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by Franz Josef Radermacher
Thursday, Jul. 30, 2009 at 12:23 AM
The IT-branch is part of the solution. The best solution is balance or eco-social equalization. The Finnish constellation produces the greatest prosperity. Higher prosperity arises out of a state of balance, not under Brazilianization conditions.
“THE OPEN INTERNET IS IN DANGER”
Interview with Prof. Dr. Franz Josef Radermacher, information scientist, globalization expert respected worldwide and member of the Club of Rome, who asks will there be a “world in balance,” a return to the Middle Ages or a collapse? The Internet could play a crucial role – if it is not controlled. This interview published in: computerwoche.de, 6/22/2009 is translated from the German on the World Wide Web, http://www.computerwoche.de/knowledge_center/compliance_recht/1898618/.
Let’s begin with the IT-branch. It seems to come to terms with the economic crisis better than the non-IT world. Why is that?
Radermacher: That is especially true for the part of IT that optimizes processes. IT is one of the levers for reducing the number of co-workers in the crisis. At the same time production tends to be cheaper the more technology is applied. The IT-branch is part of the solution, not part of the problem.
The IT-branch has always denied destroying jobs.
Radermacher: All technical progress, strictly speaking, consists in doing work more efficiently with fewer personnel. At the beginning, almost everyone worked in agriculture. Today they are only three percent but much more food is produced than before. Earlier nearly half worked in assembly-line production; today they are only 15 to 20 percent. We produce far more machines and cars than ever before. New jobs arise again and again. That will also be true after the crisis.
When personnel are reduced in one sector through innovation, similar new jobs are created. If that does not succeed, state subsidized possibilities of participation could be created – perhaps through a basic income not tied to any conditions. Problems come when neither happens. Then there is increased economic efficiency and more and more people do not profit.
Isn’t that happening?
Radermacher: Yes, that is the process of nascent precariousness. If allowed to run, it ends in Brazilianization. Democracy could be hoodwinked or redefined.
China and India are genuine boom regions with flourishing markets in the economic crisis. Doesn’t this contradict your statements?
Radermacher: The upward movement is a consequence of the so-called leap-frog effect. Poorer states are outfitted with technologies that already existed in the developed states and sometimes get the rich to pay for all this. Through better capital design, better infrastructure and better knowledge, these countries have growth rates of ten percent and more. Certainly, this annual growth occurs on a modest level. Calculated per capita, a ten-percent growth in China brings less growth than one percent in Germany.
From the perspective of one’s capital resources, profiting from ten percent growth is much more attractive than from only one percent. Thus vast capital resources of the rich world are brought into these countries. This spurs a process that generates a growth rate of ten percent. From the view of the Chinese, this makes sense because they want a growth path that will bring them to the US level if they hold on for 50 years. What is now happening in the crisis is completely consistent. Take the example of generika. It can dramatically raise the life expectancy of people for very little money through cheap medicines. The research expenditures were paid long ago. Thus the status quo can be spread very reasonably over the world and produce considerable growth effects.
BRAZILIANIZATION MEANS IMPOVERISHMENT, CIVIL WAR AND DESTRUCTION
As a member of the Club of Rome, climate change is a burning subject. What economic structures are necessary so the environment has a chance?
Radermacher: The best solution is balance or eco-social equalization. If we do everything right, we can have a ten-times higher eco-efficiency within 70 years. We could save enormous energy if we realized a long-term growth- and innovation-path for a better use of energy. This assumes international agreements and internalization of external costs. Brazilianization only solves problems through impoverishment and potentially at the price of civil war and destruction. This could be very expensive for all participants. This way is not acceptable from the social side of sustainability. Market economy plus sustainable development – that is the right way, which the Club of Rome also describes as a worldwide eco-social market economy.
What are the tasks of central regulation by a worldwide governance structure that you advocate?
Radermacher: That governance structure will be concerned about the ecological, the social, the balance between the cultures and the economic process itself. The latter involves middle class policy and anti-trust boards that can effectively prevent cartels, this time on the global plane. A rational regulation of the social-cultural, the environment and the economy is necessary. Then greater prosperity will develop under the condition of a balance between people and with nature.
Does a redistribution process stand at the beginning of the social change you envision?
Radermacher: No. Capital concentration occurs almost automatically and is not the core problem. The question is how profits are used and taxed. If capital were the main problem, the prospects for improvement would be much worse than they already are anyway. If done right under present conditions, a growth process compatible with sustainability would be introduced. We in the North could add one to two percent growth over a long time this way. The South would have five to six percent. On average the world economy would grow annually three to four percent. The annual improvement of eco-efficiency would be a similar increase.
The central point is that the possibilities of technical progress should be utilized. However this only helps today with adequate ecological regulation and appropriate cross financing of poorer countries. The rich countries must be ready to pay for this. The hard medicine we must swallow is financing elements of a worldwide social equalization. The poorer world is ready to agree to consistent worldwide regulation in environmental questions. This is something obvious and is regularly put on the agenda with every expansion in the EY.
What do you mean by “Brazilianization”?
Radermacher: A crass two-class society arises, a top and a bottom. This is comparable with the colonial regime with an elite and a kind of “slave population” that does services for this elite under very precarious conditions.
What would society look like in such a scenario?
Radermacher: Seen mathematically, you have the situation in a country like Brazil where 20 percent with the highest incomes divine 65 percent of the cake while 80 percent share the rest. Countries like Finland have a much better relation where 20 percent have a third and 80 percent two-thirds. Interestingly the Finnish constellation creates the greatest prosperity for everyone. Higher prosperity arises in a state of balance, not under Brazilianization conditions.
How do you explain this difference between two extremes?
Radermacher: Again seen mathematically, the highest net product is created by well-educated persons. Thus the core of social balance is a good education. Good medical care and good old age provision also develop from that starting point. The reason is when you invest much money in educating minds, you cannot allow economically someone to die of a cough. Thus there are connections why a rich society has a well-educated population who are somewhat healthy and become relatively old. These connections can be explained mathematically. That is the opposite of the Brazilian structure: no rational or sensible education, no broad access to proper medical care and high mortality. The average life expectancy of the poor part of the population is comparatively low.
THE WORLD REINVENTS DEMOCRACY
If one looks at the movements around Open Source and Web 2.0 on the Internet, the Internet seems to abolish these limits. There is only one worldwide digital society that produces a border-crossing net product, some think. Brazil is a very good example of this with its lively open-source community. Does such a digital counter-movement exist?
Radermacher: Yes, that has great importance because this movement can potentially replace the dominance of the media with a kind of counter-public. This theme is discussed extensively in former US vice-president Al Gore’s latest book “Attack on Reason.” He sees the only chance of reinventing democracy in Web 2.0. However Gore also says the other side has long tried to take control over the Internet and abolish the free, open and relatively chaotic part through regulation and so-called trusted structures…
What do you mean by “the other side”? The IBMs and Microsofts of this world?
Radermacher: No, they are only of interest since they have enormou9s assets. Ownership questions are crucial and complex. Take Bill Gates. Others do not control Bill Gates; he controls himself. Bill Gates does much good with his money. How he increases it is another subject. In this process, the vital question is the question of control. Microsoft had a great interest in ultimately eliminating competition through an oligopolist marriage of the economy and the state.
SOME ACTORS DO NOT WANT AN OPEN INTERNET
Don’t you fear individual human freedom will be restricted too much?
Radermacher: No, just the opposite. Rational rules for all promote freedom. Restrictions of freedom can be expected under conditions of Brazilianization where 95 percent of the people would be poor and only a few would form an elite. There are influential actors who aim at such an extremely asymmetrical society and push redistribution to those above, the top five percent. These actors do not want an open Internet. On the other hand, they need this as part of a rich world for as many people as possible. In such a rich world, people would be well educated, oil efficiency would constantly improve and the net would be used to lower transaction costs in economic processes.
In this model, you could activate relatively inexpensive resources. This is imperative if you want ten billion rich people on the globe. If that is not your goal, you have another economy in mind: clear separation of top and bottom, different rights on different planes and permanent controls.
That sounds almost like a conspiracy theory as if a core of people had teamed up to exploit the rest of humanity.
Radermacher: There are people who want that. There are think tanks that are paid to reach that goal.
What drives these people?
Radermacher: In a global society guided by eco-social maxims, average incomes become more and more similar. In a worldwide social balance, India and China will be the largest economies some time or other and no longer the US with its relatively few inhabitants. The largest economy also produces the largest military. The US with its relatively small share of the world’s population cannot control world events in the long run as they do today. If you want to control worldwide processes with a trifling percentage of the world’s population, you must be concerned that 80 to 90 percent of the people on this globe remain comparatively poor.
Radermacher: “The rich sit together in Dubai, make deals and play golf.”
Under today’s globalization conditions, this also causes impoverishment processes even in the rich countries today. That is Brazilianization. In the long run, most Americans and Europeans on this globe will be comparatively poor. Parts of the global elite think that is fine. These elites join forces worldwide and build a supra-national structure that serves their goals. The elites do not have their national power base as in times of past nation states. Some had their power base in the Ruhr province, others in France and still others in England. In globalization, elites sit together everywhere, in Dubai for example and make deals in a nearly law-free zone. They drive to the most beautiful places of the earth and ensure these are safe zones. There life is marvelous. They have their golf courses, five-star hotels, convention halls and malls, airports, stately streets etc.
That sounds like a return to the Middle Ages.
Radermacher: Therefore we speak of a re-feudalization.
ONLY A 35-PERCENT CHANCE FOR A ‘WORLD IN BALANCE”
How great must be the pressure to start this balancing process? Different institutions in the world focus on certain themes but have great problems in conversion. Because it always comes down to compromises, the process is on ice when someone lodges a veto.
Radermacher: Thus the possibility of failure is very realistic. In my opinion, there are three possibilities for the future, Brazilianization, which I give a 50-percent chance, eco-social balance with a 35-percent chance and ecological collapse with hardly foreseeable consequences that has a 15-percent probability.
Can you describe the scenario of ecological collapse?
Radermacher: Ecological collapse would mean the breakdown of ecological systems in the scope of a climate catastrophe with the most grievous dislocations for the economy, peace and the environment because food would not be secure any more and the battle for resources would take even more victims.
The elites must feel pressure for changes. That is not the case now.
Radermacher: I do not see it that way. Many representatives of the elites feel massive pressure on account of the world financial crisis. A “gold frenzy” was encouraged over the money supply expanded as never before. This was coupled with international balancing guidelines, “industrialization” of guaranteeing processes and the massive use of “credit-default swaps” – that acted like a fire-accelerator in the course of the financial crisis. They drove firms into bankruptcy – forcing them to spend their own capital resources. At this time, entrepreneurs or managers stand with one foot in prison – on account of bankruptcy delay when they do not tackle new realities or pay with their own capital resources. Parts of the banking elite stood in a dynamic downward movement before tremendous pressures including criminal prosecution pressures. Then there were immediate reactions. That is why so much happened in the last two weeks. The maximum credible accident has not yet ended.
An even greater crisis waits behind the present financial crisis as a consequence of the exorbitant indebtedness of states, which results in part from the mastery of the current crisis. In this regard, we do not have ten years. The financial collapse of states threatens us next. If we do not solve the problems of tax havens, taxation of global financial transactions and restrictions of border-crossing tax optimization, we will not be able to avoid a breakdown of past structures. The possibility exists of currency devaluation with all the consequences for property relations!
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