We need better international coordination of economic, finance, and monetary policies. This coordination is indispensable if we want to stabilize the world monetary system and increase growth and employment. If the global employment crisis is to be overcome, then we need an international growth initiative. This includes having national central banks take full advantage of any latitude they have to lower interest rates in close consultation with the finance policies of all participating countries. [ . . . ]
From Germany’s perspective, one can say that the new international division of labor will change the economic structures of industrialized countries. Labor-intensive production that is subject to international competition will be outsourced more and more to countries with lower wage costs. It is important to realize that the internationalization of the economy will also increasingly affect countries outside of North America, Europe, and eastern Asia. This prospect often spreads feelings of concern in industrialized countries. This anxiety, however, fails to take many dynamic factors into account: the further development of technology and productivity in industrialized countries, and, no less important, economic and social developments in low-wage countries, even during the course of their own economic development.
The Federal Republic, with its traditionally strong capital goods industry, is in a particularly good position to benefit from the catching-up process of developing countries. Shutting ourselves off from these countries is certainly no solution. As these countries become integrated into the world market, they will also become more reliable partners within the scope of international cooperation. This can only suggest that an international regulatory framework will continue to attract more partners, step by step. If the new opportunities presented by globalization are to be utilized, then we need to rethink our policies, especially our economic policy. We need improved international cooperation in politics in the place of resignation, social dumping, and protectionism. Then we will be able to overcome the fateful, real economic race to the bottom among nation-states. [ . . . ]
Source: Rede des SPD-Vorsitzenden, Oskar Lafontaine, vor der Friedrich-Ebert-Stiftung am 25. Juni 1997 [Speech by SPD Chair, Oskar Lafontaine, to the Friedrich-Ebert-Foundation, on June 25, 1997], reprinted in Internationale Politik, no. 5, 1998, pp. 64-67.
Translation: Allison Brown