This paper looks in brief at two sets of issues which were not discussed at the l ast meeting of the group:
a) the non-economic dimensions of globalisation and their impact on UK government policy options.
b) UK government policy options in relation to the international dimensions of globalisation.
Underlying both is the n ecessity of international cooperation to address supra-national issues which have domestic impacts, avoid mutually-destructive outcomes, and pursue wider equity and sustainability goals. For reasons which are spelled out below, an incoming Labour gove rnment has an historic opportunity to lead the way into an era of genuine rules-based international cooperation, as a foundation for a secure and prosperous future for all.
a) The first of these areas is relatively straightforward. Globalisation mean s that capital and jobs; pollution, crime and terrorism; people, ideas and values, all move increasingly across national borders in response to changing patterns of incentives and disincentives. What happens in one country does have an influence over wha t happens in another, and the aggregate effect of national actions may make all worse off in the long term - a classic example being the progressive degradation of the "global commons" as a result of unsustainable use of natural resources.
At our last meeting, the consensus was that the UK can protect itself against capital and employment flight without abandoning equity considerations by pursuing prudent macroeconomic policies, investing in education and training, promoting industrial flexibility and innovation, and other measures which keep the economy internationally competitive. Arguably, this requires cooperation with other countries to avoid the "race to the bottom" as each tries to undercut production costs in others (something we did not talk about last time).
International cooperation is more obviously important in relation to the non-economic side of globalisation - extra-territorial pollution, migration flows, trade in drugs, criminal and other security threats, and new diseases. Becau se of its geographical position and other factors, the UK is relatively well-protected against influences such as these, but domestic policy cannot ignore them, especially since they seem set to increase as energy-intensive industrialisation proceeds apac e in Asia and Latin America (Chinese growth alone could destroy the targets set at the Rio Summit on sustainable development), and as conflicts multiply against a background of unequal access to resources (eg water) and political power (eg among ethnic gr oups). Enlightened self-interest dictates a collective response to these trends, since no country can isolate itself from the supra-national costs of degradation and insecurity.
Two policy responses are required: first, harmonisation of domestic polic y with international standards and goals (eg industrial emissions targets or asylum law for terrorist suspects); and second, allocating resources to help monitor and enforce these standards (to ensure that one country's policy sacrifices are not exploit ed by others). Neither of these things constitutes much of a restriction on an incoming government, though the implications of a full "greening" of the economy are of course huge.
In the longer term, one can speculate about the impact on any nationalg overnment of the growing influence of business and civil society organisations over decision-making at both local and international levels. This is a key characteristic of globalisation. Theoretically, the rise of transnational corporations and global cit izens' alliances undercuts the authority of nation states, just as the power of markets and civil society dominates decisions at the local level. This has led some commentators to predict the diffusion of some forms of authority downwards to local institu tions, and the surrender of others upwards to global ones. While attractive in theory, this prospect is far distant in reality, at least at the global level. However, a Labour government would be well-advised to explore its implications in practical term s within the context of existing commitments to decentralised governance and international cooperation.
b) Globalisation is good news for economies, firms and workers who are internationally competitive, but not so good news for those who fall behind; as in any liberalised market, the disciplines imposed on poor performers are severe. Given the extreme differences which exist between rich and poor countries in the "starting conditions" which have such an influence over competitiveness, globalisation is likely to exacerbate existing global inequalities unless conscious action is taken to address these differences. Efforts to "catch up" with industrialised countries in terms of competitiveness may also result in falling labour and environmental standar ds as firms cut costs, thereby resulting in increased environmental degradation, social exclusion, and economic exploitation in industrialising countries. This is obviously "bad news" for many people in these countries, but is also an issue for the UK bec ause a) it contributes in the aggregate to the global problems highlighted above from which no country is insulated, and b) poses a moral challenge to principles of equity and justice which are fundamental to New Labour's philosophy.
The alternative t o "destructive globalisation" of this sort is cooperation within the framework of globally-negotiated rules and standards (social chapters, environmental standards, restrictions on capital instability, avoidance of "investment wars" etc.), applied with so me flexibility according to the starting conditions of different countries; coupled with a concerted effort to change these starting conditions through the kind of large-scale, long-term transfers of resources, technologies, access to markets, and social- sector investments which enabled Western Europe (after World War II) and East Asia (in the 1950s and 1960s) to develop an industrial base very quickly while keeping inequality to reasonable levels.
It is important that rules and standards are genuinel y negotiated (rather than imposed by the G7, as in the GATT Uruguay Round), and allow for graduated application (so that lower standards are permitted in poorer countries until their economies have developed sufficiently to be competitive within the same rules). International support to regional self-reliance or (temporary) "selective delinking" may be a better option for countries where starting conditions are especially difficult (Sub-Saharan Africa and South Asia, for example). This requires radical r eform of the current international "system" (to democratise its governance, protect its developmental focus, and achieve real cooperation among member states), and a much greater commitment of energy and resources from the industrialised countries. It als o requires harmonisation of domestic policy with international development goals - for example, the extension and deepening of trade concessions to the poorest countries, encouraging private investment outside of the current "big emerging markets", and en suring that macroeconomic policy avoids passing on costs to poor countries (as when a rising budget deficit results in rising interest rates, thereby increasing still further the debt burden of Africa and Latin America). Labour's proposed international st rategy ("Britain in the World") supports these ideas, though in my view does not go far enough; an obvious problem to be faced is that domestic constituencies for enhanced international cooperation are weak at present. Strengthening them should be a prior ity for an incoming government (in collaboration with civil society groups).
This is important because now is the ideal time for Labour to take a lead in reinvigorating and reforming international cooperation., for a number of reasons:
- the end o f the Cold War removed the prime motivating force behind aid and intervention between 1949 and 1989, but thus far no accepted alternative framework has replaced it. There is an intellectual vacuum waiting to be filled.
- political support for conventi onal aid is declining worldwide (except Japan). Rebuilding support requires new arguments.
- globalisation provides a new context which challenges old assumptions.
- an intellectual resurgence on the left is challenging the neoliberal ascendancy w hich has dominated international development policy for the last two decades.
At the international level there are parallels to debates over stakeholding, egalitarian market economies, inclusion and community, which underpin New Labour's domestic agen da. But the international equivalents of such arguments have not been developed very far. What does it mean for everyone to be "included" in a global economy and society, and how is inclusion to be achieved when globalisation produces more inequality and centralizes power in unaccountable institutions? "Levelling the playing field" (attacking unequal starting conditions by redistributing resources and opportunities), democratizing global governance (by reforming the current state-centric and G7-dominated international institutions), and securing much higher levels of cooperation to achieve international goals, are all essential, but require a fundamental shift in political leadership and policy priority. An incoming Labour government has a golden opportun ity to make its mark internationally by taking up this challenge and making it a centrepiece of its political programme.