Global Policy Forum

By Professor Bob Deacon

The Case for a Socially Responsible Globalization

Preamble.

Many discussions about the social impact of globalization point to the negative consequences of greater liberalisation of trade and investment upon social inequality both within countries and between them and go on to focus on the perpetuation of poverty among the poorest of the poor in the world. This then leads to a policy strategy which targets limited resources on the poorest. While understandable this approach misses much of the point and may generate a residualist social policy orientation that history has shown does not serve the poor well.

The point of this presentation is to argue that the social impact of globalization as it is currently conceived and managed is much wider than this..it effects potentially in a negative way the social welfare of citizens in developed, transition and developing countries. There is a danger, often overstated however as I shall show, that the universalistic social solidaristic approaches to social policy common in many developed countries, still existing in many transition countries and being pursued in some developing countries will be challenged and undermined by the economic logic and ideological zeal currently associated with a liberalising globalisation. The need is now for a socially responsible globlalization (globalization with a human face) which combines global trade and investment with global (and regional) social redistribution, global (and regional) social regulation and global (and regional) social empowerment of citizens everywhere.

In a short presentation I can only make a few assertions. The basis of these assertions and the evidence and argumentation that underpins them can be found in the longer paper entitled Globalisation and Social Policy: International Actors and Discourses which some of you have and which can be downloaded fro the GASPP web site at http://www.stakes.fi/gaspp

These ideas are the results of some of the work of the Globalism and Social Policy Programme (GASPP) which is a joint research programme based partly in Helsinki and partly in the UK. Economic competition and welfare states,

The danger of a race to the welfare bottom where countries reduce taxation on employers and loosen labour and social regulation in order to attract footloose capital and reassure global financial traders is a feature of the contemporary global politics of welfare. However some liberalising policy initiatives taken in the name of globalization are motivated by ideological commitment to liberalisation..globalization is the (false) justification.

The reality is more complex but there is now a measure of agreement in the literature that suggests:

i)Welfare states that are financed out of employer payroll contributions are more threatened by economic competition than either privatised welfare 'states' or ,and this point is largely ignored by ideological liberal globalizers, welfare states financed out of income and consumer taxes. (Citizens have always been able to trade wages for welfare so long as it is not at the expense of profit. Governments can go on redistributing between income groups if they have the political will despite globalization).

ii)Globalization has segmented the labour market north and south into high tech jobs and low skill jobs. The south has come to the north as well as the north to the south. It is holders of low skill jobs in the north whose social welfare is challenged by globalization. However, again a point usually lost on ideological liberalisers, this only strengthens the case for income redistribution within countries so as to soften the resistance of low wage earners to globalization.

iii)Globalization of investment in services as envisaged by the stalled MAI would have posed a further challenge to governments wishing to provide monopolistic state social and health services.

The dangers of protectionism.

Although some of the threats to welfare states posed by global economic competition have been overstated and some of the liberalising social policy reforms apparently made necessary by globalization have been shown to be motivated not by economic necessity but ideological zeal there remains none-the-less a threat to universalistic forms of national social solidarity as a result of the current form that globalization is taking. The case is now being articulated in many quarters for a reform of globalization, for a socially responsible globalization.

Just as unfettered capitalism within single countries in the 19th century lead through class struggle, fear of the underclass, and through the persuasion of reformists to cross-class compacts providing varying degrees of social security so now at the close of the 20th century we are witnessing the same calls for the reform of global capitalism for fear of the consequences. The fears oscillate between the spectre of social disintegration, crime and social unrest which would follow if the current phase of liberalising globalism were to go unchecked and the warnings of a new national and regional protectionism with the subsequent danger of international conflict that this would presage.

Paul Hirst writing in a recent issue of Foreign Affairs warns;
'under the rhetoric of responding to international competitive pressures many countries are cutting welfare, attempting to reduce wages, and rendering labour markets more competitive. They are in danger of damaging prosperity by undermining its social foundations....................The danger of recklessly pursued internationalisation without sufficient regard to its social effects is that there will be revolts against an open international economy in both the advanced and the developing world. In the developing world new protectionism arguments are gaining momentum and span a broad political spectrum. Thus we see environmentalists rejecting long-distance trade between advanced countries as wasteful, trade unions opposing the threat of accelerated job losses to low wage countries, and populist business figures turned politicians like Ross Perot and Sir James Goldsmith, arguing for protection.

Global discord on what to do about social policy in the context of globalization

Within the past few years the implications of globalization for social policy have become the subject of heated debate and controversy within and between several global and regional organisations. The issue is now, thankfully, wide open as this session is testament to. I mention just a few examples of this discussion and discord.

i)The Human Resources Network inside the world bank continues to debate the relative merits of European universalistic and state approaches to social policy compared with American targeted and privatised approaches. Robert Holzmann now has the responsibility to settle a global bank strategy on social protection policy.

ii)The IMF recently convened a conference questioning the long held assumption that inequality and growth had to be traded against each other and asked rather whether there was a minimum degree of equity within all countries upon which we could agree and work for globally.

iii)The focus of International Development Co-operation (Aid) upon the goal of eliminating the worst poverty through targeting by 2020 does however hold the danger of cutting across in a way that is not helpful the recent realisation that universalistic policies can make the best contribution to social stability.

When I turn to the UN in this global debate I am struck by the fact that because some in the South are tempted by the short term comparative advantage of low labour and social standards the UN isn't necessarily the ally of universalistic social protection policies.Attempts by the North to argue for common global labour and social standards are often perceived to be self interested attempts to protect the social welfare securities of people in developed countries from being undercut by competition from the south. This situation bedevilled the discussions in 1996 when attempts were made to establish social clauses in world trade agreements.

These concerns of some southern governments have impacted upon the capacity of UN agencies to put their weight behind social policies of the kind that have ensured a degree of equity in developed welfare states. The impasse within the ILO where initial moves to argue for inserting social clauses into world trade agreements were derailed by a concerted campaign of some southern governments is illustrative of this. Reviewing the current situation with regard to this debate Eddy Lee of the ILO notes 'there is a deep fault line of distrust between industrialised and developing countries....the existing system of international labour standards as it has evolved through the ILO has, willy-nilly been caught in the cross-fire of this debate'.

The positive aspect of the debate is the affirmation by all parties to support for what have come to be known as core labour standards. These are generally regarded to be those contained within conventions 29, 87, 98, 100, 105,111,and 138 concerned with ' the prohibition of forced labour and child labour, freedom of association and the right to organise and bargain collectively, equal remuneration for men and women for work of equal value, and non-discrimination in employment.'.

Lee recognise that even here the ILO is not out of the wood. 'Industrialised countries should share part of this burden (of enabling developing countries to implement labour standards), since they also benefit from the reduction of these "international public bads"'. In the case of child labour for example calls to eliminate it should be accompanied by aid to compensate children and families. This necessity of combining north south trade with north south aid in order to uphold global standards will be returned to in the last section of this presentation.

Steps on the road to a socially responsible globalization

While there are undoubted obstacles in the path toward a more socially just globalisation the case for pursuing the project remains as was set out earlier.From the foregoing discussion it can be suggested the that the following steps and measures would contribute to reforming globalisation in a direction that is more socially responsible;

Continuation of the intellectual and ideological struggle within and around the Bank and Fund so that when, as they will, continue to influence governments by loan conditionality, technical assistance, and through global training programmes they encourage governments to adopt universalist social policies that history and research have taught us both North and South are more likely to lead to social stability and social inclusion.

Work while the WTO is still in its formative years to ensure that social considerations are part of its remit and that , in the words of Clinton addressing the WTO in May 1998, the goal is the levelling up rather than down of labour and social standards.

Engineer new institutions of global financial management to regulate capital flows especially short term ones. Within this it is necessary that a global tax authority is created with power to raise revenue for global redistributive purposes and power to regulate fiscal policy within all countries so that tax havens are outlawed as a strategy for attracting capital.

Continue the work already done to strengthen both at a global level and within each country the social and economic policy dimension of the UN by, for example, establishing closer working relations between the Social Policy and Social Development Secretariat of the UN and the ILO, WHO, UNDP, UNICEF etc.The appointment of new Directors of the ILO and the WHO might be the window of opportunity needed for this. In turn the strengthened UN social presence in each developing and transition country should be used to insist on the right to be involved along with county social partners in all Bank and Fund discussions with government where policies that have implications for social welfare are being reviewed.

The OECD Development Assistance Committee, EU ECHO, and other major donors need to review the implications of their present focus on targeted poverty alleviation for the development of universal and socially inclusive social policies. Equally the practice of channelling aid via unregulated INGOs needs to give way to a practice of supporting, in association with country NGOs, the capacity of government to provide for the social well-being of its citizens.

At all levels, globally , regionally, nationally a goal should be to establish tripartite forms of policy consensus building. By the Bank, for example, opening regular dialogue with international trade unionism a step has been taken.

Western government leaders should refrain from preaching morality to the south and east on the issues of human rights when they are not also backing this up with the transfer of funds to enable these rights to be met substantively. A principle of systematic triangulation is needed within which aid, or better still organised and predictable north-south and west-east social transfers, is coupled with access to trade which in turn is coupled to the commitment upon the part of recipient governments to the gradual levelling up of labour, social and health standards.

While it would be pointless to conclude with a blue print for a reformed globalization that took social needs and social equity seriously it is possible to discern a measure of agreement emerging among those who are contributing to this discussion. Another way of conceptualising this is to envisage at the global level mechanisms of governance in the social sphere that exist at the national and regional level. Governments manage their economies so as to reduce the risk of crisis, they ensure the existence of public goods that markets do not automatically provide and they raise revenue in order to, among other things, achieve a reasonable degree of equity and social justice. A schematic way of imagining the reforms needed for a socially responsible globalization is therefore to project onto the global level the policies of social redistribution, social regulation and social empowerment that governments do when engaging in social policy nationally.

The above steps will not satisfy some in the south and elements of global civil society who want the Bretton Woods institutions consigned to history and for all power to reside in a strengthened UN. Nor will it satisfy those who want an end to long distance trade and for globalization in all forms to be put in reverse. On present form there would be no guarantee that a UN dominated by a one country one vote system would legislate for socially responsible social policies. The concern with north-south equity would be likely to outweigh a concern with within country equity. If a Social and Economic 'Security' Council within the UN could be created that reflected , in its constitution, both population and economic size and gave appropriate voice also to regional organisations (the other side of the coin of reforming the Bank and Fund so that recipient governments were given more power) then it might be practical politics to begin to shift the locus of global power from the Bank , the IMF and fora such as the G7, to a UN that was respected by all as having the capacity to take the major role in global social governance.

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