World Federalism, Inequality and Economic Justice
As the economy has become increasingly globalized and global corporations organize their business ventures on a global scale it has become apparent that the regulatory system has not kept up with this change. Global corporations may produce in one country and sell in another, may pay tax (if at all) in a third country, and in doing so avoid regulation in any country. This has led to a ‘race to the bottom’ regarding countries setting ever lower corporate tax rates and has led to an erosion of workers’ rights and wages. This unregulated, globalized production system is ultimately leading to increased poverty and inequality in the world and is causing huge damage to the environment.
In our globalizing world, no nation is an island to itself. Our economic, social, environmental and political realities are now interdependent globally and local factors alone are utterly inadequate to explain local realities. Most importantly, the extremely unequal distribution of economic and political rights between the different parts of the world, and within them, can only be understood from a global perspective. When we take a global perspective we see that the prosperity, freedoms and justice enjoyed in some parts of the world are not self-generated, but are in fact heavily dependent upon the poverty, oppression and absence of justice in other parts of the world. Europe, for example, would not have its remarkable wealth today without the years of colonialism, slavery and oppression that it enforced on much of the global South. Whilst the nature of the oppression has changed today, it is still very much the case that the wealth of the North depends on the continued oppression of the South in sweat shops producing cheap clothes, plantations exporting food products in countries suffering from hunger, and so on.
Production has shifted to the poorer countries of the global South in recent years because it is cheaper to produce there. This is not just because wages are lower, it is also because in many of these countries there are very few regulations about working hours, social security payments, environmental standards, child labour or worker safety. And often corporate tax rates are kept extremely low. This leads to workers working in dangerous situations without adequate protective clothing, for very long hours, for very low pay, while the local landscape is being polluted and surrounding communities are being poisoned. Moreover, the shift in production to the poor countries in the South has left vast areas of the richer Northern countries without work or productive activity. People in these working class areas are falling into poverty, while those who work with the big corporations are getting ever richer. Thus inequality is increasing in both the rich countries and the poor countries.
The economy is global, but the political system is national. We believe that this divide between the global economy and national politics is the main reason that the world’s problems are getting out of hand and seem to resist resolution. There is no global democratic platform for collective deliberation, regulation and decision-making. Instead we have global anarchy and the rule of the strongest.
A democratic World Federation could change all this. It could pass and enforce global laws to regulate business. It could also set global tax rates and global standards for workers’ rights, thus stopping any ‘race to the bottom’ and enabling fair and just conditions in all countries. This would radically change decisions about where to locate production facilities, as instead of looking for the place with the lowest salaries and the least enforced regulations – as these would all be much the same – corporations would look for places close to market and with good transport and logistics. Working conditions and quality of life would improve in poorer countries, as they became wealthier. And some production would return to the richer countries and the working populations there would again flourish.
Operating as a global social democracy, a world government could also redistribute resources through forms of global taxation and the provision of global public goods, such as schools and hospitals. Instead of small amounts of money being given to the countries of the South as ‘aid’ – essentially charity, with strings – larger amounts could be transferred through taxes and welfare spending – a form of justice with which we are familiar today in national settings, and which could truly change the world if applied at the global level. All of these changes would reduce global inequality and make the world a much more just place.