This essay critically examines the ways in which social policy is said to be affected by globalisation. It will explore the impact of what is called ‘globalisation’ on the public policies and institutions that aim to protect citizens from social contingencies and poverty, and ultimately enable them to strive for their own life goals. A good example is the welfare state in Britain. After providing brief definitions for the key words in the essay, globalisation and social policy respectively, the essay then carefully explores not only the social and economic factors arising from this phenomenon but also the political and cultural ones.
The essay will evaluate the roles played by global institutions such as World Trade Organisation and World Bank combined with the increase of privatisation policies; Public Private Partnerships in Britain. Although globalisation implies that social policy should be addressed from both a national, a transnational and a global perspective, for the purposes of this essay, examples and case studies will be applying to and be limited mainly to industrialised, developed countries with well established advanced welfare protection systems, like Britain.
According to Anthony Giddens and his co-authors, globalisation can be thought of as “a process (or set of processes) which embodies a transformation in the spatial organisation of social relations and transactions- assessed in terms of their extensity, intensity, velocity and impact-generating transcontinental or interregional flows and networks of activity, interaction, and exercise of power” (Giddens et al, 1999: 16).
Globalisation is said to herald profound changes to the objective reality of the world, our perceptions of the world and our experiences; it pertains to global economic and political structures, but it touches all our lives in many ways and in a range of spheres: in work, education, politics, family and leisure. Although most of its aspects are disputed, the concept of globalisation encompasses a host of interwoven processes.
These include amongst other things: increasing transnational capital, goods, people; closer ties through new common technologies; a complex international division of labour as a result of the dispersion of the means of production of goods and services to a number of different locations; a rapid turn over of ideas, of images and of patterns and objects of consumption; a growing awareness of risks and dangers that threaten the world as a whole; a large increase in growth and status of transnational institutions and globally interlinked political movements.
On the other hand, precisely what counts as social is also a matter of considerable debate. “The most common interpretation is that social policies are government policies (both central and local) that are directed towards the social needs of the population (social needs usually being interpreted as welfare needs), with the list including policies concerning social security, health, housing, education and (sometimes) law and order” (Marshall (ed), 1994:619).
However, this view of social policy can be considered too narrow, because it directs attention to policies generated specifically within the usual list of welfare fields. It ignores key policy areas that also have a profound impact on welfare, especially in those in the area of economic policy, such as fiscal and policies on inflation and economic growth. Although these can be called ‘economic policies’, they are also ‘social policies’ -or policies with major implications for welfare, which cannot be excluded from the field of social policy.
Equally, it has been argued that exclusive concentration on government policies is mistaken and that one should also include the policies of religions and charitable bodies as well as of private corporations (as, for example, in consideration of pension policies and transnational corporations)- a position that has become increasingly necessary with the privatisation of arrangements for welfare (Marshall, 1994). The prevailing approach to the implications of globalisation for social policy has been framed in terms of the impact of ‘external’ economic forces on national welfare states.
Globalisation is said to undermine the economic and political conditions on which the traditional welfare states were built, erode national policy autonomy and force the marketisation and residualisation of welfare states. One of the most common themes in the vast literature on globalisation is that it is gradually undermining the state by making it meaningless if not obsolete. These themes are based on the “assumption that globalisation has placed significant constraints on the autonomy of nation states in the making of social policy” (Mishra, 1999: 29).
Economic globalisation is particularly considered as a threat to the social security systems that represented stability in the western democracies and market economies over the last 60 years. With the dissolution of the Communist bloc, the world is increasingly envisaged as a single integrated market, in which deregulation works in the service of ‘free trade’. These processes have called into question the role of the nation states, national governments and their public spending programmes, including social welfare spending in a number of ways.
First, corporate capital has articulated its demands for ‘business friendly environments’ (geo-political places with low tax, low regulation and low-cost labour) “Bond markets have knocked away the floor from under post-war full-employment policies… social market systems are being compelled progressively to dismantle themselves so that they can compete on equal terms with economies in which environmental, social and labour costs are lowest” (Gray, 1998:92) Globalisation requires us to look beyond the traditional organisation, delivery and consumption of welfare at a national level and forces us to think globally.
This means that we have to consider that the causes of social problems and their solutions are not confined to national institutions and structures. The global structure of production and trade, for example, bears on national systems of economic security and inequality and how it affects the structure of employment, family structures, the gender divisions of labour, and the degree of income inequality. The global causes of increasing mobility of people internationally, which is often seen in the West as social problems of migrants, refugees and asylum seekers, also lies in the uneven development and geo-economic inequality (Yeates, 2001).
Radically new forms of social, economic and political organisations are being brought into being by globalisation, not only across nations but also within nations and within individual cities and regions of different nations. Globalisation is associated with massive increases in cross-national flows of capital, labour, technological know-how, goods and services, and its correspondingly important effects on employment, economic development, political institutions and social welfare.
There too is a strong relationship between domestic policies and international competitiveness. The dynamics of modern market forces do not derive from the power of economics but from the economics power. The single most dominant force is the corporation. In the same way, the global process that we are witnessing is not the power of globalisation but the globalisation of power” (Thorpe, 1997: 6). Transnational Corporations (TNCs) have become the dominant force leading the globalisation process and determining the future of world economy. They have immense power within national and regional context.
This is as a direct result of principal social and economic policies that have been put in place by countries such as Britain. These include: deflationary policies to keep exchange rates low for purposes of international product transfer (export, imports); abandonment of full-employment policies; labour market enhancement to make labour markets flexible; restructuring of the welfare state to reduce corporate taxation levels and restrain internal labour costs; privatisation which enables the creation of additional or larger TNCs as the companies buy into previously protected state assets.
Capital can in principle ‘go regime shopping’ and engage in ‘social dumping’ whereby firms leave areas where the taxation (for social purposes) is high. Esping-Anderson (1996) identifies three kinds of responses to this openness of economies to global trade. The social democratic welfare states for example Sweden, are trying to maintain the commitment to welfare through job creation with increasing doubts being raised about how viable this is as a permanent solution. Liberal welfare states most notably the USA have embarked on deregulation and wage lowering to attract global investment in low wage jobs.
Conservative corporatist regimes like Germany have shed jobs in the less productive sectors. An understanding of the impact on welfare policy by competitiveness must examine the impact of the welfare effort on the supply of capital and labour and the productivity of the two. In the present phase of world economic development, social activities traditionally analysed within and undertaken within one country now take on a supranational and transnational character. Economic competitions between countries are leading them to shed the economic costs of social protection in order to be more competitive.
The social policy of a country or locality is no longer wholly shaped (if it ever was) by politics of the national government. “It is increasingly shaped by the implicit and explicit social policies of numerous supranational agencies, ranging from global institutions like the World Bank and the International Monetary Fund, through supranational bodies such as the Organisation of Economic Co-operation and Development and the European Commission, to supranational non-governmental agencies like OXFAM” (Beacon, 1997:10)
Below is an example of precisely how globalisation has gone about undermining nation state’s powers to shape theirs own policies. A key feature of globalisation is the emergence of a more sophisticated system global economic rule with the World Trade Organisation (WTO) now at centre stage. High up on the agenda of this global institution is the privatisation of education, health, welfare, social housing and transport. On closer examination, you realise that this is exactly what a typical nation states’ social policy is really all about.
The WTO’s target is to increase the scope of the free market in the provision of what is called traditional public services. Although the WTO’s membership includes143 nation states (at February 2001), the transnational corporations that sit on all the important advisory committees decide detailed policy and agenda. The USA, Japan and the EU link the expansion of trade in public services to economic success, and with the backing of powerful TNCs (medico-pharmaceutical (property rights), insurance, and service corporations), the race is on to capture the share of gross domestic product that governments currently spend on public services.
As early as 1999, the UK had already set up the necessary mechanisms: the introduction of private-sector accounting rules to public services; the funding of public sector investment via private public partnerships or private finance initiative; and the change to capitation funding streams, which allows the substitution of private for public funds and services. Although the current government faces some hostility especially from the trade unions, its privatisation policies are going to be determined more by trajectory of globalisation.
We now live in a period of a revolution in information technology (IT), in a world increasingly dominated by services where knowledge is a very valuable traded product. The awesome pace of IT innovations is essentially the codification of knowledge: the storage of information-whether pictures, numbers or letters-and its transmission at low cost. The WTOs focus on the service industry. In a grim New Year message to welcome 2003, the British Prime Minister, Tony Blair spoke of dangers and difficulties at home and abroad. “In an era of globalisation the world is more inter-dependent than ever…
The British economy is hugely dependent on developments both in the USA and European economies… We must be bold to reform, opening up public services to greater diversity of supply and consumer choice, ending the ‘one size fits all’ idea of the past” (Daily Mirror, 1/1/2003:4) In conclusion based on issues raised above, globalisation therefore poses new questions for the understanding, study, making and implementation of social policy. It means paying more attention to economic, social and political processes happening beyond the geo-political confines of a nation-state that have consequences for the direction and organisation of welfare.
Globalisation also requires rethinking some of the basic conceptual framework of social policy itself. It implies re-evaluating the role of social welfare in reproducing or redressing forms of inequality and the forms of conflict over the state and welfare. Finally, globalisation means exploring the status of citizenship, the relationship between economic and social policies, the intersection of inequalities, social problems and social policies.
However, the rethinking of old questions and exploration of new ones should not treat globalisation as a causal force and social policy (or changes in social welfare) as an effect or product of that force. If we keep in mind the argument of Held and his co-authors that “Globalisation is a process or set of processes rather than a singular condition” (Held et al, 1999: 27), it becomes possible to treat the intersection of globalisation and social policy as a force for active ‘rethinking’.