The Arguments



As indicated in the first chapter, in the United States and within the Euro- pean Union, a balance between expenditure and revenue for financing the welfare state had been reached by about 2000. Strong economic growth at the end of the millennium was helpful in this respect. This, however, did not prevent governments from continuing to reform their welfare states. The fourth phase of fundamental reforms to systems of social security through the introduction of other methods of financing and paying bene its and the re-allocation of responsibilities between governments and social partners is still underway. To explain this phenomenon, I examine two arguments that are used by governments from 1975 onward to legitimize their continued pursuit of this new goal, i.e., reducing public spending. These arguments, one economic (that is, globalization)and one ideological (that is, new dogmas), are the subject of this chapter.


Foreign Direct Investment Social Security Public Choice Welfare State Public Spending 
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Chapter 3

  1. 1.
    Following Levine, I use the term “ideology” “to refer to a doctrine or collection of doctrines that enjoy the influence they do, not in consequence of their cognitive merit, but because they help to sustain or otherwise benefit social elites” (Levine, A.: The American Ideology: A Critique, Routledge, 2004, pp. 79–80).Google Scholar
  2. 3.
    For instance: Sociaal Economische Raad: Dimensie Europa 1992, Den Haag, 1990.Google Scholar
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    Example from the Netherlands: Kolnaar, A. H. J. J.: Sociale Zekerheid en Verantwoordelijkheid: Een discussienota van de CDA-werkgroep Sociale Zekerheid, The Hague, 1992, p. 22.Google Scholar
  4. 5.
    For instance: (1) Commission of the European Community, European Social Policy: Options for the Union, Green Paper, Consultative Document by Mr. Flynn, 17 November 1993, Com (93) 551, Directorate-General for Employment, Industrial Relations and Social Affairs.Google Scholar
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    Krugman, P.: Competitiveness: A Dangerous Obsession, ibid., pp. 28–44.Google Scholar
  6. 8.
    Scholte, J. A.: Globalization: A Critical Introduction, ibid., p. 39. This is illustrated by the fact that the term globalization is used along with terms like modernization, internationalization, liberalization, universalization, Westernization, deterritorialization, and supra-territoriality—terms which, although with substantially differing emphases, are related and overlapping to some extent.Google Scholar
  7. 9.
    As for the question of when globalization emerged, some authors refer to the journeys of Marco Polo and Columbus’ discovery of America, followed by the exploratory expeditions of the Portuguese, the Spanish, and the Dutch. From those days on, international trade became an important aspect of commercial life, organized in, for instance, the Dutch East Indian Company. Pepper, coffee, tea, sugar, oriental silk, gold, silver, porcelain, rubber, and tobacco, became important items of a booming global trade. This trade involved high import levies, however. Because of that, some scholars do not use the term globalization here, since to them globalization presupposes free trade (Legrain, Ph.: ibid., pp. 80–86). Mittelman mentions three possible origins of globalization (Mittelman, J. H.: ibid., pp. 18–19). In his view, one can argue firstly that globalization stems from the origins of our civilization, i.e., when groups of people started to interact with one another through conquest, trade, and migration. This would mean that globalization is about 5,000 years old. Urbanization during the Industrial Revolution of the 18th century would be part of this process of intensifying communication and economic relations. A second view is that globalization developed in parallel with the origins of capitalism in Western Europe during the 16th century. In those days, major technological innovations accompanied decisive shifts in the ratio of labor to capital, resulting in new economic and social relations. It was the start of a market orientation directed at profit maximization, of wage labor, and of private ownership of the means of production. Thirdly, one could argue that globalization is the consequence of fundamental changes in capitalism. Here, the 1970s represent an important turning point. Starting with a severe recession, the 1970s saw fundamental reforms having certain characteristic features: the collapse of Bretton Woods system; the restructuring of production processes toward more flexible, capital-and technology-intensive production; decreasing power of the unions; reductions in social expenditure; deregulation, privatization, and enhancing competitive power. Mittelman does not choose between these three possibilities. To him, globalization can best be understood in terms of its continuities and discontinuities with the past. Based on this distinction, he distinguishes between (a) incipient globalization, which is the period before the 16th century; (b) bridging globalization, being the period from the inception of capitalism in the Western world until the early 1970s; and, since then, (c) accelerated globalization, of which hyper-competition, induced by temporal and spatial reorganization of production, is characteristic.Google Scholar
  8. 10.
    The bulk of literature on globalization can be classified in terms of opinions, ideas, convictions, statements, or perceptions. They illustrate, indeed, that globalization is a highly contested concept. Structural analyses of the phenomenon are not that readily available and, in so far as they are available, they differ in approach. Mittelman, for instance, focuses on the systemic dynamics and myriad consequences of globalization, the interplay between globalizing market forces and the needs of society. To him, globalization is not a phenomenon on its own but a syndrome of processes and activities. This syndrome is propelled by changing divisions of labor and power, manifested in a new regionalism and challenged by resistance movements (Mittelman, J. H.: ibid.). In short, Mittelman gives a holistic and multilevel analysis of the globalization process, combining economics, politics, and culture and concluding that, though globalization offers many benefits to some, a price has to be paid. That price is “a lessening, or in some cases a negating, of the quantum of political control exercised by the encompassed, especially in the least powerful and poorest zones of the global political economy. In addition, the penetration of world markets and increased polarization on a world level erode cultural traditions, giving rise to new hybrid forms” (Mittelman, J. H.: ibid., p. 5). Since the fall of communism, Marxist scholars define globalization as “the current phase of international capitalist accumulation” (Colás, A.: The Class Politics of Globalisation, in: Rupert, M. and Smith, H., (eds.) ibid., p. 191). Robinson distinguishes between four epochs in the history of world capitalism: (1) mercantilism with primitive capital accumulation; (2) competitive or classical capitalism, marking the Industrial Revolution, the rise of the bourgeoisie, and the forging of the nation-state; (3) corporate (monopoly) capitalism, which led to the consolidation of a single world market, organized within the nation-state system; and (4) globalization, which started with the economic crisis of the 1970s (Robinson, W. I.: Capitalist Globalization and the Trans-nationalization of the State, in: Rupert, M. and Smith, H., (eds.): ibid., p. 211). Marxist scholars insist that the potentially emancipatory resources of a renewed and perhaps reconstructed historical materialism are now more relevant than ever before. Rather than viewing global capitalism as a natural force, they try to show that there is a dialectic of power and resistance at work in the present-day global political economy. They believe that this dialectic could create the conditions for new forms of collective self-determination. For modern Marxists, globalization refers to a re-structuring of state-society and inter-state relations, following the economic downturn of the 1970s. They argue that diverse state-society relations, whether classical liberal, corporatist, interventionist-welfare or neo-liberal, “simply represent variations in the degree of re-politicisation and de-politicisation [...] of the economy in what are essentially capitalist totalities” (Teschke, B. and Heine, Ch.: The Dialectic of Globalization, in: Rupert, M. and Smith, H., (eds.), ibid., p. 178). To them, states are structurally tied to the power of capital. Because of that, over the past 20 years, states have not been able to harness their power to any other purposes than the interests of capital (Teschke, B. and Heine, Ch.: ibid., p. 182). Though it is interesting to read the Marxists ideas, brought together in a book of 300 pages, one does not find any idea on how these proclaimed new forms of collective self-determination could deal with democratic values, like freedom of speech, or how self-determining collectivities could stimulate individual initiatives and prevent command-and-control bureaucracies. Because these were precisely the ailments of communism, the modern Marxists’ approach of globalization is no more than a theoretical exercise having no practical use. Further, with Van der Loo and Van Reijen, one could consider globalization to be a process of modernization, i.e., as a complexity of mutually connected structural, cultural, psychological, and physical changes that have crystallized from past centuries and through this have shaped the world of today, and are still pushing that world in a certain direction (author’s translation) (Loo, H. van der and Reijen, W. van: ibid., p. 14). According to these authors, processes like these always produce their own paradoxical counter-movements regarding aspects like differentiation, rationalization, individualization, and domestication. The transition from an agricultural society into an industrial one, for instance, not only changed production processes, but also led to urbanization, secularization, rationalization, individualization, and many other economic, social, political, and cultural changes. Also, to a certain extent, Romanticism can be interpreted as a reaction to the ideas of the Enlightenment. Supporters of Romanticism criticized the optimistic belief in social progress and utilitarianism of the Enlightenment, because to them the society created by the Enlightenment was inhumane and repressive. A similar line of reasoning could be followed with respect to the transition from industrial society into post-traditional society. According to Giddens though, the latter has not made a complete break with traditions; these have become the subject to permanent reflection. A reflection that is fostered by expert systems, i.e., sectors of professionals who have a knowledge monopoly and who are organized according to their own logic. For those who are excluded from these systems, it is impossible to have an insight in their dealings (Loo, H. van der and Reijen, W, van: ibid., pp. 158–159). As for today’s modernization processes, one could argue that the globalizing world finds itself in a new transition phase; i.e., we have entered the network society or the information age (Castells, M.: The Rise of the Network Society, ibid.). Jihad and fundamentalism in general could be seen as a reaction to that, because they oppose an ongoing modernization and cultivate tradition. They stipulate the importance of family ties and religion. They call for a return to the clarity, security, and simplicity of earlier times; a longing for the better past (Loo, H. van der and Reijen, W. van: ibid., p. 92). They see the benefits of modernity as a threat to their own fundamental viewpoints. Paradoxically, however, although fundamentalists are longing for the better past, they make use of the most sophisticated communication technology to promote their anti-modernity ideas. Finally, one can, like Beck (Beck, U.: What is Globalization? Polity Press, 2001, introduction), focus on the meaning of globalization and ask how it can be molded politically. Beck does so from the perspective of differing modernities. The first modernity is a national one, conceived and organized within a particular cultural identity, i.e., a territory and a state. To post-modern philosophers, this first modernity has failed, because the universalism of the Enlightenment can no longer hold, and the cement in society has grown porous through the process of individualization. Therefore, society has lost its collective self-consciousness and, through that, its capacity for political action. Consequently, the collapse of the first modernity is inevitable, and with it the historical Western model of the association between market economy, welfare state, and democracy. In this scenario, neo-liberal ideas were instrumental in terminating the first modernity. Beck opposes this depressing view by distinguishing between globalism, on the one hand, and globality and globalization, on the other. Globalism is the mono-causal and economical neo-liberal theory of the world market that supplants political action, reducing the multidimensionality of globalization to a single economic dimension, conceived in a linear fashion (A completely different interpretation of the concept of globalism can be found in Keohane and Nye: Governance in a Globalizing World, ibid.). In other words, all other dimensions like ecology, culture, politics, and civil society are subordinated to the world market system. This ideological core liquidates an essential element of the first modernity, that is, the difference between economics and politics. Consequently, the central task of politics, which is to define the legal, social, and ecological conditions for economic activities, no longer plays a role, thus resulting in the second modernity. As for globalism, Beck argues that we have been living in a world society for a long time already, in the sense that the notion of closed spaces has become illusory. These days, no country or group can isolate itself from others. Consequently, we have colliding economic, cultural, and political systems. Therefore, what we call “world society” is not a homogeneous entity but a totality of social relationships, which are not integrated into or determined by national state politics. When we speak of world society we have to realize that self-perceptions of states or groups play an important role. World society, therefore, is a perceived or reflexive idea. The question as to the extent to which such a society exists may, on the basis of empirics, be rephrased into the question of “how and to what extent people and cultures around the world relate to one another in their differences and to what extent [their] self-perception of world society is relevant to how they behave” (Beck, U.: ibid., p. 10). Altogether, we may conceive the term world society as multiplicity without unity, accepting differences and non-integration. According to Beck, “this presupposes a number of very different things: transnational forms of production and labour market competition, global reporting in the media, transnational consumer boycotts, transnational ways of life as well as ‘globally’ perceived crises and wars, military and peaceful use of atomic energy, destruction of nature and so on” (Beck, U.: ibid., p. 10). These are globality characteristics of the second modernity which cannot be reversed. Globalisation, on the other hand, “denotes the processes through which sovereign national states are criss-crossed and undermined by transnational actors with varying prospects of power, orientations, identities and networks” (Beck, U.: ibid., p. 11). In order to redress this situation, each single autonomous aspect of the logic of globalization [culture, ecology, economics, politics and civil society] must be independently decoded and grasped in its interdependencies. According to Beck, “only in this way can the perspective and the space for political action be opened up. Why? Because only then can the depoliticizing spell of globalism be broken; only with a multidimensional view of globality can the globalist ideology of ‘material compulsion’ be broken down” (Beck, U.: ibid., p. 11). In other words, a decisive critique of globalism is necessary to provide space for the primacy of politics.Google Scholar
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    The term is from Mittelman, J. H.: ibid.Google Scholar
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    Scholte, J. A.: Globalization: A Critical Introduction, ibid., p. 74.Google Scholar
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    Legrain, Ph.: ibid., pp. 107–110. For Chomsky, this type of globalization is very much connected to the start of a new era in world history, which began in the late 1980s and early 1990s, caused by two important things. The first one was the collapse of the Soviet Union. The second one was the continuing development of information technology, which linked the world together in global networks of computers and communications devices, making international trade and speculation faster and easier (Fox, J.: ibid., p. 18).Google Scholar
  12. 14.
    The Group of Lisbon (Petrella, R., Chairman): Limits to Competition (Dutch Translation), Brussels, 1994, p. 46 (author’s translation). In defining the phenomenon, the group relies on McGrew. In this definition, the globalization phenomenon covers two separate aspects, i.e., reach and intensity. As for its reach, globalization has a spatial meaning. It may relate to processes that encompass the whole world. Intensity refers to the levels of interaction, mutual connectedness, or interdependence between states and societies worldwide. The spatial aspect is central to Scholte, to whom globalization refers to the spread of supra-territoriality, which entails “a reconfiguration of geography, so that social space is no longer mapped in terms of territorial places, territorial distances, and territorial borders” (Scholte, J. A.: Globalization: A Critical Introduction, ibid., p. 16). Gilpin defines globalization as “the increasing linkage of national economies through trade, financial flows and direct investments by multinational firms” (Gilpin, R.: ibid., p. 299). In doing so, he stipulates the importance of the intensity aspect. In each of the three definitions, however, technological progress, the liberalization of capital exchange, and decreasing government interference in economic life, are the engines of the globalization process (Regarding this, see: Gooijer, W. J. de: On Solidarity in Changing Health Care Systems: Europe in Search of a New Balance, ibid., pp. 51–57).Google Scholar
  13. 15.
    I have chosen Gilpin’s approach somewhat arbitrarily. I could just as easily have used the schools of thought mentioned by Held, et al. They distinguish between globalism, traditionalism, and transformationalism. The first school encompasses those who argue that states are increasingly subjected to worldwide processes of change, which erodes the power of nation-states. Traditionalists resist this view. They believe that present global circumstances are not particularly unique. They point to a reinforcement of state powers in many places. Transformationalists argue that globalization transforms state powers and the context in which states operate (Held, D., (ed.): ibid.). Elsewhere, Held speaks alternatively of hyperglobalizers, sceptics, and transformationalists (Held, D. & McGrew, A., Goldblatt, D. & Perraton, J.: Global Transformations: Politics, Economics and Culture, Polity Press, 1999).Google Scholar
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