The new nationalism of nation state and trade unions

Unlike overseas-aid workers employed by nation states, many employees of multinationals have to be respectful in their treatment of people of other cultures: not because they are out to do more good, but because good behaviour is a necessary condition for entering new markets. International companies cannot afford to show anything but respect to citizens of countries where they want to do business. For a businessman all consumers, whether Indians, Danes, or Portuguese, are equally valuable: not because the businessman has higher ideals than the rest of us, but because customers provide an income, and that demands respect. It is part of the logic of the free market, an indirect consequence of the system in which companies operate and hope to make a profit. Unlike nation states, companies always need to co-operate and fit in order to succeed.

The only significant kind of discrimination known to the ideology of the free market is the distinction it makes between those who have money and those who have none or little. Their ethnic background or nationality is unimportant.

The nation state defines its identity and growth largely in opposition to other nation states. The multinational defines its growth in co-operation with foreign nation states. To the multinational, another State means another market. It has a direct interest in the development of other countries, in seeing the living standards of their citizens rise, in seeing new infrastructure built. These things mean that those countries' population will be able to consume new and more expensive products. This non-discriminatory aspect of market ideology (result of corporate greed though it may be) is not well explained in the current literature on international relations. In the literature on international business it is often ignored altogether. The international-relations literature often focuses instead on the discrimination and suffering caused by globalization, on exploitation. There is some truth in that, but the reality is that private-sector companies are far less guilty of exploitation under globalization than nation states used to be under what we call colonialism. To the extent that this criticism is coming from state employees, protecting the interests of the nation state and its bureaucracy, they are like people in a glass house throwing stones. Colonialism and globalization are at base the same geoeconomic strategy. Only the players are different, the former being promoted by the nation state, the latter by the private-sector company. The methods are different, too: where the State controls by force, the multinational controls by trade.

Globalization has reshuffled the cards in more ways than one. It is now the bureaucrats and the unions which form the more self-protective, nationalistic elements in society, since it is in their interest for national borders to be kept closed. The reverse has happened in the large companies, which are now less concerned about putting up obstacles to the entrance of foreign companies and more interested in gaining access themselves to foreign markets. Suddenly it is in the multinationals' interest to help developing countries improve their infrastructure, since the companies need that development in order to engage in future business, to build plants and factories. It has also come to be in the multinationals' interest to lower barriers to immigration.

The trade unions are in much the same situation as the nation state, tied to a geographical logic of national borders. Because of that, they are demanding that all workers should be paid the same regardless of where in the world they live. International solidarity has come to imply that workers overseas should refuse to accept pay that is lower than what they themselves earn. This makes no sense to a worker overseas who needs the job and is willing to take it for less because he lives in a country with a lower cost of living. With lower pay he can live much better than our workers at home. Thus the trade unions have largely missed the point of the argument about exploitation. They are instead insisting on equal pay regardless of country, which makes no sense in a world where standards of living vary from country to country. In effect the unions are asking workers overseas to show solidarity with workers in the home market, rather than vice versa. Thus the unions' definition of solidarity has become synonymous with their own self-interest as a group. Internationalization has become a threat, and the Internationale is now a hymn in dubious taste. In consequence, some unions in Europe are moving towards a nationalistic agenda, and many workers are once again flirting with extremist right-wing parties. That is, the new extreme-right parties are attracting members not mainly from the ranks of conservative parties, but from disillusioned working-class voters, the old Lumpenproletariat.

Over the past few decades the nation states - supported chiefly by parties of the centre and the left - have built up huge bureaucratic sectors, which have become increasingly expensive to run. In consequence, any public activity has become increasingly dependent upon tax revenues from the private sector, demanding ever higher taxes while simultaneously cutting costs. England under David Cameroon is here a good example. As the public sector has become more dependent, it has been forced to give the private sector a freer rein, simply in order to underwrite its own existence. The example of Sweden is striking. Never before have there been so many private-sector initiatives. This development has occurred only because those who work in the public sector know that their interests are ultimately being best served through increased privatization. The alternative would be to dismantle much of the bureaucratic sector. Many functions are now changing hands from public to private, whether in the fields of healthcare, care of the elderly, or education. The problem has been that many of the privately owned companies are less expensive, but also less concerned with customer satisfaction, at the end leading great sums of profits out of the country. Backlashes are already a problem. A main reason why Social Democrats in Sweden and other Scandinavian countries built up a large bureaucracy in the first place was to create a stable and loyal voter base: to win elections, by making workers dependent upon special favours and trapping them in social-security schemes (e.g. disability programmes) and impermanent-jobs-for-votes arrangements (the large percentage of insecure jobs in the public administration). Now they find themselves forced to drop some of these special arrangements. The left and centrist parties have even gone so far as to give up their full-employment policy. In that respect they are no longer in reality "workers'" or "labour" parties demanding zero unemployment. They have had instead to accept that a certain level of unemployment is beneficial for competition in the job market, and hence good for the national economy, even though they would never say so out loud. There is a distant parallel with Stalin's coming to power, when the realities of social life quickly demanded policy reversals: the Communist agenda changed and Communist ideals became mere rhetoric. For instance, Stalin soon realized that it was best to let the Orthodox Church continue holding services. Idealistic Communists, like Tito, were seen as a nuisance. Power tends to make political parties and idealists pragmatic, but ideals are excellent vote-winners: so you duck and weave. As Stalin and as Putin would have agreed, the important thing is who counts the votes.

All political parties in Europe are now more or less in agreement about the question of how much unemployment is acceptable. The precise limit will depend to an extent on a country's individual culture, but the principle is the same. Thus, in France people will take to the streets at about fifteen per cent unemployment and there will be riots at about twenty-five per cent. Eastern Europe can tolerate about thirty to forty-five per cent. In Sweden any unemployment rate greater than seven to ten per cent will usually make the governing party lose the next election, but riots would be un-Swedish at any rate of unemployment. Politicians in these countries have to adapt to the differing cultural sensitivities, but they all acknowledge that a certain rate of unemployment is good for the overall health of the labour market.

When multinationals move jobs out to low-wage countries, this has a direct negative impact on the economy of the home State, which as said above has become ever more dependent on tax revenues received from these companies. Consequently bureaucrats want more control over their borders to ensure that no more jobs are moved out, and to ensure that taxes are paid in their home country. If companies continue to move out and high earners continue to deposit their funds in tax havens, and if refugees who are not self-supporting continue to flood into Western countries, then our Western democracies will soon be a thing of the past. We will be out competed by more authoritarian states with more effective models of public management. To some extent this is already happening.

In consequence the welfare state is being dismantled. Europe will not let go of its healthcare system, but the Social Democratic model is already changing in other respects. Thus, in Sweden even the Social Democrats themselves encourage the creation of private schools, since they have come to realize, if not to admit openly, their own role in the failure of the State school system. So when a previous Social Democrat Swedish prime minister, Goran Persson, permitted privatization in the school sector this was out of necessity, for the sake of Sweden's competitive advantage, and certainly not out of ideological conviction. In terms of the country's interests this was a courageous decision. (By contrast, the Soviet leadership did not alter their social model until it was too late.)The men who run Swedish industries could not accept their children falling behind in important subjects such as mathematics and Swedish language, and without competitive industry Sweden would not be able to pay for its large public sector. Persson understood this better than most; his party however did not. As a result, in 2007 he was forced out to make way for a new party leader who stood further to the left, Mona Sahlin (who subsequently lost the election of 2010). The same privatization policy is being continued by the rival party, the New Moderates, and their coalition government now in power. National interest comes before political differences. We see this in a number of well-run countries that find themselves hard-pressed by the new force of globalization, e.g. Japan, Germany, the Netherlands, but also to some extent in France and Britain. In extreme cases ordinary politicians will be replaced by expert technocrats, as in Italy after Berlusconi or now in Greece.

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