly use (or threaten) their new exit options. There is now debate over the size of the "exportation of jobs," for example, from Western Europe to low-wage countries in South East Asia, Latin America and Central and Eastern Europe. In the developed countries, low-skilled blue-collar workers in industries with low-level technology and comparatively low productivity bear the brunt of this. And fourth, with the rapid increase in the industrial goods exported by the "newly industrialized countries," the OECD countries face mounting competitive pressures that bias their restructuring efforts toward high-tech sectors.

If this appropriately describes prevailing trends, then we can no longer view the world economy as an "international" system of exchange in which nation states participate as important actors, buttressed by their respective economics and competing with one another through foreign trade channels. Instead, the economy's globalization creates a transnational system that blurs the boundaries between domestic and foreign trade, and thus forces nation states to change their view of themselves as world actors.

Since the power to structure interactions has now been transferred to deregulated markets that are less and less confined by territorial borders, the political scope of nation states is less curbed by the strategic decisions of other nation states but increasingly constrained by systemic interdependencies. The aggregate individual decisions taken worldwide by a huge and opaque number of market participants generate contextual constraints that can be somewhat calculated but not easily influenced compared with shaping the behavior of strategic opponents. Within the transnational model, even the most powerful governments depend oil globalized markets and find themselves unable to frame economic processes politically.

The nation state has fewer and fewer options. Protectionism and demand-sidee economic policies, for example, are no longer viable. To the extent that capital movements can be controlled at all, the costs of a protectionist domestic economy would soon soar to unacceptable heights under current world economic conditions. State employment programs also fail, not only because of limits put on the public debt but also because they have decreasing effectiveness within a national framework. In a globalized economy, "Keynesianism in one country" no longer works.

Instead, it will be more promising to devise a policy to adapt national conditions to global competition. "New Labour" has adopted this approach. It relies on a long-term industrial policy, the promotion of research and development (for future innovation), the increasing qualification of the workforce (through better training and further education), and a reasonable degree of "flexibility" for the labor market. In the medium term, these measures would bring about local advantages, but would not change the pattern of international competition between countries. Nor does it help the miners and dock workers who have been laid off. The lower-strate unemployed would probably profit from a deregulation of the labor market but only if a low-wage sector were permitted where cheap jobs were subsidized, such as by imposing a negative income tax--a program the German Social Democrats have now advocated.

To give this idea a more radical twist, we could endorse a general, state-guaranteed citizen income, as originally proposed by Andre Gorz and now backed by Claus Offe, among others. Severing the link between income and employment would place the current "economic society"--now centered on the traditional role of full-time wage labor-on a new footing and create an equivalent for the disintegrating welfare system. This "basic income" would absorb the capitalist world market's destructive impact on those who slide into the increasingly "superfluous" population. Such a radical redistribution program requires, however, a change in deep-rooted values that will be difficult to orchestrate. Also, under present conditions of global competition, we might wonder how the program could be financed within the budgetary limits of individual nation states, since the target income would have to be above the lowest level of welfare support.

The globalization of the economy ends the history of the welfare-state compromise. While it by no means ideally solved capitalism's inherent problems, this compromise had at least succeeded in keeping social costs within accepted limits. Despite the bureaucratization and "normalization" so convincingly criticized by Michel Foucault, the scale of social disparities under this compromise was limited sufficiently to avoid the manifest repudiation of the normative promises of the democratic and liberal tradition.

If making the European Political Union has been difficult, how much more so will it be to devise a broader economic world order? It would require the implementation of transnational free-market conditions such as those now pursued by the World Bank and the International Monetary Fund, as well as the worldwide development of informed political opinion and the will to produce binding political decisions. Since the demands of a globalized economy exceed the powers of single nation states, the obvious alternative--in abstract theory--would be to transfer the functions previously performed by the welfare state to supranational agencies. But this level lacks another mode of political coordination: something that would channel the undesirable social and ecological side-effects of transnational economic flows and steer them in troubled waters. There is already a network of institutions interconnecting the 180 sovereign states even below the abstract level of the United Nations. About 330 governmental organizations, more than half of them founded after 1960, have been designed for economic, social and peacekeeping functions. But they are too weak to take binding decisions and to assume any efficient regulatory function over the economy, ecology or social security.

From the viewpoint of mainstream social and political science, a global welfare regime seems quite rapturous if not bizarre. Similarly regarded would be those approaches that assume that by choosing particular conceptual frameworks, complex societies can consciously exercise political influence upon themselves and self-reflexively cope with the failures of functional subsystems. Of course, nobody likes to keep heading for utopia, much less so today when all utopian energies seem to be exhausted. Thus, in the absence of any noteworthy social science initiatives, the idea of supranational politics catching up with globalized markets has not yet even reached the stage of a "project."

But we could begin to speak of such a project if we could outline new transnational procedures and institutions that reflect political opinion, and that suggest how compromises between obviously conflicting interests could reasonably be achieved within the existing global political order. In a stratified world society like ours, irreconcilable interests arise out of the asymmetrical interdependency between developed, newly industrialized, and underdeveloped countries. But these conflicts can be minimized by devising institutionalized procedures for a transnational political process that induces those few collective actors most capable of global action to give priority not merely to their own interests but also to the advantages of "global governance."