The E-G8 Deauville Summit

 May 31, 2011

As a regular user of internet services as well as a content provider, I was very interested in last week’s e-G8 summit. The idea of bringing together the chieftains of the internet industry and the world’s most powerful political leaders seems a step in the right direction. The internet as a platform and applications such as social media have an awesome power to help people network,educate themselves and even promote major political change, as the unfolding events in the Arab world illustrate. As always, however, along with great power comes great responsibility.

If during the ’90’s hopes of a new frontier in business development via e-commerce have somewhat evaporated in the wake of the dot com bubble, academic research, political awareness or activism and some areas of the mass-media have benefited enormously from the IT revolution.

This is not to say that all is well in the virtual world. The relative absence of adequate regulation protecting personal data and the confidentiality of communications / business transactions is sapping users’ confidence. The fact that executives of internet companies resist the introduction of minimal norms and regulations governing further development of services proves that neoliberalism is still affecting the mentality of many – albeit not all – in the business community. J.A. Schumpeter, the noted Harvard economist otherwise known for his professional admiration of American corporate achievements, was nevertheless in favour of the introduction of laws and regulations governing innovations and business development in general. To make his point, he used an analogy from the car industry, demonstrating that automobiles have been able to reach ever-increasing speeds only after being equipped with adequate brakes and safety features, which had to be developed first.

As matters now stand, however, intellectual property rights are trampled upon by “content farms”, children are exposed to pornography, and governments, from the US on down, can unlawfully obtain data from personal emails and have access to confidential files on a regular basis. As a consequence, the cyber world looks more as if it were governed by the laws of the jungle than those of civilised states protecting their citizens from harm or legal abuse.

One issue that has not been discussed so far at e-G8 is the hegemonic position achieved by the United States due to its status as the global communications hub. In the long run this has to be addressed in a way that could relieve the national security concerns of European, as well as Asian governments. As the recent financial crisis has shown, America’s position as the centre of both global finance and global communications by no means guarantees the integrity and smooth functioning of the two systems, on the contrary.

The EU’s political leadership also has to investigate why the invention of the internet by local specialists was not followed by a development of applications for it. Lack of technological savvy is surely not one of the reasons. It’s a sad spectacle to witness the fact that even the most mundane applications such as operating systems for PC’s and leading edge word processors, not to mention search engines or efficient email services come from the United States. Instead of endlessly dragging Microsoft through the European courts, it might prove a better idea to provide financial and tax incentives to interested European e-entrepreneurs or existing IT corporations to develop home-grown IT products for the 500-million strong European market.

From an international relations perspective, “the real problems of the post-cold war world would not be challenges for hegemony, but the new challenges of transnational interdependence” (Joseph Nye Jr, The Changing Nature of World Power). The political leaders of the G8 proved that they are aware of this fact. It is now up to the executives of the internet industry to grasp it and live up to their many responsibilities. (sources: Dow Jones newswires, WSJ, France24)

The onset of a social tsunami

 June 17, 2010

Most of us over forty remember how it all started. The first neoliberal victories won by Margaret Thatcher in Britain led to the near collapse of the British trade union movement. The victory against Soviet-style communism and the fall of the Berlin Wall have led to ten years of economic euphoria in the West, resulting from the opening up of the Central and Eastern European markets. Unexpectedly, neoliberalism’s main economic tenets came undone during the first decade of the new century.

By way of analogy, the current sovereign debt crisis in Europe could safely be regarded as neoliberalism’s very own Stalingrad. Even before the 2007 financial crisis, the flawed logic of supply-side economists started to produce negative social results. Yes, profits accumulated for a while, but these only to a handful. True, most products became cheaper as a result of moving entire industries to former Soviet countries or to China. Lower taxes did initially benefit consumers, but provoked a dearth of social services, investment in infrastructure, hospitals and schools. After thirty years of neoliberalism, most people find themselves poorer and their children less educated than generations of the previous fifty years.

According to neoliberal theorists, economic growth, lower taxes and free trade would eventually trickle down prosperity to all. Instead, they have given rise to an ‘investing class’ who used the profits accumulated in their accounts in unproductive, i.e. speculative ways. This led to a series of bubbles – the dot.com bubble, the Japanese real estate bubble, the US sub-prime bubble – that ultimately culminated in the global financial crisis, similar in proportion if not in outcome to the one in 1929.

The situation created after 2007 led to the counter-offensive of states against mindless speculative activities, deregulation of financial markets and neoliberal economic philosophy. The latter, had it been applied in full, would have led to the withering away of states altogether. In other words, what Marxists were dreaming of doing, neoliberal societies very nearly achieved.

The counter-offensive of political administrations against neoliberalism has shaken the very foundations of the Washington consensus. Increasingly, Western politicians, industrialists and trade union bosses are talking about the opportunity of adopting a new development model, the Beijing consensus, in which state-led investment for major projects is again the main engine of economic activity.

Not surprisingly, the investing class, its rating agencies and press have resorted to savaging the European Union’s southern flank, provoking huge financial losses to the Spanish, Greeks, Italians, Irish, and ultimately to France and Germany. In this protracted battle one could foresee the signs of a social tsunami in the making. The signs are everywhere, from Athens to Bucharest, from Germany to Spain. In the months and years to come, the protests will increase in intensity and are set to sweep away entire political structures built around neoliberal tenets.

To be sure, this is not an exercise in ball gazing, but the result of an extrapolation of observable tendencies, as J.A. Schumpeter would have put it. A few years from now, huge economic inequalities within societies would cease to be acceptable. Financial speculation and low taxes would become a thing of the past. Whilst foreseeable, the outcome is not going to be reached comfortably and without defeating entrenched and powerful financial interests together with their many helpers.

Author : Spotlight on Geopolitics
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English, External Relations  , neoliberalism