Free development of the individual as the prerequisite for free development of all - that is the message of a free, modern and democratic socialism. The political challenge to democratic socialism is to organize society in a way that ensures social and political human rights for one and all. In this sense socialism is the human rights policy of modern societies. It calls for equality in freedom and is therefore based on freedom and solidarity.
Below are twelve theses for a democratic and socialist policy at the end of the century.
1. The 21st century vision: combine modernity with socialism.
Modern societies are distinct from traditional pre-capitalist or early capitalist societies because of 'the permanent transformation of production and the uninterrupted disruption of conditions in society, the eternal insecurity and motion' (Karl Marx). The driving force behind these continuous innovating changes is an institutionalized competition in the economy, politics, science, education, the media and culture, which is based on a pluralistic
distribution of property, power and influence. The security of being able to rely on seemingly invariable living conditions throughout a life span has vanished.
Permanent modernization is an ambivalent process. Its institutions in the economy, politics, science, education, the media and culture have often been used as instruments of the fiercest oppression in this century. From them arose the disasters of this century, the world wars, the Holocaust, genocide, misery, starvation and environmental destruction.
The state socialist attempt to evade the spontaneity and insecurity of capitalism by replacing competition and evolution with planned control and centralized administration of resources has failed. Even though, in a historical context, the permanent attempts to defeat it and the conditions resulting from that must be taken into account, one fact remains: the general conditions for innovation and progress were either destroyed or could not emerge. Social security, therefore, did not have a lasting economic basis. Freedom and individual initiative were limited and fundamental democratic rights were not guaranteed. State socialism became a stagnating society which crumbled and eventually collapsed. Nevertheless, it gave humankind an important experience that needs critical analysis, not
denunciation.
Socialist policy following the collapse of state socialism should liberate and protect the evolutionary potentials of competition in the economy, politics, science, education, the media and culture from the dominance of capital utilization and its patriarchal conditions. Only this will make it possible to use competition as a resource for the emancipation and development of all individuals, and to control and compensate in solidarity for the risks, spontaneities and insecurities entailed. The equality of the sexes consequently arises from such a change and is also the prerequisite for its taking place. Embarking on the road to socialist modernity means aiming at the replacement of capital utilization's dominance over the direction, manifestation and speed of change in human civilization, with the dominance of social, cultural and ecological objectives. To this end, politics must be controlled, deliberate efforts made to mould society and counter-powers developed that are able to bring all this about.
What matters is not the abolition of markets, but the creation of new ones; not the suppression of entrepreneurial initiative but the creation of new overall conditions for its social and ecological orientation. That cannot be achieved through supplicatory formulae such as those in Schroeder's and Blair's joint proposal, but by limiting the right of disposal of capital and property where it works contrary to the common good and channel it where it leads to ecological degradation and social disintegration. Public property must assume a new role.
What is intended here is not a relapse into pre-modernity or anti-modernity, but a transformation of modernity. A combination of modernity and socialism is not inevitable, however, it could be the major task for the next generation.
2. The Social Democratic mark on the age of Fordist mass production was rather successful. It can no longer be copied today, but it harbours lessons.
Gerhard Schroeder and Tony Blair paint a picture of Social Democratic policy during the past decades as a source of levelling, innovation phobia, permanently increasing public spending put to unproductive uses, etatism and irresponsibly high material expectations. This picture is unhistorical and unjust. It makes one forget the degree to which productivity, innovation and broad sections of the population have developed over the past 50 years, and especially the great influence of Social Democratic visions that.
The Fordist welfare state emerging in Western Europe and the US after World War II was able to guarantee nearly full employment over a lengthy period of prosperity, growing earnings in keeping with the development of productivity, and index-linked social benefits in old age, sickness, disability or unemployment, although poverty has
never really been abolished. Industrial mass production of material goods and private mass consumption were prominent features of Fordism. Combined with it were also more scope for individual involvement such as co-determination in companies and better chances for emancipation. Not all, but quite a few dreams of the Social
Democrats came true. Not only, but mainly, thanks to the trades unions, the Social Democracy, socialist movements and parties, as well as the competition with state socialism, institutions emerged which were able to voice the interests of the working class and to partially complement the capital principle in society with social participation. Unfortunately, prosperity was paid for by the oppression and exploitation of the so-called Third World and an increasing destruction of the natural livelihood of the human species. Yet there has been development there, too. The colonial age is over. These days, the impoverishment and exploitation of the Third World these days happens through bilateral and international political and economic dependency. Ecology has become a political subject and a matter of public awareness.
The achievements of state intervention in the market economy are porous and disintegrative. This is not because rapidly growing wages, increasing state redistribution, Keynesian spending policies and state control over the major players have always been wrong. The limits of the old ideal have to a large degree resulted from its success. The crisis of the Fordist working society results from a type of growth that only worked as long as ever new areas of human life could be turned into gainful employment, organized along economic lines and rationalized until less and less social labour was necessary for the production of the goods needed for consumption and investment. The wealth of free time gained this way in a Fordist working society can only be used to produce and consume more, and it is being invested to save more living labour. This cannot go on without restrictions. The ecological problems generated by this type of growth and the increase in 'superfluous labour' are manifested in growing discrepancies between capital utilization, wages, taxes, social surcharges and transfer incomes.
Nowadays we have reached a point where we need redefinition of the relationship between working and living. Redundant labour cannot be completely reinvested, but it must not become superfluous time, dead time of a seemingly superfluous underclass. And it is just as anachronistic to turn the time available now into cheap, subsidized service jobs. This is the way to a different new class society - on the one hand the big-income earners with too much work and too little time, and the small-income earners who, as servants, raise the children of the big-income earners, take care of their houses and gardens, and see to all the unprofitable errands. This new split into classes would be anti-modern and anachronistic.
Instead of snorting at the achievements of the social democratic age as Schroeder and Blair do, efforts should be made to completely revamp and integrate the achievements into new societal structures. A genuine modernization does not mean dismantling and deregulating social institutions, it means searching for a new path of development and deciding in favour of an alternative reform policy, linking economic, social, ecological and individual developments.
3. The era of neo-liberal destruction of the post-war system should not be merely interrupted by a Social Democratic episode of damage-containment but superseded by an episode of modern socialist politics.
Through a chain of aggressive reforms, neo-liberalism has started to dismantle Fordist welfare capitalism over the past twenty years. This was carried out mainly in the interest of transnational corporations and international financial markets, the global economic, political and cultural upper classes. The quest for a new, future-capable way of combining economic development and social progress is not a relevant component of the neo-liberal reform programme. The emergent system is, therefore, extremely unjust, unstable and threatens peace, the environment and social cohesion.
So far, the neo-liberal reforms have been implemented in Germany only in part. Important structural elements of the social democratic era remain intact. These can hamper reform, on the one hand, because justified social interests are represented in an obsolete fashion. On the other hand, they may facilitate reform: there is a chance to transforming the existing welfare state and corporate institutions for the new tasks ahead.
The Social Democracy of the New Centre or the Third Way attempts to pick up on the neo- liberal approach and partially correct it. It tries to give the state a bigger role again, not acting as the Fordist redistribution state but as an 'activating' force. Like neo-liberalism, it means to establish, promote and moderate market mechanisms and forms of competition which improve the competitiveness of nation-states and major regions in global competition, while (in contrast to Thatcher's neo-liberalism) safeguarding a minimum social consensus at home by promoting
bargaining processes of opponents (such as the Alliance for Jobs).
The fact that social democratic governments are in office in many European countries proves that the people wanted a correction of the neo-liberal reform strategy. However, the defeat that the German and British Social Democracies suffered in the European election is a clear sign that their current policy cannot count on stable support. On the one hand, it is unable to take the offensive and make use of new chances. On the other, it has not proved that it can and ill
effectively oppose new social threats. Hence, it seems to equally step back to pre-neo- liberalism and pre-social democratic times, disappointing both those who have pinned their hopes on new chances and those who are threatened.
4. Those who want to make use of the new chance have to let everybody have an opportunity. Those who want to oppose the new threat must not allow them to attack those who are most vulnerable. Society requires a new consensus.
Social justice is the fundamental social condition for a lasting, truly modern policy. It must not be reduced to individual fairness. The social foundations of individual performance must not be ignored. Democratic socialism, therefore, favours a new consensus in society.
Basic elements of this consensus are:
a policy that credibly faces the new challenge - turning new chances into chances for a freer development of all, in
solidarity;
a transition to a mode of development that ensures a more just participation of everyone in social wealth through a new way of working and living that is ecologically sustainable;
surmounting all obstacles in the way of women's self-determination and equality of the sexes;
full employment by exploring new fields for economic development in keeping with sustainable, ecological and social criteria, while the same time reducing hours and increasing the flexibility and enrichment of gainful employment and its combination with the chance for voluntary creative work;
a social system whose costs are shared in solidarity and whose aims are basic safe-guards for everyone and active involvement of all in terms of new opportunities;
a policy of restructuring public finances, thereby opening the way to a more just social system and new development.
5. Modernizing politics means more than adapting to new conditions and supporting business. Above all, politics should be a deliberate effort to structure social conditions. To this end, organized counter-powers are required.
Neo-liberalism turned the politics of nation-states and international organizations into executive bodies of transnational corporations and international financial markets to which the framework of Keynesian control over the economy has become captive. The new Social Democracy wants to promote the economy and create overall conditions under which an unhampered functioning of market forces is possible, according to Schroeder and Blair.
Social justice and ecological sustainability are strangers to an unhampered functioning of highly empowered world markets. Expecting any access to social and ecological sustainability from an improvement of the supply situation amongst the current actors in these markets would, therefore, either be unworldly or a deliberate ideological hoax. Without strong socially and ecologically oriented forces in society, and global and regional regulation, any change of direction would be impossible.
For democratic socialism, a modernization of politics cannot mean serving the economy more efficiently and disposing of its unwanted 'waste' in a more social manner. And it is not enough to improve the utilization capabilities of labour by better training. In the first place, a modernization of politics means regaining politics as a means of deliberately moulding social conditions giving the forces of the market and society as a whole an orientation towards the common good.
What is needed is a policy of dialogue and a European employment pact. Yet, they only make sense if they open up new chances for those who are unemployed today or are underpaid. The orientation toward the common good requires that those who are disadvantaged today are the ones who benefit. This orientation can only be successful if a higher portion of the gainfully employed share in the national wealth and small and medium scale entrepreneurs receive support in real terms so that their almost complete dependence on banks and major corporations will be clearly reduced.
Political power depends tremendously on the balance of forces in society and, above all, on the economy. Just like a division of powers is the condition for democracy in a political system, a division of economic power is the prerequisite for a social and ecological economic order. Developments oriented at the common good can only emerge from an institutionalization of ecological and social counter-powers, in contrast to the power of mere capital utilization and the misconception of maximum wages and consumption.
Those without power are in no position to negotiate and are not accepted as a partner. Organized capital's omnipotence inevitably results in a powerlessness of politics vis-à-vis the economy. What are called practical constraints are those constraints that arise from the predominance of the former and the relative powerlessness of the latter in the first place. Without a change in the power structures in the economy the 'Alliance for jobs, vocational
training and competitiveness' will become a coercive contract providing the biggest companies with the most favours and will result in social decline and some social concessions granted rather as an act of mercy.
For decades, Social Democrats have foregone preparing people for the fact that road blocks to development can be removed by nothing other than their own involvement in changing the relations of power. It's not by accident that the calls by Gerhard Schroeder and Tony Blair for The Third Way and Die Neue Mitte (The New Centre) are appeals to the governments and not the peoples of Europe.
The emergence into social and ecological sustainability starts when those affected recognise their own interests, and it is based on the commitment to such a change amongst citizen's initiatives, project organizers, associations, trades unions, churches, expert groups and local actors. A modern Left must promote self-organization and representation of interests of the civil society, contribute to networking and provide a political shell for offers in the quest for a new path of development. The state and legal system are gaining importance as they make such developments possible and promote them by setting the rules.
6. A combination of ecological restructuring, modernization of the working society and establishment of a multifaceted and varied way of life could create a sustainable type of development that surmounts the obstacles of Fordist capitalism, becomes less harmful to the environment and facilitates the economic conditions for a freer development of all. What matters is a path of development superseding the socially tamed post-war capitalism.
Technologically, societies today are able to supply all people on earth with only a small expenditure of labour. However, this development has not led to everybody working less. A growing number of people capable of gainful employment has no paid job, the other part is working more and more, partly also earns more and has to pay for the 'redundant' sections of the population through taxes and social charges. This kind of productivity development and growth means that social integration is increasingly getting destroyed and the living environments of people erode - both for those who have no work and those who, because they are competing for better performance, lack the time and ability for varied human relations and leisure activities.
The enormous increase in labour productivity was not matched by an equivalent efficiency development in handling resources and productive factors. The exploitation of natural resources has grown enormously without the efficiency of their uses having risen comparably. Such a development not only disastrously undermines the foundations of future production and consumption but also destroys the living environment of people - the basis of which is nature.
It is possible and necessary to embark on a new road of economic development and find a type of development that is in harmony with the environment and human needs. What is on the agenda is a socio-ecological transformation that can also be called a global revolution (Club of Rome) and must leave its mark on the 21st century. Three aspects of this transformation must be highlighted:
the transition to ecological sustainability and the inevitable reorientation possible now of production from manufacturing material goods to the production of real human wealth - the universal needs, abilities, pleasures, productive forces etc. of individuals produced in universal exchange (Karl Marx);
a global offensive for overcoming poverty, hunger and underdevelopment and a new era implementing the equality of sexes in politics, the economy, science, education, the media and culture. A modern Left does not, however, reduce the abolition of patriarchal power to a policy on equality. It regards the emancipatory struggles of women as one of the major movements for changes in society.
Not less than a transformation of world society is on the agenda. An erosion of ruling structures touches on the predominance of capital utilization over society, the destructive urges of society to rule nature, the rule of the 'North' over the 'South' and the rule of men over women.
The entire system of production services, housing, transport and way of life as existing in the 20th century must be converted. An efficient use of natural resources and the ability to handle them 'productively' must improve in multiple ways in the next 20 years. Those are the completely underdeveloped future markets requiring labour, capital and, most of all, knowledge. The ecological and social transformation will start comprehensive innovation and
investment processes and can lead to a net increase in jobs even in the mid-term.
In order to achieve this goal, a new framework for markets is indispensable. Amongst other things, it must include in the prices the burdens resulting from economic activity for society which so far have not been included in business costs by means of ecological taxes that really and actually regulate and certificates and charges. Structural and regional policies can contribute to desirable developments. The new economy will be based on a globalized exchange of information, a far-reaching regionalization of material and energy cycles and localization of many people-related services enabling the regional labour capacity to be used to the full and the environmentally friendly economic cycles to be established. The necessary revolution leading to an efficient use of natural resources requires a reorientation of the research and technology policy towards sustainable development.
Socio-ecological sustainability and a modernization of the working society boil down to gainful employment and a reduction of the overall lifetime work in differentiated and flexible forms for everyone. A modern working society must also make a new combination of gainful employment and creative communal and individual work possible. Finding versatile and meaningful fields for communal and individual work can start with the ecological transformation of private life, must regain the power to shape communal affairs in local and regional areas and will give rise to a host of social and cultural projects. Extending the opportunities for voluntary communal and individual work forms the alternative to a continued subordination of social relations to the economy and commerce as well as a further reduction of life to material consumption.
Creativeness and commitment must no longer be limited to individual careers in gainful employment, high incomes and exclusive consumption of a few only. Everyone should be employed - both with paying jobs and with personal work - according to their abilities and needs in order to find a sensible combination of work, life, enjoyment and personal fulfilment.
7. The growth of the low-wage sector results in a lasting division of society. The alternative is to find new fields for sustainable development, and to reduce and diversify gainful employment as well as to increase its flexibility.
Growth oriented at the world market and reduction of additional wage costs will not solve the problem of mass unemployment. Traditional labour market policy is insufficient and the creation of a low-wage sector polarizes society and wrongly subsidizes businesses. Without establishing totally new fields for and a redistribution of gainful
employment, society will suffer a lasting split into high income earners, their servants and the unemployed.
The crisis in gainful employment can be resolved. A modern socialist policy must search for new ways that are closest to its goal - the free development of everyone. Three ways should be mentioned:
First, the future of work can be found in a transformation of production and production-related services as well as replacement of goods and technologies incriminating the environment by ecologically harmless ones. Second, since only 20 percent of those gainfully employed could provide the necessary material goods for society as a whole under current productivity conditions, it requires a considerable extension of social, people-oriented services, education and training, health, upbringing, nursing care, scientific, cultural and sports activities, social and psychological care, counselling, support for self-help projects, interhuman communication and environmental protection. These fields are inexhaustible for human activity. Already today the majority of people in the Western world are employed outside material production. Yet, the functioning of services should not be reduced to the provision of 'human capital' for businesses. People-oriented services form the core of the production of wealth in the 21st century. The current leisure time industry is only the late Fordist harbinger, the present-day internet may be the early form of a new knowledge and communication society still hidden in the folds of the old system, covered by commercials and passive entertainment.
Strategic decisions for a new path of development, for future-capable fields of employment are indispensable. Yet, they must be twinned with institutional innovations. A modernized working society cannot limit itself to creating more jobs. It must give rise to institutions that are in line with the emergent social structures and circumstances of life. The modernization processes of the past 50 years have eliminated the social conditions of a Fordist working world that were based on a male head of the family who was normally employed for a lifetime.
Nowadays the biography of gainful employment is marked by various simultaneous and subsequent roles. Yesterday a trainee, today self-employed and part-time worker, tomorrow unemployed and the day after that maybe entrepreneur and finally a share-holder receiving welfare. The diverse social roles can no longer be clearly attributed to certain social classes, strata and groups. That does not mean social injustice has decreased: on the contrary, it is growing. But there are no clear lines of classification left. There are workers, blue and white- collar with rather high incomes, rich free-lancers and also those who for many years live close to the poverty line, businesspeople gone broke without any social safeguard, rich and poor doctors and university graduates without a job and entitlement to social safeguards and such with the best material opportunities.
Consequently, the concentration on normal working relationships must be abolished and the diversity of incomes and employment and their combination must be accounted for when setting up rules for gainful employment and laying out systems of social safeguards. The debate about pseudo-employment shows especially that the old categories have become anachronistic. Various forms of gainful employment, times of training and work in communal projects or in an individual sphere must be combined flexibly and in most diverse manifestations without people suffering a lack of income or social safeguards, and without the individual being able to wriggle out of their solidarity obligations towards the community.
The exploration of new ecological, social and cultural fields for gainful employment and development of new forms thereof and their combination are the fundamental condition for modernizing work. At the same time, by shortening the average work-week for men and women to 30 hours, it should be possible to shorten the overall cycle of lifetime employment and thereby allow gainful employment to be combined with voluntary communal and individual work (without income).
Lifetime employment must be reduced in various and flexible forms. In this field a balance of interests between employee and employer is necessary and possible. Flexibility means various possibilities in terms of working hours. 'Working hour choice' could be a future possibility. It addresses more than just part-time work, training times, Sunday years, parents' leaves and flexible replacement without facing social decline using the Northern European example. Offering working hour choice to older employees should provide them an opportunity for making a smooth transition into retirement. People of 55 years and older should be legally entitled to old-age working hour choice. In terms of flexibility, thought should be given to an individual handling of working hours by the employees in the first place.
A large degree of non-profit jobs in the overall amount of work in society and the specific features of many people-oriented services simply cannot be subordinated to the yardstick of investment returns. Therefore, it is necessary to find out how these jobs can be classified.
In part they will have to be done as public work as now, yet with more emphasis on citizens and their needs. At the same time, the non-profit sector or third sector should be jointly extended by private businesses and the state and organized by autonomous economic entities instead of expanding the low-wage sector. Public institutions and organizations under local supervision could farm out new socio-cultural and ecological projects financed in part by
public funding and partly by fees and prices. The businesses chosen to run the projects would have to live up to certain labour market, social, ecological and local political criteria. Through a structural policy and business philosophy they should contribute to the emergence of relatively stable regional economic networks. This is where the third employment sector receiving public funding should come in. Another possibility would be the creation of individual income by combining social safeguards with an allowance for taking over socially meaningful jobs. Shorter working hours twinned with fundamental safeguards for times without employment should make it possible for the individual to find time for training in their own field of work, or for cooperation in non-profit or charitable projects of cultural, ecological, social, scientific or pedagogical nature while in employment or instead of it.
8. Participation of citizens in the wealth of society does not, exclusively, mean more private consumption; rather it will lead to a better quality of life for both women and men.
Abandoning a mode of consumption that reduces pleasure to mass consumption and eventually leads to a worsening quality of life and stultification, does not mean forsaking the positive aspects of the Fordist consumer society. What is required is not the elimination of consumption, but the use of the material wealth, mobility, space and the world of goods in a different way. Consumption will bring pleasure and satisfaction if it reflects the variety of enjoyable behaviour and the richness of human relations. To this end the individual needs free time and self-determined work. This will not lead to a reduction of purchasing power and ultimately demand. Conversely, their increase must not be the only undifferentiated alternative to a one-sided policy on supply. Collective bargaining in the next century should also be used to translate rises in productivity into rises in the quality of life. In one's own body, upbringing of the children, private life, the flat, house and garden, food and drink, local affairs, harmony with the environment and the latter's preservation there are no constraints that need commercialization, no expenses to be minimized and no tasks that home servants or service-providers do for them. They form the private life from which pleasure and satisfaction arise at least as much as from gainful employment and a career. The battles of the future will be more like battles about a new mode of living. A redistribution of opportunities in life is a fundamental condition for preserving cohesion in society and democracy.
A tremendous reduction of the time spent working is an essential condition for women and men being equally able to take part in gainful employment and work. That also opens up new opportunities for women's real involvement in the renewal of democracy. True equality requires that there are no obviously underpaid sectors which tie women and also men financially to their partners. A more cooperative working world, a new employment policy and a more self-determined combination of gainful employment with voluntary work would make it possible for all to overcome the exploitation of stereotyped 'women's work' according to patriarchal socialization (interhuman solidarity and readiness to take care, social sensitivity, orientation at compromise) in the mostly poorly paid service industries and to give such behavioural orientation a much more central role.
In this and other fields the strength and development of trades unions assumes a pivotal role.
9. A new mode of development requires a change in economic regulation and institutional reforms, without which the new trend for socially and ecologically transforming society cannot be moulded.
A social and ecological conversion means that a host of actors - individuals, organizations, businesses, state authorities etc. - must change their behaviour. Each far-reaching change of behaviour, therefore, requires a reform of institutions regulating and structuring behaviour. This is not done to simply juxtapose more regulation through either the market or the state. Institutions only work as well as they correspond with the opportunities and means of the actors. The regulatory system incorporating markets, big organizations, corporate bargaining procedures, detailed bureaucratic economic activity, exploitation of the environment, a system of labour on the basis of an oligopoly under Fordism is no longer in keeping the social facts at the end of the 20th century. The traditional regulation of international markets and money in the world has collapsed without new and effective institutions having emerged.
Deregulation provides no solution. It is only a negative variation marked by a one-sided interest in dominating the market for the best capital utilization possible. A new path of development, therefore, requires institutional reforms especially in the fields of the economy, social and tax systems. When rearranging economic regulation the following currents, amongst other things, could be of importance:
Primarily, overall conditions must be set for the world markets establishing and enforcing comparable standards in the fields of political and social human rights, ecology, product quality and consumer protection. World markets need regulation that also guarantees opportunities for the economies of less developed countries. Financial markets must be regulated in a fashion that does not hamper productive investment but scales down speculation. Apart from agreements on environmental and social standards a regulation of the international trade in capital seems to be most urgent. The introduction of (Tobin) taxes on foreign exchange and capital transfer, public supervision of banks and less scope for the dollar and Euro are essential steps.
Without underestimating the difficulties of re-regulating world markets, far more initiative should be expected from the Social Democratic governments in Europe in this respect. The world market powers dominating in regions must take the lead. The fact that rich countries reject the introduction of certain environmental and social standards, citing international competition, is not only dishonest but also writes off the future.
The vast majority of institutions for an ecological regulation of the economy have yet to be established. The underlying principle would be that ecological resources, depending on their nature and importance, remain the property of the regional or local communities, nations or world population and cannot be privatized. Such resources can be used by private businesses in periods to be determined in exchange for compensation for the cost of reproduction of ecological resources, i.e. the cost for replacing or substituting rare ecological goods and the investment cost of long-term ecological conversion. Apart from eco- taxes achieving genuine ecological regulation, other suitable instruments could be certificates and environmental charges. They do not constitute any distortion of the economic balance. They simply correct the mistakes made because of insufficient inclusion of ecological costs in the calculations of businesses. Ecological conversion does not mean simply collecting the cost for using ecological resources. It also means using these revenues in a socially and ecologically meaningful way. First, it is necessary to ensure that those receiving very low pay are compensated for their additional burdens. Second, businesses must not be freed from ecological taxes by exceptional regulations, as calculation of long-term ecological costs is urgently required. Wherever it is necessary and makes sense, the competitiveness of businesses is to be backed up by temporary capital aid, amongst other things, for investment lowering the consumption of resources and relieving the strain on natural cycles. Special support for small and medium- sized businesses should be done directly and not by way of cutting ecological taxes in defiance of the system in order to lower additional wage costs. Third, consumers must be able to compensate for the additional costs resulting from ecological taxation through environmentally friendly conduct. This calls for support for public and long-distance transport and energy conservation. This requires an ecological investment programme that re-invests the money coming from ecological taxes in efficiency-raising and economically meaningful projects. Businesses and authorities, through semi-public capital investment companies, could do this and create new jobs in the process.
Economic support could gradually be changed from subsidies which both perpetuate structures and distort competition to equity capital support for innovative investment. It should not come from the state. Democratic and public companies for economic support based on equal representation ought to organize it. In the long run economic support could, therefore, be shifted from the state budget to a considerable degree and financed mainly from independent sources.
A number of public services obviously cannot be provided efficiently by state-owned companies in their current form. However, services for the common good are an obstacle to privatization. Solutions that replace local state monopolies by supra-regional big companies in monopoly positions with no ties to either the region or local community are particularly problematic. That again requires a quest for new ways between state and private companies.
What is feasible is combinations of umbrella companies under public law and democratic supervision with the broadest participation possible. However the state would not be in a management position. They meet the needs of the customers through their services, together with a number of smaller and medium-sized companies. In this area pluralistic competition could be connected to public control. Such ideas must be followed up and tested. In this context it would make sense to introduce the legal form of a public company which the state appoints to run certain public services, commercially act like any business in competition, but which receives no or only temporary subsidies, and is under public supervision. Its profits are used for the common good.
Eventually industrial relations and codetermination must be revised. Big companies and their activities are not the capital owners' private business. It is not enough either to incorporate only the interests of the workforce. It would be necessary to set up boards divided into thirds. Public interests, which the activities of the company touch on could be represented by a public bank. These banks should not be represented by staff from state authorities, but elected representatives of public non-governmental organizations.
10. A modernization of the social system requires the participation of most people in financing it and introducing a demand-oriented social safeguard, ridding the solidarity- based insurance systems of out-of-area services, limiting entitlements and the obligation to pay for high income earners, more efficiency and democratic self-management in the use of funds, as well as universal standards for all mandatory insurance schemes.
The welfare state is a second field for institutional reform and regulation. Welfare and social systems developed and index-linked under Fordism such as health and pension insurance, unemployment and nursing-care insurance, have been subject to heated debates and insufficient attempts at reform for a long time. The reform of the health system and pension schemes which the German government has just ushered in holds a few correct approaches - especially the introduction of a fundamental safeguard - but still more problems.
Its time for a reform of the social systems that comply with the social structures evolving in the 20th century and support the transition to a new ecological path of development and a new connection between the economy and way of life.
That mainly requires two big steps - a standardization of social insurance and introduction of a fundamental safeguard. In future there should be only one mandatory basic and health insurance. At a time of grave changes and ever greater losses in social security it is very urgent to introduce a new pillar in the systems of social security in exchange for other services, fundamental social safeguards based on needs. The traditional reduction of social security to those in gainful employment must be abolished, a differentiation between services for civil servants, separate insurance systems for blue and white collar workers is untimely. There is a need for a social insurance system that insures all sections of the population against risks and provides basic safeguards in case they are necessary. In return most forms of income should be used to fund it. Not only workers, but also entrepreneurs, free-lancers and self- employed people may need social security at some point. Above all, a pension system that takes full employment for a lifetime for granted to provide a normal pension is no longer in keeping with a society in which changing social roles and kinds of income are increasing in the course of a lifetime. Continuous security and stable premiums require that almost all kinds of income are used and businesses pay in solidarity, however, on the basis of what is feasible economically.
Basic safeguards must guarantee conditions fit for human beings to live in. It is not enough to provide the material conditions for one's existence. This safeguard must not be misunderstood or abused as a 'gentle way to dispose of' people. It must open chances for actively taking part in social life, getting training and seeking a job as a worker or becoming self-employed, starting a business or a career.
A basic social safeguard must be available for everyone in need. The compulsory index-linked basic social safeguard does not need to completely cover the high living standard reached in life for those earning high incomes. They can see to that for themselves. The entitlement comes from premiums to be payable amounting to twice the basic social safeguard as a maximum for example. Except for those unable to work, recipients of the safeguard (including pensioners) and children up to the end of training, everyone would have to pay a premium depending on the kind of income. This would cover the funds necessary for meeting the payment commitments without raising rates. Earners of higher incomes pay into the solidarity-based insurance scheme up to a certain limit. Nothing has to be paid for the income exceeding that limit, however they cannot claim any payments either for that part. Higher income earners can make their own provisions for beyond the income threshold. Apart from private insurance this can involve company pensions, collective social schemes, co-operative insurers and the like. Incomes therefrom are also freed from premiums to the basic safeguards system. Welfare, unemployment benefit and allowance and mandatory pensions could expire over a longer period in their present form. Procedures about granting them could be reduced to a minimum. Humiliating control procedures would be dropped because relatives' incomes, savings etc. would be exempt from consideration. The mandatory basic safeguard would, therefore, replace today's pension and unemployment insurance schemes. As health and nursing-care insurance could also be standardized, there would be only two mandatory insurance schemes left to be paid for by income earners.
The premium-system is preferable to tax-financed systems (such as a basic state pension) because the latter can be changed arbitrarily according to change of politics. The premium- system has a built-in quasi-ownership-based claim. For children up to age 18 a child allowance covering all everyday costs as basic safeguard would be paid. From age 18 they are entitled to a minimum basic safeguard independently of their parents' income when in need. This would also apply to students replacing students' loans.
Businesses must show solidarity and pay into the insurance funds. Payments would no longer be based on the gross wage costs. The net profits will form the basis. So far businesses with relatively high labour costs in the overall costs and more employees at comparable turnovers have been disadvantaged. Now the changes would bring about a more just and functional division of costs.
It is possible immediately to rid the social security systems of out-of-area services and make them more efficient in their use of social funds. Services for which no premium has been paid must be financed from taxes, if necessary by means of an insurance. A standardization of the mandatory insurance schemes raises efficiency, eliminates unequal treatment, makes simpler laws possible and scales down red tape. The insurance schemes' self-management must be extended and made more transparent.
11. The tax system must be fundamentally modernized, simplified and made transparent as well as oriented at tax justice: lower taxes on small incomes, higher taxes on big private property and unproductively invested profits and revenues from financial investments. The public purse can be rehabilitated in a fashion that paves the way to a more just social order and sustainable development.
A fundamental reform of the system of taxes and charges is urgently required. First of all, the Social Democratic plan to broaden the basis for taxation by doing away with exceptions, subsidies and exemptions and lowering the rate of taxation in return is correct. The taxes businesses pay in Germany are not too high in absolute terms; the tax burden has been levied incorrectly and unjustly both from an economic and social standpoint between enterprises, the very wealthy and those dependent on wages.
The Social Democratic approach does not suffice for a real reform of taxation legislation. It is an illusion to lower incomes from enterprises and assets, taxes and charges for the middle classes, taxes for workers and the financially vulnerable all at the same time and yet gain enough scope for the state to manoeuvre in finance policy.
The crux of the problem is that German taxation legislation no longer corresponds to the social facts at the end of the 20th century. An overdue modernization must also introduce a reasonable differentiation between private households and businesses for unincorporated companies, so that the transfer of investments and profits between private households and enterprises can be taxed more justly. The separation between private households and enterprises
must adequately precipitate in the arrangements of commercial, corporate taxation and social legislation. Re-invested profits and investments should be treated differently and taxed less than income transferred to private households. An increase in value of businesses, as long as it remains in the company, should be taxed less. In return, depreciation schemes for fictitious investment must be abolished because they only serve to avoid taxes on private incomes.
The variety of enterprises, on the one hand, and the different kinds of incomes, on the other, amongst the private households should be taxed in a comparable way. In particular taxes on profits from and transfer to financial investments must be completely reorganized. The underlying principle should be here, too, that investments and reinvested profits are taxed less, and profits transferred to private households taxed more. Under this condition a wealth tax can be imposed, above all, on assets not invested for productive purposes. Profits used for as well as stemming from speculation must be taxed much more than profits resulting from production or services. The trend from production to speculation cannot be stopped otherwise. Only if profits from production are higher than those from speculation there will be a real chance to create jobs and contain and keep on a leash the dangerously uncontrolled international money transfer.
Estate taxation could be arranged in such a way that assets remaining in a business are taxed less, while those transferred to private households above a certain threshold (which e.g. does not touch privately used housing property) are taxed more.
The public purse in Germany and in other leading Western nations has been slithering into a serious crisis for years, perceived mainly as a problem of public debt. Since the early 1980s national debt has risen by 600 per cent in Germany; in 1997 the total amount of national debt exceeded more than DM 2,000 billion. Almost one in four DM of taxes now goes towards debt service. And the debts are growing further. About 25 per cent of the 1999 budget is covered by loans and the sale of federal property.
As much as they are desirable, initial new trends in expenditures such as a continuous labour market policy or the first steps of the 100,000 roofs solar-collector programme cannot be repeated next year without new solutions. The revenues from privatization incurred this year can only be used once. These approaches have been reduced even more and partly cancelled by the austerity programme. Weighty election promises, such as a rise in the housing allowance, the ecological transformation of society and a modern innovation policy especially for small and medium-sized businesses, are lacking funds.
The crisis of public finances does not primarily arise from the fact that so far the road to social justice had been paved with ever higher levels of public spending, as Tony Blair and Gerhard Schroeder would have it. That does not go for the previous government in Germany. The crisis was mainly caused by the fact that the public purse lost the part of revenues that used to come from corporate and wealth taxes. In fact, in Germany taxes on profits and incomes play an ever smaller part in overall tax revenues while the share of wage taxes has risen by 20.7 per cent alone between 1992 and 1997 and constitutes the biggest item for the Treasury. The burden of taxes and charges on wages and salaries is much too high. Under the condition of Fordism in crisis, by and large, only the major corporations have received big tax breaks for reasons of competition. Incomes from property rose more than proportionally. The decrease in unemployment promised for that event failed to materialize, in fact the number of unemployed clearly grew.
As to businesses, the myth of Germany as a high-tax country is not true: the actual average corporate tax is 21 per cent. According to the OECD amongst the industrialized nations only the Netherlands have a lower rate, while it is much higher in the US (27 per cent), Denmark (28.6 per cent) and Great Britain (32.4 per cent). If German businesses were still taxed according to the 1980 regulations the government would have DM 100 billion more every year. The problem is that the major corporations avoid taxation or are exempt from it so that small and medium-sized enterprises as well as wage-earners must shoulder the main burden.
The crisis of the public finances must be resolved other than in the socially unjust way the German government is trying now. The following principles would have to apply:
Each DM earned above the poverty line (be it from wages, salaries, other earnings, profits and revenues) is subject to taxation with taxes rising progressively. Pensions, revenues from life insurance policies and other old age incomes as well as the basic social safeguard (as soon as it has been introduced) are exempt from taxation. In other words the basis for taxation is broadened, exceptions are abolished and effective instruments are applied to counter tax avoidance by big corporations, the rich and loan and insurance companies. Higher taxes are levied on capital revenues from transactions in international financial and foreign exchange markets. More pressure is necessary to harmonize taxation legislation within the EU.
The development causing the crisis in public finances has beneficiaries and profiteers. Against the background of huge unsolved problems in society requiring financing and the unjust accumulation of wealth amongst the economically mighty, a temporary wealth charge on big property and the assets of insurance and loan corporations and investment companies is necessary for a transitional period of ten years.
In the long run, fewer burdens from a decrease in mass unemployment and the reform of the welfare state as well as revenues from embarking on new development roads will pay off. A new kind of full employment would cut the costs of unemployment (about DM 170 billion in Germany in 1998) tremendously and clearly raise tax revenues.
All expenditures are being checked for their contribution to the necessary economic and socio-ecological conversion. Subsidies perpetuating structures are gradually phased out. Support contributing to a socio-ecological transformation of society and thus to a possible elimination of mass unemployment are retained and extended.
The financial transfer to east Germany, and the competencies for decisions about that are changed; a fund for social and ecological communal projects or an innovation bank within the 'pilot project east' will be established.
By means of a reform of local finances self-administration as decreed in the constitution will be established in a new way in local communities. They must be able to positively influence regional, ecologically oriented economic cycles and to assume a leading part in establishing a third employment sector with public support.
12. International security and the preservation of peace mainly depend on a just world economic order, non-violent forms of implementing human rights and claims by ethnic, political and cultural groups as well as a UN monopoly on the use of force.
From the experience of the most appalling of all wars in history and the failure of the League of Nations, the United Nations Organization and in its Charter an international law emerged which outlaws war, orients at consensus and bases international relations on fundamental democratic principles. Furthermore, for nearly half a century the balance of terror prevented the terror of war in Europe.
The return of war to the European continent, its extension to Africa and Asia, its re- legitimization by the policy pursued in the capitalist metropolises and countless other countries also results from the fact that the mutual fetters on the military arsenals in west and east were cut. Yet, most of all, it shows that there have never been real intentions to replace confrontational and military security concepts by cooperative and civilian ones. Gorbachev's New Thinking has turned out an ineffective episode for a civilian make-up of international relations. Readiness on the part of the west to let themselves in for such ideas was relinquished following the demise of the Warsaw Treaty and the Soviet Union.
International conflicts, the dangers of a variety of wars and proliferation of arms of mass destruction have increased. Unjust economic relations and underdevelopment in which many countries of the South are still being kept are causes of present-day crises and military disputes, as well as US and NATO ambitions to virtually establish a world-wide military monopoly on the use of force, the undemocratic nature of international relations and disregard for human rights, international law and the rights of ethnic, political and cultural groups by many countries.
The neo-liberal, radical globalization jeopardizes traditional social structures and alternative opportunities for development alike. It is flanked by cultural imperialism causing resistance. Without underestimating the specific causes in individual regions and countries: dictatorial regimes, ideological fundamentalism, wars about distribution and a world-wide militarization of politics are not last resulting from economic, political and military strategic decisions by the metropolis countries.
Currently anti-militaristic forces are weak and the monopoly of the west on the use of force is hardly restricted. However, politics building on that is short-sighted, counter-productive and irresponsible. It creates new tensions and aggravates old ones, destroys civilian and cooperative thinking and, at best, solves warring conflicts by causing new, and in the long run probably worse ones. Universal applicability of human rights, individual freedom and democracy cannot be brought about by military threats or war and are not really intended. But the granting of human rights is a requirement for lasting peace.
Those who want to pursue a policy based on finding causes to prevent new wars and remove and contain existing military conflicts, must reduce the instruments of war and first of all in the dominating military powers of NATO. First, disarmament must again be in the focus of international politics: arms exports must be downsized and eventually banned altogether, the manufacture of new arms and especially high tech weapons and the extension of the attack- capable armed forces must be effectively limited or stopped. The proliferation of weapons of mass destruction can only be prevented by disarmament by the nuclear powers themselves.
Second, a renewed legitimization of war as a political instrument, i.e. any policy, must be halted and the UN monopoly on the use of force rehabilitated. Surrendering sovereignty in terms of security policy to democratized international institutions could provide joint security with a reliable basis. Not the enlargement of NATO and extension of its military strategy or an activation of the Western European Union as the military wing of the EU but a decisive strengthening and democratization of the United Nations and the OSCE in Europe offer a way out of the spiral of wars.
A just world economic order and the opening of alternative and self-determined chances for development for the countries of the South is, third, the most important prerequisite for removing the causes of dangerous regional battles over distribution, regional ambitions for supremacy and local militarism.
Fourth, civilian crisis prevention, an international crisis early warning system and peace education and research must assume a totally new status. Non-violent and effective forms of implementing human rights as well as the rights of ethnic, political and cultural groups could complement existing instruments under international law.
Peace, too, can only result from politics. The consequences of the current world economic policy, present strategies in security policy, the traditional instrumentalized human rights for power politics and current western attitude towards the UN and OSCE are unsuited for peace. The socialist Left must contribute to a new beginning in each of these fields.
