Socio-economic and political development are interconnected

1. Socio-economic and political development • are interconnected (Crisis of) economic development (Crisis of) political development Contact: Marc Saxer, marc@fes-thailand.org

2. Transformation crises around the world… Philippines: 2000/01; Estrada, elected, ousted Venezuela: 2001/02; Chavez, elected, government survived Taiwan: 2004, 2006; Chen, elected, govt. survived, later convicted Kyrgyzstan: 2005; Akayev, elected, ousted; 2010; Bakiyev, elected, ousted Bangladesh: 2006/07; Zia, elected, govt. survived Kenya: 2007; Kibaki, elected, govt. survived (intern. mediation) Bolivia: 2008; Morales, elected, govt. survived Georgia: 2007; Saakashvili, elected, govt. survived Ukraine: 2004, 2013; Yunukovych, elected; ousted Egypt: 2013; Morsi, elected, ousted Turkey: 2013; Erdogan, elected, govt. survived Brazil: 2014; Rouseff, elected, govt. survived Thailand: 2006, 2008, 2013/14; Shinawatra I-III, elected, ousted …show similar patterns Contact: marc@fes-thailand.org

3. The “script” of transformation conflicts Socio-economic development transforms societies. Emerging classes demand equal participation in political and social life, leading to a crisis of the political order and a crisis of social justice. Clever political entrepreneurs realize that by catering to the hopes and needs of the majority, they can build an electoral power base beyond traditional elite networks Once elected, these leader become “elected autocrats”. Following the zero sum winner-takes-it-all logic of patrimonial culture, they reward supporters, protect clients, distribute spoils, favor kin, cut out non-supporters and crush their opponents. From the perspective of the middle class in the capital, the patrimonial practices of elected representatives from the provinces is seen as a fall-back into darker times of vulgar corruption. The disregard for the rule of law (etc) is perceived as a threat. The middle class fears that “corrupt politicians use our tax money to buy votes from the greedy poor with populist policies”. Desperate and angry, elites and middle class in the capital turn to extra-constitutional means to topple the elected autocrat. Hundreds of thousands of middle class men and women are marching in the streets, calling for interventions by the judiciary and the military. Despite military coups & judiciary interventions, “elected autocrats” manage to come back with the support of the loyal majority. Contact: marc@fes-thailand.org

4. Historically, patterns of transformation processes look remarkably similar in societies around the world… Stability Instability closed open …opening up creates economic, political and cultural conflicts, which can only be resolved by a new social contract. Contact: marc@fes-thailand.org

5. In order to resolve Thailand’s conflict, the nature of the transformation crisis needs to be better understood… POLITICAL CONFLICT TRANSFORMATION CRISIS Contact: marc@fes-thailand.org

6. Driver 1: Complexity A modern and globalized economy needs efficient service, management and steering… TRADITIONAL ECONOMY HIGHLY COMPLEX ECONOMY TRUST BUILT BY PERSONAL RELATIONSHIPS TRUST BUILT BY INSTITUTIONS …A political order based on personal relationships does not have the institutions necessary to satisfy the needs of a complex economy Contact: marc@fes-thailand.org

7. Driver 2: Diversity On the cultural level, the pluralisation of lifestyles, values and identities … …creates the “noise” of permanent debate typical for a modern society Contact: marc@fes-thailand.org

8. Driver 3: CONFLICT Economic development creates winners and losers… …triggering permanent conflict between social classes Contact: marc@fes-thailand.org

9. Structurally, development erodes the traditional vertical society... …but a new political process does not emerge by itself Contact: marc@fes-thailand.org

10. To tackle the challenges of a modernizing society... • Universally accepted rules who gets mandate to make decisions, and what are the powers of those controlling decision makers • Mediation mechanisms for permanent conflict • Management capacity of complex economy • Impartial institutions to fight corruption • Merit-based education system • Responsive policies to address crisis of social justice …an upgrade of the “operating system” is needed. Contact: marc@fes-thailand.org

11. “Short-cuts” and “quick fixes” are counterproductive… Stability Instability closed open …because they delay or derail the process of political transformation. Contact: marc@fes-thailand.org

12. Traditional governance mechanisms… How to satisfy the growing demands for public goods if the middle class does not accept to be taxed? How to deal with demands for greater participation in decision making if traditional elites do not accept all citizens as equal ? How to process the large amounts of information needed to stir a globalized economy when only a few people have the authority to make decisions? How to mediate permanent conflict between social classes or identity groups if political culture fears debate as divisive and conflict as decay? How to tackle politicized problems as corruption if institutions lack the legitimacy of impartiality? …lack the capacity to manage a complex economy and pluralist society Policy maker Contact: marc@fes-thailand.org

13. To overcome the transformation conflict... • SOCIAL CONTRACT • Elites accept democracy as the only game in town… and learn how to win majority with political platforms responsive to the needs of the society • Middle class accepts to finance responsive state… and get meritocracy and protection by rule of law • Majority population offers social peace and accepts anti-majoritarian safeguards … in return for full capabilities for all …society needs to renegotiate the social contract. Contact: marc@fes-thailand.org

14. Tocontinueeconomicdevelopment, manychallenges must beaddressed Finite Resources/ Energy security Third Industrial Revolution/ New global division of labor Climate Change/ Natural Disasters Industrialization Japanese Tsunami Export Low Wage Vulnerability to external shocks Contact: Marc Saxer, marc@fes-thailand.org Looming Global Recession = Lack of external demand Financial Crisis Influx of “hot money”/ Currency volatility AEC: Low Wage competition

15. A new development model is needed NORMATIVE VISION STRATEGIC AIMS GROWTH ENGINES GROWTH COMPASS To Produce GOVERNANCE TOOLS GOVERNANCE TOOLS To drive To Fire Up To Achieve • Income Equality • Inclusive Institutions • Public Goods (Education, Health, Social Security) • Fair Income For All(consumption demand) • Include all Talent (innovation & laborproductivity) • Collective Bargaining • Minimum Wages/ Wage Policy • Short Term Employment • Vocational Training • Lifelong Learning Programs • Decent Work SociallyJustGrowth • Stable financial markets • Balanced Trade (balanced current accounts) • Balanced Budgets (fiscal sustainability) • Stable natural, social environment • Curbing of speculation • Anti-cyclical macro-economic guidance ResilientGrowth • Financial Market Regulation • International Monetary Regime • Capital Controls • Administrative Capacity (Oversight and Control) GOODSOCIETYwith FULL CAPABILITIES FOR ALL • Setting Incentives for • Productivity and Innovation • Long-term investment & management strategies • De-Coupling • Market introduction schemes • Standard Setting • Emission Trading • R&D in (green) technologies • (Green) Innovation • “Greening the Old Economy” • (resource efficiency) GreenDynamic Growth Contact: marc@fes-thailand.org

16. The new order will be the outcome of the political struggle … EXCLUSIVE SOCIETY WITH PRIVILEGES FOR THE ELITES GOOD SOCIETY WITH FULL CAPABILITIES FOR ALL … between those who benefit from the status quo and those who seek change. Contact: marc@fes-thailand.org

17. Vicious Circle of Transformation • Political and • economic • INNOVATION • ability crippled • Society cannot • adapt to change • Change is feared as decay • Conflict paralyses • political system Contact: Marc Saxer, marc@fes-thailand.org

18. Thailand lacks a democratic center Democraticcenter Feudal Elites Capitalist Tycoons Bangkok middle-class North- Eastern middle-class Southern middle-class Red workers Yellow workers “Red Urbanized Villagers” Yellow Urbanized Villagers Southern “Political Peasants” North – Eastern “Political Peasants” red extreme yellow extreme Moderate Contact: marc@fes-thailand.org

19. Majority is not enough… limit abuse of power emancipate from patronage marginalize marginalize …democracy needs a solid social foundation in the center. Contact: marc@fes-thailand.org

20. Only a social contract based on social compromise… Elites legitimate mandate to govern Middle Class Full Capabilities Social Peace Tax burden Majority Population • ... works as a stable foundation for a political and economic development Contact: Marc Saxer, marc@fes-thailand.org

21. Social Contracts based on • socialcompromise • USA: Roosevelt’s “New Deal” (1933, cancelled 1981) • Canada, Australia, New Zealand • Western Europe after WW II • Germany • Netherlands, Belgium, Luxemburg • France • UK (cancelled 1980) • Italy • Switzerland, Austria • Scandinavia (Sweden, Norway, Finland, Denmark) • Latin America • Brazil • Chile • Uruguay • Costa Rica Contact: Marc Saxer, marc@fes-thailand.org

22. Many challenges and obstacles have to be tackled… Coalition Individual Actors Political Field Strategic Interests Actions Interests, Agendas, Leverage, Strategies, Actions, Coalitions, Alliances, Deals, Networks…. Narrative Policy Discourse Meta Discourse Discourse World Discourse Paradigm discourse Topos Discourse Alliance Values, Lifestyles, Norms, Narratives, Myths, Agenda, Historical Experiences, Public Opinion… Society Classes, Milieus, Ethnic Groups, Religious Communities, Hierarchies, Winners and Losers…. Income Distribution Production Base Political Economy Diversity Complexity Contact: marc@fes-thailand.org Division of Labor, Distribution of Resources, Functional Logic, Means of Productivity….

23. Political battles over policies are likely to be lost if they go against the grain of hegemonic paradigms… Old Discourse New Discourse Cheap Labor Minimum Wages, Social Security, Redistribution From competiveness by …to investing in human capital for cheap labor … productivity and innovation led growth From diversification…. …to Moving up the value chain From patronage… ...to empowerment/ capabilities From “markets are rational” … … to “markets are flawed” From “inequality is morally just” …“inequality is injustice” ...major policy shifts need to be prepared by discourse shifts on the deeper levels of paradigm and narratives Contact: marc@fes-thailand.org