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Globalization

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Globalization: Boon or Bane?
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"For globalization to serve human needs rather then the greed of the strong at the expense of the weak, I recommend spreading global consciousness through mass education and popular culture. "


29 January 06, Dr Aqueil Ahmad ~ STWR

The year was 1944. World War II was winding down, with disastrous consequences for much of the world. National economies lay in ruins. Industrial infrastructure in Europe, whatever was left of it, could hardly cope with the needs of the war-torn region. Great Britain did not look all that great in 1944. Coinciding with the end of the war, the end of their colossal empire was also in sight. "An Iron Curtain" was about to descend across the European continent. The Cold War was about to begin. American industries churned out war machinery at an incredible rate. The Great American Depression was wiped off. The foundation for a permanent military industrial complex as a vital part of the American economy had already been laid. But as World War II wound down, American industries shifted toward a civilian mode of production. In less than a decade the United States became the paramount economic and military power, countering the hegemonic advances of the Soviet Union. That would prove to be a mixed blessing for the world, as well as for the United States itself, as events in Europe, Japan, Korea, and Vietnam indicated in succeeding decades. American assistance helped rebuild war-ravaged European and Japanese economies. American aid flowed to the de-colonized developing countries. But the American power bred an arrogant foreign policy whose cost proved heavy indeed for many in America, Korea, Cuba, and Vietnam. It was in this climate that the World Bank and International Monetary Fund (IMF) were created in 1944 at the Bretton Woods Conference, New Hampshire, by the allied nations. The idea was to help rebuild Europe through trade, aid, and a freer transfer of capital and technology. The Bretton Woods agreement was also expected to help out the ex-colonies as a price for two hundred years of plunder. And so the global economy, or the more encompassing globalization, as we understand it today was born.

But for thousands of years before Bretton Woods, before the birth of telecommunications, even before the birth of Christ, individuals, groups, and nations had been interacting with each other in war and peace, as warriors, ambassadors, travelers, and traders. Chinese merchants sold silk and spices in South and Central Asia and Europe and brought with them eastern knowledge to the West. Many centuries later, western technology, along with foreign opium and opium smoking habits, were introduced into China by the Dutch and the English. The Muslim conquests in the 10th century AD and onwards, and the Christian counter offensives that followed, were the first examples of large-scale clash of cultures across nations and continents. These were unholy encounters. But the Moorish renaissance in Spain lit the torch that subsequently led to the European renaissance. The Crusades helped establish the Italian City states as centers of international trade. And long before Admiral Perry landed in Japan (1854), China supplied advanced knowledge and technology to that island kingdom. That laid the foundation for the mid-19th century Meiji Restoration. Japan by then was building large ships and trading with the world as an equal partner. During the first half of the 20th century, Japan was able to occupy China, join the Nazis in their quest for world conquest, attack the United States, absorb the nuclear holocaust, and subsequently emerge as the second largest industrial nation in the late 20th century global economy.

The rise and fall of colonialism were also important factors in the more recent history of globalization. The establishment of colonies in the 17th century started as trading outposts of which the British East India Company (India), the Dutch East India Company (the East Indies), and the Hudson Bay Company (Canada) were prime examples. While trade led to empires, the empires continued their exploitative commerce in the colonies. They stole resources and treasures such as ancient knowledge about stars, oceans, agriculture, fauna, flora, textiles, dyes, arts, and armaments. These were used to build local technoeconomic systems and expand global influence and trade. The transactions were neither entirely one-sided nor entirely exploitative, though. Colonizers laid the foundations for modern education, science, technology, and industry that would give the colonies the wherewithal to fight back, gain their independence, and participate in an expanding world economy. The emergence of post-colonial societies as viable economic and political entities is one of the most remarkable developments of the late 20th century, as much as the fall of the Berlin wall, dissolution of the Soviet Block, and creation of the European Union. The rise of some ex-colonies as centers of international technology and trade in half a century is nothing short of a miracle. This would not have been possible without globalization of education, technology and trade.

This brief backdrop of history suggests that globalization is not a one-dimensional or unilateral phenomenon to emerge out of Bretton Woods. Neither is it the creation of post-colonial imperial powers, notably the United States, to help themselves at the expense of developing economies, as the anti-globalization activists would have us believe.

The anti-globalization activism suffers from a myopic vision. It sees all globalization as exploitation by the West of the rest, aided and abetted by giant multinational corporations in collusion with the World Bank and IMF. Ironically, this chauvinistic view suffers from the same arrogance that the anti-globalization activists accuse the globalization activists of: a western bias that looks at everyone else as a gullible oaf. This view ignores the antecedents of globalization. It ignores the non-western contributions to, and payoffs from globalization. There is another problem with the anti-globalization rhetoric. It implies that it would be fine if somehow all could equally participate in the 'globalization racket' - as they see it.

The fact is that globalization is not a racket. It is a creation of history. Large-scale social, political, economic, and technological changes have contributed to the development of an interconnected and interdependent global system. Of course, globalization affects different nations, cultures, and groups differently depending upon their status in the scheme of things. That scheme is highly uneven and unfair and must be changed. Where forces of globalization accentuate that scheme, measures must be taken to counter them. And those measures would, by necessity, have to be political. That would involve, for example, reformulation of the power structure and policies of the Bretton Woods institutions. These structures and policies are rapidly becoming obsolete although their overall influence on the economic fate of weaker nations and groups remains strong.

Reforming Global Development Financing

The most significant contribution of Bretton Woods to (economic) globalization, and not entirely for the greatest good, was the creation of a single world currency. That currency was the American dollar supported by the Gold Standard Act of 1900 by the United States Congress. All international loans, grants, trade and technology transfers were to be transacted through the U.S. dollar. They were to be monitored by the World Bank and the IMF under the General Agreement on Tariffs and Trade (GATT) replaced later by the World Trade Organization (WTO). That was indeed an imperialistic formula. As Britain, France and Germany rebounded from the War, their currencies were also given the status of 'hard' currencies as good as the American dollar. When the United States abandoned the Gold Standard formula in 1971, as Britain had already done in 1931, the modern 'floating currency' system came into vogue. The currencies of other advanced industrial nations subsequently acquired the hard currency status. But that did not change the situation for the rest of the world. Their currencies remain to this day 'soft' currencies not good for international technoeconomic transactions. The division between the have and have-not countries of today may easily be seen as the division between the hard and soft currency countries.

Where do the soft currency countries get the hard currency to buy goods and services from others? They can get it by selling something to the hard currency countries. But if that transaction is insufficient for their needs, they may have to get it as loans from the World Bank/IMF. That can easily land them into a so-called 'debt -trap.' In other words, you are damned if you do, damned if you don't - truly a devil's bargain. Such international loans are a necessary evil for developing countries. Development projects need local expenditures as well as high-tech goods and services from abroad. Continuous borrowing without having paid off existing loans is a sure way to perpetual dependency on international financial institutions, and indirectly on the industrialized nations who finance them and control them.

This state of affairs needs radical reform. We can start by converting the World Bank and IMF into global cooperatives with all nations as share holding members. None would be eligible for loans without having invested at least a minimum amount in shares. The governing structures of these institutions would be changed accordingly. A democratically elected (by the members) management board would have the ultimate authority to approve all development loans and grants. Regional offices of the Bank and the Fund may also be established on similar lines to process local demands with a ceiling. Loan/grant applications above the ceiling would be handled at the main office. But this simple formula would not be easy to implement. It may have to wait until the economic, and along with it, the political power gradually disperses, first from the United States to Europe, and then to the Asian region. This movement seems to have already begun.

Wither Globalization?

For better or for worse, globalization is here to stay. There are no strictly national economies any more. But the playing field remains highly uneven. This inequality serves the parochial interests of elite nations through new export markets, cheaper offshore production, and political influence. Despite their handicaps, the less developed countries, if they learn to play the game well, can use globalization as a vehicle for modernization, national development, and entry into world markets.

At the same time, it would make a great deal of sense for the advanced industrial societies to help build a more balanced, and consequently, a peaceful world by promoting the less developed countries' capacity to benefit from globalization. Some movement toward that goal took place in the decades of the 1980s and the 1990s. The North American Free Trade Agreement (NAFTA) promised to help correct the economic imbalance between Mexico and its North American neighbors. Under pressure from the Clinton Administration, the IMF wrote off billions of dollars owed by Mexico as loans and interests. China became a full member of the World Trade Organization. The U.S. imposed embargo on India and Pakistan following nuclear detonations was relaxed to the point of becoming ineffective or nonexistent. Products manufactured in less developed countries gained access into American and European markets and generated employment opportunities for local workforce.

The results of these measures are mixed at best for all sides concerned. China has gained enormous advantage in terms of skills acquisition and export of low-tech products 'Made in China' in exchange for high-tech investments from the United States, Japan, and the European Union. But offshore manufacturing and imports of textiles, furniture, shoes, hand tools, Christmas ornaments, toys, and other consumer goods from China, Mexico, and other industrializing countries have adversely affected these industries in America. There have been shutdowns, buyouts, bankruptcies, layoffs, labor unrest, and backlash. Even the service industries - software development and customer services for major information technology (IT) firms - are now being shipped overseas, mostly to India. NAFTA did not turn the tide of illegal immigration from Mexico into the United States. These unintended consequences of free trade for some of its strongest proponents must be built into the boon-bane equation of globalization for a correct assessment of its worldwide implications. Trade and technology transfer agreements may, therefore, have to be renegotiated between individual nations on a case by case basis.

Furthermore, informed by the successes and failures of NAFTA and the European Union, other regional economic zones are likely to emerge in the near future. The ASEAN (Association of Southeast Asian Nations) is already a viable entity although it needs a good more structure, integration, muscle, and common purpose. The most promising economic zones of the future reside in the Middle East and the African continent. National leaders there need to learn from the experience of existing regional alliances and get the ball rolling for their own regional development by sharing resources. The first step in Africa, for example, should be to establish continental transport, communication, and investment networks. This could pave the way for much needed transformation of resource rich but downtrodden national economies and societies.

A new dimension - international terrorism, has now been added to the future of globalization. The most serious effects of the 9/11/01 terrorists attacks on America were felt by the airline industry, the tourist trade, and seasonal and long-term global movement of students and qualified workers. World travel was immediately cut in half. The American Patriot Act allowed the Department of Justice to enforce harsh security checks on all foreigners entering or residing in the United States, particularly those with any connection with Islamic countries. Civil liberties in America suffered the most serious setback since the McCarthy era. Foreign student enrollment tumbled in many American and European universities depriving them significant tuition monies. Science and engineering departments lost a major source of graduate research and teaching assistants, a loss that has not yet been fully recovered, at least in the United States.

The business downturn, particularly in the IT industry, which had started even before the 9/11/01 attacks, suffered further setbacks. America was no longer invincible. It invaded Afghanistan and subsequently, Iraq, ostensibly to fight terrorism. But other local and geopolitical considerations were also at work. Islam and Christianity were seen by many to be at odds. Europe and America drifted apart and not just in terms of French fries, cheese, and wine. The specter of an "axis of evil" was created. The world lost its innocence as never before since the Nazi carnage. America lost its credibility. The only superpower seems rudderless today, unable to help regain national and international economic and political equilibrium. These developments do not augur well for globalization.

The greatest casualty of these developments is the promise of globalization to bring about a semblance of social justice in a world of highly unequal nations and groups. Despite the post- World War II redistribution of global technoeconomic resources, more than half of the world's population still lives in acute poverty and deprivation. Some may argue that alleviating suffering or instituting social justice were never, or can never be, the avowed purposes of globalization any more than these can or should be the avowed purposes of national economies and societies. But then what are the social and economic systems for if not for serving human needs, whether at the national or global level?

The contemporary world system consists of several interconnected and interdependent subsystems, each with its own cross-national institutions, networks, and resources. Some are more interconnected and interdependent than others are . Some exercise more global power and leverage than others do. Each of them can play a significant role in serving universal human needs regardless of any other considerations. For example, nationally appropriated minimum wages could be tied to all loans and development programs supported by the World Bank and its sister institutions. Nascent and traditional national industries should be protected by WTO regulations instead of being gobbled up by multinational corporations in the name of free trade. A tragic consequence of the global push toward privatization is continuation of hunger and escalation of epidemics like AIDS. Despite the fact that food is plentiful and treatments are available, neither reaches the needy. The supply and distribution of both are governed by market mechanisms where profit and greed are more important than human needs. Of course, the producer and manufacturer have to get a decent return on investment to stay in business. But what is a decent return on investment and where must it come from when the needs of the poorest of the poor are to be met? Obviously it cannot come from them. International agencies like the UN's Food and Agricultural Organization and the WHO can play a key role in mobilizing local and global resources to procure food and medicine and see to it that they reach those who need them most.

Measures like these are easier suggested than implemented even locally let alone globally. One great problem is an endemic lack of humanistic global consciousness. Corporations and governments use globalization to promote economic and political self-interests regardless of their consequences for others. In this game, the weak often lose out to the strong. Even when the strong show interest in the real problems of the weak, it is usually with ulterior motives. Such motives cannot be served by investing national resources in the coffers of international agencies to serve global human needs.

It is, therefore, imperative that the geopolitical goals of great powers change before large investment toward the welfare of humanity at large could be made. For example, would it not make more sense to use the vast resources of Europe and the United States to initiate worldwide movements to reduce poverty, hunger, disease, and ignorance instead of ramming democracy down the throats of the hungry through war and violence? People cannot eat democracy. But if they are educated, healthy, and well fed, they might decide to create homegrown democratic institutions by themselves.

For globalization to serve human needs rather then the greed of the strong at the expense of the weak, I recommend spreading global consciousness through mass education and popular culture. The primary feature of global consciousness is to reduce perceived social distance among nations and peoples. This involves an understanding that we are all humans sharing a common destiny on a planet with finite resources of air, water, space, and whatever else nature provides for human survival. Our common needs, joys, and sorrows bind us together as the human family. The joint efforts of this family over the millennia have contributed to a cultural base that helps us interact with nature in a meaningful way to make our survival as a species possible. Some have contributed more than others have to this common heritage. Some have benefited from it more than others have. But it has been a joint enterprise nonetheless. Our common effort as civilized people at this evolutionary juncture should be to equalize this equation so that all could contribute to this cultural base and benefit from it to the maximum degree possible. Or else, we may destroy our planet and destroy ourselves. That is the essence of global consciousness, to give globalization a human face. And that is what is required for globalization to become a boon to humanity.


Dr Aqueil Ahmad is a sociology professor at the University of North Carolina - Greensboro and can be reached at: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it