Our relentless evolution toward a global economy will clearly require new institutions both to regulate unstable markets and to protect ordinary citizens from the brutalities of worldwide, dog-eat-dog capitalism. Eventually, like national economies, the global marketplace needs the equivalent of a central bank, securities regulation, enforceable labor and environmental rights, and the other institutions of modern social democracy.
But the social democratic left has little leverage at the level of global politics. So it is caught in a Catch-22: a global social democracy requires stronger international institutions. Stronger institutions increase the power of international capital, which further undercuts efforts at global social democracy. Rather, the left’s leverage is in national politics. It is on that base that it must build its alternative program for the global economy.
Given this, the democratic left should not waste its time doing the work of the corporate right: decentralizing the organization charts of international agencies, creating new ones with more sophisticated powers, adding advisory committees of nongovernmental organizations, and so on. Instead, social democrats should concentrate on proposals that appeal to the needs of working people across borders, linking national and global economic questions in ways that build toward a social democratic vision of the global economy.
Here are three such proposals, in ascending order of difficulty:
1. Coordinated lowering of interest rates: It is a measure of the timidity of today’s social democratic parties that there is little political agitation over high real interest rates in an era in which the core inflation threat is close to zero. High interest rates are a crushing burden on indebted developing economies, and they have made a major contribution to slow growth in Europe. Even in struggling Japan, signs of recovery are greeted by the central bank as a reason to raise the cost of money. As Federal Reserve Board head Alan Greenspan slows down the U.S. economy, it will be essential that Europe and Japan loosen monetary policy—both for their own economies and to maintain global momentum.
A parallel demand from progressives around the world that central banks lower rates would begin to challenge the hegemony of finance—particularly the bond-holding class—whose interests have been favored over poor debtors everywhere. Such campaigns also have the potential of creating alliances with the small- and medium-sized producers of goods and services in all countries whose survival depends on cheap money.
2. Financial transactions tax, a.k.a. a “Tobin Tax”: The purpose of such a tax, whether applied domestically or internationally, is to slow down the destructive short-term, speculative movement of capital. It has the virtue of being easily understood, administered with minimal bureaucratic discretion, and already supported...
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