Marc Saxer
A deep crisis is paralyzing the societies of the West. The outsourcing of low skilled manufacturing to emerging economies has created a ‘precariat’ excluded from economic, social and political life. The middle classes, already under pressure from stagnating real wages, are afraid of suffering the same fate in the digital economy. More and more people are asking if democracy in its current form still gives them any say, or is in fact one of the drivers of disenfranchisement.
Little has been done to rein in casino capitalism. Under the pressure of financial markets, the seminal project of European unification is about to collapse because of an economic policy driven by European institutions that narrowly focuses on austerity measures in already weak economies. They have undermined that European project’s social contract. And, still, the disciples of market radicalism continue to sing the gospel of supply side economics, willfully ignoring the fact that it is the very lack of aggregate demand that lies at the root of the crisis. Our fears and obsessions seem to contradict the rational Homo Oeconomicus of economic textbooks. Did we build the pillars of the modern order – the state, the market and democracy – upon unrealistic assumptions about our very nature? The old certainties start to crumble.
Digitalization, robotization, and Artificial Intelligence will change the way we work and live. Genetic engineering and nano technology are changing what it means to be a human being. The revolution of information technologies has shown how quickly disruptive innovations can turn over entire industries. The next industrial revolution will once again come from the garage. Digital tools like 3D printers allow us to manufacture everything from a cup of coffee to vital organs with the click of a mouse. The household of tomorrow will be a micro factory and a micro power plant the same way social media turned it into a micro broadcaster. The developers and makers, sellers and buyers are now connected worldwide through the Internet of Things.
The Political Economy Of The Digital Transformation
This development is driven by techno-utopians who view the democratization of the means of production as nothing less than the greatest emancipatory leap in history. Hailing from Silicon Valley, a New Age capitalism is bursting forth into the world, ready to do away with any older structure standing in its way. These techno capitalists are driven by a radical, libertarian vision of human empowerment through technology. The state, or rule setting in general, is their nemesis. Rules, they insist, are only created to cement the existing political economy, thereby stifling technological innovation and social progress. The techno do-gooders equally despise the cynical casino on Wall Street, but they share the dog-eat-dog worldview of their robber baron ancestors: Evolve or die.
At the other end of the spectrum, visions of the future are dominated by bleak dystopias. Many have come to understand that the political economy of tomorrow will be equally dominated by power-political interests. Google and co have shown how power can be concentrated even within an allegedly flat world. In the NSA scandal, the old surveillance state rears its head. Cyber-attacks offer a first glimpse into the wars of tomorrow. The social gap between ‘technical haves’ and ‘have-nots’ will continue to grow. And if digitalization starts to wipe out middle class jobs, what will happen to the democratic systems built around and sustained by these middle classes? The increasing complexity and interdependence of the globalized world sharply limit the ability of democratic actors to influence policy making. With institutional decision-making processes constrained by fiscal, legal and ideological barriers, progressive policy making is increasingly replaced by technocratic policy implementation. Are the days of the Republic numbered and a new plutocratic Empire coming?
The Simultaneity Of The Non-simultaneous
Some believe change is guided by the invisible hand of the market, conveniently forgetting that past industrial revolutions would have never materialized without the massive input of public resources and coercion. Others just want technological innovation to run its course, as if blind to the fact that development all too often goes hand in hand with dispossession, eviction and exploitation. Every change produces winners and losers. Sometimes these losers are old elites whose status and privilege hinges on the status quo. Sometimes the established middle class feels harassed by emerging winners of change.
Others feel their identities are threatened by the rapid shift of social norms. Often, transformation conflicts are framed in cultural terms, that is as conflicts between different religious, ethnic, race or gender identities. It is therefore no coincidence that we are witnessing the re-emergence of racism, Islamophobia and homophobia in the developed world. In such cultural frameworks, it is easy to construct scapegoats for the alleged moral decay of society, and use the resulting outrage to advance economic and political interests. The resulting political blockades, on the other hand, are beneficial for those who stand to lose in a new order. In other words, change produces the forces who resist it. The new order, therefore, does not emerge by itself but as the outcome of a struggle between political projects.
The Historical Role Of Social Democracy
The last Great Transformation was essentially shaped by social democracy. On the basis of a social democratic social contract, a complex architecture of institutions has been constructed with the aim of taming capitalism for the good of society. Without the century-long struggle between capital and labour, this inclusive social contract would never have been possible.
Today social democracy is struggling to shape the next Great Transformation. With the proletariat, the movement lost its ‘historical subject’. Social democratic mass organizations, political parties and labour unions are essentially creations of the centralized, hierarchical and standardized industrial society. Our very notion of ‘policy making’, essentially setting universal standards, is reflective of the industrial production process. Today, such rigid norm setting seems to be at odds with the pluralistic, decentralized, differentiated society with its different speeds and contrasting life worlds. Accordingly, social democratic answers to the challenges of the industrial age no longer satisfy the needs and demands of the emerging society. Social security systems, for instance, are built upon lifelong formalized employment, and seem ill-fitted for the highly flexible employment forms typical of a post-industrial economy. In short, in order to shape the Third Industrial Revolution, the old formulas are no longer enough.
Not least, left to its own devices, the old labour movement is no longer strong enough to dictate the struggle over the new order. Hence, new alliances between all progressive forces need to be built. The challenge is to build a platform on which heterogeneous groups with often diverging interests can join forces. This means a coalition made on the basis of the lowest common denominator cannot mount enough political muscle for the struggle over the new order.
In this struggle, the change narrative is a decisive factor. Over recent decades, neoliberals successfully framed their market radicalism as ‘economically reasonable and rational’, allowing them to paint labour as defenders of the status quo who would ultimately endanger economic survival. This extraordinary power of definition not only survived, but allowed conservatives to reframe the financial crisis as a crisis of the welfare state, thereby making the case for the next wave of structural adjustments under the banner of ‘austerity’. This means that whoever gets to frame the narrative of digital transformation will have the power to define the trajectory of policy making for years.
The New Struggle: Shaping The Digital Transformation
In order to shape the digital society, three major challenges must be met. To win the struggle to define the policy paradigms, a practical utopia and a convincing change narrative are needed. To implement the policy shifts necessary to shape the digital transformation, a broad societal coalition for change needs to be mobilized. Finally, to lay the foundation for the digital social contract, new inclusive compromises between all classes must be struck. In short, what is needed is nothing less than a new progressive project for the digital age.
To mobilize the masses, a concrete and achievable vision of a better tomorrow is needed (‘Change you can believe in’). Practical utopias have a long tradition within all progressive movements. Under the regiment of TINA (‘There is no alternative’), however, utopian thinking went out of fashion. Today, we have to realize that the very lack of viable alternatives on the Left has opened the door for rightwing populists all over Europe. At the same time, we bemoan how quickly the ‘coloured revolutions’ disintegrated once the dragon was slayed, making it easy for reactionary forces to roll back whatever little progress was achieved. To form and keep together a broad societal coalition for change, a compass is needed to show the way into a better future.
At least the search for alternatives to market radicalism has begun. Under such bulky titles as ‘Industrie 4.0‘, “Zero Marginal Cost Society“ or ‘Green New Deal’, practical visions for a new economy are being put forward. What these somewhat technocratic models have in common is their belief in technology. The social cost of techno-economic change, not least the growing inequality and exclusion, are often neglected. The crisis of social justice is better addressed by inclusive growth models but those often fail to come up with more than just the old Keynesian redistributive policies. More exciting are models which aim for socially just, resilient and green dynamic growth. This is the formula more than 200 Asian and European thinkers agreed on within the “Economy of Tomorrow” project facilitated by the Friedrich-Ebert-Stiftung. Similar models have been formulated by UNDP, OECD and even the World Bank. In Germany, the question about how the impact of digitalization on the world of work can be shaped is being debated under the label ‘Arbeit 4.0′.
Dry theoretical models are useful to give orientation to policy makers who are already willing to implement transformative policies. To create this political will, however, it is necessary to mobilize a broad societal coalition for change. To enable social movements with diverging agendas and interests to join forces, a common platform is needed.
What would such a common platform look like? The Asian Economy of Tomorrow thinkers are pointing to Amartya Sen’s seminal approach that identified full capabilities to be and do what individuals have reason to value as both the prerequisite and goal of development. Sen and Nussbaum define the provision of capabilities, e.g. real opportunities based on personal and social circumstance, as the primary responsibility of the state, the private sector, and civil society. With its emphasis on the ‘freedom to achieve’, the capabilities approach reconciles liberal notions with the ideal of social justice. Socially, the capabilities approach is a compromise between the middle class which demands a merit-based social order, and the majority population which hopes to work its way up the social ladder. Economically, the capabilities approach is a compromise between capital seeking innovation and productivity gains, and labour which expects decent work for higher qualifications. In the knowledge economy of the future, the capabilities approach is the main driver of growth by activating the full creative, entrepreneurial and organizational potential of each individual. ‘Full capabilities for all’ can be the common platform on which a broad spectrum of social groups, ranging from labour to responsible entrepreneurs, from civil society activists to technocrats, from progressive intellectuals to minority groups, can join forces.
The practical utopia of a ‘Good Society with full capabilities for all’ needs to be further elaborated to work as a progressive counter-narrative to the brave new world pushed by libertarian or neoliberal capitalists. But even in its nascent form, it allows for building discursive bridges between the various progressive tribes, and can help to mobilize diverse social groups. Most important, the new frame enables one to reopen the debate over policy paradigms as the necessary first step to preparing the ground for the struggle over the concrete policy shifts which need to follow.
A New Political Project For The Digital Society
The perplexing paradox about the digital transformation is that while the way we work, live and think is about to change radically, the nature of the Political remains unaffected. While the organizations, institutions and policies built for the industrial age are about to vanish, the progressive idea of the Political as the agonistic struggle between political projects is more up to date than ever. What is needed, therefore, is nothing less than a new progressive project for the digital age. It is high time for progressives of all tribes to rediscover political economy and practical utopia, join forces, and prepare for the struggle over the shape of the digital transformation. This struggle will define the world of tomorrow.
In the end, the only way to overcome a transformation conflict is by concluding a social contract based on inclusive compromises between all classes. Building a broad societal coalition for change to meet the struggle, and seeking the inclusive comprises to overcome it: this is the task of social democracy in the digital age. What these inclusive compromises at the heart of the new social contract will look like will define the Good Society.
Marc Saxer head of the Friedrich Ebert Stiftung Office for Regional Co-operation in the Asia Pacific.