A NEW WORLD

The famous french university Science Po and the OECD organized under the title „Nouveau Monde“ an interesting and often controversial two days discussion in Paris. The deliberations ranged from the questions of modern industry and the importance of the digital services via the crisis in Europe – where I was on the panel together i.a. with Arnaud Montebourg and Jean Claude Trichet – to the big challenges in Africa and Asia. Traditional and „digital“ industrialists, professors, experts of international organizations etc. discussed the already visible structures of the new world and its future developments.

Jean-Paul Fitoussi was the intellectual guide through the meetings. I know him quite well as I could invite him some time ago – together with Peter Bofinger, Andras Inotai, Kate Picket, Joseph Stiglitz and many others – to join the scientific advisory board to the Progressive Economy initiative which I started as President of the S&D group in the European Parliament. Again at this conference Fitoussi – together with Robert Skidelsky – proved that there is an attractive alternative to the mainstream neo-liberal ideology adhered to by many academics and even more politicians.

Industry, services and leisure time

Back to the title of our meeting in Paris: New World. But what is new in and on our world? The digitalization of our economies is certainly a relative new phenomenon. How far it will contribute to the employment/unemployment in our traditional industry was one of the first questions. That the traditional industries will not be the job creators was clear for everybody. But all agreed, that they are still important to earn enough income for supporting our economies including the services to grow. In this connection the possibility of regaining full employment was raised by Robert Skidelsky. His position was clear: „We cannot get back full employment with a 40 hours work week. But what we need and can get, is an income equivalent to a 40 hours week and what we look for in addition is a reevaluation of work and leisure!“ With reduced working hours leisure becomes more important and should not be discredited as unproductive idleness.

This reminded me very much of a recent discussion in Vienna on „Entschleunigung“, that means on the necessity to reduce the speed and force promoted in and by todays capitalism inclusive our consumption patterns. Marx in the Communist Manifesto has described the process of the global and all comprising – and destructive(!) – capitalist forces. Schumpeter and even Keynes have taken up this point. At last today we should consider seriously how we can use the increased productivity for an improvement of our individual and societal life and underline the importance of sustainability of our economic system and society. For this we need more concentration and orientation on culture and nature which could give us more personal satisfaction and resonance than running after each new consumer product, promoted by industry. These are at least questions for the developed world, even if it is different for the countries which want to catch up to deliver the minimum of goods and services for their own people. Here the questions will have to be raised and dealt with differently, but the question of sustainability and quality are as important as for the „developed“ world.

Emerging economies

Obviously the questions of mature economies are somewhat different from the main issues in countries which want to catch up and be part of a global race to meet the basic demands of its people. Thus the representatives of India, Indonesia and other emerging countries especially from Asia had other issues on their mind. The vast differences between rural and urban areas was one of the issues. A hot debate started around the question, if development means primarily urbanization and if this urbanization should be promoted in order to beat poverty. In this respect one has to admit that urbanization means not only the growing number of big cities with several million people. No, very often cities with between 5000 and 10,000 inhabitants are specially successful in creating jobs and fighting poverty and by thus avoiding the creation of an urban proletariat.

In any case the number of countries growing with the double rate than the OECD countries has been increasing dramatically. But growing fast does not solve all the problems. Very often it is based on population growth and connected with low productivity and lack of social cohesion. Even the growing middle classes in these countries have in majority no car and no right to a pension and are very poor in comparison to our middle classes. And in connection with many young people with a better education than ever before but no adequate jobs this will create new tensions and unrest. Stability is a big issues in emerging countries. As a title in a recent Africa supplement of the Financial Times expressed it: „Job creation critical to prevent social unrest“!

Creating a strong, viable middle class stays an important political job in emerging economies. So it is with the necessity to build and improve the existing infrastructure. The lack of an adequate infrastructure from transport to electricity is often a major obstacle against sustainable growth. To improve education is another task for decreasing the birthdate and improving women’s participation rate in the labour market and by this their material wellbeing. All that affords strong political action and leadership. Markets alone cannot achieve sustainable developments as many examples show. And strong and efficient political leadership is no contradiction to a business friendly climate.

Africa on the rise?

This is especially true for Africa. As a participant of Africa expressed it: „Africa is like a souk, you can find everything, what you want to find: from exiting opportunities and valuable resources to poverty and diseases like Ebola“. And as another one said: „Africa is a huge platform of poverty, disease and ignorance as a hangover from colonialism“. An important fight in Africa is the fight for efficient government and against corruption and impunity. And not for everything colonialism can be blamed for.

One of the questions raised was if there is a special „African“ way of development and doing business or if the „Western“ model is a universal one. A very vocal representative, who does business in her country of origin, Senegal, and the US underlined the importance to take up the regional culture and products in order not to copy the western style businesses and economies. She pleaded clearly for a dual economy with robots doing the jobs which could be automatically done and the more „handicraft“ style of jobs where human beings can find some satisfaction and use their brains and skills. Brains and skills trained also to know and use local and regional traditions from food to medicine.

New instabilities

One element of our New World is the growing importance of movements and flows. These concern trade, migration and data flows. „We leave less and less from stocks and more and more from flows!“ Stocks would mean the existing land and the local labour force, flow would mean globally mobile capital, information, labour etc. But this new development creates also greater instability because of increased fluctuations. We saw it specifically in the financial markets and we have to recognize the growing resistance against the increasing influx of migrants and refugees – at least in Europe.

One of the problems is the fact, that these flows are more and more crossing country borders and that means mostly political boundaries. To manage and tame these flows we would need global governance. But the speed of building up the different forms of global governance is lagging far behind the new developments. And many politicians are still thinking or pretending they can manage our challenges on a national level. And with this attitude they prepare the ground for nationalists and populists.

And Europe?

The resistance against global or even European solutions is particularly strong by the rising nationalist forces in Europe. The success of the European Union in bringing peace to our war and conflict ridden continent is endangered by growing populism and nationalism. But these phenomena and their representatives are supported and enhanced by the reluctance of Europe’s traditional politicians to take up the challenges of unemployment and inequality. The job of attacking the lack of growth is left to the European Central Bank with all its limitations decided by the politicians themselves.

It is more and more obvious and promoted by pragmatic economists, that in view of the nearly zero interest rate public – and of course private – investment has to be increased at least to a level near the pre-crisis level. It dropped dramatically the last years. But stubborn neo-liberal political forces fight this demand with hinting at the necessity of reducing the deficits. But everybody can see, that the actual policy is failing to do that and that more investment would not increase but decrease our public debts, at least in the medium term. So unemployment stays at an unacceptable high level and we are losing competitiveness and the chance for an ecological transformation of our economies towards sustainable development by „green“ investment as has been again demonstrates in the recent Climate Report.

The New World is a world of dramatic changes. Europe was known in the past as a continent of curiosity, looking and longing for new frontiers. It has promoted our own dynamic development. Of course we have to recognize that European colonialists also destroyed many traditional societies outside our continent and were responsible for many killings and slavery. Today Europe, at least the political one, is looking mostly to itself and is concentrated on its own problems. But the world outside is less and less interested in taking up European solutions and „values“ unless Europe is engaged in an open and engaged dialogue with the „rest“ of the world. Europe cannot undo its failures and crimes of the past by diverting its interest away from the New World.

We still have –traditional – cultural and social elements which could contribute to a new but nevertheless human world. The mere race to achieve the highest growth rate or the cheapest products or the highest profit cannot be our race anymore. But thinking, by closing up Europe and by creating new barriers against global flow of goods, data and people, we can avoid to be confronted with these flows is naive. We have to offer more sophisticated solutions for leading these flows in the right direction:

Europe has to offer data protection combined with support for digital economies and creative startups.

Europe has to negotiate out of strength bilateral and multilateral trade agreements on a fair legal basis with accompanying measures for the losers of these agreements and give time for adjustments.

Europe has to fight against the organizers of illegal migration, create new passages of legal migration and enhance integration of the newcomers.

Europe cannot participate on building a New World by isolation, nationalism and xenophobia. We need openness and security at the same time. The years after World War II with its courageous politicians to overcome the past and open the borders should give an example. And public engagement including public investment, competitiveness and social welfare are no contradiction, why should it be today?