08 August 2007

1857) Globalization: An Economic Orientation - What Is The Argument Against Globalization?

  • Globalization: An Economic Orientation

  • What Is The Argument Against Globalization?

  • DOGU ERGIL . . d.ergil@todayszaman.com


    Globalization: An Economic Orientation

    Globalization is one of the most commonly referred to concepts of our day. This is inevitable because it alludes to a growing economic interdependence of countries through an increasing volume and variety of interaction in flow of goods, services, capital and diffusion of technology. Put in other words, globalization is a state of the world involving networks of interdependence with multiple economic, legal, financial, political, security, environmental, social, cultural and technological linkages among individuals, markets and nations (nation states).

    William Greider, author of “One World Ready or Not,” has a more eloquent description of the phenomenon. To him globalization is like a “wondrous new machine that reaps as it destroys. … Like the machines of modern agriculture, but vastly more complicated and powerful ... running over open terrain and ignoring familiar boundaries. … As it goes, the machine throws off enormous mows of wealth and bounty while it leaves behind great furrows of wreckage ... but no one is at the wheel. …The machine has no wheel or internal governor to control the speed and direction. It is sustained by its own forward motion, guided mainly by its own appetite. The machine is modern capitalism driven by the imperatives of global industrial revolution, creating the drama of a free-running economic system that is reordering the world.”

    In theory globalization provides large gains that can be divided among all participants in the globalizing economy. This may be in the form of capital flows to those who invest in high-risk areas or handsome returns as goods and services that are produced by those who have comparative advantage. These are all profit-maximizing processes. They seek efficiency in production and advances in information technology and computerization that not only decrease cost but also enhance global communications. Faster, easier and cheaper communications or interaction between investors, entrepreneurs, producers and consumers facilitate the reorganization of production on a multinational or global scale that never before seen. These are all good for those who give their money and entrepreneurial capacities, and bear the burden of uncertainties and the possibility of failure due to extra-economic factors. But what about the workers and consumers, and the political entities whose duty it is to see that they are not exploited and that their needs for health, education, retirement and other social (security) benefits are catered for?

    The problem lies at this conjuncture because national boundaries disappear and the benevolent/protective hand of the nation state has been largely rendered ineffective in the protection of the working people. The end result is the growing gap between higher and lower income groups (”income gap”). The “gap” is attributed to the new rules of globalization that are believed to have created inequality. This simply means that, contrary to its claim, globalization has failed to provide increased incomes for anyone other than the elite.

    It is argued that those who exalt globalization ignore income distribution and just look at income per capita. Yet the purpose of globalization has never been to create a boon for low-wage workers -- or workers generally. The purpose of globalization is, first and foremost, about profit. And for that reason the driving force behind trade is the search for the lowest possible wage.

    What is the solution then? Is pulling out of the global economy a panacea? Evidence suggests that the poorest countries of the world are also those with the least involvement in the global economy. Adversely those countries of, let us say, east and southeast Asia have rapidly improving living standards boosted by considerable participation in the global economy. Multicultural surveys of satisfaction indicate that increasing average income levels increase satisfaction in poorer countries, more so than richer countries that have been saturated with material satisfaction. The same may be said of countries that are fairly advanced in their development efforts. For example, Turkey, Mexico, South Korea, Taiwan and Mexico, which are most connected to the global economy, not only grow rather fast but also enjoy improvements in the standards of their social and political lives. Yet globalization has to be managed for its fruits to be shared relatively equally and to make sure that its benefits have a human face rather than sustainability of its ever-growing machinery that has a logic of its own: profit maximization. First of all globalization must have a heart, not just a brain and pure muscle. It has to develop mechanisms not only to satisfy the producers/workers materially, but has to enrich their lives in the social and cultural realms that make them more a part of the human family. Some social scientists call this involvement/participation “networking” and some call it “re-humanization of social relations.” If one aspect of this process lies in the work place, the other lies in community building in the wider sense. Thus disruption of traditional life experiences is ameliorated by creation of new ones consonant with new needs.

    The transition or transformation is costly and painful, but failing to make the transition to modernized means of production and social interaction (involving change of attitudes and behavioral patterns) means remaining rural, poor and traditional. In other words, these are the conditions to miss the process of globalization and fall out of the evolution of history in the making.
    05.08.2007


    What Is The Argument Against Globalization?

    The growing connections between the people of a globalizing world, and notably that of national elites, are likely to be an effective deterrent to war. Is it a coincidence that the horrors of ethnically based conflicts have been witnessed more often in those countries that are least integrated into the global economy?

    What is the argument against globalization?

    The philosophical debate about the relative merits of central political control of the market versus market forces in the allocation of society's resources is an old one, and one that will probably never be finally resolved. The new primacy of "market capitalism" as the economic model and the technological ease of sharing the information needed to operate global markets are rapidly changing many people's lives.

    Great fortunes have been amassed as world stock markets boom in expectation of new opportunities and falling production costs and as a result many parts of the world have experienced rapid economic growth and the consequent improvements in living standards. Growth has not, however, been uniform: Russia, Brazil and the Southeast Asian states experienced economic contractions in the late 1990s along with reversals in international capital flows and the resulting steep declines in currency values. Some observers think that the benefits of globalization accrue mainly to investors, multinationals and the elites in developing countries, while the working classes suffer relative impoverishment.

    Further, they feel that the massive inflows of foreign investment in developing countries cannot be effectively absorbed, especially in regard to environmental protection and workers' rights. This is because developing countries standards and enforcement mechanisms are not as well established.

    The open-door aspects of global production and marketing have tended to "homogenize" economic and even cultural lives around the world as dominant entertainment and media; consumer products; and, commercial practices fall into place. Additionally, the consumer goods produced by a globalized economy are not necessarily those that the world's poor are most in need of.

    For these reasons, and others, the opposition to globalization has grown amongst a diverse, but surprisingly cohesive, group of nongovernmental organizations and other interest groups. The primary targets of the anti-globalization movement have been the United States, the World Trade Organization (WTO), the International Monetary Fund (IMF) and the World Bank. These organizations are seen as the enforcers of the globalization and the rights of multinationals to the detriment of ordinary people. This loosely coordinated group of protesters has taken on a high profile by disrupting various WTO and IMF/World Bank meetings over the years. Ironically, the same information technology that facilitates global commerce makes it easy for the forces against globalization to mobilize. Information technology has the ability to amplify both individual and NGO voices making the case for limits on global changes.

    In "The Lexus and the Olive Tree," Thomas Friedman suggests that, in looking at countries in a global context today, a "six dimensional" framework is needed. To the traditional economic, political and national security analyses of international relationships, we must add technology, the environment and culture as critical dimensions in which globalization is affecting nations. Interestingly, these dimensions can be looked at in the light of the eight core principles espoused by anti-globalization forces ("Beyond the WTO: Alternatives to Economic Globalization," International Forum on Globalization, Nov. '99):

    Popular sovereignty over resource allocation decisions through political institutions rather than the consumer sovereignty of the market (although globalization opponents normally express consumer sovereignty as "corporate control" as they see consumers as unable to resist the multinational's efforts to introduce and sell their products in world markets -- the French reportedly loathe McDonald's but many still eat there).

    Localization vs. globalization: Production for sale to local, not global, markets and keeping political decisions at as local a level as possible.

    Environmental sustainability: Global market capitalism is seen as intrinsically harmful to the environment as it is characterized by ever-expanding consumption of unneeded homogeneous products; over-exploitation of natural resources; and, waste-disposal problems. Accordingly, local political institutions need to have primacy over environmental policy.

    Economic human rights: Workers are seen as having their traditional lives irreversibly disrupted by globalization and/or being treated less favorably than the same multinationals would treat those in developed countries. In this instance, it is often recognized that local political sovereignty may not be enough; global rules are needed to ensure that multinationals can't exploit workers.

    Certain goods should not be traded as economic commodities or be subject to trade agreements: Food; water; seeds; the genetic basics of life (and some culturally sensitive products, e.g., entertainment) as well as toxic waste; arms; and drugs, should not be classified as "economic goods." The knowledge embodied in genetic structures should not enjoy intellectual protection, but should be "collective property." Local authority over food and agriculture should not be restricted by international trade agreements.

    Equity: Globalization should be restrained as a force that tends to widen the gap in living standards both between and within states.

    Cultural, biological, economic and social diversity: Local politicians should be able to prevent economic activities which tend to homogenize life in the various regions of the world.

    The main theme running through the core principles of anti-globalization is local political control versus market sovereignty. This is the subject of Yergin and Stanislaw's "The Commanding Heights," which traces the ascendancy of the centralized control of economies in the 1930s and 1940s. It also looks at the more recent ascendancy of market forces in determining the allocation of resources, which we now know as the phenomenon of globalization. As Yergin and Stanislaw point out, whether the capitalist market model maintains its current ascendant position depends on whether it in fact delivers enough benefits to enough people and at acceptable cost. At this time, anti-globalization activism is a well developed world issue and the peoples of the developing world will probably not support any policies that limit the access their countries have to Western products, entertainment, capital and jobs in multinational factories. For example, in Robert Wright's "Will Globalization Make You Happy" (Foreign Policy, September 2000), the author argues that:

    The economic efficiency effects of globalization are in fact raising living standards worldwide, even if in relative terms, the gap between rich and poor nations is growing.

    08.08.2007


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