International Democracy Watch

Globalization is a social and economic integration process which has a significant political meaning, i.e. the erosion of state sovereignty.

Globalization, the Erosion of State Sovereignty and Market Fundamentalism(*)

It is not a mere quantitative increase of social relations and exchanges at the world level. It is instead a qualitative change rooted in the scientific revolution of material production, and it creates, alongside the national societies and markets, a global society and a global market. Globalization is a process that is changing form and size of  economic and social life, imposes to all sectors of society a much wider dimension than that of sovereign states and escapes states’ control, limits their ability to act and dents the essential character of their structure and functions. Globalization produces an ever deeper contradiction between the development of the forces of production that are going to unify the world, and the state, the organized power that should govern it and make it so that general interests prevail over the private ones.

Globalization raises problems of such a magnitude that cannot find a solution on the national plane. The great issues of peace, security, the regulation of the global market, poverty, international justice and environment protection have taken on global dimensions. The states, which are progressively losing control of their essential functions ─ economic development and security ─ are not able to face up to problems of such a dimension. But also international organizations and international regimes are increasingly inadequate to this task.

The Shift of Power towards Non-State Actors and Market Fundamentalism

Owing to the globalization process, power migrates from states to global non-state actors, first of all those involved in global finance. Banks, stock exchanges, rating agencies, multinational companies are taking the world market away from states’ control. Religious organizations, research centers, Foundations, Universities are working out and spreading around cultural models on the world plane. Global TV networks (CNN, Al Jazeera, etc.) shape the global public opinion. The civil society movements are activating the first forms of citizens’ mobilization at the world level. Criminal and terrorist organizations are threatening the monopoly of violence held by the states. In sum, globalization is digging an ever deeper ditch between the states, remained national, and the market and civil society, that are taking a global dimension. This contradiction has produced the idea ─ market fundamentalism ─ that the global market and civil society can regulate themselves and therefore do not need any public regulation. The predominance of markets over states has brought about a reduction of the impact of politics on economy, a process otherwise known as deregulation. It has contributed to disseminate the message that the free play of market forces promotes the universal spread of wealth, freedom and peace. The financial and economic crisis has proved the inconsistency of this ideology.

Governments' Answer: International Organizations

Governments’ answer to globalization has been to pursue international cooperation, not by choice, but due to the absence of alternatives. In fact, there is no national answer to global problems. The ever more frequent creation of international organizations (the most significant is the UN for its vocation to universality) represents the road taken by governments for finding a solution to problems that they cannot solve alone. A quantitative datum is sufficient to appreciate the importance of the phenomenon of international organizations: the incredible speed at which their number grew during the 20th century. According to the Yearbook of International Organizations, they were 37 in 1909 and grew to 7,608 in 2011. Considering the non-governmental organizations, the explosion of that phenomenon is even more astonishing. They were 176 in 1909 and have reached the number of 56,834 in 2011.

The Limits of the Intergovernmental Paradigm

The decision-making procedures adopted by international organizations are based on the principles of consensus and the veto power, on the belief that cooperation between sovereign states can solve every international issue and exclude the idea of surrendering national sovereignty to a supranational and federal authority. The intergovernmental paradigm suffers from two limitations: a) executive powers able to give binding force to common decisions are lacking at international level; b) the decision-making procedures exclude the adoption of the democratic principle of the majority vote. Citizens feel that the most important decisions upon which their destiny depends are by now beyond their control, because they are taken at world level, while democracy stops at states borders. Beyond those borders dominate relations of force among states and non-state actors, competing with the states for determining the lines of world politics. There ensues a crisis of the consent towards the political institutions and of the legitimization of public powers. Consequently, the decline of the state brings about the triumph of private interests connected to the market and the decline of collective values on which political coexistence is founded.

The Retreat of Politics and the Growth of Inequalities

Politics has abdicated its responsibility to submit global markets to rules and institutions. The power vacuum created by the retreat of politics has been filled by financial oligarchies and all sort of economic and social potentates, and paved the way to the spread of violence of organized crime and terrorism. The lack of market regulation has increased economic and social inequalities that only politics can mitigate. If private interests prevail and healthcare, education and welfare are entrusted the strongest groups, politics loses credibility and trust. The power vacuum created by the retreat of politics has been filled by financial oligarchies and all sort of economic and social potentates, and paved the way to the spread of violence of organized crime and terrorism. The lack of political control has led to the financial and economic crisis. The market anarchy can be corrected only by the intervention of the public hand. The greatest lesson we can draw from the experience of the 1929 Great Depression and the Keynesian theory is that the intervention of politics is necessary to get out of the crisis.

The Return of Politics

The global financial and economic crisis has marked the failure of the concept of self-regulated markets and neo-liberal ideology. Politics, that had given up governing the economy and society, is re-occupying the stage. Two political answers to globalization are competing: nationalism and globalism. Nationalism represents the return to the past with its array of disasters: the spread of violence, economic disorder and authoritarian regimes. The only alternative is the adjustment of political institutions to the dimension taken by economy and society so as to pave the way for a regulated globalization. In today’s transitional period, the US and Russia represent the old order, ride the wave of nationalism with the purpose of defending their old privileges. But their efforts are vowed to defeat, since it is impossible to go against the course of history. On the other hand, China and the EU have a vital interest in maintaining open markets, regulating their modus operandi and correcting their distortions.

The Lessons of the EU

The novelty of the EU lies in the fact that it represents the most successful attempt to build a supranational community including almost all the nations of a great region of the world. Even though its evolution has been slow and hesitant, it is the laboratory of a new form of statehood at international level. The EU is the most intensively regulated region of the world. Its political institutions impose restraints on what sovereign states may do in their relations with each other, and in this it shows the way to what the UN could become in the future: namely, the guardian of international law and the framework of a process of constitutionalization of international relations. The European integration process has weakened national governments and compelled them to co-operate in order to solve together the problems they were unable to cope with separately. It has created a European civil society side by side with national civil societies, and established European institutions that represent a decision-making mechanism which progressively depleted national institutions. The process has advanced to such a stage that war among European Union member states has become inconceivable.

Strengthening and Democratizing the UN

On the one hand, with its entry in the Security Council the EU could become for the rest of the world the model of a reconciliation among nation-states and the vehicle for giving to the other regions, still divided into nation-states, the impulse towards their federal unification. The transformation of the Security Council into the Council of the great world regions offers three advantages. Firstly, all the states, and no longer the strongest ones, as is happening now, could be represented in the Security Council through their respective regional organizations. Secondly, the hegemony of the great powers and the inequality among states could be progressively overcome by reorganizing the UN in groupings of states of equivalent dimensions and power. In particular, the developing countries of Africa, the Arab world, South Asia, South-East Asia, Latin America could find in their economic and political unification the way to free themselves from their condition of dependence. Thirdly, the unjust discrimination between permanent and non-permanent members could be overcome by replacing the right of veto with the majority vote.

On the other hand, the European Union, as a laboratory of international democracy, will become the leading country of this new political formula, and will be willing to help extend that experiment to the world level. In other words, it will promote the democratization of the United Nations. The formation of a World Parliament can only be conceived of as a gradual process, as the institutional evolution of the European Parliament has shown: at the beginning it was composed of the members of the national Parliaments, then it was elected by universal suffrage, and finally it has progressively strengthened its legislative and control powers. Therefore, the UN Parliamentary Assembly should likely be the first step on the road to the democratization of the UN.

In sum, the international role of the European Union is not just that of a model, but also that of the motor of the unification of the world.

According to the data provided by the International Democracy Watch in 2013, in the world there are 39 international parliamentary institutions. Despite the proliferation of parliamentary assemblies at international level, the most inclusive international organisation – the UN – does not have such a body. The WTO has established a Parliamentary Conference. However, the democratisation process is still at the starting point, as it cannot influence the agenda and the decisions of the institution it belongs to. This shows how far the UN and its specialised agencies are far from having attained that minimum degree of democracy which characterises most international organisations.

However, in my opinion, the WTO is the ground in which the efforts to democratize the UN and regulate globalization can succeed. Historical experience teaches that the authority of Parliaments grew in opposition to monarchies to limit their absolute power. Likewise, the international assemblies established last century aim to limit the absolute power of the nation-states that dominate international organisations. The most important result achieved by parliaments in their struggle against the monarchs was the budgeting power. The first step was the power to resist the monarch's tax collectors, and this gradually evolved towards a “power of the purse” i.e. a true budgeting power based on the principle of parliamentary consent to taxation and control of expenditure. This is one the most significant powers achieved so far by the European Parliament. 

By Lucio Levi

(*) Abstract of the intervention of Lucio Levi to the international seminar "Federalism in the Europe and the world", Ventotene, 2-7 September 2018

Link: http://www.istitutospinelli.org/en/download/programma-seminario-internazionale-di-ventotene-2018/