In the latest issue of openDemocracy, Jigmi Thinley poses the question: “If we accept that globalisation is a product of human activity, how might we manage it to serve the larger interest of human progress?” As a socialist Member of the European Parliament, I approach this question by seeking to ground my political principles within the context of a strong, globally oriented Europe. In doing so, I seek a new model of society that embodies a healthier balance between both democracy and the market economy, and the richer and poorer countries of the world.

The need for this new model is, I believe, especially relevant in the aftermath of the events of 11 September in the US, and the subsequent war. If globalisation is only about free and open markets, it will fail “to serve the larger interest of human progress”. Rather, globalisation must also be justice, working conditions, and the legitimacy of the global financial made to encompass issues of the environment, a fairer distribution of resources, social institutions that govern our lives. In this endeavour I argue that there is a necessary, inventive role both for socialist principles and European institutions.

A new era of capitalism

Beginning in the early 1970s, the world entered a new age of capitalism, characterised by the domination of the financial sphere. The reduction of transport costs, information technologies, and the end of fixed currency exchange rates were accompanied by far-reaching political change.

In this period, financial capital increasingly imposed its norms on other spheres of the economy. It is more than multinational; it is transnational. It looks for fifteen per cent returns on investments, with no regard for real economic growth. This speculative logic weighs against all long-term thinking, as we can see from the crises which have struck Mexico, Argentina and South East Asia. In this new era of capitalism, everything must enter the sphere of marketisation: whether it is the former public services, transport, energy, water supply, health, or education. Even the living form and the human genome, through patent, must become an avenue for profit.

In this new era of capitalism, economic integration no longer produces political integration. Financial capital requires freedom from all those constraints built by states in former times. It looks to rely on institutions as far removed as possible from citizens’ control. It promotes institutions, like the International Monetary Fund or the World Trade Organisation, capable of limiting and reducing the political sovereignty of nation-states. Early in 2000, in the heart of the EU, an economic lobby group like the European Round Table even tried, with Commission support, to remove some of the legislative and regulatory powers of the European Parliament and the Council of Ministers, in the name of a “new governance”.

This new age of capitalism is marked by an unprecedented growth in inequality – between and within nations. The income of the three hundred richest people is higher than that of the two billion poorest put together. United Nations and IMF studies show that gains from globalisation are concentrated in countries which already have a greater than average revenue per head of population. One fifth of the world population has regressed in relative and in absolute terms. Whole countries are ravaged by battling clans struggling for control of petrol, diamonds, and other mineral resources.

A new era of protest

Ever since environment and development NGOs gathered at the UN earth summit at Rio in 1992, and increasingly since Seattle in 1999, a disparate movement has also come into being – one which uses public opinion as its sounding board. For all their differences, these groups share a number of common aspirations:

• The will to protect the environment, resisting the privatisation of planetary common goods.
• Resisting the subordination of already precarious work and living conditions to the sole logic of the market.
• The desire to see a fairer redistribution between North and South.
• Concern for the lack of transparency of international financial institutions, and lack of legitimacy of their political decision making.

This movement should not be caricatured. It has reconnected millions of citizens with political debate, among them a lot of young people. It is posing the alternative to the liberal economic model at the global level, and not by way of nationalist solutions. It gives a new modernity to internationalism, bringing it back onto the political agenda. In all these respects, it represents an opportunity for us socialists.

Yet so far it is an opportunity not taken. Unlike capital, the socialist movement at the beginning of the twentieth century had a strategy which was international to its core. Now that we are in the era of ‘globalisation’, the socialist movement is having difficulty conceiving of any original international strategy. It is hesitant about Europe. On the one hand, Europe is said to be an opportunity to build an alternative to the market society or the American model. On the other, in the name of necessary compromise, we have been building a Europe increasingly geared to liberalisation. Public service has begun to be seen as a hindrance. Lowering public expenditure has become a dogma. The completion of an internal market is the Holy Grail.

It is accepted that all socialists can do is to be the best modernisers – where modernisation means the leanest state and public services, lowest taxes, least protection for workers, greatest flexibility for business, and the least impediment to profit.

The time has come to be more ambitious – not in the service of dogma, but to meet the real human and social needs which the current social model is not fulfilling. Socialists must be able to offer a real and ambitious alternative to this new era of capitalism. They must be in a position to challenge the European Union to promote a new way of regulating globalisation, based on a different model of society and a fresh equilibrium between democracy and the market.

The radical, practical alternative

Socialists are often criticised for the abstraction of their arguments and proposals. In response, I wish to devote the rest of my article to three concrete proposals for change: a Tobin-type tax to promote a global redistribution of wealth; the reform of the World Trade Organisation; and a practical European pursuit of five principles.

Promoting global re-distribution of wealth

$1500-1800m are exchanged every day on the market. Ninety per cent of these transactions have no direct connection with goods, services or investments. Operators speculate on currency valuations, sometimes miniscule ones. More than forty per cent of transactions involve buying and selling in under three days. The volatility of capital and its erratic movement can, in the space of a few hours, plunge an entire country into recession. Central banks can barely keep up with the daily volume of transactions on the market.

The American economist, James Tobin, has proposed that a very low tax should be levied on speculative exchanges. This would not affect trading in goods, of services and investments, but would be designed to put a brake on speculation. Tobin anticipates that this would stabilise the flow of finance, giving states and central banks a bigger role in running their monetary policies, and creating an important source of revenue. It is hard to gauge the potential income from such a tax, since like taxes raised on tobacco or alcohol, the higher they are set, the more they dampen down consumption. But at a crude estimate, it could raise $50-250m per year. To put this in perspective, the UN Development Programme estimates that to eliminate extremes of poverty and provide access to basic health and education provision in the Third World would cost $30-40m per year.

One of the strongest arguments against such a tax is that the market would move to countries which don’t apply the tax, or to offshore centres. But the risk of avoidance is there in all taxes. If one listened to this argument, there would be no taxes. The great international financial centres are used for important exchange transactions for reasons of security and convenience. Offshore centres are no substitute, though since all these capital movements are traceable, a supertax could be imposed on every transaction between an offshore centre and one of the great financial centres. And in the new post-11 September context, everybody agrees on the importance of new controls on offshore centres.

Tobin’s most prestigious adversary, Robert Mundel, argues that such a tax risks putting a brake on capital movements. This is its own sort of commendation, since those who back such a tax deny that balanced economic development is always best served by capital flow being completely free. They think that speculation has more bad effects than good ones.

Such a move would have to be accompanied by other measures to control the movement of capital. It would not right the wrongs of the world. But at least this first move towards creating a “global structural fund” would start rolling back the domination of the markets. When the EU invited poorer, less developed countries to join it, the offer was not confined to joining a market. It made great efforts to develop backward regions and to educate the young. Since fifty per cent of exchange transactions take place within the EU, if Europe adopted the Tobin tax, such a decision would have global repercussions.

Today, development aid is a long way from the objective of 0.7% of the GDP fixed for industrialised countries. It has fallen to 0.22%. Alongside this, Europe should propose deep-structural reform of the Bretton Woods financial institutions. The political objectives and the composition of the IMF and World Bank need to be redefined. Debt cancellation would be the first move.

How can we refuse others the help we have given ourselves since the war, in order to reconstruct our own industry, agriculture and economy? Within Europe we have benefited hugely from sectoral public funds, regional ones, and restrictions on imports. We would hardly have a car industry had we not restricted imports of Japanese cars for the period of reconstruction.

The international community cannot ask developing countries to open themselves up to the great winds of competition, without giving them similar support. There must be no globalisation without redistribution. This ought to be the founding principle for a socialist politics in today’s globalised order.

Transforming the WTO

‘‘Liberalisation of world trade will get developing countries out of trouble”. This was the promise of the Uruguay Round following the creation of the WTO in 1994. Six years later, Africa’s proportion of world trade has dropped to below 1%. Twenty years ago the LDC (least developed countries) 600 million poorest people in the world were responsible for 0.6% of trade. Todays that figure has dropped to 0.4%.

Under the guise of regulating commercial conflicts, must we accept that the WTO should take upon itself the role of a world supreme court, imposing its views over elected governments? This issue arises every time the WTO forces Europe to drop its food safety standards – the hormones in beef affair – or challenges its traditional cooperation with the Caribbean and French Antilles; or when Europe is forced to give up protecting species of sea-life threatened by particular fishing techniques, or by imports of petrol containing forbidden pollutants.

A few months ago, thirty-nine pharmaceutical laboratories took South Africa to court over the issue of cheap generic medicines for the treatment of AIDS. They were trying to impose the WTO’s definition of intellectual property rights. The USA has started a similar case against Brazil, despite Brazil’s excellent record in fighting AIDS.

By contrast, no sanction has ever been imposed on the United States or any of the multinationals which violate fundamental tenets of the International Labour Organisation on the use of child labour, prisoners’ labour, or trade union rights.

The issue is not whether we need rules for world trade but whether those promoted by the WTO are compatible with democracy and real development. Socialists must come up with a new approach for Europe, one which is not protectionist, but which redefines the relations between nations.

Europe and globalisation: five principles

Reducing inequality

The dismantling of commercial barriers which resulted from the WTO talks at Uruguay was all the more hypocritical since the industrialized countries excel at maintaining non-tariff barriers against developing countries, through recourse to ‘standards’ which are often insurmountable without technical help. Our markets have not opened up to them as much as theirs have to us.

The objective of this round of WTO talks at Qatar should be to reduce inequality between North and South. It is time to break with the dogma of free trade, with this belief that health is in the market, as happiness is in the field. Free trade, unfettered by other considerations, is a race between a runner on vitamins and new shoes and one who is underfed, wearing old sandals and carrying a 30kg sack.

Europe must change its tune. It must encourage the setting up of regional assemblies, which will be able to influence international affairs and work towards the development of a multipolar world. It must establish privileged relations with bodies such as Mercosur (Brazil, Argentine, Paraguay, Uruguay) and help them become more than a common market, able to resist the will of the US imposed on the whole American continent through NAFTA.

Europe must champion asymmetrical preferences. That is, developing countries must not be forced to open up their markets in the same way that rich countries should between one another.

Limiting the WTO’s field of competence

Europe must insist that the WTO’s field of competence be limited. Everything concerning public and social services, culture and creation touches the core identity of each society. It cannot be weighed in the balance of a commercial negotiation, or put under the jurisdiction of international commercial tribunals. Europe must challenge the WTO to recognise the legitimacy of such criteria. This should also be true of anything regarding health and safety considerations. Whatever the US thinks of the scientific basis or not of the EU decision to reject hormone-injected beef, it is Europe’s right to exercise this choice.

As for EU condemnation of the United States over its subsidies to exports through the Foreign Sales Corporation scheme, the sanctions would have been so enormous – more than $4oom – that Europe has never dared impose them. President Bush’s trade representative threatened the EU with commercial meltdown if it took a step in this direction! The WTO’s strictures are relative when seen from the American balcony.

Recognising non-commercial standards

Europe must declare that there are some principles which rise above commerce. The Universal Declaration of Human Rights, the ILO conventions, conventions for the protection of the environment (Rio, Kyoto) are more important than the rules of commerce. No one in France would accept that such a tribunal should replace the Council of State, or the Constitutional Court.

The principles of world regulation must be made coherent. It should be possible to appeal against a WTO decision to the World Health Organisation or to a future world environmental organisation, when that decision concerns core principles which these organisations have been charged with defending.

In addition, Europe must champion democratic reform of the WTO, in order to reinforce the interests of poor countries and NGOs.

A new architecture of multinational organisations

The WTO should not be allowed sole responsibility for taking action where the issue in question has a non-commercial dimension. This gives to it the powers of a global Supreme Court. The basic principle governing the relations between multilateral organisations should be based on a recognition of an international hierarchy of norms. That is to say that in any conflict between the WTO and an organisation raising basic issues of human rights, those rights would prevail. A commercial conflict concerning an environmental issue should be referred to a future World Environment Organisation; while one which concerned the right to health should be referred to the World Health Organisation.

Towards a World Parliament

The establishment of this new order could be vested in a World Parliament, to be organised under the auspices of the UN. Consultation and public debate on the issue would constitute one of the first tasks of this parliament. It would also have to propose a means of involving multilateral organisations according to principles laid down by the international community.

Its other great responsibility would be to establish a Tobin-type tax, and to put in place the institutions and determine the priorities for the distribution of these funds. This body would be the cornerstone for a global democracy.

A court of arbitration would have to be set up, charged with determining the legal functions of these organizations. How could one ensure that these would not be dominated by the same forces which control the WTO? Much would depend on the role played by Europe. At least such a mechanism would encourage open debate on the conflicts between these norms, within a context – the debate on globalisation – where public opinion could increasingly become a major player. This “democratisation of globalisation” would be a real social advance.