Liberalization and Democratization: the Forum and the Hearth in the Era of Cosmopolitan Post-industrial Capitalism

The processes described under the misleading term “privatization” have been part of a major social restructuring in both the political and economic spheres. Most notably, widespread state failures have resulted in significant changes in the form and functions of the state. This reform encompasses not only the collapse of state socialism, but also crises and radical reforms in developed capitalist states, including U.S. regulated corporatism, European-style social-democratic welfare states, and the developmental states of Japan and the Asian “tigers.” The causes of these changes have been equally diverse, involving a mixture of both political and economic factors. Nevertheless, these processes have much in common, entailing a transition to post-industrial capitalism, or what Manuel Castells has called the “Information Age.” The crisis of the state has been most evident in eastern Europe and the former Union of Soviet Socialist Republics, which experienced a systemic social crisis of both political autocracy and economic centralization. Elsewhere, the relationships between the political and economic aspects have been less explicit, and thus the overall nature of the processes has been harder to grasp. One linking element has been the increased difficulty of legitimizing public expenditures from general taxes—especially those paid by direct taxes on income. This problem applied not only to social and welfare spending, but also to public funding of the renewal of infrastructure, in particular, expenses to keep pace with emerging needs and technologies in areas such as transportation and telecommunications.