What's wrong about globalisation?


By Doug Henwood

The concept that has now entered daily speech as "globalisation" is used pretty recklessly. It's described as an innovation, when it's not; it's described as a weakening of the state, though it's been led by states and multi-state institutions like the International Monetary Fund (IMF); it's been indicted as the major reason for downward pressure on United States' living standards, even though most of us work in services, which are largely exempt from international competition; and it's been greeted as an evil in itself, as if there were no virtue to cosmopolitanism.

Let me expand a bit on each of my opening claims. First, the novelty of "globalisation". One of my problems with this term is that it often serves as a euphemistical and imprecise substitute for imperialism.

From the first, capitalism has been an international and internationalising system. After the breakup of the Roman Empire, Italian bankers devised complex foreign exchange instruments to evade church prohibitions on interest. Those bankers' cross-border capital flows moved in tandem with trade flows.

And, with 1492 began the slaughter of the First Americans and with it the plunder of the hemisphere. That act of primitive accumulation, along with the enslavement of Africans and the colonisation of Asia, made Europe's takeoff possible.

Not only is the novelty of "globalisation" exaggerated, so is its extent. Capital flows were freer, and foreign holdings by British investors far larger, 100 years ago than anything we see today. Images of multinational corporations shuttling raw materials and parts around the world, as if the whole globe were an assembly line, are grossly overblown, accounting for only about a tenth of US trade.

Ditto trade penetration in general. Take one measure, exports as a share of GDP. By that measure, Britain was only a bit more globalised in 1992 than it was in 1913, and the US today isn't a match for either.

Japan, widely seen as the trade monster, exported only a little larger share of its national product than did Britain in 1950, a rather provincial year. Mexico was more internationalised in 1913 than it was in 1992. Exports are just one indicator, for sure, but by this measure, the distance between now and 1870 or 1913 isn't as great as it might seem.

Indeed, it's probably more fruitful to think of the present period as a return to a pre-World War I style of capitalism, rather than something unprecedented, and to rethink the Golden Age of the 1950s and 1960s not as some sort of norm from which the last 25 years have been a perverse exception, but as the exception itself.

The state

Another thing that must be rethought is the role of the state, which we constantly hear is withering away under a new regime of stateless multinationals. While there's no question that the state's positive role has been either sharply reduced or under sharp attack, its negative/disciplinary role has grown.

In the US, we've experienced a mad, cruel incarceration boom, accompanied by increased snooping and behavioural prescriptions. Elsewhere, the neo-liberal project has been imposed by states, whether we're talking about the Maastricht process of European union or structural adjustment in the so-called Third World — states acting in the interests of private capital, of course, but that's the way states have been acting for centuries.

And, over the last 20 years, we've seen an almost entirely new role for the state, preventing financial accidents from turning into massive deflationary collapses. The US's Savings & Loans bailout of the 1980s, far from being unique, was replicated in scores of countries around the world, most extravagantly in Mexico right now.

So what about pressure on living standards? We First Worlders have to be very careful here, since the initial European rise to wealth depended largely on the colonies, and while we can argue about the exact contribution of neo-colonialism to the maintenance of First World privilege, it's certainly greater than zero.

It was embarrassing to hear [US consumer rights campaigner] Ralph Nader and the Fair Trade Campaign describe the North American Free Trade Agreement and the World Trade Organisation (WTO) as threats to US sovereignty, echoing the rhetoric of [far-right Republican] Pat Buchanan; Washington has been abusing Mexican sovereignty for more than a century, which is why it's a good idea to stop saying globalisation when you mean imperialism.

I'm not going to deny that plant relocations to Mexico and outsourcing contracts in China have put a sharp squeeze on US manufacturing employment and earnings, and the threat of those things has greatly reduced the bargaining power of US workers. But how much has this contributed to downward mobility and increasing stress?

The econometricians say that trade explains, at most, about 20-25% of the decline in the real hourly wage since 1973. That leaves 75-80% to be explained, and the main culprits there are mainly of domestic origin.

I'd say an important reason that trade doesn't explain more of our unhappy economic history since the early 1970s is that 80% of us work in services (and a quarter of those in government), which is largely exempt from international competition.

What did "globalisation" have to do with Teddy Kennedy and Jimmy Carter pushing transport deregulation, or with Ronald Reagan's firing the air traffic controllers, or Bill Clinton's signing the end-of-welfare bill, or [New York Mayor] Rudy Giuliani being such an arsehole? What does "globalisation" have to do with cutbacks at universities or the war on affirmative action?

While lots of people blame the corporate downsizings of the 1990s on the twin demons, globalisation and technology, the more powerful influences were Wall Street portfolio managers, who were demanding higher profits.


And when did internationalisation become something feared and hated in itself? I got a piece of e-mail a few months ago from a feminist group claiming that globalisation was threatening to undermine commitments made at the Beijing women's conference. But what was the Beijing women's conference but a kind of globalisation? A couple of women who attended that conference told me that contacts made there by some Latin American women's groups allowed them to organise for the first time against domestic violence. Isn't that both global and good?

Now there's no reason, as John Maynard Keynes said, why a British widow should own shares in an Argentine railway. Nor is there any reason why Bankers Trust should run Chilean pension funds. Nor is there any good reason why GM should be taking advantage of Korea's crisis to buy up that country's automobile industry.

The case is a bit murkier when it comes to relative peers — what precisely is so horrible about Toyota running plants in Tennessee, aside from the ecological horrors of the automobile and the social horrors of capitalist production relations?

Surely there are things being traded now that wouldn't be traded in a more rational, humane world. The only social gain in Nike's producing shoes in Indonesia is claimed by the shareholders of Nike. Indonesian resources and labour would be much better devoted to feeding, clothing, schooling and housing Indonesians than making $150 running shoes while being paid pennies an hour.

It's a tremendous waste of natural resources to ship Air Jordans halfway around the world. Export-oriented development has offered very little in the way of real economic and social development for the poor countries which have been offered no other outlet.

But does that mean trade itself is bad? Does that mean the movement of people across borders is bad? I thought the left opposed xenophobia and embraced intercourse of all kinds among the people of the world.

Why do we find so many people lost in fantasies about self-reliance, pining away for a lost world that never really existed? Why, in other words, do so many people treat globalisation itself as the enemy, rather than capitalist and imperialist exploitation?

We can hardly say "capitalism" anymore, much less think about anything beyond it. Instead, we say "globalisation", and its frequent Doppelganger "technology", and that's bad for both intellectual analysis and transformative politics.

What does this mean for the WTO? Yes, it's an important organisation, both for its secretive, unaccountable power and its value as a symbol of the coercive and centralising powers of capital. But it's one part of a much bigger, much more complicated picture.

I'm trying to be more optimistic these days, so I'll close by saying that it's really cheering to see the global movement, a part of which is explicitly anti-capitalist, developing around the WTO, the G-7 and the IMF. Five or 10 years ago, such a movement barely existed, and now it's developing a worldwide momentum.

[Slightly abridged from the transcript of a speech to the People's Global Action kickoff gathering in New York on October 28. Doug Henwood is editor of Left Business Observer, 250 W 85 St, New York NY 10024-3217 USA. E-mail: . Web: . His book Wall Street: How It Works and For Whom was published by Verso in 1997. A New Economy? is due from Verso in 2000.]