Democracy Is Over

OECD member states (as of 2006)
Organisation of Economically Crippled Democracies

So those young anarchist protesters ten years ago were right, globalisation did bring devastation and exploitation. Not to the Third World though. It actually turned out to be quite a treat for a lot of people there. In Europe and the US however, it has led pretty much directly to the collapse of democracy.

Globalisation has de-privileged the ordinary people of the West. And by the ordinary people, I mean anyone whose income derives from work rather than from ownership. Increasingly they find that they are in competition for employment not with the people of their own countries, or even with those of other Western countries, but all possible people.

In particular of course, people who aren’t the descendants of generations who fought for better working conditions, better wages, and democracy. Bluntly put, the work conditions and democratic freedoms enjoyed in the West were created when wealthy people needed a great deal of skilled and unskilled labour.

Conditions for the poorest improved suddenly and drastically at only two times during Western history. The first was after the Black Death. That decimated the peasant labourers, but it meant that afterwards there was a shortage of them. They could reject the previous conditions of their employment, which were more or less slavery, and start bargaining.

The second time was in the late 19th and early 20th centuries, when the Industrial Revolution created renewed demand for labour. Conditions in factories were of course horrific at the start when the supply of poor people exceeded the demand, but that turned around and labour was able to organise and gain much safer conditions and better wages. Ultimately, it gained political representation and universal suffrage.

Easing up conditions of trade with the rest of the world has completely undermined the position of the workforce – right up to the most skilled. Yet at the same time it has created new opportunities for business. With plunging labour costs, profitability has generally soared. But the tax base of most Western countries is not the wealth of business owners. To say the least, these are the people who can afford not to be taxed. They can afford the accountants. They can afford the lawmakers. So the tax base is collapsing. The countries of the West are simply running out of money, one after another.

But what can we do? It seems too late to introduce protectionism. The only option is to extract more money from the people who profited by exporting jobs – the corporations, and in particular the super-rich personally. But all the major political parties clearly do not dare to, they are helpless in the face of wealth.

Welcome back to serfdom.

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6 thoughts on “Democracy Is Over

    1. Well things are always more complicated than any 500-word snapshot, but though those figures only come up to 2004 I think they actually show what I predicted beginning to happen. Wages were remaining nearly static in the US – where globalisation began – even as profits rose.

      It hasn’t really struck in Western Europe yet, where domestic industries are more protected, but I believe in the banking crisis we’re seeing the beginning of that here now. The effects were just masked over the last decade by the credit boom, or ‘false economy’ as I like to call it. Basically, there is a shortage of sheer, actual money in domestic economies across the continent.

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  1. Part of it is globalization, part of it is the waking of China. Here in the Czech Republic, globalization has meant that technically skilled Czechs can work in the international marketplace, for international companies, earning more than Czech employers pay if less than the same job pays in the West. For example, I’m a tech writer, and Prague is becoming a tech writing center as well as a software center. I know of one large company that is ending its UK and US tech writing contracts and hiring writers here and in India. Here many of those writers are British or American, like myself, and willing to work for far less than California wages while still enjoying a good lifestyle (you know the lifestyle here. If your goal on the other hand is to accumulate houses and expensive toys, it’s not good to move here. If you want to live near the center of town and spend all your time in cafes and pubs, it’s invincible.) Do you know how shafted Czech or Slovak workers would be if they had to rely entirely on local employers?
    China, and India, are another story. It’s actually a much older story than globalization. We think of India as a poor country, but it used to be a black hold sucking all the gold out of the West. China is now structurally in the same position as China was at that time. Let me quote economic historian Fernand Braudel, The Perspective of the World, writing in the 1970s:
    “I would not therefore accuse capitalism of being responsible for India’s backwardness…Among the internal causes, perhaps one should single out low wages. It is a truism to speak of the gap between Indian wages and those in Europe. In 1736, the directors of the East India Company reckoned that the wages of French workmen (and we know that these were far below the wages of English labour) were six times as high as wages in India. Chaudhuri understandably finds it a little puzzling that highly skilled workers, who seem to have had some freedom and means of defending themselves within the social context, should have been paid so miserably. But could it perhaps be argued that low wages were a structural feature, long embedded in the overall economy of India? Were they not, that is, the sine qua non of the flow of precious metals into India, a flow dating back to very ancient times, indeed to the Roman Empire? Is the low wage economy not a more satisfactory explanation than unbridled thirst for gold on the part of the emperor and the privileged classes, for the cyclonic suction which seems to have drawn precious metals from the West to the East? On reaching India, gold and silver currencies automatically increased in value, compared to the very low price of human labour…This would in turn explain the powerful rebound — the penetration of Western markets by Indian exports, raw materials, but above all textiles…”
    Elsewhere Braudel points out that the heroes-of-free-market British permitted Indian textiles into the country only for re-export.for most of the 18th century.

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  2. I can’t be satisfied though with the explanation that low wages were a ‘structural feature’ of the Indian economy. There must be some deeper reason, whether it be competition, oppression, or some supplementary non-monetary system of reward like religion. Or perhaps it can be traced to a, in such a highly stratified society very literal, social security system.

    But it’s an interesting example because I think I see a lot of our future in the India of the past. The Princely States period sounds an awful lot like the rule by oligarchs which seems the inevitable outcome of the weakening nation state.

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