Wednesday, 1 April 2009

G20: The Future of Global Society

In terms of political debate, the G20 conference has been billed as a confrontation between Anglo-American free market capitalism and Franco-German social democracy. While the British and Americans want to re-capitalise the financial system and save the banks, whose initial irresponsibility was based on the free market ideology of the Thatcher-Reagan political era, the French and Germans want to concentrate on regulation in order to control future financial speculation. Unfortunately, from the British and American perspective, the effects of this regulatory policy would be to restrict the entrepreneurial scope of the city, cool the global economy, and limit the possibility of future growth. But while the British and Americans are concerned to ensure the possibility of future economic growth, and remain wedded to the neo-liberal theory that understands economic freedom as the essential public good, the French and Germans recognise that the problem of unfettered economic freedom is social fragmentation and disintegration.

We know that these effects have been produced by the current economic downturn: UK unemployment has reached 2 million, house repossessions are on the increase, and despite zero interest rates social insecurity has become the norm for the majority of the population. But what is worse is that British and American efforts to re-capitalise the financial system in the name of economic freedom and the public good will no doubt have further negative effects on social security, precisely because the enormous expenditure of public funds on the financial sector will require cuts in public services, such as health, education, and welfare. Although British and American policy makers are clearly willing to sacrifice public services to the market because they are invested in ideas of the individual and individual responsibility, it is clearly not acceptable to the French and Germans who are attached to the notion of the social state and the idea of social responsibility.

While it may well be necessary to stabilise banks in order to reboot the economy and encourage lending, the British and American approach to limit reform is based on the desire to repair the current neo-liberal system and restart the credit society based on individual speculation. This attachment to individual speculation applies to everybody from the man or woman in the street, who is encouraged to buy now and pay later, to bankers, who have spent the last twenty years speculating on the markets and inventing complex financial instruments called derivatives based entirely on the buying and selling of insurance and debt. It is this political-economic system that both invented the contemporary global economy and caused its rapid collapse over the course of the last twelve months. Given the connection between the credit society and processes of high-tech globalisation, which have been more or less entirely based on globalised communication and financial networks, it may appear that Franco-German plan to regulate financial trading will somehow limit or roll back globalisation and result in the emergence of a proliferation of national protectorates.

But surely there must be some middle ground between free market neo-liberalism, which abandons the individual to the whims of the invisible hand of the global economy, and national protectionism, whereby states close their doors to processes of globalisation for fear of the negative effects of market turbulence on society? But is this really a choice? It may be that there is really no choice between these two options because, as the Chinese have recently discovered, it is not possible to decouple from the global economy. Regardless of whether or not a particular nation state wants to participate in processes of globalisation, it cannot escape the reality of the contemporary global condition, including the global economy. It is clear that the French and Germans know that decoupling is not an option. However, it is also clear that they have no intention of contributing to restarting the consumer boom, which is frustrating for the British and Americans who know they cannot re-boot the neo-liberal economic system on their own. What, then, is the Franco-German plan?

Since national decoupling is not possible, the Franco-German approach is based on a view that what is required is a global or at least integrated multi-national response to financial regulation. Whether or not this view succeeds, and results in the emergence of the new form of social globalisation, is probably more or less reliant on whether Obama remains true to his utopian promise to deliver change. I think this shift to a more socialistic brand of globalisation is unlikely to come from Gordon Brown, simply because he clearly understands economy better than he does society, meaning that what is likely to make or break a global new deal at the G20 conference is Obama, and his courage to advance a more socialistic brand of Americanism comparable to that of FDR and abandon the neo-liberal robber baron capitalism of Bush II.

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