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Globalization

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Definitions

"The term "globalization" has been appropriated by the powerful to refer to a specific form of international economic integration, one based on investor rights, with the interests of people incidental. That is why the business press, in its more honest moments, refers to the "free trade agreements" as "free investment agreements" (Wall St. Journal). Accordingly, advocates of other forms of globalization are described as "anti-globalization"; and some, unfortunately, even accept this term, though it is a term of propaganda that should be dismissed with ridicule. No sane person is opposed to globalization, that is, international integration. Surely not the left and the workers movements, which were founded on the principle of international solidarity - that is, globalization in a form that attends to the rights of people, not private power systems."[1] - Noam Chomsky

"Let us first make clear that the word "globalisation" on its own is virtually meaningless. Like its precursor, the word "development", it needs an adjective to escape from a convenient conceptual fuzziness. The adjective used here will be "neo-liberal". This means that "globalisation" is another name for late-twentieth/twenty-first century capitalism, qualitatively different from previous incarnations. When used in connexion with developing countries, globalisation is also synonymous with the various elements of the so-called Washington Consensus [WC] as first defined by John Williamson, the inventor of the phrase; but also includes other policies that have been grafted on to the WC. Williamson first coined the now-famous term in 1990, but the thing itself had already been in existence for a good ten years. The WC came to the fore with the earliest manifestations of the debt crisis, usually dated from the first major quasi-default of Mexico in 1982."[2] - Susan George

The main points of neo-liberal globalisation include: The rule of the market (liberating "free" enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes); Cutting public expenditure for social services (and reducing the safety net for the poor); De-regulation (reducing government regulation of everything that could diminish profits); Privatization (selling state-owned enterprises, goods and services to private investors); Eliminating the concept of ‘the public good' or ‘community' and replacing it with ‘individual responsibility.' (pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves -- then blaming them, if they fail, as ‘lazy').[3]

"To put it simply, I watch like others for signs that the leadership of civilization by economics - the basic premise of Globalization - is working in some satisfactory way.  After all, leading society through the prism of economics has been an experiment never before tried.  And the assertion, that only a particular school of economics could provide leadership, has made the experiment ever more uncertain."[4] - John Ralston Paul

"In 1945 or 1950, if you had seriously proposed any of the ideas and policies in today's standard neo-liberal toolkit, you would have been laughed off the stage or sent off to the insane asylum. At least in the Western countries, at that time, everyone was a Keynesian, a social democrat or a social-Christian democrat or some shade of Marxist. The idea that the market should be allowed to make major social and political decisions; the idea that the State should voluntarily reduce its role in the economy, or that corporations should be given total freedom, that trade unions should be curbed and citizens given much less rather than more social protection--such ideas were utterly foreign to the spirit of the time. Even if someone actually agreed with these ideas, he or she would have hesitated to take such a position in public and would have had a hard time finding an audience."[5] - Susan George

"Openness (ie open markets) has become the new religion of much of the economics profession.  Its strongest adherents are to be found in the IMF, the World Bank, the WTO, and Northern governments.  Admittedly, the latter constituency applies the principles of the faith on a selective basis: import liberalisation in the developing world is preferred to liberalisation at home."[6]

"It is almost an article of faith among those who attend the World Economic Forum in Davos, Switzerland that ‘(the) problem today is not that there is too much globalisation, but that there is far too little'."[7]

"Neoliberalism tends on the whole to favour severing the economy from social realities and thereby constructing, in reality, an economic system conforming to its description in pure theory, that is a sort of logical machine that presents itself as a chain of constraints regulating economic agents."[8]

"The globalization of recent decades was never a democratic choice by the peoples of the world--the process has been business driven, by business strategies and tactics, for business ends. Governments have helped, by incremental policy actions, and by larger actions that were often taken in secret, without national debate and discussion of where the entire process was taking the community."[9]

Double-standards and distorted history

"There is a paradox at the heart of international trade.  In the globalised world of the early twenty-first century, trade is one of the most powerful forces linking our lives.  It is also a source of unprecedented wealth.  Yet millions of the world's poorest people are being left behind.  Increased prosperity has gone hand in hand with mass poverty and the widening of already obscene inequalities between rich and poor."[10]

"The full potential of trade to reduce poverty cannot be realised unless poor countries have access to markets in rich countries.  Unfortunately, Northern governments reserve their most restrictive trade barriers for the world's poorest people.  Competition in the international trading system can be likened to a hurdle race with a difference: the weakest athletes face the highest hurdles. When desperately poor smallholder farmers or women garment workers enter world markets, they face import barriers four times as high as those faced by producers in rich countries.  Trade restrictions in rich countries cost developing countries around $100bn a year - twice as much as they receive in aid."[11]

"(T)he truth of post-1945 globalization is almost the polar opposite of the official history.  During the period of controlled globalization underpinned by nationalistic policies between the 1950s and the 1970s, the world economy, especially in the developing world, was more stable and had more equitable income distribution than in the past two and a half decades of rapid and uncontrolled neo-liberal globalization.  Nevertheless, this period is portrayed in the official history as one of unmitigated disaster of nationalistic policies, especially in developing countries.  This distortion of the historical record is peddled in order to mask the failure of neo-liberal policies."[12]

In 2002, India paid more tariffs to the US government than Britain did, despite the fact that the size of its economy was less than one third that of the UK.[13]

While rich countries may preach the free trade gospel, they remain staunch protectionists. They cut their tariffs by less than poor countries during the Uruguay round of trade negotiations, which ended in 1993. As a result, tariffs facing developing countries are about a third higher than those facing industrialised countries.[14]

"So we have an apparent ‘paradox' here - at least if you are a neo-liberal economist.  All countries, but especially developing countries, grew much faster when they used ‘bad' policies during the 1960-1980 period than when they used ‘good' ones during the following two decades.  The obvious answer to this paradox is to accept that the supposedly ‘good' policies are in fact not beneficial for the developing countries, but rather that the ‘bad' policies are actually likely to do them good if effectively implemented."[15]

Ideology

"This idea of our intellectual and ideological failure is the dominant narrative of our time. It's embedded in all the catchphrases that we've been referring to. "There is no alternative," said Thatcher. "History has ended," said Fukuyama. The Washington Consensus: the thinking has already been done, the consensus is there. Now, the premise of all these proclamations was that capitalism, extreme capitalism, was conquering every corner of the globe because all other ideas had proven themselves disastrous. The only thing worse than capitalism, we were told, was the alternative."[16] - Naomi Klein

"Globalization is both an active process of corporate expansion across borders and a structure of cross-border facilities and economic linkages that has been steadily growing and changing as the process gathers steam. Like its conceptual partner "free trade," globalization is also an ideology, whose function is to reduce any resistance to the process by making it seem both highly beneficent and unstoppable. And as with free trade, while globalization may sometimes yield economic benefits, both the process and economic-political regime it is helping bring about threaten progressive ends, and should be recognized as such and fought at every level."[17] - Edward S. Herman

"Those who preached Globalization couldn't tell the difference between ethics and morality. Ethics is the measurement of the public good. Morality is the weapon of religious and social righteousness. Political and economic ideologies often decline into religious-style morality toward the end. But Globalization had shoved ethics to the side from the very beginning and insisted upon a curious sort of moral righteousness that included maximum trade, unrestrained self-interest, and governments alone respecting their debts. These notions were curiously paired with something often called family values, as well as an Old Testament view of good and evil. It somehow followed that if countries were in financial trouble, they were moral transgressors. They had to discipline themselves. Wear hair shirts. Embrace denial and fasting. This was the crucifixion theory of economics: you had to be killed economically and socially in order to be reborn clean and healthy. For a quarter century, under the severe hand of the International Monetary Fund, this moralizing and emotionally charged approach has been applied to the developing world with absolutely no success."[18] - John Ralston Paul

"The transient nature of Globalization comes in part from the intellectual innocence or naivety that surrounds it.  What could be more naïve than to believe in one rather abstract approach to human life based on an expectation of economic leadership based upon a single and highly specific theory of economics? And what could be more innocent than to expect the world to sit back and watch that theory make its way uninterrupted for as long as it requires in order to succeed in its own terms? And even more naïve: that everyone would wait expectantly for the trickle-down or discipline or inevitability of this approach to successfully reformulate all the other aspects of our lives."[19] - John Ralston Paul         

Contradicted theory

On the evidence of the World Bank's own figures, the impact of global integration on poverty reduction appears less powerful than often suggested.  Extreme poverty declined only slowly in the 1990s.  The proportion of the world's population living on $1 a day fell from 28 per cent in 1987 to 23 per cent in 1998.  At the start of the twenty-first century, 1.1 billion people are struggling to survive on less than $1 a day, the same figure as in the mid-1980s (World Bank 2001d).  The proportion and number of people living on less than $2 a day, a more relevant threshold for middle-income countries, show similar trends.  In other words, the wealth that flows from liberalised trade is not trickling down to the poorest, contrary to the claims of the enthusiasts of globalisation.[20]

"If the number of people in extreme poverty is not falling and if global inequality is widening, we cannot conclude that globalization in the context of the dollar-Wall Street regime is moving the world in the right direction, with Africa's poverty as a special case in need of international attention. The balance of probability is that--like global warming--the world is moving in the wrong direction."[21] - Robert Hunter Wade      

"Crime and unhappiness stalk unequal societies. In the UK the bottom 50% of the population now owns only 1% of the wealth: in 1976 they owned 12%. Our economic system's incentive structure, instead of "trickle-down", is causing a "flood-up" of resources from the poor to the rich. Inequality leads to instability, the last thing the country or world needs right now."[22] - Andrew Simms, New Economics Foundation

"Trickle-down theory also predicts a positive correlation between inequality and economic growth, the idea being that income disparities strengthen motivation to get ahead. Yet when researchers track the data within individual countries over time, they find a negative correlation. In the decades immediately after World War II, for example, income inequality was low by historical standards, yet growth rates in most industrial countries were extremely high. In contrast, growth rates have been only about half as large in the years since 1973, a period in which inequality has been steadily rising."[23] - Robert H. Frank      

Intergovernmental policy-making in today's global economy is in the hands of the major industrial powers and the international institutions they control-the World Bank, the International Monetary Fund, the Bank for International Settlements. Their rule-making may create a secure environment for open markets, but there are no countervailing rules to protect human rights and promote human development. And developing countries, with about 80% of the world's people but less than a fifth of global GDP, have little influence.[24]

"Globalization has failed to provide capital an escape route from its accumulating crises. With its failure, we are now seeing capitalist elites giving up on it and resorting to nationalist strategies of protection and state-backed competition for global markets and global resources, with the US capitalist class leading the way. This is the context that Jeffrey Sachs and other social democrats fail to appreciate when they advance their utopia: an "enlightened global capitalism" that would both promote and "humanize" globalization."[25] - Walden Bello

Costs of globalization

"The world, it would appear, has entered a new era of laissez-faire globalization, with everything that this implies - in particular, mercantile booms and busts that ratchet up inequality and distribute new wealth increasingly unevenly. In the past, this world system was responsible for creating the famous slum areas of major cities in the developed world; and it will, no doubt, do the same again in the developing world."[26] - The Challenge of Slums    

Today's flow of culture and cultural products is heavily weighted in one direction-from rich countries to poor. The rise of culture as an economic good has added to the identification of culture with commodities that can be sold and traded-crafts, tourism, music, books, films. Although the spread of ideas and images enriches the world, there is a risk of reducing cultural concerns to protecting what can be bought and sold, neglecting community, custom and tradition.[27]          

In both poor countries and rich, dislocations from economic and corporate restructuring and dismantled social protection have meant heavy job losses and worsening employment conditions. Jobs and incomes have become more precarious. The pressures of global competition have led countries and employers to adopt more flexible labour policies, and work arrangements with no long-term commitment between employer and employee are on the rise.[28]              

Globalization opens many opportunities for crime, and crime is rapidly becoming global, outpacing international cooperation to fight it. There are now 200 million drug users, threatening neighbourhoods around the world.[29]

Another thriving industry is the illegal trafficking in women and girls for sexual exploitation, a form of slavery and an inconceivable violation of human rights. In Western Europe alone, about 500,000 women and girls from developing and transition economies are entrapped in this slave trade each year.[30]

Civil conflicts have been flaring for decades. What's new today is the complex interaction of interests, the blurred line between conflict and business. Defence is becoming privatized, and international private military firms are proliferating. In some countries mercenaries often sell their services for mining and energy concessions and set up affiliates in air transport, road building and trading. And more and more, the clients of mercenaries are multinational corporations seeking to protect their mining interests in conflict-prone countries.[31]

Liberalization of markets

Trade liberalisation has cost sub-Saharan Africa US$272 billion over the past 20 years. Had they not been forced to liberalise as the price of aid, loans and debt relief, sub-Saharan African countries would have had enough extra income to wipe out their debts and have sufficient left over to pay for every child to be vaccinated and go to school.  Two decades of liberalisation has cost sub-Saharan Africa roughly what it has received in aid.[32]

In the year 2000 alone, sub-Saharan Africa lost nearly US$45 dollars per person thanks to trade liberalisation... This looks like a bad deal: in 2000, aid per person in sub-Saharan Africa was less than half the loss from liberalisation - only US$20. Africa is losing much more than it gains if aid comes with policy strings attached.[33]

(T)he top fifth of the world's people in the richest countries enjoy 82% of the expanding export trade and 68% of foreign direct investment-the bottom fifth, barely more than 1%.[34]

Economic growth and progress measurement

"We have, in recent years, become fixated on economic growth. This is partly just one component of a broader fixation on the macroeconomy. It is partly a result of the tyranny of numbers - a growing obsession with quantifiable indicators of policy performance and a failure to make what is important measurable rather than making what is measurable important."[35] - New Economics Foundation 

"Corporate globalists generally measure progress by indicators of their own financial wealth, such as rising stock prices and indicators of the total output of goods and services available to those who have the money to pay.  With (few exceptions), these indicators generally perform well, confirming in the eyes of the corporate globalists their premis that their program is enriching the world.  In contrast, citizen movements measure progress by indicators of the well-being of people and nature, with particular concern for the lives of those most in need.  With the exception of the highly visible pockets of privilege enjoyed by corporate globalists, these indicators show deterioration at a frightening pace, suggesting that in terms of what really matters, the world is rapidly growing poorer."[36] 

"Between 1990 and 2001, for every $100 worth of growth in the world's income per person, just $0.60 found its target and contributed to reducing poverty below the $1-a-day line. To achieve every single $1 of poverty reduction therefore requires $166 of additional global production and consumption, with all its associated environmental impacts. This approach is both economically and ecologically inefficient."[37] 

"(O)f every $100 of growth in income per person in the world as a whole between 1981 and 2001, just $1.30 contributed to reducing poverty as measured by the $1-a-day line, and a further $2.80 to reducing poverty between $1-a-day and $2-a-day lines. The remaining $95.90 went to the rest of the world population above the $2-a-day line."[38]

"(I)n the 1990s it took $166 of global economic growth, with all the associated environmental costs, to achieve just $1 of progress towards the MDG on poverty reduction."[39]

Economic growth, an important input for human development, can translate into human development only if the expansion of private income is equitable and only if growth  generates public provisioning that is invested in human development-in schools and health centres, not arms.           "Human Development Report 1999: Globalization with a Human Face" (United Nations Development Programme (UNDP), New York 1999) p 44.

Proposals for change

"Global economic competition is a game of unequal players. It pits against each other countries that range from, as we development economists like to say, Switzerland to Swaziland.  Consequently, it is only fair that we ‘tilt the playing field' in favour of the weaker countries.  In practice, this means allowing them to protect and subsidize their producers more vigorously and to put stricter regulations on foreign investment." Ha-Joon Chang. Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (Bloomsbury Press, 2008) p 219.

"Those of us who have no appetite for social crisis should be working up alternative theories to neo-liberalism and practical ways to modify the post-Bretton-Woods architecture, so that the working of market forces within a modified framework would produce more equitable results."[40]    

"(M)any problems of human development go beyond what nations can tackle on their own and require more international cooperation."[41]     

"Having spent our adult lives in a competitive, individualist, selfish world, how can we hope to imagine an economy based on sharing? Fortunately, we have no need because the model has been not only developed in theory but operating in practice for more than 150 years: the cooperative model, also known as mutualism."[42]     

"It is a tragic truth that much of the work ahead centers on repairing the enormous damage caused by the Bretton Woods institutions.  Debts must be cancelled, commodity prices stablilized, control established over the goods and money flowing across borders, antitrust measures implemented to break up concentrations of corporate power, corporations with repeat criminal convictions dechartered, national economies rebuilt and redirected with proper regulatory regimes to meet local needs, the environment healed, the power of corporations curbed, financial speculation brought under control, wealth redistributed to create a semblance of equity, and the democratic accountability of governments established."[43] 



[1] Noam Chomsky interviewed by Toni Gabric. The Croatian Feral Tribune (Znet, May 07, 2002)

[2] Susan George. Down the Great Financial Drain: How Debt and the Washington Consensus Destroy Development and Create Poverty (International Celso Furtado Centre Colloquium on "Poverty and Development within the Context of Globalisation", Rio de Janeiro, 25-27 July 2006)

[3] Edited extract from Elizabeth Martinez and Arnoldo Garcia. What is Neoliberalism? A Brief Definition for Activists (National Network for Immigrant and Refugee Rights, www.Corpwatch.org, accessed April 2008)

[4] John Ralston Paul. The Collapse of Globalism and the Reinvention of the World (Atlantic Books, London 2005) p xii.

[5] Susan George. A Short History of Neoliberalism: Twenty Years of Elite Economics and Emerging Opportunities for Structural Change (Transnational Institute, lecture presented at the Conference on Economic Sovereignty in a Globalising World, Bangkok, 24-26 March 1999)

[6] Rigged Rules and Double Standards: Trade, Globalisation, and the Fight Against Poverty (Oxfam, 2002)

[7] Robert Wade. Globalisation: Emancipating or Reinforcing? (Open Democracy, 29th January 07)

[8] Pierre Bourdieu. What is neoliberalism? A programme for destroying collective structures which may impede the pure market logic (Le Monde Diplomatique, December 1998)

[9] Edward S. Herman. The Threat of Globalization (New Politics, vol. 7, no. 2 (new series), whole no. 26, Winter 1999)

[10] Rigged Rules and Double Standards: Trade, Globalisation, and the Fight Against Poverty (Oxfam, 2002)

[11] Ibid.

[12] Ha-Joon Chang. Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism (Bloomsbury Press, 2008) p 31.

[13]Running into the Sand: Why failure at the Cancun trade talks threatens the world's poorest people' (Oxfam briefing paper, August 2003) p 24.

[14] Kevin Watkins. Let's have a bonfire of WTO hypocrisies (The Guardian (debate), 8 November 1999)

[15] Ha-Joon Chang. Kicking Away the Ladder: Development Strategy in Historical Perspective (Anthem Press, 2003)

[16] Naomi Klein. From Think Tanks to Battle Tanks: "The Quest to Impose a Single World Market Has Casualties Now in the Millions" (Democracy Now!, 15 August 2007)

[17] Edward S. Herman. The Threat of Globalization (New Politics, vol. 7, no. 2 (new series), whole no. 26, Winter 1999)

[18] John Ralston Paul. The Collapse of Globalism: and the Rebirth of Nationalism (Harpers Magazine, March 2004)

[19] Ibid, p 31.

[20] Rigged Rules and Double Standards: Trade, Globalisation, and the Fight Against Poverty (Oxfam, 2002)

[21] Robert Hunter Wade. Is Globalization Reducing Poverty and Inequality? (London School of Economics and Political Science, London, January 2004)

[22] Andrew Simms. Now for a maximum wage: A pay ceiling would be good for both business and social cohesion (The Guardian, 6 August 2003)

[23] Robert H. Frank. In the Real World of Work and Wages, Trickle-Down Theories Don't Hold Up (New York Times, 12 April 2007)

[24] "Human Development Report 1999: Globalization with a Human Face" (United Nations Development Programme (UNDP), New York 1999) p 34.

[25] Walden Bello. The Post-Washington Consensus: The Unraveling of a Doctrine of Development (Focus on the Global South, 14 September 2007)

[26] United Nations. The Challenge of Slums: Global Report on Human Settlements 2003 (United Nations Human Settlements Programme - UN Habitat, 2003) p. 52.

[27] "Human Development Report 1999: Globalization with a Human Face" (United Nations Development Programme (UNDP), New York 1999) p 33.

[28] Ibid, p 37.

[29] Ibid, p 41.

[30] Ibid, p 42.

[31] Ibid, p 42.

[32] The economics of failure: The real cost of ‘free' trade (Christian Aid, July 2005)

[33] Ibid.

[34] "Human Development Report 1999: Globalization with a Human Face" (United Nations Development Programme (UNDP), New York 1999) p 31.

[35] David Woodward and Andrew Simms. "Growth isn't working: the unbalanced distribution of costs and benefits from economic growth." (New Economics Foundation, 23rd January 2006) see Conclusion.

[36] John Cavanagh and Jerry Manders. Alternatives to Economic Globalisation: A Better World is Possible (International Forum on Globalisation, 2004)

[37] David Woodward and Andrew Simms. "Growth isn't working: the unbalanced distribution of costs and benefits from economic growth." (New Economics Foundation, 23rd January 2006)

[38] Ibid.

[39] Ibid.

[40] Robert Hunter Wade. Is Globalization Reducing Poverty and Inequality? (London School of Economics and Political Science, London, January 2004)

[41] "Human Development Report 1999: Globalization with a Human Face" (United Nations Development Programme (UNDP), New York 1999) p 44.

[42] Molly Scott Cato. Market, Schmarket: Building the Post-Capitalist Economy (New Clarion Press, 2006) p 49.

[43] John Cavanagh and Jerry Manders. Alternatives to Economic Globalisation: A Better World is Possible (International Forum on Globalisation, 2004) p 319.