Conflict and the global economy: towards a new sharing of responsibility
Address by Dr Peter Fuchs, Director General, International Committee of the Red Cross (ICRC) at the Hôtel Savoy Baur en Ville, Paradeplatz, 8001 Zürich, 29 February 1996.
(English version of a talk given in German)
Probably nobody expected the dramatic breakdown of the Sovjet Empire at the end of the eighties. The -sometimes too triumphal - euphoria provoked some opening up and some stimulating models for the future. But at the same time we had to recognise that with the end of the Cold War a new world order would not emerge and develop spontaneously. And yet we all hoped that the end of bipolarity would transform the world and usher in a new era of international stability less prone to conflict. Even we at the ICRC, who are required by its international mandate to work at the scene of every conflict, hoped that we would be able to check the growth in its activities that had characterized the final Cold War years.
We have all been disillusioned in many respects. We now know that the end of bipolarity has brought insecurity, a loss of direction and a political vacuum. The number of conflicts has not lessened. Instead, many experts forecast an increase in hostilities and situations of tension. International law, in particular international humanitarian law, and basic values of society, such as solidarity, tolerance and respect of basic human rights, are being questioned - and flouted - more and more frequently. Large States have broken up and been replaced by sometimes disparate systems of small and minute States. Admittedly, the UN now has new wind in its sails, but we are further than ever from any form of world government, for the UN only reflects the intentions of its member States and they are having more trouble than ever in working out common strategies. A new international momentum has indeed developed, but the steering mechanisms are largely relics of the past.
We are thus in a transitional phase in which the sense of being in a vacuum predominates. This is unsettling, particularly when there are no clear concepts in sight which could fill that vacuum and enable fundamental values to be reaffirmed or consolidated anew. But before it can be filled we must realize what brought it about.
One of the main causes, to my mind, is the growing discrepancy between two key factors in social development - power and responsibility.
Another reason is that many social parameters have changed very rapidly, whereas the players and their behavioural patterns are adapting with different speeds to the new environment. While political mechanisms are changing very slowly, the business world is reacting quickly ans starts dictating the new agenda. This means that the politically defined societal frame no longer covers all the new social phenomea and leaves space for new and politically uncontrollable systems and subsytems with sometimes lower thresholds of responsibility for the common good.
In the following remarks I shall concentrate on these two key factors - power and responsibility - and in so doing I shall inevitably have to bypass certain considerations.
It is a truism to say that power and responsibility go hand in hand and should grow in equal proportion. People with a particular social responsibility must also have sufficient power to put their social concept into effect. Responsibility without power inevitably leads to resignation and to an administrative mentality which precludes the formulation of long-term prospects and strategies. Conversely, power without responsibility leads to the breakdown of society. Finally, power which is not value-oriented leads to mechanistic and technocratic models which neglect largely the individual dignity.
How has the international power structure changed over the past ten years?
During the Cold War the main problem was to keep two conflicting ideologies in geostrategic balance. Naturally, the behaviour of the two protagonists did not always correspond to the responsibility inherent in the enormous power at their command. It did, however, enable certain regulatory mechanisms to be set up; these prevented the annihilation of mankind - which had become a distinct possibility - and gave some measure of control over conflicts. The destruction of entire peoples and States by wars was not in the interest of the two big Powers, which wanted to maintain their spheres of influence. Agreement was therefore reached on a certain damage control. Naturally, this attitude resulted in much human suffering - far too much, from the humanitarian point of view - but at least the course of conflicts could be influenced politically to some extent. Even the ICRC had regular recourse to this possibility. Nor was it in the interest of the great Powers that States should disintegrate into countless mini-States, since that would have made ideological control more difficult.
Economic considerations often ranked high in the power structure of the Cold War, but the cyberspace age had not yet arrived, and economies were thus not yet sufficiently organized on a global basis for economics to play a more important role than politics. Furthermore, economic development was substantially influenced by the conflict of ideologies.
To sum up, it can be said that the period from the outbreak of the First World War to the end of the Cold War was one of political dominance. Politicians bore the responsibility for promoting social development and for deciding on war and peace and had the necessary power to do so. Thus there was no vacuum, and generally recognized points of reference were available.
The present-day vacuum stems from fundamental changes in these two factors - power and responsibility - which have given rise to a doubly paradoxical situation.
The first paradox is that of the politicians.
Although the responsibility for social development still rests with the politicians, as it did during the era of political dominance, their power to act accordingly is now limited. That power, which is essential for responsibility to be fully assumed, depends on the size and power of the nation-State, but also on the interaction of several concentrations of power.
Today a tendency towards miniaturization can be observed on the political scene. The one serious exception, the European Union, merely confirms the rule. The disappearance of the bipolar system which forced the States to maintain a permanent political and ideological discussion and an outward-looking attitude in order to observe the competitors has led to a more self-centred, inward- looking or even nationalistic mentality.
Many new States have emerged over the past few years, and there are thus fewer focal points at which power is concentrated and which make continuing political and ideological discussion possible. In addition, negotiations among States are complicated by the rising number of participants; it is becoming ever harder to find common solutions and common strategic approaches are few and far between. It would probably be virtually impossible nowadays to develop a coherent body of international law, and even the implementation of existing international law is growing more and more difficult as the influence of the individual State diminishes. The miniaturization process and the reduction of power that has ensued, both for the individual State and for the politicians acting in its name, have led to the transnational shaping of society being progressively taken over by other quarters. The result is the present paradoxical situation in which politicians, although responsible for global social development, no longer have all the power needed t o define the social (societal?) frame and to discharge that responsibility. It is therefore not surprising that in many countries they are increasingly concerned with national interests and administering what has already been accomplished, rather than seeking new global concepts and strategies.
This new paradox accentuates another which has long been apparent in many States, namely that certain politicians largely fail to assume their responsibilities and use power in order to enrich themselves and to keep society under repressive control instead of developing it. Clearly politicians of this kind are interested in solving global problems only when it serves their own purposes to do so.
From the humanitarian viewpoint this paradox is disquieting, for much of the responsibility for war and peace still lies with the politicians, as does that for the prevention or settlement of conflicts - tasks rendered much more difficult by the tendency towards miniaturization and the lessening of influence and sense of global responsibility that goes with it. Conclusive evidence of this phenomenon can be found in the growing number of uncontrollable civil wars causing unspeakable human suffering and destroying the entire social structure.
The second paradox is that of the global economy.
The business community has recognized the link between size and power, or at least its more superficial implications, and has taken the end of the Cold War and the emergence of the new information technology as an opportunity to go global. This is entirely in keeping with a new-age philosophy, but runs counter to the miniaturization process on the political scene. The result is a progressive shift of power away from politicians in the increasingly fragmented political world to the realm of global systems, of which I shall mention only two - the global economy and information.
Therein lies the d anger of a second paradox: if the business world just designs mechanistic and technocratic models, this might be in its short-term interest but jeopardizes the dignity of the individuum. If it does not adequately assume the social responsibilities which go hand in hand with increasing power, it will, after a relatively short period of success accompanying globalization, undermine the very foundation for its existence, for governments and governmental organizations will be less and less able on their own to guarantee harmonious social development - and hence stable markets.
This is particularly evident in many countries with what is known today as " emerging markets " . However, the first clear signs of the government authorities'growing inability to keep pace with international developments and to deal with ever more pressing social problems can be seen in the industrial countries as well.
In the emerging industrial countries with good economic prospects, potentially profitable State enterprises are increasingly being privatized - or made self-supporting (for instance higher education) - although they will then serve no more than a small elite, whereas the government is left with only unprofitable basic services to run. This could be acceptable if a truly democratic tax system based on solidarity with the less fortunate enabled those services to be financed. In the absence of any such system, the transfer into private hands of potentially profitable activities both erodes government services and concentrates capital in a narrow stratum of society. This inevitably tends to polarize the under-privileged many and the privileged few - an explosive recipe for violent social upheaval. If this volatile situation is exacerbated by an inept or corrupt government that rules by repression, the stage is set for civil war.
At the same time the poverty rife in large sections of the population and the loss of power and cred ibility by State institutions are leaving the way wide open for illegal transnational economic systems - networks of organized crime - that likewise foster violence. Society is being drawn ever deeper into the resulting vicious circle of destabilization, tension and conflict.
In the light of these observations and in its own interest, the business world should consider without further delay how far it intends to assume responsibility commensurate with its present power.
This step would not be unprecedented. In the second half of the nineteenth century, economic pioneers were confronted with a similar challenge, but relatively few of them rose to the occasion.
At that time, in the turbulent days of the Industrial Revolution, society underwent a metamorphosis. Many of the early capitalists thought solely in terms of quick personal gain. As profiteers they took individual and collective suffering in their stride and dismissed any idea of sharing in medium- and long-term responsibility. The euphoria of rapid growth blinded them to the need for sound social development.
Yet even then there were some enlightened capitalists who realized that social stability was prerequisite for lasting economic success. They were motivated not only by a desire to increase their capital but also by their acceptance of what they viewed as their economic, social and political responsibilities. Admittedly, philanthropic thinking still prevailed in the second half of the nineteenth century. Those few enlightened capitalists began, however, to include social stability and market consolidation among their strategic objectives. The philanthropic impulse was thereby satisfied, as was the then still widespread pious spirituality. But the contribution towards social stability, which was a pointer to the future social market economy and public welfare services, also reflected a rational desire to preserve what the young capitalist movemen t had achieved. Naturally, the growing labour movements also played a significant part in this change of attitude.
While the philanthropic response was above all an individual manifestation of the mood of the times, the safeguarding of achievements was a clear expression of what might be termed " enlightened self-interest " - enlightened in the sense that those captains of industry who made a decisive contribution to the development and stability of the societies in which they operated also derived benefit themselves from doing so.
The time may now have come for a renewed appeal to that enlightened self-interest. The redistribution of power taking place as the era of political dominance draws to a close is every bit as significant as that of the early twentieth century. However, the shift of power from politicians to other quarters is not yet accompanied by a corresponding shift in responsibilities. That paradox of responsibility without corresponding power and power without corresponding responsibility has brought about the present situation fraught with indecisiveness, mounting insecurity and an ever increasing potential for tension and conflict.
Private entrepreneurs, and indeed anyone involved in the private sector, must therefore have a twofold - if not a threefold - interest in taking on a greater share of social responsibility. A first might be philanthropic, devoid of any primarily economic considerations. This would be a welcome personal motivation, but one which should remain a matter for each individual. There are then two other eminently practical motivations that could be qualified as enlightened self-interest.
For one thing, a market is only as stable as the society in which it is based. Therefore, while an emerging market may have enormous potential, social tension, to say nothing of actual violent conflict, can destroy that potential. To ensure medium-term and long-term growth and profitability, the private sector has a major interest in ensuring that social stability is maintained.
By the same token organized crime, which flourishes in the midst of poverty and social instability, is probably the most acute threat to private business, as it does not benefit society in any way but simply undermines it and encourages the spread of violence. Private enterprise is the first victim when the power of organized crime grows beyond a certain point, but society as a whole is so radically changed and destabilized that any further development comes under threat and violent upheaval looms.
Enlightened self-interest should therefore be sufficient incentive for entrepreneurs and shareholders - especially in emerging industrial countries beset by social instability - to look beyond short-term growth and profits, and to invest some of those profits into long-term measures aimed at stabilizing society in order to avert tensions and armed conflict.
Measures to promote stability may be taken in a variety of fields. One of the most promising is to encourage individual initiative and hence entrepreneurial spirit and small firms, which in turn create jobs and provide the stabilizing influence of a middle class. A further contribution to greater stability could be made by systematically fostering individual leaders with a clear sense of social responsibility in order to pave the way for a new generation of competent politicians. Another is the sustainable use of natural resources, which lessens the likelihood of conflict over them. Support for governmental and non-governmental organizations such as national Red Cross- and Red Crescent Societies working to develop society, counteract marginalization and uphold values such as tolerance and humanity also has a favourable long-term effect, as does support focused on education. The promotion of transparent legal and independent judicial systems and efforts against corruption deserve support .
These are only a few of the many realistic ways in which the present trend towards disintegration can be reversed.
This stabilization of society will preserve the market's potential for future growth. At the same time, the private sector will thereby assume an increasing share in responsibility for society as a whole, a share which is proportionate to its increasing power and which alone ultimately confers legitimacy on that power.
The result will be beneficial to both sides: for society as a whole, because tensions diminish, as does, therefore, the potential for conflict; for the private sector, because its prospects remain good over the long term and the disruptive effects of organized crime are prevented. In humanitarian terms, a growing acceptance by the private sector of responsibility for the common good could substantially help to prevent social tensions and armed conflict - and thus human suffering - and foster harmonious development within society. It would be a decisive, and very constructive, change of course.
Naturally, this tentative solution will not set a new pattern for society. However, it could help to fill the vacuum caused by the current crisis and eventually to restore that balance which is indispensable for all parts of society to discharge their intrinsic duties and responsibilities with the appropriate degree of power and influence: the politicians creating the societal frame by taking into account and balancing the particular interests of all players in society to serve the common good to the greatest extent possible; and the business world by creating added value within this frame and resisting temptation to define the frame on its own.