CHAPTER IV
SOVEREIGNTY AND LOSS OF CULTURE
Sovereignty - Economic blocs - National economic integration into the global market - Economic blocs and culture
During this transition period, politics, at the level of an economic bloc, is the only control over the global economy. Even economic bloc politics cannot impose global control and some type of global government must eventually acquire power. Politicians, loath to give up power, even to an economic bloc, will limit that power to the entrenched interests of politicians. G.A.T.T., for example, does not allow direct election of its members from the public - all its members are politicians.
Global problems require global solutions. Global solutions are not only possible; they will be necessary if we are to halt the deteriorating ecology of the globe. Unfortunately, due to the entrenched interests of politicians, it may well take some major catastrophe to force that realization. It is unfortunate that humankind often only moves to a better position when faced with disaster instead of when conditions are more favorable.
Sovereignty
The continued power of national politics is based on the notion of political sovereignty. Peter F. Drucker has commented on this problem in his book MANAGING IN TURBULENT TIMES:
The modern national state was built on the theorem that political territory and economic territory must be congruent, with the unity of the two forged by governmental control of money- a startling heresy when it was first propounded in the sixteenth century. The code word for this new politico-economic unit was the term "sovereignty". Prior to the late sixteenth century, economic and political systems were quite separate. Money was basically beyond political control except insofar as the Prince made a substantial profit by reserving to himself the right to mint coins. Commerce before the seventeenth century was either transnational or purely local. In the Europe of 1500, before the long inflation of the sixteenth century destroyed the economic system of the time, long-distance trade was carried out by trading cities, the sixteenth century equivalent of the multinational corporation of today, and equally controversial, equally criticised, equally reviled. The domestic economy was organized around a market town, which was the center of a self sufficient agrarian economy in which money, while used to calculate, was only in very limited circulation. And long-distance trade and local market town economy were almost completely insulated from each other, the former with free-market prices, the latter with rigid price controls.
The modern national state was born with the assertion that money and credit have to be controlled by the sovereign and that the economy has to be integrated into the political system, if only to provide the Prince with the means to recruit and pay his mercenaries. The modern national state created national markets within which both long-distance commerce and local trade were unified.1
Political sovereignty is referred to sanctimoniously when interests are threatened and treated with great casualness when interests are served. The United States brushed aside notions of political sovereignty when it invaded Panama in December of 1989 because Manuel Noriega, the leader of Panama, was believed to be a drug trafficker. Whether political sovereignty is respected or not depends on power.
Leslie A. White has also commented on political sovereignty and survival:
National sovereignty and patriotism go hand in hand; each nourishes and sustains the other. In former times they contributed greatly to the survival of nations; they were means of mobilizing all the resources of a nation for power and even for their very existence. This is how cultural systems preserve themselves.
Today, however, national sovereignty constitutes the greatest nontechnological threat, not only to the existence of nations as autonomous and sovereign cultural systems, but to the very existence of culture and man himself. The advent of the hydrogen bomb and intercontinental missiles have signalled the end of global wars. This is fully realized by many men and women- some of them heads of states- in every nation capable of nuclear war, and in many nations that can only be passive victims of such a holocaust. But are nations- cultural systems- capable of preventing such a war? People, human beings, may have hope and faith, but there is very little hard evidence that nations will- or even can- move against their very nature and sacrifice sovereignty for survival.
As we have seen, cultural systems are incapable of behaviour that can be called intelligent; they are limited to reflexes and tropisms. The habits of centuries are powerful. Threats to national sovereignty must be repulsed; national honour must be upheld. Threat is countered with threat. Disarmament talks are held while armaments are piled and stockpiled in vast amounts to insure that they will never be used; the bow and arrow, the crossbow, cannon, bombs, and rockets have all had their day as "deterrents" in a series of wars that never ends. This is the sort of intelligence that marks the "mind" of nations.2
Political economic sovereignty is a major conundrum. It is detrimental to humankind by separating people into competing factions rather than congruent forces. It is opposed to the global marketplace and consumerism and an impediment to global solutions. It is, however, being undermined by larger economic blocs such as the EEC and the North American Free Trade Agreement.
Economic blocs
In 1992, Germany and France, are seeking to unite Western European nations due to the global market. This is a move to political union with an accompanying loss of economic sovereignty. It also means that Europe will be an economic bloc of two hundred and fifty million people. An economic bloc of this magnitude will be able to exert significant control on the global market. It is also significant that the Europeans have taken the lead in forming a European parliament with members elected directly from the public.
The desire for economic affluence forces nations to join blocs, but it also ends the rationale for nations. The loss of political power over the economy signals the erosion, and eventual dismantling, of national governments.
Peter Drucker has also commented on this:
The countries that believed the most strongly in the power of the national government to control and to build an autonomous domestic economy, the two Keynesian countries, Britain and the United States, have done the poorest. Japan and Germany tried to manage supply to fit the demands of the world economy; they succeeded. Britain and the United States tried to manage demand to fit domestic political goals; they failed. But the more bankrupt the claim to national sovereignty over the national economy became, the more tenaciously have governments clung to it. As a result, the gap between economic reality and political reality, between economic fact and political pretension, has become increasingly wide....
There is an increasing conflict between the fundamental trends in the economy, which push toward integration, and the fundamental trends in world polity, which push towards fission. And there is an increasing conflict between the pretensions of political authority, the government of the national state, and the reality of its impotence in the economic sphere....
Japan and Germany emerged as the most successful governmental managers of the economy, precisely because they based themselves on the novel premise that national economic policy begins with a careful assessment of the world economy. The Japanese, for instance, started off their rapid growth in the early fifties with a thorough analysis of industrial and technological trends in the world economy. This led them to direct their domestic economic development away from their such as textiles, which every other developed country tried to protect, and towards high-technology consumer industries like cameras, tape recorders, automobiles, radios, and television sets.3
Canada entered an economic bloc after a free trade discussion raged for almost two years. By 1990 some of the effects of the Free Trade Agreement were becoming clear.
An example is a firm, Unican Security Systems, which had a workforce of 1,725 divided between the United States and Canada. It makes locks and key blanks, and as a result of the agreement it rationalised its work force. The more automated production was positioned close to the mass market and the more complex production concentrated in Canada to have the advantage of better-trained labour. The work force was reduced by 170 employees by streamlining operations and automation. Unican is globally competitive and the chairman of Unican believes that Canada will be reduced to a service economy for the mass market areas of the United States. He also pointed out that the tax structure in Canada was "terrible" which is a reflection of the continuing economic loss suffered by Canada to retain fiscal independence. Almost all the global trends are found in this anecdote, including the continuing reduction of the work force by automation and the lowering of the costs of production.
This new progression, where nations lose national political power to global economic blocs, also causes nations to produce a limited number of commercial products. Canada is likely to be a service economy with the West serving the Los Angeles megalopolis, Ontario is already part of the Great Lakes megalopolis, and the East serving the New York megalopolis. No attempt should be made to produce all the products a nation might require.
National economic integration into the global market
The two forces of power politics and global economic efficiencies determine how a nation will be affected by a global economy. Mexico, in the eighties, not being a major industrial power, is suffering from inflation and a devalued currency as its industries, sheltered by national politics, cannot compete in the global economy. Products within Mexico are overvalued in comparison with global prices and also personal income is low.
In 1987, the U.S., being a more powerful nation than Japan, could pressure Japan to reduce its tariff barriers through the famed `oranges and beef' discussions. Japan has to make some concessions to the U.S., but as Japan is a more powerful nation than Taiwan it need not make the same concession to Taiwan. It is power politics that causes a Taiwanese official to bitterly exclaim about the concessions, "They certainly won't help us".
Canada, being a medium sized industrialized nation, can achieve global pre-eminence in wheat, lumber, minerals, electrical power, and farm products. It will therefore suffer mild dislocation but should be able to adjust successfully to global economic efficiencies.
The element of power politics in the global economy is usually an expression of ingrained cultural attitudes. The United States has been quite responsive to change as it has an openness at its lower organizational levels whether such change is initially beneficial or not. A disadvantage of Japan is its resistance to change and some of its ingrained cultural attitudes conflict with its material success in the global marketplace.
Japan's cultural expectations are homogeneous and chauvinistic. It is one of the few countries left in the world that discriminates against outside goods. Japanese have difficulty dealing with any thing or person who does not belong to their closed inner circle. To the Japanese internationalism is an attractive ideal, especially as it is popular with most other peoples, but emotionally Japan, Japanese culture, and Japanese artifacts, are closest to the heart.
Japan is therefor very successful in some industries but inefficient in certain protected industries. Japan can only do this because of barriers to trade that are not necessarily government laws. Japan is self sufficient in its main staple, rice, because Japan has decided that Japanese rice is preferable to California rice. Tests in Japan show however that if Japanese housewives are blindfolded and taste different samples of rice they usually prefer California rice. California rice in 1983 was one-fourth or less the price of Japanese rice. Yet California rice is excluded from Japan and from the Japanese point of view that is a good decision. To allow California rice to enter Japan without duty would destroy the livelihood of millions of rice farmers. In California a person may be out of work and on welfare because of Japanese automobile or electronic imports, but in Japan, rice farming sops up millions of potentially unemployed persons.
In the retail trade there are one and a half as many outlets in Japan as their is in the U.S. for half the number of people. Roughly translated that means that the retail clerk in the U.S. is three times more efficient than a Japanese counterpart. When Safeway, a large U.S. supermarket chain, tried to enter the Japanese market it was forced out by the retail trade closing ranks. The Japanese loudly exulted their success as if they had turned back another invasion by Genghis Khan. In the long run they are the losers as their retail business will remain inefficient. Worse than that, they reinforce a belief of rejecting importation that is detrimental to the international trade upon which their entire material success is pinned. In the meantime millions of young women are inefficiently employed in the retail trade instead of being unemployed.
A further advantage of large inefficiencies within the internal system is to reduce the wage level of the worker in the export industries. This gives Japanese products a further price advantage in export markets. The efficient Japanese auto worker commands a high wage within Japan, but when he compares his wage to that of the inefficient retail worker it automatically curtails his desire to ask for an even higher comparative wage.
The net effect of these ingrained cultural attitudes of Japan is to export domestic unemployment abroad. Although Japan has benefitted to a great extent by its `Japan first' policies it causes strong resentment in the United States and with its Asian neighbors. In addition the success achieved by Japan is emulated by other nations and it cannot continue its "Japan first" policy in the future. Power politics will eventually be replaced by economic bloc agreements.
The methods be which an economy thrives in the global economy are not secret. There must be good government both in the sense of being stable and having popular support. Government must eschew foreign entanglements and carry out rational, wise policies. Government must act like a prudent business and encourage the populace to maintain a high savings rate. A conducive business environment should maintain competitive costs and low taxes. Regulations should be friendly and the workforce should possess good work attitudes. A nation should produce only the products that are economically viable in global terms. As Kenichi Ohmae pointed out, one of Japan's blueprints was to select several priority industries with which to establish global preeminance. In addition, the entire supporting infrastructure for those industries should encompass both downstream and upstream operations.
One of the results of understanding what must be done to compete in the global economy is that the regulations and attitudes of all nations are becoming similar. There is less reason to believe that belonging to a particular industrialized nation has advantages over living in any other industrialized nation. As industrialized nations form economic blocs the differences in society between one nation and another becomes more and more difficult to ascertain.
Economic blocs and society
Society is changing so rapidly that it is becoming difficult to know the customs and organization of a particular society. One can say he belongs to Canadian society, but with the North American Free Trade Agreement it is better defined as North American society. North America is an integral part of the global economy, and it also could be said that a Canadian belongs to the global society.
By 1992 Europe will be a trading area without borders. What does a Dane become following that year? The Dane is part of the Danish society but there are only five and a half million Danes in a Europe of two hundred and fifty million. She or he is perhaps better described as a member of European society.
The Dane and the Canadian are both part of a blurring of identifiable societies. National society is blurring into a continental society which in turn is blurring into a global society. With this blurring there is a loss of agreed societal values. National societal values are no longer fixed and individuals now search for localised societal values. Alienation is common as the need for a new culture becomes more apparent.
Fear of loss of indigenous culture in the global mass market society is a lack of identity. For the Japanese to lose their ‘Japaneseness’ is unthinkable and to give up the Japanese way to doing things is a fearsome prospect. Clinging too tightly to a national sense of self all too often is in opposition to global trends of equitable agreements and shared power structures.
It is a questionable assertion that loss of indigenous culture means rejecting globalisation and relying on sovereignty. The Welsh, the Scots, and the Irish were coerced into a British ‘free trade area’ some two hundred years ago. Yet, even with that passage of time there is no apparent sense of loss of identity in those three cultures. In addition for the Scots, a new culture arose that of the Scots as successful immigrants or managers of tea plantations, mines or shipbuilding throughout the British Empire. It should not be assumed the Danes will lose their ‘Danishness’ when their economy is full integrated in to E.C..
Alienation and culture are tied together in an inverse spectrum. Canada having a relatively new and imported culture means that Canadians do not feel too strongly about being Canadian and many can easily move to the United States, Mexico or Europe. Canadians are more pliable and can easily think of themselves as global citizens. Japan has a strong indigenous culture. Japanese feel strongly about being Japanese and see themselves as living and dying in Japan. A strong culture can more easily direct its efforts to national goals such as Japan’s economic dominance but is likely to experience greater difficulty in accommodating global trends.
No matter whether it is a strong culture or a weak culture all national economies into a single global market. On the macro level political sovereignty will give way to economic bloc agreements and individuals will seek to have their rights protected by global legislatures such as the European Parliament. On the micro level individuals face a period of change and alienation. There is a search for a sense of belonging. Being a ‘global’ citizen is too abstruse for most and the sense of belonging and identification is likely to shift to groups smaller than a nation such as Manchester United Football club or Actors Guild or Teachers Association.
One of the unifying concepts that we now face is the desire for a reasonable standard of living accompanied by the belief that that standard can be achieved through work. The implications of this concept may be as important as the liberal humanism generally accepted throughout the Western World. We are moving into a period where a reasonable standard of living will be world wide and the hounds of survival fear will be held at bay. Accompanying this standard of living will be guaranteed work of some kind – not its present form of social benefits or employment insurance or pensions.
Any future conception of a culture has to enshrine an answer to the question of how to support a reasonable standard of living and guaranteed work. This indicates the workplace is the likely site for fostering a sense of belonging.
1. Pp. 162-3, Managing in Turbulent Times by Peter F. Drucker. Harper and Rowe. N.Y., N.Y..
2. P. 175 Some reflections upon the implications of this essay, by Leslie A. White. Columbia University Press.
3. P. 168-9, Managing in Turbulent Times by Peter F. Drucker. Harper and Rowe. N.Y., N.Y..
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