Public Services Under the Pressure of Globalisation

We live in an era of deep social transformation. The ongoing
so-called globalisation of the economy represents a redistribution
of wealth, which is unprecedented in modern history. The gap
between rich and poor is increasing at all levels on the entire
globe – in rich and in poor countries as well as between
countries. The attacks on the public sector are an important part
of the policy of redistribution. Through privatisation, the public
sector is turned into an attractive area for the expansion of
powerful multinational companies. Over the last 20 years a massive
transfer of assets has taken place from the public to the private

In this contribution, I will focus on three main analytical
points which I consider important if we want to develop our
struggle against privatisation and deregulation.

My first point is about power, structural power
and power relations in society. Public services and the welfare
state as we know it in Western Europe are the results of social
struggles – of economic, social and political power. What made the
welfare state possible in Europe in the last century, was an
enormous shift in the balance of power in society. Public health,
national insurance schemes, social security and other public
services were thus introduced and improved as a result of the
increasing power of organised labour. Public ownership and control
of the basic infrastructure in society, of the utilities,
represented an important part of these new power relations.

It is important to notice that the strength of labour was not
only reflected in labour laws and regulations. Probably more
important was the general taming of market forces. The power of
capital was reduced in favour of politically elected bodies.
Competition was dampened through political interventions in the
market. Capital control was introduced and financial capital became
strictly regulated. Through a strong expansion of the public sector
and the welfare state, a great part of the economy was taken out of
the market altogether and made subject to political decisions. It
was the organising and the struggle of the trade union and labour
movement, in alliance with other popular and social movements,
which created new power relations in society and gave us universal,
high quality public services.

My second point is about the social pact or the
class compromise. As there is no time for a comprehensive analysis,
I will only focus on some key elements of this specific, historic
development. During the last century, the trade union movement in
great parts of the world gradually developed a sort of peaceful
cohabitation with capitalist interests. In the 1930s this
cohabitation started to become institutionalised in some parts of
Europe when the trade union movement stroke accords with employers’
organisations, particularly in the North, and after W.W.II in most
of Western Europe. From a period characterised by hard
confrontations between labour and capital, societies entered a
phase of social peace, bi- and tripartite negotiations and
consensus policies. This social pact between labour and capital
formed the basis on which the welfare state and comprehensive
public services were developed.

One important factor in the post W.W. II period was that
international capitalism experienced more than 20 years of stable
and strong economic growth. This made it easier to share the
dividend between labour, capital and the public sector.

It is important to realise that this social partnership between
labour and capital was a result of the actual strength of the trade
union and the labour movement. The employers and their
organisations realised that they were not able to defeat the trade
unions. They had to recognise them as representatives of the
workers and to negotiate with them. The peaceful cohabitation
between labour and capital rested in other words on a strong labour
movement – a strength which was developed exactly through the
many struggles and confrontations between labour and capital in the
previous period, including the Russian revolution and thus the
existence of another economic system in the East. As the British
historian Eric Hobsbawm correctly has pointed out, this created
fear among capitalists and made them give in to many social and
economic demands from the labour movement in order to dampen its

Now, more than 50 years later, we have to admit that the
capitalists succeeded with their strategy. Due to important
achievements in terms of welfare, wages and working conditions, the
policy of the social pact gained massive support from the working
class, and the more radical and anti-capitalist parts of the labour
movement were gradually marginalised. Thus, this development led to
the depolitisation and deradicalisation of the labour movement and
the bureaucratisation of the trade union movement. It became the
historical role of the social democratic parties to administer this
policy of class compromise. In other words, the policy of the
social pact undermined in the long run the power basis on which the
welfare state and the extensive public sector were developed!

My third point is about the neo-liberal
offensive. The politics of the social pact culminated in the 1970s.
Then, in the aftermath of a deep international economic crisis,
market forces went on the offensive and the current era of
neo-liberalism started. Two parallel historical processes came
together and made the neo-liberal offensive possible. One was the
economic crisis in the 1970s, which made capitalists and
governments take action to restore profitability, the other was the
depolitisation and deradicalisation of the labour movement, which
opened a possibility to «solve» the crisis by attacking working
conditions, trade union and workers’ rights, public services and
social rights and provisions.

What we have been facing over the last twenty years, is
therefore the abolition of capital control and fixed exchange
rates, the deregulation and liberalisation of markets, the
redistribution of wealth, the privatisation of public services, the
increased use of competitive tendering and outsourcing, the
downsizing of the workforce to the absolute minimum, and the
consequent increasing labour intensity, and the flexibilisation of
labour. In short, an immense shift in the balance of power between
labour and capital has taken place, and this time in favour of

One of the most striking features of the current development of
the global economy is the enormous concentration of power and
resources in the hands of transnational companies. At a very high
speed they are taking control over an increasing part of the world
economy. Ever more gigantic corporations are growing up from the
mega merger wave, which is currently washing over all continents.
Through privatisation they are in the process of taking possession
of a rapidly growing part of public services in every corner of the
world. Some of the most expansive ones have specialised in growing
exactly by taking over public services.

Finally, I would like to draw three conclusions
on the basis of these analytical points.

1) The shift from consensus to confrontation.
As the power basis of the class compromise has eroded, capitalist
forces have withdrawn from the social pact. In other words, bi- and
tripartite negotiations do not any longer work the same way as it
did during the social pact period. The social forces which want to
defend public services therefore will have to meet the
confrontational attacks from the capitalist forces with a counter
offensive. Whether we like it or not, reality is that we are moving
from consensus to confrontation. We had rather be prepared. Great
parts of the trade union movement have not yet realised this.
Demands for a new class compromise, obviously with a nostalgic hope
that the social peace and the gradual improvement of social
conditions of the 1960s should be restored, do not have any
realistic basis under the current balance of power.

2) The need for structural reforms.
We have to understand power. It is not a question of good
intentions, good will or high morale (or Corporate Social
Responsibility, as somebody names it), but of power relations, of
the balance of power between labour and capital, between market
forces and civil society. We will have to confront the economic,
political and social power structures which stand behind the
attacks on public services and the welfare state. Structural
reforms like a currency exchange tax, capital control, increased
taxation of multinational companies, local control of natural
resources, progressively increased democratic control of the
economy should therefore be the starting point and the perspective
of the struggle which has to come.

3) The necessity to build broad alliances.
A considerable shift in the balance of power can only be achieved
through a broad interest-based mobilisation of trade unions, social
movements and other popular organisations and NGOs which is strong
enough to confront the corporate interests and push them on the
defensive. An ever broader part of our societies are affected by
the current neo-liberal offensive, and it is these social groups
which will have to be united in new, untraditional alliances. In
particular, we should work hard to develop the alliance between the
trade union movement and the social forum movement which has
developed over the last few years. This new global justice and
solidarity movement has been decisive in revitalising popular
resistance and has – with its dynamic, its insistence on
independence and democratic control from below, its radicalism and
its militancy – given us hope and inspiration. These
characteristics could contribute constructively to the
revitalisation of many old-fashioned and bureaucratic trade unions,
and I know a lot about that after 20 years in the trade union
movement. If we are able to handle this alliance correctly, the two
movements could reinforce each other and bring the struggle to a
higher level.

Power breeds counter-power – and this is all about power.
Time is therefore ripe for resistance. There is no other way to
break the existing development than by once again mobilising broad
movements from below in society. Ever more people realise that the
so-called globalisation not only represents the offensive of
capital, but also its weaknesses, its vulnerability and internal
contradictions. The neo-liberal project is not viable, it is not
sustainable and it is not human. We may still be on the defensive,
but we are gaining ground while they are increasingly being
delegitimised through their Enrons, their Parmalats, their growing
internal contradictions and their corporate greed. Friends, it is
hope for the future, but it will require some hard struggle before
we are there. Good luck and thank you for your attention.

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Forfatter: For Velferdsstaten

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