Mind the Gap: The Left Must Live with Globalisation. Europe's Social Model Will Help Us, Says Peter Mandelson

Article excerpt

Francois Hollande may be running for president of France, but his election manifesto reads to me like a sign of the general times for the global left. Parts of it could have been written by the protesters in Athens or Madrid. Parts of it could have been lifted from Barack Obama's recent State of the Union speech. What links them is a sense of lost control and a desire to take it back. Control taken away by financial markets, by the forces of globalisation, in Europe by Brussels and, by implication, Berlin.

This is an important moment for the left. Globalisation is attacked from all sides. Capitalism is apparently in crisis. The EU's collective rush to austerity politics presents a grave threat to growth. The instinct of the left is to position itself against all three, but it needs to choose its targets carefully. This implied warning was the theme of an IPPR report I helped prepare on the "Third Wave of Globalisation".

If the left's strategy is to take back a greater measure of control over our economic lives there are plenty of credible candidates. Tougher regulation of financial markets will help, as will promoting greater long-termism in investment. Reducing deficits at an appropriate pace will help keep the bond market off our backs. But the most important focus for the left should be on equipping people to live in an uncertain economic world, not shutting that world out. Railing against globalisation misses the target.

[ILLUSTRATION OMITTED]

Because globalisation itself is not really the problem. The pre-globalised world was not a secure and egalitarian paradise. Every politician who has ever uttered the words "export-led recovery" has acknowledged the reality that Britain and Europe need to sell to global markets to prosper. Our huge European single market and the growing markets of the emerging world are critical to our economic future.

However, you cannot realistically be pro-exports but anti-imports in an international economy built on global supply chains, as much of what we import we transform into goods that we then sell abroad. Every politician who has ever worried about the cost of living must have noticed that international production models have lowered the costs of the basics of life to levels that have no precedent in economic history.

The banking crisis discredited certain kinds of financial capitalism and financial regulation, not capitalism in general. It was a warning about consumer debt and the fact that you can't build an economy on it. It was a warning about short-term incentives trumping long-term goals. And in its aftermath we recognise very starkly that the gap between the rich and the rest in our society has grown unacceptably wide. But these are problems of taxation, regulation, corporate culture and personal responsibility. …