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'Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainity and agitation distinquish the bourgeois epoch from all earlier ones ... All that is solid melts into air, all that is holy is profaned.' Marx

the information economy « Previous | |Next »
October 2, 2005

A common thesis about the informatiion economy holds that the process of globalisation is pervasive, impacting on all aspects of social life. It is associated with the decline of the nation state. The overall impact of globalisation has been to de-link financial capital from actual production, and to increase the dependency of national economies across the globe to the dictates of fluctuations in financial markets.

Consequently, the power of nation states to stabilise domestic economic conditions through fiscal and monetary policy has been severely undermined. Financial capitalists can act with speed to shift investments from one ailing industry (or risky country) to another anywhere in the global economy.

That is a good account of the economic shifts taking place arround us. What is debatable is the implication that is often made. Thsi implication is that globalisation has precipitated, and caused, the decline of the nation state.---the nation state is loosing power, is in decline; and is adrift. This happened mainly because globalisation has made all national economies depend upon the performance of their financial markets. And these financial markets are globally integrated. The state has therefore lost control over monetary policies and interest rates - key levers of national economic policy.

Has it?

It is true that big shifts are taking place in the new economy. For instance, we have the undermining of the social safety net including unemployment, health and other social benefits for the poor and sick. We also have changes to protected labour markets, minimum wage legislation, and the national system of industrial relations built around negotiation and consensus with a strongly organised union movement. The changes in the labour market are centred mainly on the rise of 'flexible labour' and the growth of part-time, self-employed, non-formal and other forms of temporary and outsourced employment. We also have changes in class consciousness away from the old collective one assocated with the Fordist economy based on large factories making the same product moving along the same conveyor belt, towards a more individualised one.

But this does not necessarily mean the nation state is adrift in the sense of decline. It can still shape development and it still can choose from a range of strategic objectives.

| Posted by Gary Sauer-Thompson at 11:18 AM | | Comments (1)
Comments

Comments

Gary, The nation-state is maintaining its influence through left-overs of the industrial economy (ie the scarcity economy). It limits the ability of its citizens, and immigrants to obtain work visas. So while capital has been freed from geopolitical boundaries. Labor is stuck due to the anti-reformist laws of the nation-state. Even with that encumbrance to the movement of skills and labor, Australia has a diaspora of 5% of its population.

The other area is economic might. Australia takes about 35% of GDP in tax revenues. This is to fund what in the past would have been the nationalised state. Banks, Insurance, protected industries etc. Consumer economies need disposable income, not protected industries. The government is going to have to focus on the core services (education, health, transportation infrastructure, unemployment, and retirement) and let the market take care of the rest. We have seen an increase in taxpayer burden without an increase in relevant services. Much of government's role and responsibility has already been dumped on the individual (ie superannuation) without any releif in taxation.

It is going the wrong direction. As scrymarch noted, "we have abundance of state, and scarcity of democracy", it needs to be the other way around.