The New Dialectic

Modern economic life crosses national boundaries to form a web of intricate association that retards aggressive and regressive nationalism. Trade, investment, enterprise, technology, communications, and travel are today relentlessly transnational. Yet this same globalism undermines the capacity of the nation-state to stabilize its economy. From this paradox comes the first of the dialectics of our time.

On the one hand, there is the broad impulse toward closer economic and political association. This is evident in the European Union, the new North American Free Trade Agreement, and a very preliminary economic alliance between the Pacific Asian countries and Australia. Countering this trend are the lingering social and economic responsibilities of the modern state. The provision of medical care, education, housing, and such -- and therewith the budget, taxation, macroeconomic policy and maintenance of employment levels -- are now the duty of individual governments.

Thus the dialectic. On one side lies the strong political and economic appeal of the larger community -- of Britain, France and Germany, no longer in military conflict but in politically safe association. On the other side lie the social tasks and responsibilities of the individual nation and its related and diverse macroeconomic performance as to budgets, taxes, expenditures and deficits. At the present stage of institutional development, no global authority exists to address these tasks; even the European Union still lacks a common fiscal or monetary authority. Also resisting the claims of larger association are the ancient and enduring ties of national identity, language, and culture.

These are not matters readily surrendered to the more distant, and perhaps more amorphous, government of the greater union. The conflict between advocates of association and advocates of disunion continues to spark intense debate in Europe. The sharpest focus falls on the plan for a single currency -- an attractive goal but one that must await coordination of the economic, social, and fiscal policies of the individual nations. Without such coordination, a common currency is a compelling but idle dream.

In the case of NAFTA, there was no vision of a shared currency or fiscal policy. Instead, debate over NAFTA in the United States and Canada turned, in a much more elementary way, on the extent to which domestic social concerns, especially employment and the environment, should be sacrificed for a larger, politically civilized association, with obvious economic advantages for monied interests. This debate will not end any time soon. The basic dialectic -- the imperatives of national sovereignty versus the gains of closer union -- will, in one form or another, continue.

The second and deeper dialectic of this decade exists within the modern state. At one time there was the all-embracing struggle between capital and labor. Democracy was a thin disguise for this conflict; political voice was most frequently on the side of the capitalists.

Now no longer. International competition has weakened the evident powers of monopoly and oligopoly. Where fear of corporate power once reigned in the United States, Canada, Britain and other countries of the industrial old-guard, deep concern for corporate weakness has taken its place. Herein lies a second paradox: corporate weakness has not brought a resurgence of labor strength. Rather, it has brought about a profound change in the nature of class conflict.

I've made the point before. A strong working-class movement and strong unions in particular require strong employers. When the latter weakens, so does the former. As excess corporate profits evaporate, so do labor's will and reason to organize. The rewards are simply too diminished. Instead, there is worry about employer survival and, in the frequent case, a financial commitment by labor thereto. Class struggle, Marxian style, is thus defunct. The more relevant dialectic now exists between the Haves and the Have-nots, at least in our most advanced economic societies. Those who combine relative well-being with political power are now the many, not the few. To the once powerful and still affluent business community -- managers and bureaucrats replacing the old-fashioned capitalists and still surviving entrepreneurs -- add the large and wide-ranging professional, academic, cultural, and entertainment communities, the great modern rentier class, and the vast numbers of the retired. Here are both political voice and votes. Here, a measure of contentment persists even in a poorly performing economy. Recession and the failure of society to produce enough jobs -- what economists call an "underemployment equilibrium" -- are discomforts for others to suffer.

Among the sufferers are those who do the tedious work, staff the service industries, are involuntarily unemployed or have given up on the search for employment. From within the well-to-do community there come sincere expressions of concern for these outsiders. But it is the well-to-doers that rule -- and rule in their own interest. Modern politics, most visibly in the United States, is dominated by this phenomenon. Consequently, many among the underprivileged do not vote. They rightly question the point of voting when every candidate shares, to some degree, a belief in the basic status quo.

Social and political conflict is not now, and in the future will not be, between capital and labor. It will be between the comfortably endowed and the relatively or specifically deprived. This conflict may not be peaceful. When political voice and participation are not available outlets, violence becomes the alternative. The danger is already evident in the United States. In Europe, also, the great voiceless underclass, imported from abroad to do physically exhausting and mentally enervating work, serves to revive an anxious nationalism.

The steps needed to resolve this new form of class conflict are not so different from those required to remedy the traditional brand. The economy must be so managed and, as necessary, supported to provide ample employment. This requires strong macroeconomic action -- public investment and job creation -- when that is needed to break the underemployment equilibrium. It also requires budget restraint, but only when the economy is functioning well.

For those to whom employment is not available and for those who cannot work, there must be a secure and unstigmatized safety net. There must also be an effective educational system -- nothing is so important for the upward mobility that vents underclass frustration. And it must be recognized that in no industrial country does the market system provide good or even habitable housing for lower-income tenantry. Finally, universal medical care and counseling for drug and alcohol abuse must be available to all. These measures become more difficult as the reach of the nation-state erodes, but they are far from impossible.

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There is no great debate as to these needs, or most of them; there is a sense of the commonplace in citing them. But merely to cite them is to see that all come, in substantial measure, at public cost. Thus the problem: rather than take on that cost, it is far easier for the comfortable to find flaws in the character of those who make up the underclass, to find flaws in immigration laws and their enforcement, and to find social virtue in a principled resistance to taxation and the invasive state. Then, as trouble looms, the comfortable find it equally easy to call for more police, more stringent jail sentences, or for moves to the suburbs.

It is the nature of the privileged to take a protective, short-run view of their own position. But there is no short-run substantive measure to relieve poverty or improve the lives of the underclass that does not require action by the state. Arguments to the contrary seek not to produce results, but to relieve the privileged of adverse conscience and cost. Our economic future will turn on how we reconcile these twin, interrelated conflicts between national autonomy and global association, and between the comfortable and the underclass.

The conflict between the exercise of national autonomy for economic and social ends and the larger global association will be resolved only by a two-way process. Tasks, notably fiscal and employment policy, must over time be shifted to an international entity as now is happening in Europe in a preliminary way. And associated countries must see the need for common internal social, fiscal, and monetary action. Some of the energy and attention now devoted to trade negotiation must henceforth go to collegial economic and social action.

As to the problem of the underclass, there is no easy answer. Perhaps some inspired leader can, as did Roosevelt in his time, bring them into the political process, make them full participants in the social order. Perhaps the threat to social tranquility, as in Los Angeles two years ago, will warn us of the need. Of the prospect here one does not know. The comfortable are now in control; one must resist the temptation to a clear or happy ending.

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