Socio-economic and political development are interconnected

Socio-economic and political development

are interconnected

Contact: Marc Saxer, [email protected]

(Crisis of) economic development

(Crisis of) political development

Philippines: 2000/01; Estrada, elected, ousted

Venezuela: 2001/02; Chavez, elected, government survived

Taiwan: 2004, 2006; Chen, elected, govt. survived, later convicted

Kyrgyzstan: 2005; Akayev, elected, ousted; 2010; Bakiyev, elected, ousted

Bangladesh: 2006/07; Zia, elected, govt. survived

Kenya: 2007; Kibaki, elected, govt. survived (intern. mediation)

Bolivia: 2008; Morales, elected, govt. survived

Georgia: 2007; Saakashvili, elected, govt. survived

Ukraine: 2004, 2013; Yunukovych, elected; ousted

Egypt: 2013; Morsi, elected, ousted

Turkey: 2013; Erdogan, elected, govt. survived

Brazil: 2014; Rouseff, elected, govt. survived

Thailand: 2006, 2008, 2013/14; Shinawatra I-III, elected, ousted

Transformation crises around the world…

Contact: [email protected]

…show similar patterns

The “script” of transformation conflicts


1. Socio-economic development transforms societies. Emerging classes demand equal participation in political and social life, leading to a crisis of the political order and a crisis of social justice.

2. Clever political entrepreneurs realize that by catering to the hopes and needs of the majority, they can build an electoral power base beyond traditional elite networks

3. Once elected, these leader become “elected autocrats”. Following the zero sum winner-takes-it-all logic of patrimonial culture, they reward supporters, protect clients, distribute spoils, favor kin, cut out non-supporters and crush their opponents.

4. From the perspective of the middle class in the capital, the patrimonial practices of elected representatives from the provinces is seen as a fall-back into darker times of vulgar corruption. The disregard for the rule of law (etc) is perceived as a threat. The middle class fears that “corrupt politicians use our tax money to buy votes from the greedy poor with populist policies”.

5. Desperate and angry, elites and middle class in the capital turn to extra-constitutional means to topple the elected autocrat. Hundreds of thousands of middle class men and women are marching in the streets, calling for interventions by the judiciary and the military.

6. Despite military coups & judiciary interventions, “elected autocrats” manage to come back with the support of the loyal majority.

Historically, patterns of transformation processes look remarkably similar in societies around the world…

…opening up creates economic, political and cultural conflicts, which can only be resolved by a new social contract.

Stability

openclosed

Instability


In order to resolve Thailand’s conflict, the nature of the transformation crisis needs to be better understood…

TRANSFORMATION CRISIS

POLITICAL CONFLICT


Driver 1: Complexity A modern and globalized economy needs efficient

service, management and steering…

…A political order based on personal relationships does not have the institutions necessary to satisfy the needs of a complex economy

TRADITIONAL ECONOMY

TRUST BUILT BY PERSONAL RELATIONSHIPS

HIGHLY COMPLEX ECONOMY

TRUST BUILT BY INSTITUTIONS


Driver 2: Diversity On the cultural level, the pluralisation of lifestyles,

values and identities …

…creates the “noise” of permanent debate typical for a modern society


…triggering permanent conflict between social classes


Driver 3: CONFLICT Economic development creates winners and losers…

Structurally, development erodes the traditional vertical society...


…but a new political process does not emerge by itself

To tackle the challenges of a modernizing society...

…an upgrade of the “operating system” is needed.

Universally accepted rules who gets mandate to make decisions, and what are the powers of those controlling decision makers

Mediation mechanisms for permanent conflict

Management capacity of complex economy

Impartial institutions to fight corruption

Merit-based education system

Responsive policies to address crisis of social justice


“Short-cuts” and “quick fixes” are counterproductive…

…because they delay or derail the process of political transformation.

Stability

openclosed

Instability


Traditional governance mechanisms…

Policy maker

…lack the capacity to manage a complex economy and pluralist society

How to satisfy the growing demands for public goods if the middle class does not accept to be taxed?

How to deal with demands for greater participation in decision making if traditional elites do not accept all citizens as equal ?

How to process the large amounts of information needed to stir a globalized economy when only a few people have the authority to make decisions?

How to mediate permanent conflict between social classes or identity groups if political culture fears debate as divisive and conflict as decay?

How to tackle politicized problems as corruption if institutions lack the legitimacy of impartiality?


To overcome the transformation conflict...

…society needs to renegotiate the social contract.Contact: [email protected]

SOCIAL CONTRACT

Elites accept democracy as the only game in town… and learn how to win majority with political platforms responsive to the needs of the society

Middle class accepts to finance responsive state… and get meritocracy and protection by rule of law

Majority population offers social peace and accepts anti-majoritarian safeguards … in return for full capabilities for all

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To continue economic development, many challenges must be addressed

Industrialization

Export Low Wage

Third Industrial Revolution/New global division of labor

Finite Resources/ Energy security

Climate Change/ Natural Disasters

Japanese Tsunami

Vulnerabilityto external

shocks

LoomingGlobal Recession= Lack of external

demandFinancial Crisis

Influx of “hot money”/ Currency volatility AEC: Low Wage competition

GROWTH ENGINES

STRATEGIC AIMS

Socially Just

Growth

Resilient Growth

Green Dynamic Growth

GOOD SOCIETY with FULL

CAPABILITIESFOR ALL

• Collective Bargaining• Minimum Wages/ Wage

Policy• Short Term Employment• Vocational Training• Lifelong Learning Programs• Decent Work

• Fair Income For All(consumption demand)

• Include all Talent (innovation & labor productivity)

• Financial Market Regulation

• International Monetary Regime

• Capital Controls• Administrative Capacity

(Oversight and Control)

• Curbing of speculation

• Anti-cyclical macro-economic guidance

• Market introduction schemes

• Standard Setting• Emission Trading• R&D in (green)

technologies

• Setting Incentives for• Productivity and

Innovation• Long-term investment &

management strategies• De-Coupling

• (Green) Innovation

• “Greening the Old Economy”

(resource efficiency)

GOVERNANCE TOOLS

To Achieve To Fire Up To drive GROWTH COMPASS

To Produce

• Income Equality• Inclusive Institutions• Public Goods

(Education, Health, Social Security)

• Stable financial markets

• Balanced Trade (balanced current accounts)

• Balanced Budgets (fiscal sustainability)

• Stable natural, social environment


A new development model is needed

NORMATIVE VISION

GOVERNANCE TOOLS

Status quo Coalition

SOCIALLY JUST, RESILIENT AND

GREEN DYNAMIC DEVELOPMENT

MODEL

TRADITIONAL DEVELOPMENT

MODEL

Progressive Change Coalition

Rainbow Coalition

EXCLUSIVE SOCIETY WITH

PRIVILEGES FOR THE ELITES

GOOD SOCIETY WITH FULL

CAPABILITIES FOR ALL

The new order will be the outcome of the political struggle …


… between those who benefit from the status quo and those who seek change.

Vicious Circle of Transformation


Political and economicINNOVATION ability crippled

Change is feared as decay

Conflict paralyses political system

Society cannot adapt to change

yellow extreme

Feudal Elites


red extremeModerate

Capitalist Tycoons

Bangkok middle-class

Southern “Political Peasants”

North – Eastern “Political Peasants”

North- Eastern middle-class

“Red Urbanized Villagers”

Thailand lacks a democratic center

Democratic center

Southernmiddle-class

Yellow workers Red workers

Yellow Urbanized Villagers

extremeselites

extremes

Majority is not enough…

…democracy needs a solid social foundation in the center.


Peripheral middle class

Majority of voters

BKK middle

classmarginalize marginalize

emancipate from patronage

limit abuse of power

Only a social contract based on social compromise…


Elites

Full Capabilities

Middle Class

Majority Population

Social Peace

legitimate mandate to govern

Tax burden

... works as a stable foundation for a political and economic development

Social Contracts based on social compromise


USA: Roosevelt’s “New Deal” (1933, cancelled 1981)

Canada, Australia, New Zealand

Western Europe after WW IIo Germanyo Netherlands, Belgium, Luxemburgo Franceo UK (cancelled 1980)o Italyo Switzerland, Austriao Scandinavia (Sweden, Norway, Finland, Denmark)

Latin Americao Brazilo Chileo Uruguayo Costa Rica

Political Field

Discourse

Society

Political Economy

Discourse World Meta DiscourseParadigm discourse

Interests, Agendas, Leverage, Strategies, Actions, Coalitions, Alliances, Deals, Networks….

Values, Lifestyles, Norms, Narratives, Myths, Agenda, Historical Experiences, Public Opinion…

Classes, Milieus, Ethnic Groups, Religious Communities, Hierarchies, Winners and Losers….

Division of Labor, Distribution of Resources, Functional Logic, Means of Productivity….

Narrative Policy Discourse

Coalition

Many challenges and obstacles have to be tackled…

Production Base

Income Distribution Diversity


Individual Actors

Elite

Middle Class

Rural population

Complexity

Actions

Strategic Interests

Discourse Alliance

Topos


Policy Discourse

Paradigm Discourse

Narrative Discourse

Metaphysical Discourse

Old Discourse New Discourse

Political battles over policies are likely to be lost if they go against the grain of hegemonic paradigms…

From competiveness by …to investing in human capital for cheap labor … productivity and innovation led growth From diversification…. …to Moving up the value chain

From patronage… ...to empowerment/ capabilities

Cheap Labor Minimum Wages, Social Security, Redistribution

From “markets are rational” … … to “markets are flawed”From “inequality is morally just” …“inequality is injustice”

...major policy shifts need to be prepared by discourse shifts on the deeper levels of paradigm and narratives

Documents

Socio-economic and political development are interconnected