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from Labour Focus on Eastern Europe, No. 64, 1999.

[The Blair/Schroeder Manifesto, "The Third Way", published in the summer of 1999, has provoked much debate on the left in Europe. We produce below one contribution to this debate from Gregor Gysi, leader of the parliamentary group of the German Party of Democratic Socialism (PDS).]

Gregor Gysi

Twelve Theses for a Modern Socialist Policy:  A Response to the Blair/Schroeder Manifesto

In almost all countries of the European Union, forces representing democratic socialism are having political influence, either through opposition, tolerance of  or participation in government. This means that we have to relate to and debate with the strategies of both  neo-conservatism and Social Democracy. Common ground must be staked out and differences highlighted. The ideas of a modern socialist left  require explanation.
The free development of the individual as the prerequisite for the free development of all - that is the message of a free, modern and democratic socialism. The political challenge to democratic socialism is to organise society in a way that ensures social and political human rights for one and all. In this sense socialism can also be seen as the human rights policy of modern societies. It calls for equality in freedom and is therefore based on freedom and solidarity.

Below are twelve theses for a democratic and socialist policy at the end of the century.

1. The twenty-first century vision: combine modernity with socialism.

Modern societies are distinct from traditional pre-capitalist or early capitalist societies because of "the constant revolutionising of production, the uninterrupted disturbance of all social conditions, the everlasting uncertainty and agitation" (Karl Marx). The driving force behind these continuous innovating changes is an institutionalised competition in the economy, politics, science, education, the media and culture, which is based on a pluralistic distribution of property, power and influence.
Permanent modernisation is an ambivalent process. Its institutions in the economy, politics, science, education, the media and culture have often been used as instruments of the fiercest oppression this century. From them arose the disasters of  our century:  the world wars, the holocaust, genocide, misery, starvation and environmental destruction.
The state socialist attempt to evade the spontaneity and insecurity of capitalism by replacing competition and evolution with planned control and centralised administration of resources has failed. Historically, this attempt was constantly under attack and we must be mindful of the conditions this created, but the fact remains: the general conditions for innovation and progress were either destroyed or could not emerge. Social security, therefore, did not have a lasting economic basis. Freedom and individual initiative were limited and fundamental democratic rights were not guaranteed. State socialism became a stagnating society which crumbled and eventually collapsed. Nevertheless, it gave humankind an important experience that needs critical analysis, not denunciation.
Socialist policy following the collapse of state socialism should liberate the evolutionary potential of competition in the economy, politics, science, education, the media and culture from the dominance of capital; it should protect this competition from the process of capital valorisation and should overcome its patriarchal structure. Only this will make it possible to use competition as a resource for the emancipation and development of all individuals, and to control and compensate in solidarity for the risks, spontaneities and insecurities entailed. The equality of the sexes is both consequence and precondition for such a transformation. Embarking on the road to socialist modernity means replacing capital's dominance over the direction, shape and speed of change in human civilisation with the dominance of social, cultural and ecological objectives. This requires political direction, conscious social structuring and the development of  counterforces able to carry this out.
What matters is not the abolition of markets, but the creation of different kinds of market; not the suppression of entrepreneurial initiative but the creation of a new framework for its social and ecological guidance. That cannot be achieved through the slogans found in Schr”der's and Blair's joint proposal, but by limiting the right of capitalist property where it works contrary to the common good and by channel it in new directions where it now leads to ecological degradation and social disintegration. Public property will acquire a new function.
What is intended here is not a relapse into pre-modernity or anti-modernity, but a restructuring of modernity. The combination of modernity and socialism is not inevitable but it could be the major task for the generation at the beginning of the twenty-first century.

2. The Social Democratic shaping of the age of Fordist mass production was thoroughly successful. We can't repeat it today but we can learn from it.

Gerhard Schroeder and Tony Blair paint a picture of Social Democratic policy during recent decades as a source of levelling, innovation phobia, increasing public spending put to unproductive use, etatism and irresponsibly high material expectations. This picture is ahistorical and unjust. It ignores the advances in productivity and innovation as well as the social and cultural advancement of broad sections of the population over the past fifty years, advances that were the direct result of social democratic influence.
The Fordist welfare state that was created in Western Europe and the US after World War II was able to guarantee nearly full employment over a lengthy period of prosperity, increasing earnings in line with productivity, and index-linked social benefits in old age, sickness, disability or unemployment, although poverty was never really abolished. Industrial mass production of material goods and private mass consumption were prominent features of Fordism. This was combined with more scope for participation, for instance, co-determination in [German] companies and better opportunities for emancipation. Not all, but quite a few dreams of the Social Democrats came true. It was thanks mainly to the trades unions, Social Democracy, socialist movements and parties, as well as the competition with state socialism, that institutions emerged which were able to promote the interests of the working class and partially to complement the capitalist principle in society with the principle of social participation. Unfortunately, prosperity was paid for with the oppression and exploitation of the so-called Third World and an increasing destruction of the natural life-basis of the human species. Yet there has been development there, too. Colonialism was overcome. Today the impoverishment and exploitation of the Third World is the product of bilateral and international political and economic dependency. Ecology has become a political subject and a matter of public awareness.
The achievements of the social market economy are insecure and are being dismantled today not because rapidly growing wages, increasing state redistribution, Keynesian spending policies and state control over the major players were always wrong. The limits of the old ideal have to a large degree resulted from its success. The crisis of the Fordist work society results from a model of growth that works only so long as there are still new areas of human life that can be turned into wage labour, economically organised and rationalised until less and less social labour is necessary for the production of the essential consumer and producer goods. The wealth of free time thus created in a Fordist work society can only be used to produce and consume more, and it is invested to further reduce living labour. But this cannot go on forever. The ecological problems generated by this type of growth and the increase in "surplus labour" are manifested in growing discrepancies between capital valorisation, wages, taxes and social spending.
Today we have reached a point where we need a redefinition of the relationship between working and living. Redundant labour cannot be completely reinvested, but it must not become superfluous time, dead time of a seemingly superfluous underclass. And it is just as anachronistic to use this surplus time in cheap, state-subsidised service jobs. This is the path to a  new class society - on the one hand the big-income earners with too much work and too little time, and the small-income earners in the service sector who look after the children of the big-income earners, take care of their houses and gardens, and see to all the unprofitable errands. This new class division would be anti-modern and anachronistic.
Rather than despising the achievements of the social democratic era,  as Schr”der and Blair do, efforts should be made to completely revamp and integrate its achievements into new social structures. A genuine modernisation does not mean dismantling and deregulating social institutions, it means searching for a new path of development and deciding in favour of an alternative reform policy, linking economic, social, ecological and individual developments.

3. The era of neo-liberal destruction of the post-war system needs not merely to be interrupted by a Social Democratic episode of damage-containment but to be superseded by an era of modern socialist politics.

With a series of aggressive reforms, neo-liberalism, over the past twenty years,  has begun the dismantling of  Fordist welfare capitalism. This was carried out in a way that served the interests of  transnational corporations, international financial markets, the global economic, political and cultural upper classes. The quest for a new viable way of combining economic development and social progress is not part of the neo-liberal reform programme. The new system is, therefore, extremely unjust, unstable and threatens peace, the environment and social cohesion.
So far, neo-liberal reforms have been implemented only partially in Germany. Important structural elements of the social democratic era remain intact. On the one hand, these can hold back the neo-liberal reform project because social interests are still tied to these structures of the past era. At the same time, they can also facilitate the reform project because these same public and corporate institutions can be restructured around new goals.
The Social Democracy of the New Centre or the Third Way accepts the neo-liberal approach and attempts to partially correct it. It tries to establish a larger role for the state, not as Fordist redistributor but as "activator".  The state is to establish, promote and moderate market mechanisms and forms of competition which improve the competitiveness of nation-states and major regions in global competition, while (in contrast to Thatcher's neo-liberalism) safeguarding a minimum social consensus at home by promoting forms of partnership among competing social interests (for instance, the "Alliance for Jobs" [in Germany]).
The fact that social democratic governments are in office in many European countries proves that the people wanted a correction of the neo-liberal strategy. However, the defeat that the German and British Social Democracies suffered in the European election is a clear sign that their current policy cannot count on stable support. On the one hand, they are unable to take the offensive and make use of new opportunities. On the other, they have not proven that they are either willing or able to effectively oppose new social threats. They have failed to measure up either to neo-liberalism or to the old traditional social democracy, disappointing both those who have pinned their hopes on new opportunities and those who are threatened.

4. Those who want to promote new opportunities must allow them to be opportunities for all. Those who want to deal with the new social threats cannot put themselves in opposition to those who are the least able to defend themselves against such threats.   What is needed is a new social contract.

Social justice is a fundamental precondition for a lasting, truly modern politics. It must not be reduced to individual fairness. The social foundations of individual achievement must not be ignored. Democratic socialism, therefore, aims at a new social contract.
The basic elements of this contract would be:
* a policy that credibly faces the new challenge - turning new opportunities into opportunities for a freer development of all, in solidarity;
* a transition to a mode of development that ensures a more just participation of everyone in social wealth through a new way of working and living that is ecologically sustainable;
* surmounting all obstacles in the way of women's self-determination and equality of the sexes;
*  full employment, to be achieved  by exploring new fields for economic development in keeping with sustainable, ecological and social criteria, while at the same time reducing working time and increasing the flexibility and enrichment of work and its combination with the opportunity for voluntary creative work;
* a social system whose costs are shared in solidarity and whose aims are basic security for everyone and availability of new opportunities to everyone;
* a policy of restructuring public finances in a way that opens the way to a more just social order and to new developments.

5. Modernising politics means more than adapting to new conditions and supporting business. Above all, politics should be a deliberate effort to structure social conditions. To this end, organised counter-forces are required.

With neo-liberalism, nation-states and international organisations have simply become the executive bodies of transnational corporations and international financial markets who view any kind of Keynesian direction of the economy as a burden.  The new Social Democracy wants to stimulate  the economy and create a framework in which market forces can work properly (Blair/Schroeder).
But the unhampered functioning of powerful world markets is a threat to social justice and ecological sustainability. To expect social and ecological sustainability from a strengthening of the main actors in these markets is either a demonstration of ignorance or a deliberate ideological hoax. Any social renewal is impossible without a strong social and ecological orientation as well as global and regional regulation.
For democratic socialists,   modernisation can't mean making politics a more efficient housemaid in the service of the economy, helping to dispose of its unmarketable waste. And it is also not enough to improve the level of skills by better training. In the first place,  political modernisation means restoring politics as the conscious structuring of social relations, using the forces of the market and of society as a whole for the common good.
We need a policy of dialogue and a European employment pact. But these only make sense if they open up new opportunities for the unemployed and the low paid. An orientation toward the common good means that those who are disadvantaged have to benefit. This orientation can be successful only if a higher proportion of wage earners share in  national wealth while small and medium sized businesses are promoted and their  almost complete dependence on banks and big corporations significantly reduced.
Political power depends essentially on the balance of forces in society and, above all, on the economy. Just as a separation of powers is essential for political democracy, a separation of economic power is essential for a social and ecological economic order. Developments oriented at the common good can only emerge from an institutionalisation of ecological and social counter-powers to the power of  capital valorisation and the misconceived maximisation of income and consumption.
The powerless can't negotiate and are not partners. The overwhelming power of organised capital inevitably produces a powerlessness in politics. The so-called constraints on political actors arise quite simply from the predominance of the former and the relative powerlessness of the latter. Without a change in the power structures of the economy the "alliance for jobs, vocational training and competitiveness" will become a contract  imposed in the interests of the big corporations, with some small concessions in an overall context of social dismantling.
For decades, Social Democrats have neglected to prepare people for the fact that the obstacles to further development can  be removed only by their own actions to change the relations of power in society. It's no accident that the calls by Gerhard Schroeder and Tony Blair for The Third Way are appeals to the governments and not the peoples of Europe.
The breakthrough to social and ecological sustainability starts when those affected recognise their own interests and its foundation is the active involvement of citizen's initiatives, projects, associations, trades unions, churches, expert groups and local people. A modern Left must promote initiatives for civil self-organisation and interest representation, help them to network and take on board their proposals for new development paths. The state and legal system can only gain by making such developments possible and legal.

6. A combination of ecological restructuring, modernisation of work,  and laying the foundations for a multifaceted and richly varied way of life could create a sustainable type of development that goes beyond the limitations of Fordist capitalism, is less harmful to the environment and facilitates the economic conditions for a freer development for all.

This would mean a new development strategy, one that would transcend the socially limiting capitalism of the post-war period. Technologically, societies today are able to supply the needs of all people on earth with only a small expenditure of labour. However, this development has not led to everybody working less. A growing number of people capable of  work have no paid job while others are  working longer hours,  sometimes earning more and, through higher taxes and social spending, are having to care for the "superfluous" section of society. This kind of productivity development and growth means that social integration suffers and life-worlds decay - both for those out of work and for those in work who, because of the growing pressures of work, lack the time and ability for varied human relations and leisure activities.
The enormous increase in labour productivity has not been matched by an equivalent efficiency in the handling of  resources and productive factors. The exploitation of natural resources has grown enormously without a comparable rise in the efficiency of their use. Such a development not only disastrously undermines the foundations of future production and consumption but also destroys the life-worlds of people - the foundation of which is nature.
It is possible and necessary to embark on a new path of economic development and to find a type of development that is in harmony with the environment and human needs. What is on the agenda is a socio-ecological transformation that can also be called a "global revolution" (Club of Rome). Three aspects of this transformation must be highlighted:
1.  the transition to ecological sustainability and the inevitable reorientation of production from manufacturing material goods to the production of real human wealth - the universal needs, abilities, pleasures, productive forces etc. of individuals produced in universal exchange (Karl Marx);
2.  a global offensive for overcoming poverty, hunger and underdevelopment and
3.  a breakthrough towards gender equality in politics, the economy, science, education, the media and culture. A modern Left does not, however, reduce the abolition of patriarchal power to a policy on equality. It regards the emancipatory struggles of women as one of the major movements for changes in society.
Nothing less than a transformation of world society is on the agenda. Breaking out of the structures of power in our society means confronting the dominance of capital valorisation in society, society's destructive exploitation of nature as well as the dominance of the North over the South and of men over women.
The entire system of production,  services, housing, transport and way of life as they have existed in the twentieth century have to be restructured. There has to be a real improvement in the efficient use of natural resources and in our ability to handle them "productively" over the next twenty years. These are the undeveloped market of the future for which we need labour, capital and, most of all, knowledge. Ecological and social transformation would bring with it comprehensive innovation and investment and could lead to a net increase in jobs even in the mid-term.
In order to achieve this goal, a new framework for markets is indispensable. Among other things, it would have to incorporate into its prices, by means of eco-taxes, emission regulations, etc.,  the costs of previous economic activity which up to now have not been included in business costs. Structural and regional policies could also make a contribution to a better form of development. The new economy would be based on a globalised exchange of information, a far-reaching regionalisation of material and energy cycles and the localisation of many services,  enabling the full use of regional labour capacity and the creation of environmentally friendly economic cycles. The necessary revolution leading to an efficient use of natural resources requires a reorientation of  research and technology policy towards sustainable development.
Socio-ecological sustainability and modernisation of  work would involve a differentiated and flexible way of  providing work and earlier retirement for everyone. A modern working society must also make possible a new combination of work and creative communal and individual work. Finding versatile and meaningful fields for community and individual action can start with the ecological transformation of private life. It would also have to involve local people regaining sovereignty over the structuring of their own affairs in their communities and regions and would give rise to a large number of social and cultural projects. Creativeness and commitment must no longer be limited to individual careers, high incomes and exclusive consumption for a few. Everyone should be employed - both with paying jobs and with personal work - according to their abilities and needs in order to find a sensible combination of work, life, enjoyment and personal fulfilment.

7. The growth of a low-wage sector results in a lasting division of society. The alternative is to find new areas for sustainable development,  to reduce working time and to increase flexibility.

Growth oriented at the world market and at the reduction of additional wage costs will not solve the problem of mass unemployment. Traditional labour market policy is insufficient and the creation of a low-wage sector polarises society and wrongly subsidises businesses. Without finding new areas for work and without a new distribution of work in society there will be a permanent division between high income earners, their servants and the unemployed.
The crisis of employment can be resolved. A modern socialist policy has to find new solutions that are more in keeping with its ultimate goal - the free development of all. Four possibilities should be mentioned:
(1)  First, a solution to the problem of employment would involve an ecological transformation of production and production-related services as well as the replacement of goods and technologies that damage the environment by ones that are ecologically sound. Since only 20 percent of the workforce is needed to  provide the necessary material goods for society as a whole under current productivity conditions, it would require a considerable extension of social services: in education and training, health,  nursing care, scientific, cultural and sports activities, social and psychological care, counselling, support for self-help projects,  communication and environmental protection. These fields are inexhaustible for human activity. Already today the majority of the workforce in the Western world is employed outside material production. But services should not be reduced to the provision of "human capital" for businesses. People-oriented services form the core of the production of wealth in the twenty-first century. The modern leisure industry is only a late Fordist phenomenon, the  internet may be the incipient form of a new knowledge and communication society still hidden in the folds of the old system, obscured by commercials and passive entertainment.

(2) Strategic decisions for a new path of development, for viable future areas of employment are indispensable. They must also be twinned with institutional innovations. A modernised work society cannot limit itself to creating more jobs. It must create institutions that are in line with new social structures and lifestyles. The social preconditions of the Fordist work society, based on the model of the male family head in the job for life, has been superseded by the modernisation process of the past fifty years.  Work roles and patterns today are significantly different. Yesterday a trainee, today self-employed and part-time worker, tomorrow unemployed and the day after that maybe entrepreneur and finally a share-holder in receipt of welfare benefits. The diverse social roles can no longer be clearly attributed to certain social classes, strata and groups.
That does not mean social injustice has decreased: on the contrary, it is growing. But the lines of classification are not so clear. There are blue and white-collar workers with relatively good incomes, the self-employed who are quite well off but  also those who for many years live close to the poverty line, successful businesspeople but also businesspeople gone broke, without any social safeguard, doctors and university graduates, some without work and some in very well-paid positions.  Consequently, the concentration on normal working relationships is inadequate and the diversity of incomes and jobs must be taken into account for when setting up rules for work and laying out systems of social safeguards.

(3) The basic preconditions for the modernisation of work are the creation of new ecological, social and cultural areas of employment as well as the creation of new structures of employment. By shortening the average work-week for men and women to thirty hours, it should be possible to shorten the overall cycle of lifetime employment and  allow work to be combined with voluntary communal and individual activity.
Lifetime employment must be reduced in various and flexible forms. In this area a balance of interests between employee and employer is necessary and possible. Flexibility means various possibilities in terms of working hours. Flexi-time, the individual choice of working hours,  is one possibility. It addresses more than just part-time work, training, "Sunday" years, parental leave and flexible replacement schemes. Offering working hour choice to older employees should provide them with an opportunity for making a smooth transition into retirement. People of 55 years and older should be legally entitled to choose their own working hours.

(4) Work in the public sector and in the social services should not be measured by the criteria of capitalist profitability. The forms this kind of work should take  is still to be decided.  In part it would continue as public service work but closer to the citizens it serves. At the same time, the non-profit or "third" sector,  between the private and the state sectors, needs to be expanded. This would be organised by autonomous entities. Public institutions and organisations under local supervision could farm out new socio-cultural and ecological projects financed in part by public funding and partly by charges and prices. The businesses chosen to run the projects would have to live up to certain labour-market, social, ecological and local political criteria. Another possibility would be the creation of individual income by combining social safeguards with an allowance for taking over socially meaningful jobs. Shorter working hours twinned with fundamental safeguards for times without employment should make it possible for the individual to find time for training in their own field of work, or for co-operation in non-profit or charitable projects of cultural, ecological, social, scientific or pedagogical nature while in employment or instead of it.

8. Participation of citizens in the wealth of society does not, exclusively, mean more private consumption; rather it will lead to a better quality of life for both women and men.

Abandoning a mode of consumption that reduces pleasure to mass consumption and eventually leads to a worsening quality of life and stultification, does not mean forsaking the positive aspects of the Fordist consumer society. What is required is not the elimination of consumption, but the use of the material wealth, mobility, space and the world of goods in a different way. Consumption will bring pleasure and satisfaction if it reflects the variety of enjoyable behaviour and the richness of human relations. To this end the individual needs free time and self-determined work. This will not lead to a reduction of purchasing power or demand. Collective bargaining in the next century should be used to translate rises in productivity into rises in the quality of life. Looking after one's own body, bringing up children, private life, the flat, house and garden, food and drink, local affairs, harmony with the environment - these are not parts of life that require commercialisation, these are not areas of life that we want to be liberated from by a growing services sector. These are part of our life world from which we derive pleasure and satisfaction, perhaps even more than from career and work. The battles of the future will be to a growing extent about new life styles. A redistribution of opportunities in life is a fundamental condition for preserving social cohesion and democracy.
A major reduction in working time is an essential if women and men are to participate equally in work and leisure. It would create new opportunities for women's real involvement in the renewal of democracy. True equality would require that there are no sectors with such low levels of pay that women or men would become financially dependant on their partners. A co-operative work society, a new employment policy and a more self-determined combination of gainful employment with voluntary work would make it possible to overcome the exploitation of stereotypical "women's work"  and the misuse of those female qualities encouraged by patriarchal socialisation (solidarity, caring,  social sensitivity and readiness to compromise) in the mostly poorly paid service industries.
In this and other fields the strength and development of trades unions assumes a pivotal role.

9.  A new development path requires a change in economic regulation and institutional reform, without which there could be no project of social and ecological transformation.

A social and ecological transformation requires a change of behaviour in a host of actors - individuals, organisations, businesses, state authorities etc. Changing behaviour patterns, in turn, presupposes a reform of the institutions that structure and regulate such behaviour. This is not a simple counterposing of regulation by the free market or by the state. Institutions  work well to the extent that  they correspond with the opportunities and means of the actors. The Fordist regulatory system, based on oligopolistic markets, big organisations, corporate bargaining procedures, and bureaucratisation of economic activity, of natural resource exploitation and of the labour system, is out of step with social reality at the end of the twentieth century. The traditional regulation of international markets and money has collapsed without new and effective institutions having emerged.
Deregulation provides no solution but only a negative variation based on the interests of free market capitalism. A new development path requires institutional reform in the economy, the social system and the tax system. Any new system of economic regulation should take into account the following points:

  The first task would be to establish a world market framework that put in place common standards of political and social rights, ecology, product quality and consumer protection. World markets need regulation that also guarantees opportunities for the economies of less developed countries. Financial markets must be regulated in a fashion that does not hamper productive investment but scales down speculation. Apart from agreements on environmental and social standards, a regulation of international capital markets is most urgent. The introduction of (Tobin) taxes on foreign exchange and capital transfer, public supervision of banks and a stronger linking of the dollar and Euro are essential steps.
Without underestimating the difficulties of re-regulating world markets, we should expect far more initiatives from  European Social Democratic governments. The major regional players will have to take the lead. The fact that rich countries reject the introduction of certain environmental and social standards, citing international competition, is not only dishonest but also writes off the future.

  Institutions for ecological regulation of the economy have yet to be established. The underlying principle would be that ecological resources, depending on their nature and importance, would remain the property of  regional or local communities, nations or the people of the whole world, and could not be privatised. Private enterprise could use such resources, in ways to be determined, but only in return for financing their reproduction. In addition to eco- taxes, other suitable instruments could be certificates and environmental charges...

  State promotion of the economy, which tends to preserve existing structures and limit competition, could gradually be shifted to the independent sector which would be responsible for innovative investment. Promotion of economic development would then not by guided by state bureaucracies but by democratically constituted economic promotion bodies with co-determination based on the principle of parity. Over the longer term, economic promotion would gradually be self-financing and removed from the state budget.

  A number of public services obviously cannot be provided efficiently by state-owned companies in their current form. Privatisation, however, is not in the common interest. Especially problematic are solutions that replace local state monopolies with supra-regional big companies in monopoly positions with no ties to either the region or local community. What is needed here, once again, is to find new ways between public and private.
One possible way would be publicly constituted agencies under democratic supervision with the broadest participation possible, not managed by state bureaucracy, which would include a number of smaller and medium-sized companies and would provide the necessary services. In this area pluralistic competition could be linked with public control. We need to give more consideration to such ideas and test them in practice...

  Finally, we need a reform of industrial relations and codetermination. From the point of view of the effects of their activities on society and the environment, big corporations are no longer the exclusive concern of their private owners. It is no longer adequate to think just of the interests of the workforce in such big corporations [as happens in codetermination]. Supervisory boards need to have a tripartite composition. [Translators note: supervisory boards in German companies are made up of representatives of the workers and the employer.]  The interests of the public could be institutionalised in a public bank, the representatives of which would not come from the state bureaucracy but would be elected by non-governmental organisations.

10. A modernisation of the social welfare system requires the participation of most people in financing it and introducing a demand-oriented social safeguard, ridding the solidarity- based insurance systems of out-of-area services, limiting entitlements and the obligation to pay for high income earners, more efficiency and democratic self-management in the use of funds, as well as universal standards for all mandatory insurance schemes.

The welfare state is a second area in need of institutional reform and regulation. Welfare and social systems developed and index-linked under Fordism, such as health and pension insurance, unemployment and nursing-care insurance, have been subject to heated debates and insufficient attempts at reform for a long time. The reform of the health system and pension schemes which the German government has just ushered in has a number of approaches that are correct - especially the introduction of a fundamental safeguard - but there are still a lot of problems.
We need a reform of the social system that better corresponds to the new social structures that have evolved in the twentieth century and which would support the transition to a new ecological path of development and a new link between economy and way of life. This requires two big steps - a universalisation of social welfare and the introduction of a basic safety net. In future there should be only one mandatory basic social insurance and one basic health insurance...
A basic social security system has to guarantee conditions fit for human beings to live in. It is not enough to simply safeguard material existence. It  has to open up opportunities and provide challenges for active participation and advance in society, for the acquisition of further qualifications  and for active participation in economic activity as workers or self-employed.
A basic needs-based social safeguard must be available for everyone. A compulsory index-linked basic social safeguard does not need to fully insure the high living standards of high income earners. This could be done privately. Claims based on contributions could go as high as twice the basic level. Everyone would have to contribute, regardless of type of income,  except those unable to work, those on basic entitlements (eg pensioners) and children until they have finished their education. High income earners would pay into the solidarity-based insurance scheme up to a certain limit. There would be no obligatory contributions for income beyond a certain upper limit but neither could there be social insurance claims made on that income. Higher income earners could make their own provision for income beyond the threshold level.  Apart from private insurance, this could involve company pensions, collective social schemes, co-operative insurers and the like. Income from these sources should also be free of premiums in the basic safeguards system. Welfare, unemployment benefit and allowances and mandatory pensions could, in their present form, be phased out over a longer period.  ... The mandatory basic safeguard would therefore replace today's pension and inemployment insurance schemes. As health and nursing-care insurance could also be standardised, there would only be two mandatory insurance schemes left to be paid for by income earners.
The contributory system is preferable to the tax-financed system (such as basic state pensions) because the latter can be changed arbitrarily by a change in government policy. The contributory system has a built-in, quasi-ownership-based claim.
For children up to age 18 a basic child benefit would be paid, related to age and covering basic needs. After the age of 18 they could, when in need, claim the basic social insurance independently of parental income. This would also apply to students and would replace the student loan scheme.  
Businesses must show solidarity and pay into the insurance funds. However, payments should not be assessed on the basis of gross wage costs but on the basis of value creation.  Companies that are labour intensive with high wage costs have been disadvantaged in the past. This change would bring about a more just and functional distribution of costs among businesses...  

11. The tax system must be fundamentally modernised, simplified and made transparent as well as oriented towards tax justice: lower taxes on small incomes, higher taxes on large-scale private property and on unproductively invested profits and revenues from financial investments. A reform of public finances could lead to a fairer social system and a more sustainable form of development.

A fundamental reform of the system of taxes and charges is urgently required. First of all, the SPD's  plan to broaden the basis for taxation by doing away with exceptions, subsidies and exemptions while at the same time lowering the rate of taxation is correct. The taxes businesses pay in Germany are not too high in absolute terms; the share of the tax burden between big corporations, small businesses and workers has been levied incorrectly and unjustly both from an economic and social standpoint However the Social Democratic approach does not suffice for a real reform of tax law...
Public finance in Germany and in other leading Western nations has been sliding into serious crisis for years. This crisis is seen mainly as a problem of public debt. Since the early 1980s national debt has risen by 600 per cent in Germany; in 1997 the total amount of national debt exceeded more than DM 2,000 billion. Almost one in four DM of taxes now goes towards debt service. And the debts are growing further. About 25 per cent of the 1999 budget is covered by loans and the sale of federal state property...
The crisis of public finance does not primarily arise from the fact that so far "the road to social justice had been paved with ever higher levels of public spending", as Tony Blair and Gerhard Schroeder would have it. That is certainly not true of the previous government in Germany. The crisis was mainly caused by the fact that public finance lost that part of revenue that used to come from corporate and wealth taxes. In fact, in Germany tax on profits and corporate income constitutes an increasingly smaller part in overall tax revenue while the share of tax on wages rose by 20.7 per cent alone between 1992 and 1997 and constitutes the biggest item for the treasury. The burden of taxes and charges on wages and salaries is much too high. Under the condition of Fordism in crisis, by and large, only the major corporations have received big tax breaks for reasons of competition. Incomes from property rose more than proportionally.
As far as business is concerned, the myth of Germany as a high-tax country is not true: the actual average corporate tax is 21 per cent. According to the OECD amongst the industrialised nations only the Netherlands have a lower rate, while it is much higher in the US (27 per cent), Denmark (28.6 per cent) and Great Britain (32.4 per cent). If German businesses were still taxed according to the 1980 regulations the government would have DM 100 billion more every year. The problem is that the major corporations avoid taxation or are exempt from it so that small and medium-sized enterprises as well as wage-earners have to shoulder the main burden.
The crisis of public finance has to be resolved in a different way. The way that the Social Democratic government in Germany is attempting to solve the problem is socially unjust.  As an alternative, a reform of public finance should be based on the following  principles:
Earnings above the poverty line (be it from wages, salaries, other earnings, profits and revenues) should be subject to progressive taxation. Pensions, revenues from life insurance policies and other old age payments as well as the basic social safeguard (as soon as it has been introduced) are exempt from taxation. In other words, the basis for taxation is broadened, exceptions are abolished and effective instruments are applied to counter tax avoidance by big corporations, the rich, and loan and insurance companies. Higher taxes are levied on capital revenues from transactions in international financial and foreign exchange markets. More pressure is necessary to harmonise taxation legislation within the EU.
There are those who have benefited and profited from the developments that led to the crisis in public finance. Against the background of huge unsolved problems in society requiring financing and the unjust accumulation of wealth amongst the economically powerful, a temporary wealth tax on big property and on the assets of insurance and loan corporations and investment companies is necessary for a transitional period of ten years.
In the long run, a decrease in mass unemployment and the reform of the welfare state as well as revenues from new development paths  will pay off. A new kind of full employment would cut the costs of unemployment (about DM 170 billion in Germany in 1998) tremendously and raise tax revenues.
All expenditures are checked for their contribution to the necessary economic and socio-ecological conversion. Subsidies that merely preserve existing structures are phased out. Those   contributing to the socio-ecological transformation of society and thus to a possible elimination of mass unemployment are retained and extended...
A reform of local government finance will lead to a new quality of self-administration in the communities and regions. Communities must be in a position to positively influence local ecologically oriented economic cycles and to assume a leading role in establishing a public employment sector.

12. International security and the preservation of peace depend above all else on a just world economic order, non-violent forms of implementing human rights,  respect for the claims of ethnic, political and cultural groups,  and a UN monopoly on the use of force.

Following the experience of the most appalling of all wars in history and the failure of the League of Nations, the United Nations Organisation was created and its Charter established an international law that outlaws war, is oriented towards consensus and bases international relations on fundamental democratic principles. Furthermore, for nearly half a century the balance of terror prevented the horror of war in Europe.
The return of war to the European continent, its extension to Africa and Asia, its re- legitimisation in the politics of the capitalist metropolitan countries and many other countries results from the fact that the mutual restraints on the military arsenals of East and West have now been loosened.  It was not intended,  that confrontational and military concepts of security should be replaced by co-operative and civil ones, nor has it happened. Gorbachev's New Thinking  about a civil restructuring of international relations has been without effect. With the collapse of the Soviet Union and the end of the Warsaw Pact, the West was no longer interested in such ideas.
International conflicts, wars and proliferation of arms of mass destruction have increased. Unjust economic relations,  underdevelopment of the South, US and NATO ambitions to establish a world-wide military monopoly on the use of force, the undemocratic nature of international relations, disregard for human rights, international law and the rights of ethnic, political and cultural groups by many countries - all of these are causes of current crises and wars.  
Neo-liberal  radical globalisation , accompanied by cultural imperialism, jeopardises traditional social structures and alternative opportunities for development and provokes resistance. Without underestimating specific causes in individual regions and countries, it must be said that dictatorial regimes, ideological fundamentalism, wars about distribution and a world-wide militarisation of politics are the consequence of  economic, political and military strategic decisions by the metropolitan countries.
Currently anti-militaristic forces are weak and the monopoly of the West on the use of force is almost without restraint. But politics established on that basis is short-sighted, counter-productive and irresponsible. It creates new tensions and aggravates old ones, destroys civilian and co-operative thinking and, at best, solves warring conflicts by causing new ones, and in the long run probably worse ones. Universal application of human rights, individual freedom and democracy cannot be brought about by military threats or war. But human rights is a requirement for lasting peace.
Firstly, those wanting to pursue policies to prevent wars and remove and contain existing military conflicts, must first of all reduce the instruments of war, especially in the dominant military powers of NATO. Disarmament must again be a primary focus of international politics: arms exports must be downsized and eventually banned altogether, the manufacture of new arms and especially high tech weapons and the extension of the attack-capable armed forces must be effectively limited or stopped. The proliferation of weapons of mass destruction can only be prevented by disarmament by the nuclear powers themselves.
Second, the recent re-legitimation of war as "the continuation of politics by other means"  has to be stopped and the UN monopoly on the use of force has to be restored. A surrender of sovereignty in security matters  to democratised international institutions could provide joint security on a reliable basis. Not the enlargement of NATO and extension of its military strategy or an activation of the Western European Union as the military wing of the EU but a decisive strengthening and democratisation of the United Nations and the OSCE in Europe offer a way out of the spiral of wars.
Third, a just world economic order and the opening of alternative and self-determined opportunities for development for the countries of the South is the most important prerequisite for removing the causes of dangerous regional conflicts over distribution, regional ambitions for supremacy and local militarism.
Fourth, civilian crisis prevention, an international crisis early warning system and peace education and research must assume a totally new status. Non-violent and effective forms of implementing human rights as well as the rights of ethnic, political and cultural groups could complement existing instruments under international law.
Peace too is the continuation of politics by other means.  The continuation of the current international economic policy, of  current security strategies, of the traditional power-political instrumentalisation of human rights,  and current Western attitude towards the UN and OSCE will not bring peace.  The socialist Left must contribute to a new beginning in each of these areas.


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