Twilight Of The Gods: The Globalisation Losers Hit Back

Wolfgang Kowalsky

True believers in globalisation can be recognised by the following simple characteristic: They are convinced that it benefits all. This credo is being queried since Brexit, and some intelligent authors now recognise that the UK vote may well be linked to the fact that many people see themselves as losers of globalisation who are now starting to revolt. Paul de Grauwe admitted in the face of the politically correct consensus that there are many links between European policy and anti-European movements.

Globalisation – in the past as well as in the present and the future – inevitably produces winners and losers. Brexit was an accident waiting to happen and others might indeed follow if the EU doesn’t change course. The question is whether or not a domino effect develops. Another EU-exit could well trigger its total collapse within a short period. Not all leaders are aware of the imminent danger. Donald Tusk slammed utopian illusions on Europe. Wolfgang Schäuble warned that more integration is not the answer to the current crises. Martin Schulz had nothing better to do than to demand a “true European government,” further fueling the impression that Brussels does not care about the losers.

The category of ‘Losers’ in the context of globalisation is not only economic; it covers those segments of society which harbour fears about the future. In the post-war period the “social escalator” or “social elevator” (l’ascenseur social) worked quite well in delivering opportunities for many young people from the working or middle class to be upwardly mobile.. Nowadays, just 85 individual billionaires own as much as 3.5 billion people from the poorer half of the world’s population. Since the financialisation of the economy, and in particular since the financial crisis and the huge increase in inequalities, the “social elevator” has stopped or even started going downwards so that the younger generation is constantly under pressure to move forward only to retain the same modest position. All those who are not – for various reasons – able to constantly make the effort descend towards precariousness.

Globalisation and Europeanisation have been intrinsically linked for decades. The European policy framework established under Jose Manuel Barroso’s two terms as Commission president has put an additional burden on the losers of globalisation: austerity, the fiscal straightjacket in the form of a Fiscal Compact, the inability to counter the financial crisis and to come back to pre-crisis unemployment levels, the structural reforms and better regulation agenda. In parallel, the EU has shackled the hands of national authorities that might wish to organise the required compensation for the losers of globalisation. Protective policies have been regularly dismantled and undermined and precedence has been given to internal market rules over fundamental rights.

The fact that free and unfettered trade is lowering the living standards of substantial segments of society should not be overlooked: these segments fuel protests against further globalisation measures and other political initiatives perceived as such, for instance the agenda of liberalisation and privatisation of services (such as water). Whenever these factors come together, from a social science perspective, an anti-globalisation movement is likely. Such anti-globalisation movements – seen as “backlashes” by the establishment – will continue and will shatter European political groups, in particular those which are supposed to protect against the arbitrariness of free global market forces. Many people feel trapped – and even Member States can find themselves on the losing side.

You reap as you sow

In this specific context, the EU added a form of severe austerity, which is perceived as in line with globalisation, in the Troika programmes for several peripheral European countries. The ETUC saw the danger looming and immediately started organising a series of major demonstrations under the simple slogan “No to austerity”. From time to time, a number of socialists chose to join in, but the official position of most socialist parties remained fundamentally ambiguous because most of them are in the camp of true believers in globalisation. Generally, the trade unions remained alone in protesting against austerity. It followed logically that the ETUC opposed the Fiscal Compact and remained isolated, whereas leading Green Danny Cohn-Bendit and most of the socialists accepted it – some of them reluctantly – but the opposition remained inaudible and invisible out of fear of being seen as “anti-European”.

Even for a founding country such as Italy, the risk of being downgraded to a ‘programme’ country under Troika surveillance loomed on the horizon, when a technocratic government, led by ex-Commissioner Mario Monti, adopted a harsh reform package in line with a strict external constraint, that Fiscal Compact. .

An early example of a successful anti-globalisation movement was the French referendum on the European Constitution in 2005. The argument put forward by the far left that the Constitution would write competition and free markets in stone was a prominent one. The counter argument of progressive forces that the Constitution should recognise an ambitious Charter of Fundamental Rights was totally undermined by the leftist anti-globalisation crusade. Europe was perceived as a Trojan Horse for globalisation. The Frits Bolkestein Directive pushing for a Europe-wide unified market for services based on the country of origin principle, with the effect of outsourcing French jobs to eastern Europe, was used as a confirmation certificate for that credo.

The real problems started when official Europe failed even to try to understand the message from the grassroots. The perception was that Europe planned to give room to unfair competition leading to social dumping. Austerity policy was seen as placing European welfare states under threat. These arguments proved to be decisive and caused a shock for Europe’s political establishment, which had not wanted to listen because of its commitment to neoliberal ideology and the supposed universal benefits of globalisation. Consequently, Europe was unable or unwilling to counter the financial crisis and its effects, such as continuing high unemployment, whereas in the US employment figures went up after the government restructured the banking and financial sector.

No wonder that Europe has never recovered from this defeat in the sense that all elections on European issues have been lost since (unless repeated). Dutch voters rejected the Constitution, while other planned referenda were simply cancelled. Ireland in 2008 voted against the Lisbon Treaty, and had to revote a year later. Greece in 2015 rejected the bailout conditions. Dutch voters rejected the association agreement with Ukraine in 2016. The image of the EU has turned more and more negative all over Europe as recent opinion polls have quite strikingly confirmed.

One socialist party after another had to pay a high price, for example, in Greece or Spain. Further globalisation effects such as huge migration waves were seen as putting more pressure on the losers – and the collapse of the Austrian socialist party on that issue followed in May 2016. In Germany, the SPD leadership continued to be surprised that TTIP does not sell so well amongst its own electorate. The polls may well predict a downsizing of the SPD from 40.9% in 1998 to under 20% in 2016, yet a change of course on free trade is not given serious consideration.

The trade unions have been more open to these concerns, probably because they are more directly in contact with these segments of society, and they have formulated differentiated positions criticising important parts of the secret TTIP negotiations . Their demands were taken up by the anti-globalisation movement, which is convinced that the small economic benefit in some economic sectors cannot outweigh the high political risks posed by the TTIP agreement as it stands now.

When opposition movements organised protests such as “We are the 99%”, the “indignados”, or in France “Nuit debout”, the political parties reacted and tried to absorb the movements but in vain. The movements popped up and disappeared again, but the social malaise remained and caused a series of political implosions. As long as Europe does not understand that these segments need a policy of protective safety nets to avoid an increasing number of globalisation losers, there will be more of these ex- and im-plosions coming. Some segments of society will move further towards increasingly hostile attitudes towards globalisation – and other segments will join them, mixing up globalisation and Europeanisation. If the EU is unable to show that it can also produce welfare for the losers of globalisation, other EU-exits will follow.

Once you recognise that both globalisation and European integration have produced losers, you can design a policy framework to compensate for this and start redistribution and fair globalisation on the foundations of a fair social Europe. National responses are dysfunctional, as the crisis is multi-level, both at European and global levels, and is multidimensional, first the financial crisis from 2008 onwards, and now the refugee crisis. A change of course is needed now more than ever.

A first step has been taken by Juncker in launching the debate on the Social Pillar. But words are not enough – actions are needed. The British referendum should be a wakeup call for a Europe to take a different path. Now a closer core Europe is needed – 2 speeds is better is than no speed at all – and around the open core a landscape of differentiated integration (‘variable geometry’). The spirit of permanent grand coalitions is leading to paralysis and is suffocating new ideas. In the end, it brings a dangerous political monoculture which undermines the usual democratic rules of controversial debate between government supporters and opposition.