FEPS Fresh Thinking

The current crisis almost brought us to a dead end – certainly more evident in the US and Europe than perhaps in the other continents. But nevertheless the situation is frightening.

Europe seems to be crumbling; the sovereign debt crisis threatened the whole European project. In Spain, in Britain and elsewhere the youth no longer accept promises for a better future; they are asking jobs for their decent life now. Older people are facing enormous difficulties to live with their pensions. And more and more unemployed have no chance to get back into jobs. Even in Germany where unemployment is fortunately declining, nearly one million people are jobless for years and years and are supported by a social welfare system which is in danger. In other countries, far right movements are growing quickly like in France or in Eastern Europe and individuals such as the Anders Behring Breivik, the perpetrator of the horrible murders in Norway, are challenging and threatening European democracies.

In Europe’s southern neighbourhood, in the Arab world, dictatorship is fortunately now being dismissed but we do not know what is coming next. In Asia we are also seeing the growth of movements such as with Anna Hazare‘s campaign against corruption in India. Chinese human rights violations are continuing. An estimated 500,000 people are currently enduring punitive detention without charge or trial. House arrest and imprisonment of human rights defenders are on the rise, and censorship of the internet and other media has grown. However, Chinese human rights activists are becoming ever more outspoken.

The US is more occupied with internal political fights which are becoming ever more unmanageable. This summer the small but influential Tea Party movement challenged the whole system of international finance and global governance! In the next year President Obama has to focus on his re-election, so will have less time to dedicate to tackling global issues and problems. And we are facing similar problems in Latin America and especially in Chile. Hence the global crisis is evident.

We have to recognize that the current model of globalization driven by neo-liberal rules undermined the foundations of our world order with severe consequences for regional and national economies. The erosion of our welfare systems, the problems of youth (un)employment, the challenges of aging societies and definitely the long term impact of climate change need answers. But we don’t need simple answers in doing little measures or small reforms. We really need to face the problems in a progressive way. We have to develop sustainable alternatives to the liberal model.

Firstly on the global level: We must build a new international architecture able to guarantee a fair globalization, while reducing inequalities and ensuring a sustainable development. We must recognize that such an outcome cannot be achieved through the sole action of single states. We must recognize that the challenge of a global world lies in the ability to govern processes at a supranational level. We must recognize that politics and democratic institutions must orientate and regulate the economy, because this is the only way in which capitalist development can be reconciled with the principles of democracy and social justice.

Secondly on trade: “Fair trade” has become something of a buzz phrase, a logo and a brand. This threatens to rob it of its meaning. Trade must be to the benefit of all, and not only the rich countries of the world. This is the fundamental question of global governance and if we do not address the injustices in our trade system, we show dishonesty in our concern for the poor. This will require reform in the global trade architecture to offset the vulnerabilities of the developing world.

Thirdly on the three basics progressive values: Jobs, Solidarity and Education: A job has always been perceived as an occupation that someone should hold in order to sustain oneself and one’s family financially. The cruel reality is that work is the question of economic survival. The promises made by politicians to create employment are hard to believe by the people. Even progressives have seen unemployment not as a group or society matter but as an individual problem. This fosters disappointment in politics, breeds emotions of resignation, resentment and withdrawal.

We have to do the utmost to assure the right to a good job for everybody. I am aware that this is visionary but we also need vision in order to fulfil our commitments, one of which is “a good job”. This means in the traditional social democratic sense of a decent standard in income, an assured social security and the ability to be trained for new challenges. Here comes also in the notion of Solidarity. And it should not be neglected that investing in human capital is something which benefits the individual through higher wages and capabilities and the society through a higher level of productivity and welfare provisions. People have to be more and more empowered through programs of education and professional training in order to be prepared for the new challenges in their work.

But the great contradiction of economic life nowadays is still that financial markets are inherently globalised, while regulation is still predominantly national and regional. This has allowed actors in financial markets to take extreme risks and the consequences of this anomaly have been truly catastrophic as we all know.

If regulation is to work, it must be genuinely international. Any effort to improve international financial regulation must be based upon the will to build an ethical and comprehensive institutional framework. We must develop an alternative based on the values of social justice and the pursuit of global public goods.

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  1. Lieber Ernst,
    aus Zeitmangel nur einen Kommentar zur contradiction of economic life: Das wird uns noch teuer zu stehen kommen. Die Hankels und Starbattys dieser Welt hatten mit ihrer Klage ggn. das Setup der Waehrungsunion recht, sie hatten recht damit, Schwierigkeiten allein schon deswegen zu prognostizieren, weil die Waehrungszone nicht identisch ist mit einer einheitlichen Fiskalzone. Und wenn man dann noch jenseits der eigentlich sinnvollen Konvergenzkriterien Laender aus politischen Gruenden zu Mitgliedern macht, darf man sich nicht wundern. Als jemand, der seit jeher pro europaeische Integration war sage ich ganz offen: in die Euro-Zone sind Laender aufgenommen worden, die die Voraussetzungen dafuer nicht erfuellten. Das war ein gravierender politischer Fehler, der schleunigst bereinigt werden muss. Transferunion kann die Loesung nicht sein. Wenn die Bereinigung nicht gelingt, fliegt uns das Ding um die Ohren, und vielleicht die ganze EU. Gott bewahre.
    Herzliche Gruesse
    NB: Hast du Skype? Ich wuerde gern nach einigen Irrungen und Wirrungen im Austausch mit Herrn Itching mit dir in Sachen VA am 26.09. sprechen….

  2. Dear Ernst,
    I agree, of course, with your basic analysis. We are in a mess, globally. But different counntries sense it differenty. Despite human right violations and corrption in China and India, both have been the main beneficiaries of globalisation. Let us never forget this. And let us stop calling the trade system unjust and benefittting only the West. This is definitely not true.
    Let us not try to save the world. That will more and more exceed Europe`s feeble means. We have to focus on putting order into our own house. And we like it or not, this implies “austerity policies”. We have to put our budgets in order, but governments should do so mich more by removing fiscal loopholes benefiting the “Riich” than cutting expendtiures for education!

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