Politics, Society and Business in the New Europe - Essay Example

Politics, Society and Business in the New Europe First world countries like Europe is one of the proponent of globalisation that pushes all countries toward neoliberalism . Neoliberalism or global market liberalism (capitalism) and for free trade policies, (Neoliberalism,2002 web site). It is the making of trade between nations to prosper and develop fairly and equitably production. It is the movement of goods, resources and enterprises to find a cheaper resources, to maximize profits and effeciency, (Shah,2007). Inspite of several positive propaganda regarding neoliberalism, Germany for the first time refuted the neoliberalism convergence theory because they believe that globalization will vary according to prevailling institutional arrangements and continued divergence between liberal and coordinated economies. Germany's employers increased vulnerability to conflict that showed up centralized bargaining agreement and its effects will distabilize its system in the longer term (Steele,2005). Because globalisation pushes all countries toward neoliberalism and deregulation, encouraging firms to lower labor cost and increase labor market flexibility, (Thelen, 2003) which result to distabilization of Germany's economy. It would create trouble between employer and union e.g. labor strike and lockout in some companies if the problem will not be resolve . Besides, the state could no longer depend the welfare of their citizen because in globalization it is the multinational who is powerful. They are the one who detates the state in the removal of some Tariffs, Regulations, Certain Standards, Laws, Legislation and Regulatory measures and the restriction of capital flows and invesment. Germanys' were able to realized that the rich (multinational) grow richer and the poor grows poorer around the world. In otherwords, globalization is beneficial only for those who prososed the theory like the first world countries. They are considered as powerful financial institutions who serve as the financiers of globalization like the International Monetary Fund (IMF), the World Bank and the Inter-American Development Bank, the capitalist crisis over revive economic liberalism. That's makes it 'neo or new', (Neoliberalism,2002 web site). Germanys' as second world exporter their employers are trying to come up a bargaining agreement to sustain economic activity by maintaining labor peace and closure or lockout of some establishment.. Martinez and Garcia (Cited by Shah,2007), revealed that there are five (5) points in neoliberalism as follows: 1. The rule of Market- freedom of capital, goods and services these is to trickle down of "Wealth distribution." It is the deunionizing of labor forces and removals of any impedements to capital mobility regulated by the state or government. 2. Reducing public expenditure for social services e.g. health and education, by the government; 3. Deregulation to allow market forces to act as a self-regulating mechanism; 4. Privatization of public enterprise ( things from water to even internet); 5. Changing perceptions of public and community good to individualism and individual responsibility. Robbins and Bacon (Cited by Shah, 2007) pointed out five (5) principles of ideology of neoliberalism: 1. Sustained economic growth is the way to human progress; 2. Free markets without government "interference" would be most effecient and socially optimal allocation of resources; 3. Economic globalisation would be beneficial to everyone; 4. Privatization removes inefficiencies of public sector; 5. Government would provide the infrastructure to advance the rule of law with respect to property rights and contracts. Gounet (n.d.) stated six (6) characteristics of neo-liberalism /competition/free trade and laissez-faire as follows: 1. Bourgeois ideology preponderates by awakening industrial capitalism against feudality and parasitism by abolishing the previleges, for free competition, free trade and laissez faire to bring about wealth. 2. Age of mondialisation is the beginning of the end of the national system. 3. Financial markets predominate the rest totalitrian expansion of US economy for free trade by dynamism of the financial power. 4. Outstripping of the national states by the multinationals making employers as appendix of the employers lobbies. National states could not depend the interest of the citizens. Multinationals manage the economy and the politicians are nothing more than work managers. 5. Privitisation and the decrease of the role of the state. Marcos, (cited Gounet,n.d. ) that the state performs striptease/ repression-forces. Its material has been destroyed, its sovereignty and independence have been abolished, its political class has been swept away: the nation-state is just only a security machine in service of the mega-enterprises. The result is the loss of legitimisation of institution, weakened as a result of privatisations (reinforcement of the ecoomic private - powers), the globalisation (loss of top-down control of the economic and monetary relations) and the deregulation including European bourgeoisies. 6. American dominion of thier ideology. The mondialisation also spreads a general way of thinking throughout the world e.g. American way of life. It was reportd in Neoliberalism, (2002 web site) the additional aspects in neoliberalism,as follows: 1. A new expansion in time and space of the market; 2. Contract maximalisation or privatisation ex: British railway network; 3. The contract period is reduced, especially on the labour market, and so the frequency of contract is increased; 4. Market forces are also intensified by intensifying assessment in the labour market ex: courier services use tracking software and GPS technology; 5. New transaction-intensive markets are created on the model of the stock exchange; 6. New forms of auction in creating transaction-intensive markets; 7. Automated trading and the creation of virtual market-like structures; 8. The interactivity means that neoliberal societies are network societies, rather than the open societies of classic liberals " connectionist". 9. The growth of financial services sector-it is the inherent shift to service economies; 10. The speed of trading increased ex: advertising; 11. The creation of quasi-markets; 12. Supplier / contractor maximalisation. General characteristic of neoliberalism is the desire to intensify and expand the market, by increasing the number, frequency, repeatability, and formalisation of transactions . It is an act in conformity with market forces; maximise the opportunity for others to conform to the market forces generated by your action; it hold no other goals, (Neoliberalism,2002 web site). In otherwords, neoliberalism can be summarized as freedom of trade in goods and services; freer circulation of capital and freer ability to invest. Still Germany for the first time refuted the neoliberal convergence theory , they believe that globalization will result to economic distabilization. They believed that globalization is trying to empowers unions making employers extremely vulnerable to industrial unrest and capitalism perspective, (Thelen,2003). The conflict has shored up centralized bargaining arrangements and in the long run it destabilize its system. Their government are trying to makes measures to cut unemployment benefits and pension and charge more for healthcare which gained support from CDU in parliament (Steele,2005). Even if there are efforts that both the east and west Germany will be unified or by putting them together in the form of coallition for final collapse of the Berlin wall this can be realize through globalization (Steele,2005). Another Germanys' paradox to globalisation are: First, the employers decline to invest, small business stagnates and joblessness is high. Second, it will transformed the nation into business firm on a global market of nations-firms in which Argentina resulted a worser economic crises than the United States. Third, the economic nationalism through "protectionalism". That globalisation differs in one respect: for them it is historical but not spontaneous development that their policy imposed by non-national global elite, directed against the individual nations. That they generally see national business as a victim of global business, (Neoliberalism,2002 web site) . Because globalisation pushes all countries toward neoliberalism and deregulation, encouraging firms to lower labor cost and increase labor market flexibility, (Thelen, 2003). Globalisation in Germany resulted that most employers are heavily invested in competitive strategies that rely on high quality and often just-in-time production. They are more vulnerable to over industrial strife which resulted to three (3) collective bargaining aggreement in metalworking industry in responsed to global economic pressures. That the govenrment are facilitating it to avoid conflict between employer and the union through collective bargaining institutions that soon threatens the stability of the system, Thelen and Kume (cited by Thelen, 2003). These are: a. Struggle between embolded employers seeking deregulation and weakened union defenses. b. Capitalism perspective (union victories over disorganized employers). c. Strengths and weaknesses of the type of analytic narrative employed. Globalisation has generated new pressures for deregulation in Germany in which bargaining arrangement remains prominent and viable. Example: In February 2000, presidents of the country signed a letter calling for changes in the collective bargaining law to allow more local flexibility. Their demands were backed up by the business-oriented Free Democratic Party, which put forth even more radical proposals, including changes in the Works Constitution Act.2, (Thelen, 2003) . Inspite of the shrinkage in collective bargaining coverage, firms decided to go their own way by giving up their memberhip in the industry associations that negotiate industry-wide agreements with the union. The problems of firms was the unofficial undercutting industry agreements that West firms got 15% much higher than in the East Germany. This model remains in question on how their bargaining agreements will be sustained because of disorganized employers associations, ( Thelen, 2003). In 1998, strike of steel industry in Eastern Germany brought rapid disintegration of solidarity among employers as the leading companies rejected a hard line position and insisted on a negotiated settlement. But in succeeding year, Gesamtmetall complained and was forced by the union through "blackmail and strike threats". In the long run, defensive employers wringing concessions out of unions trying to threat them to relocate production elsewhere, ( Thelen, 2003). The employers and other business firms fear that disruption in production could result in the loss of whole markets. Otherwise, "you return to find your market occupied" like in 1990 that employer solidarity decline with their weapon, the "lockout" , Thelen & Kume (cited by Thelen, 2003). Another instances, that employers association are trying to maintain collective bargaining settlements over maintaining labor peace. If necessary,they will prefer to a prolonged conflict and supports the employers association in locking out their workers to force the trade unions to moderate their demands because of global competitive pressures in foreign markets. If the union calls for a strike, the employers association has to decide whether to pay the higher wages as part of the settlement or call for a lockout to extract a more moderate settlement, ( Thelen, 2003). Thelen 2003, presented the said situation in an Equilibria solution between Employers Association and Union in their collective bargaining as follows: Proposition 1. Equilibria of a Game. The employers association is unable to muster the solidarity for a lockout, the equilibruim will be in mixed strategies. That the employers association sometimes engaged in "bluffing" by rejecting a union's demand for higher wages in the hope that the union will abandon its demand and not strike. If this will happen continously, the union will not confront with them. Proposition 2. Increased Labor Peace. Initially, employers association accepts the union's demand for higher wage increase which resulted to an increase labor peace and the frequency of strikes and lockouts decreases as direct effect. While its indirect effect was the fear of the union's with employers association of lockout as confronted with the resolution. In addition, is the inability of the union to defend it self against employers aggression. The only strong weapon of the union is the employers disorganization. Thelen, (2003) emphasized that in the case of globalisation, employer solidarity showed differential effects in terms of sensitivity to labor peace or wage moderation trade-off. In Germany, employers will turn away from traditional arrangements that on the wage moderation and labor peace centralized bargaining agreement was provided. Given emphasis, the theory predicts continued stability and centralization. Preposition 3. Realignment of the system of industrial relations. In globalisation, there are some employers will increase version to conflict which results in an increase tolerance for higher settlements that leads to a destabilization of the system of industrial relations. The employers' increased vulnerability to production stoppages and industrial conflict as a result of increased competition from foreign markets at the same time puts pressure on other employers to cut labor costs. Simultaneous decreasing and accelerating the defects by employers desperate to cut a more moderate wage deal, (Thelen, 2003) . Thelen (2003) stressed that the said preposition will lead to dilema for both employers and the union in Germany collective bargaining system continue to command the strong support of a significant core of firms that rely heavily on labor peace and prioritize this over wage moderation allowing wage flexibility across firms . They signed on the agreement but "topped it up" with additional benefits at the plant level. For firms employers who signed and paid wage increase as stipulated in the bargaining agreement has dropped 60.6% in 1993 to 48.9% in 1997. This reduction in wage drift suggests that industry-wide contracts are increasingly exhausting the capacity of the strongest firms to pay, which in turn means that the weaker firms are now forced to pay wages much closer than before to those of the strongest companies. This is delimma that they are now facing, Hassle,et al (Cited by Thelens,2003). For Germans union, they are aware of this trade-off that individual firms face between wage restraint and employment. That expensive collective bargaining can vary substantially across firms of the the same size, depending on the percent of labor cost in total production. Union leaders and members in other firms are concerned on the resulting decrease in the coverage of collective bargaining contracts. That unification among members serves as union power to maintain solidarity among skilled workers who is experiencing economic pressures like IG Metall and metalworkers. Union leaders may be quite willing to agree to more moderate wage deals. On the employer side, it has to opened up a gap within the unions that furher fuels the negative feedback mechanism. Heterogeneous membership in an employers association serves as a great tensions to face in globalization because some member firms have a substantially different cost-benefit calculus from others, (Thelen, 2003). . On the otherhand, centrifugal pressures on the Germans industrial relations will result to a more concentrated firms that gives much danger of fragmentation of the labor movement into "clientelistic" or insider-oriented organizations who specialize in interest representation for workers in core firms rather than uniform coverage(Thelen,2003). Finally, Germany were able to survived as they refuted the neolibalism theory and they were able to find solutions and responded to globalisation foreign market pressures entering various bargaining agreement between employers and union. They have an organized labor and employers association to resolved labor disputes. These victories have set in motion dynamics that weaken the labor movement by prompting firm defections and narrowing the coverage of collective contracts, (Thelen,2003). Neoliberalism is a philosophy, an attitude rather than an economic reality that affects European politics e.g. French campaign against European Constitution. It is also an ideology tied to any culture and language e.g. Esperanto and English, neoliberal policies, and pro-American foreign policy especially in Central and Eastern Europe,(Neoliberalism,2002 website) . Globalisation represents a major transformation in the territorial organization of economic activity and politico-economic power. The sovereignty of the modern state was concentrated in mutually exclusive territories and the soveriegty in nations, economic globalization has contributed to a denationalizing of national territory,(Neoliberalism,2002 web site). References: 1. Gounet, T., (n.d.). Is Neo-Liberalism a "Neo-reformism" Theory http://www.wpb.be/doc/doc/neo.htm 2. Dayson,K. And Padgett, S., 2006. The Politics of Economic Rhineland or Hybrid Capitalism. Anglo-German Foundation for the Study of Industrial Society. accessmylibrary.com/comsite5/bin/pdinventory.plpage=smx_aml 3. Shah, A., 2007. Free Trade and Globalization A Primer on Neoliberalism. http://www. Globalissues.org/Trade Related/Free Trade/Neoliberalism.asp 4. Steele, J. 2005. A Vote Against Neoliberalism Guardians. http://www.utexas.edu/conference/africa/ads/1162.html 5. Thelen, K. 2003. The Paradox of Globalization Labor Relations in Germany and Beyond. Northwestern University Christa Van WIJNBERGEN Ohio State University. http://www.people.fas.harvard.edu/iversen/PDFfiles/Thelen2003.pdf 6. Neoliberalism: origins, theory,definition, 2002. http://web.inter.nl.net/users/Paul.Treanor/neoliberalism.html 7. Neo-Liberalism.(n.d). http://home.comcast.net/lewinspaine/NeoLib.htm 8. De Long, J.B. 1999. Globalization and Neoliberalism. http://www. I-bradford-delong.net/Econ Articles/Review/alexkafka.html Read More