8/2/2019 Moeller_The Deadly Cocktail

1/6

The Deadly CocktailNationalism, Populism, and Inequality

ByJoergen Oerstroem Moeller

This article is based upon a paper presentedat the GAC/WFS Board m eeting on July 10,2011,in Vancouver, Canada.

The current political system and economicmodel are both in deep crisis. The political sys-tem is rapidly losing its last shreds of public con-fidence, while the economic model continuallydemonstrates impotence in dealing with a crisisbrought about by flaws in its design.

None of this should com e as a surprise. Anypolitical system and eco nomic model respond tothe challenge of the do min ating worldview in thegiven era or age of civilization. Industrializationgave birth to liberal democracy and American-style capitalism. As industrialization now fadesaway, the accom panying p olitical system and eco-nomic model do so, too.

We are now living amid the transition to afuture system, one whose outline we may just dis-cern in the distance. That transition could be ahighly turbulen t one, due to three strong and un-pleasant dangers: nationalism, popu lism, and in-equalities.Nationalism

Nationalism is growing in most nation-states.

The explanation is found in globalization's cre-ation of uncertainties about jobs. Former BritishMinister and former Member of the EuropeanCommission Peter Mandelson puts it like this:"Opportunities for many, uncertainty for most."Fundamentally, people shy away from sharingjobs, income, and w ealth with others outside thecircle of common culture and shared values.Growing immigration in countries that used tobe uni-cultural but now see several, sometimesnon-congruent cultures inside their borders, ac-centuates what is fast becoming an identity prob-lem. Under pressure from economic uncertaintyand clashes between cultures, many people seekrefuge in nationalism, blaming "foreigners" forthe problems that they themselves encounter intheir daily lives.

This trend poses a danger to the future of glo-balization for two reasons. First, it lures politi-cians into pandering to nationalist-minded vot-ers and gradually eroding the postwar gains mad eby free trade , international investment, and moreflexible rules governing immigration. The inter-nationa l division of labor does not look so secureanymore. Second, the only way to solidify theever-deepening international supply chain isthrough economic integrationwhich means

Joergen Oerstroem Moeller received a Master of Science in Economics fro m the University of Copenhagen, andserved from 1968 to 2005 in the Royal Danish Foreign Min istry at a variety of posts, inc lud ing State Secretary(1989 to 1997) and Ambas sador in Asia (1997-2005). Since his retirement in 2005, hehas been a visiting senior

8/2/2019 Moeller_The Deadly Cocktail

2/6

transferring some political decision m aking fromthe national to the international level. But is thispossible when people mistrust persons from othercountries?

The dialogue between politicians and p opu-lations breaks down under the weight of mutualdistrust. Gradually countries are becoming un-governable and must rely more and more on in-ternational institutions, international communi-ties, and other countries to bail them out. Suchactions serve as proof in the eyes of a large partof a country's population that foreigners are in-deed to blame for the nation's troubles.

Any attempt to shift the political decision-making process onto the same level as the eco-nomic and industrial phenomena that it is de-signed to control runs into nationalism as abarrier. Often, the result is an implacable d ichot-omy between global economy and national deci-sion-making . The system thus remains impotent.

Popul i smThe long period of a steadily rising living

standards has convinced many people that theyhave an absolute right to get mo re every year. Un-fortunately, we are now m oving into an e ra wherethere appears to be less to distribute, at least rel-atively.

Politicians know they depend upon a man-date given by the peoplemore clearly so in de-moc racies than in o ther systems, but basically allpolitical systems need the support of the people.They therefore shy away from presenting unwel-come truths, even though they know them, to thepeople. And so the merry-go-round starts.

Politicians attempt to circumvent the hardfacts by doing two things. First, they encroachupon the future by run ning up deficits and debts,which we have seen over the last decades. Thisshifts to future generations the burden of paying

are now dem anding painful adjustments. Peoplereact by accusing politicians of having reneged ontheir promises. Politicians, in their tur n, attemptto make good on those promises by going everfurther down the drainusing future income andhiking up deficits and debts.

Second, the nationalistic card is brou ght intoplay. The an gry public is told that the ir pro blem sare due to foreigners or the outside world or toglobalization, thus adding petrol to the alreadyburn ing fires of nationalism.

Whenever politicians fail to explain compli-cated problems, the whole idea of representativedemocracy is jeopardized. People have never beenexpected to fully und ersta nd such issues, but for-merly there was a higher degree of trust betweenpoliticians and populations. The great majoritymay not have fully u nde rstood the issues, but theytrusted politicians' saying that such-and-suchwould b e beneficial for society overall despite thecost. But no longer. The panoply of new instru-ments of communication constantly underminesthe trustworthiness of politicians and, more im-portant still, it blurs the distinction between pol-iticians and experts. Who is to be believed? Theaverage person ends up believing no one and em-braces simple solutions that are often populist.

This can be seen in the U.S. with the Tea Partyand with various right-wing parties in Europeand, to a certain extent, in Asia. The result is that"hard" decisions become even more difficult tomake. And, even once they have been made bygovernm ents and endorsed by parliament, forcesoutside the parliamentary system quickly movein to delegitimize the measures and reap the re-sulting harvest of confusion and discon tent. Ou t-side forces, very often populist in nature, use thenew comm unication instruments faster and m oreeffectively than the governing establishment tomarket simple answers appealing to the public,

8/2/2019 Moeller_The Deadly Cocktail

3/6

sive role. It has to respond to all kinds of criticism,claims, and loose allegations that often lack anysuppo rting evidence but nonetheless convey theimpression the system is hiding something. Asthe perception that the political system ca nno t berelied upo n gradually gains ground, government'seffectiveness c rum bles . It is impossible for the es-tablished political culture to guess or foreseewhere and how the next attack will fall becausethe public is often guided by em otion s, while themachinery of government depends upon reasonand logic.

Eormerly, the debate was steered by politicalparties. Now it is often dominated by unknownsources, each with its own agenda but w ithout anyresponsibility for governing the country. It is al-mo st comparable to a military superpower fight-ing a guerrilla war. One side has all the power towin but does no t know where to apply it.Inequalities

Few dispute that econom ic globalization inthe form of American-style capitalism delivershigher economic growth than any other imagin-able mo del. The problem is that the flow of ben-efits it generates are no t distribu ted evenly.

The Gini coefficient used to measure in-equality has gone up for almost all countries inrecent decad es. In the U.S., the income share nowgoing to the top 1% of the pop ulation is 20%, upfrom 8% in 1973. Simultaneously, the top 1%owned 33% of we ahh, while the botto m 80%owned a mere 15%. For China, the Gini coeffi-cient rose from 32% in 1978 to 50% in 2006. Notethat the thr esho ld for raising the red flag is about40%.

Many people say American-style capitalismis great so long as high growth con tinues. But ev-eryon e expects to share in that grow th. If they be-gin to feel excluded, why should they co ntinue to

Add to this that we have seen that A merican-style capitalism has unquestionably negative side-effects on the environment and wastes resourceseven at a time when resources are becomingscarcer and more costly. This adds to inequalityin its own way, as many of those w ho suffer fromincome inequality will also be harmed by envi-ronme ntal pollution, low labor standards, and useof hazardous substances.

Those left behind in the rush to maximizeprofits feel aggrieved and angry. .They con stitutean invitingfieldfor rec ruitment by nationalist andpopu list extrem ists. In fact, it seems increasinglylikely that such p eople form the core of the back -lash against globalization.

Thus far, the uppe r segment of income earn-ers have been unwilling to give up the privilegesthey enjoyprivileges which they often grantthemselves, and which often appear undeserved.Their intransigence further deepens the feelingthat the capitalist mode l of globalization is biasedand lopsided.Hu ma nkind is transiting from one era to an-other. Some wo uld say that it is moving from theera of mass consum ption to the era of "mess com -munication." Others say that the transition is fromthe era of plenty to the era of scarcities. Wh ateverits label, this transition calls for firm leadership,determ ination, and vision. Nothing of the kind isforthcoming. Instead, the system appears para-lyzed by inactivity and long, drawn-out negotia-tions to make even incremental changes.

The political parties are baffled, and peoplesmell this when reading vacuous statem ents. Evenworse, many po litical p arties vie for votes by call-ing for change, but then continue to pursue thesame old policies once they are voted in to office,thus depriving people of the hope that a changeof governm ent w ill improve the ir lives. It doesn't.The current political system and economic

8/2/2019 Moeller_The Deadly Cocktail

4/6

In the past industrial age, people linked their id en-tities to the nation-state based on economics-standard of living, employment, etc. Being partof a nation-state secured access to the interna-tional division of labor. Without such access,growth w ould be lower, and merely regional an d/or local communities could not successfully com-pete. A person would trade in some of his or heridentity to achieve economic gains.

This is no long er so. A num ber of playersregional economic organizations, like the EU;multinational corporations (or let us use the la-bel "supranational corporations"); and even theold sub-national regions, like Bavaria in Germ any,Scotland in the U.K, and Catalonia in Spainarenow able to use the shifting architecture of themarketplace to take part in economic globaliza-tion circumventing the nation-state.

Instead of econom ics, people now look m oreto culture, values, norms, and ethics as the an-chors for their identities, and they find them byjoining groups inside the nation-state and beyondnational borders. Migration, global mass comm u-nication, the disappearance of national media,and m onopo lies for transport and public servicesare among the elements explaining this trend.

An increasing number of people are choos-ing multi-identities. They see themselves notmerely as citizens of a n ation-state, but as belong-ing to regions, supranational corporations, andnon-governm ental organizations, to mention afew. Some of these deliver econom ic services, oth -ers huma n security, and still others make peop lecomfortable being together with others who em-brace similar cu ltural values.

In the industrial age, a public that was dis-satisfied with the services provided changed theservice provider by voting anothe r party into of-fice. In the future, a disco nten ted public will seekbetter service providers from anyw here on earth.

peopleperhaps the majoritytrends towardsnationalism. They adopt a more and m ore pop u-list political agenda and table promises that can-not be fulfilled. In such an enviro nm ent, ineq ual-ity goes up, further aggravating social problem sand und erminin g social coherence.

People look for strong social capital as thefoundation for daily life. If the nation-state can-not deliver this, they seek it within group s, eithernational or international. This complicates theprospe ct of mov ing geographically or socially, be-cause their individu al identities are linked to thegroup and risk being lost if they move. Conse-quently, members of that part of the populationtend to staywhere they are. A decade ago, one outoffiveAm ericans moved every year. Now it is oneout of 10.

A nation-state's intellectual and businesselites tend to be increasingly internation al. Theyfeel little common ground with the majority ofthe population, but identify instead with like-min ded people in other nation -states. As a result,they become more and m ore mobile.

Thus we have on one hand the majority an-chored in the nation-state, and on the other handthe min ority elite going internation al an d global.Supranational corporations and internationalnon-governm ental groups act as boosters for thisgrowing dichotomy.Conclusion and Suggestions

W hat can be done to "unmix" this potentiallydeadly cocktail of nationalism , popu lism, and in-equality? First, a stronger global governanceonethat establishes links between the police makersand those affected bypolicy me asures, even if theyfind themselves in different nation-states mus tbe set up . We have economic globalization, but asyet no global econom ic policy. The regional inte-gration agencies (EU, NAFTA, ASEAN, etc.) can

8/2/2019 Moeller_The Deadly Cocktail

5/6

at a point where confidence and trust are easierto achieve than on th e global level.

Second, bring the new playersmultina-tional companies, regions, nongov ernmen tal or-ganizations, and others with strong influence onpolicies and po liticsinside the global econ omicsystem. Until now, and particularly in represen-tative democracies, such groups have been clas-sified as outsiders and relegated to lobbying toprom ote their special interests. This makes th emautomatically critical of the system, and p ron e toattack it and look for its flaws.

The recent financial crisis has revealed notonly fundamental flaws in both corporate leader-ship and governance, but has drawn attention tothe fact that they both ope rate without reciprocalsupport, fending for themselves often as antago-nists. To bridge the gap, a redefinition of corpo-rate governance is neede d. The basic idea of busi-ness is not to make money, but to deliver goodsand services to society. Money or profit serves inthis context as an indicator of how well this taskis performed. Those who are successful do makemoney, but their profits function merely as a traf-fic light, not an en d in itself

The borderline between private and publicenterprises has shifted over the last 30 years in fa-vor of private enterprises. Now it should be re-drawn, with much more thought given to whichenterprises are private and which o ught to be pub-lic. In addition, remuneration of the elite shouldbe brought into line with how well that the eliteserves the interests of society as a whole and cal-ibrated less to the profits that their enterprisesgarner.

Competition must be restored by breakingup en terprise s th at are "too big to fail." It is, in fact,quite simp le. If an enterp rise is too big to fail, itis too big to accom mod ate an d should be replacedby a number of smaller enterprises competing

Third, establish much b etter feedback am ongcitizens, business, and the political system. Thepoliticians must be better able to analyze and un -derstand people's reactions to events and the rea-sons behind their dwindling confidence in gov-ernance and their growing sense of uncertaintyand insecurity. These problems need to be ad-dressed and not just brushed away.

And th e political system m ust do a better jobof setting the agenda. Th at agenda is now too of-ten set by outsiders who criticize the system, forc-ing it to waste its breath defending itself and fre-quently conveying the impression that the systemis fatally flawed or broke n.

Representative demo cracy as we know it hasrun its course. It was based u pon the assumptionthat people voted according to where they be-longed in the industrial society (worker, farmer,civil servants, etc.) and on public confidence intheir representatives' ability to represen t their in-terest when voting . Average citizens were no t ex-pected to understand the complicated issues;otherwise, the system would not have been la-beled a representative democracy. But today, in-formation and communication technology hasturned the tables. Now many peopleand insome countries perhaps a majority of the peoplefollow closely what is going on and do not needto influence events indirectly throu gh a represen-tative.

This does not mean that dem ocracy is on itsway out. Looking around the globe, there is littledoubt that fundamental rights and individualfreedoms carry tremendous weight. A growingnum ber of people today take active interest in howtheir community and/or country is governed.W hat m any of them feel is that represen tative de-mocracy no longer offers a channel to better ex-ercise their influence, but instead constitutes abarrier. More and more are saying "I can do it

8/2/2019 Moeller_The Deadly Cocktail

6/6

Copyright of World Future Review is the property of World Future Society and its content may not be copied or

emailed to multiple sites or posted to a listserv without the copyright holder's express written permission.

However, users may print, download, or email articles for individual use.