Many in progressive circles still think that the task at
hand is to ³humanize² globalization. Globalization, however,
is a spent force. Today¹s multiplying economic and political
conflicts resemble, if anything, the period following the
end of what historians refer to as the first era of
globalization, which extended from 1815 to the eruption of
World War I in 1914. The urgent task is not to steer
corporate-driven globalization in a ³social democratic²
direction but to manage its retreat so that it does not
bring about the same chaos and runaway conflicts that marked
its demise in that earlier era.
--------------------------------------------------------
Original source URL:
http://www.fpif.org/fpiftxt/3826
Globalization in Retreat
Walden Bello | December 27, 2006
Editor: John Feffer, IRC
Foreign Policy In Focus
www.fpif.org
When it first became part of the English vocabulary in the early 1990s,
globalization was supposed to be the wave of the future. Fifteen years ago, the
writings of globalist thinkers such as Kenichi Ohmae and Robert Reich celebrated
the advent of the emergence of the so-called borderless world. The process by
which relatively autonomous national economies become functionally integrated
into one global economy was touted as ³irreversible. ² And the people who
opposed globalization were disdainfully dismissed as modern day incarnations of
the Luddites that destroyed machines during the Industrial Revolution.
Fifteen years later, despite runaway shops and outsourcing, what passes for an
international economy remains a collection of national economies. These
economies are interdependent no doubt, but domestic factors still largely
determine their dynamics.
Globalization, in fact, has reached its high water mark and is receding.
Bright Predictions, Dismal Outcomes
During globalization¹s heyday, we were told that state policies no longer
mattered and that corporations would soon dwarf states. In fact, states still do
matter. The European Union, the U.S. government, and the Chinese state are
stronger economic actors today than they were a decade ago. In China, for
instance, transnational corporations (TNCs) march to the tune of the state
rather than the other way around.
Moreover, state policies that interfere with the market in order to build up
industrial structures or protect employment still make a difference. Indeed,
over the last ten years, interventionist government policies have spelled the
difference between development and underdevelopment, prosperity and poverty.
Malaysia¹s imposition of capital controls during the Asian financial crisis in
1997-98 prevented it from unraveling like Thailand or Indonesia. Strict capital
controls also insulated China from the economic collapse engulfing its
neighbors.
Fifteen years ago, we were told to expect the emergence of a transnational
capitalist elite that would manage the world economy. Indeed, globalization
became the ³grand strategy² of the Clinton administration, which envisioned the
U.S. elite being the primus inter pares -- first among equals -- of a global
coalition leading the way to the new, benign world order. Today, this project
lies in shambles. During the reign of George W. Bush, the nationalist faction
has overwhelmed the transnational faction of the economic elite. These
nationalism-inflected states are now competing sharply with one another, seeking
to beggar one another¹s economies.
A decade ago, the World Trade Organization (WTO) was born, joining the World
Bank and the International Monetary Fund (IMF) as the pillars of the system of
international economic governance in the era of globalization. With a
triumphalist air, officials of the three organizations meeting in Singapore
during the first ministerial gathering of the WTO in December 1996 saw the
remaining task of ³global governance² as the achievement of ³coherence,² that
is, the coordination of the neoliberal policies of the three institutions in
order to ensure the smooth, technocratic integration of the global economy.
But now Sebastian Mallaby, the influential pro-globalization commentator of the
Washington Post, complains that ³trade liberalization has stalled, aid is less
coherent than it should be, and the next financial conflagration will be managed
by an injured fireman.² In fact, the situation is worse than he describes. The
IMF is practically defunct. Knowing how the Fund precipitated and worsened the
Asian financial crisis, more and more of the advanced developing countries are
refusing to borrow from it or are paying ahead of schedule, with some declaring
their intention never to borrow again. These include Thailand, Indonesia,
Brazil, and Argentina. Since the Fund¹s budget greatly depends on debt
repayments from these big borrowers, this boycott is translating into what one
expert describes as ³a huge squeeze on the budget of the organization.²
The World Bank may seem to be in better health than the Fund. But having been
central to the debacle of structural adjustment policies that left most
developing and transitional economies that implemented them in greater poverty,
with greater inequality, and in a state of stagnation, the Bank is also
suffering a crisis of legitimacy.
But the crisis of multilateralism is perhaps most acute at the WTO. Last July,
the Doha Round of global negotiations for more trade liberalization unraveled
abruptly when talks among the so-called Group of Six broke down in acrimony over
the U.S. refusal to budge on its enormous subsidies for agriculture. The
pro-free trade American economist Fred Bergsten once compared trade
liberalization and the WTO to a bicycle: they collapse when they are not moving
forward. The collapse of an organization that one of its director generals once
described as the ³jewel in the crown of multilateralism² may be nearer than it
seems.
Why Globalization Stalled
Why did globalization run aground? First of all, the case for globalization was
oversold. The bulk of the production and sales of most TNCs continues to take
place within the country or region of origin. There are only a handful of truly
global corporations whose production and sales are dispersed relatively equally
across regions.
Second, rather than forge a common, cooperative response to the global crises of
overproduction, stagnation, and environmental ruin, national capitalist elites
have competed with each other to shift the burden of adjustment. The Bush
administration, for instance, has pushed a weak-dollar policy to promote U.S.
economic recovery and growth at the expense of Europe and Japan. It has also
refused to sign the Kyoto Protocol in order to push Europe and Japan to absorb
most of the costs of global environmental adjustment and thus make U.S. industry
comparatively more competitive. While cooperation may be the rational strategic
choice from the point of view of the global capitalist system, national
capitalist interests are mainly concerned with not losing out to their rivals in
the short term.
A third factor has been the corrosive effect of the double standards brazenly
displayed by the hegemonic power, the United States. While the Clinton
administration did try to move the United States toward free trade, the Bush
administration has hypocritically preached free trade while practicing
protectionism. Indeed, the trade policy of the Bush administration seems to be
free trade for the rest of the world and protectionism for the United States.
Fourth, there has been too much dissonance between the promise of globalization
and free trade and the actual results of neoliberal policies, which have been
more poverty, inequality, and stagnation. One of the very few places where
poverty diminished over the last 15 years is China. But interventionist state
policies that managed market forces, not neoliberal prescriptions, were
responsible for lifting 120 million Chinese out of poverty. Moreover, the
advocates of eliminating capital controls have had to face the actual collapse
of the economies that took this policy to heart. The globalization of finance
proceeded much faster than the globalization of production. But it proved to be
the cutting edge not of prosperity but of chaos. The Asian financial crisis and
the collapse of the economy of Argentina, which had been among the most
doctrinaire practitioners of capital account liberalization, were two decisive
moments in reality¹s revolt against theory.
Another factor unraveling the globalist project is its obsession with economic
growth. Indeed, unending growth is the centerpiece of globalization, the
mainspring of its legitimacy. While a recent World Bank report continues to
extol rapid growth as the key to expanding the global middle class, global
warming, peak oil, and other environmental events are making it clear to people
that the rates and patterns of growth that come with globalization are a
surefire prescription for ecological Armageddon.
The final factor, not to be underestimated, has been popular resistance to
globalization. The battles of Seattle in 1999, Prague in 2000, and Genoa in
2001; the massive global anti-war march on February 15, 2003, when the
anti-globalization movement morphed into the global anti-war movement; the
collapse of the WTO ministerial meeting in Cancun in 2003 and its near collapse
in Hong Kong in 2005; the French and Dutch peoples¹ rejection of the neoliberal,
pro-globalization European Constitution in 2005 -- these were all critical
junctures in a decade-long global struggle that has rolled back the neoliberal
project. But these high-profile events were merely the tip of the iceberg, the
summation of thousands of anti-neoliberal, anti-globalization struggles in
thousands of communities throughout the world involving millions of peasants,
workers, students, indigenous people, and many sectors of the middle class.
Down but not out
While corporate-driven globalization may be down, it is not out. Though
discredited, many pro-globalization neoliberal policies remain in place in many
economies, for lack of credible alternative policies in the eyes of technocrats.
With talks dead-ended at the WTO, the big trading powers are emphasizing free
trade agreements (FTAs) and economic partnership agreements (EPAs) with
developing countries. These agreements are in many ways more dangerous than the
multilateral negotiations at the WTO since they often require greater
concessions in terms of market access and tighter enforcement of intellectual
property rights.
However, things are no longer that easy for the corporations and trading powers.
Doctrinaire neoliberals are being eased out of key positions, giving way to
pragmatic technocrats who often subvert neoliberal policies in practice owing to
popular pressure. When it comes to FTAs, the global south is becoming aware of
the dangers and is beginning to resist. Key South American governments under
pressure from their citizenries derailed the Free Trade of the Americas (FTAA)
-- the grand plan of George W. Bush for the Western hemisphere -- during the Mar
del Plata conference in November 2005.
Also, one of the reasons many people resisted Prime Minister Thaksin Shinawatra
in the months before the recent coup in Thailand was his rush to conclude a free
trade agreement with the United States. Indeed, in January this year, some
10,000 protesters tried to storm the building in Chiang Mai, Thailand, where
U.S. and Thai officials were negotiating. The government that succeeded
Thaksin¹s has put the U.S.-Thai FTA on hold, and movements seeking to stop FTAs
elsewhere have been inspired by the success of the Thai efforts.
The retreat from neoliberal globalization is most marked in Latin America. Long
exploited by foreign energy giants, Bolivia under President Evo Morales has
nationalized its energy resources. Nestor Kirchner of Argentina gave an example
of how developing country governments can face down finance capital when he
forced northern bondholders to accept only 25 cents of every dollar Argentina
owed them. Hugo Chavez has launched an ambitious plan for regional integration,
the Bolivarian Alternative for the Americas (ALBA), based on genuine economic
cooperation instead of free trade, with little or no participation by northern
TNCs, and driven by what Chavez himself describes as a ³logic beyond
capitalism.²
Globalization in Perspective
From today¹s vantage point, globalization appears to have been not a new, higher
phase in the development of capitalism but a response to the underlying
structural crisis of this system of production. Fifteen years since it was
trumpeted as the wave of the future, globalization seems to have been less a
³brave new phase² of the capitalist adventure than a desperate effort by global
capital to escape the stagnation and disequilibria overtaking the global economy
in the 1970s and 1980s. The collapse of the centralized socialist regimes in
Central and Eastern Europe deflected people¹s attention from this reality in the
early 1990s.
Many in progressive circles still think that the task at hand is to ³humanize²
globalization. Globalization, however, is a spent force. Today¹s multiplying
economic and political conflicts resemble, if anything, the period following the
end of what historians refer to as the first era of globalization, which
extended from 1815 to the eruption of World War I in 1914. The urgent task is
not to steer corporate-driven globalization in a ³social democratic² direction
but to manage its retreat so that it does not bring about the same chaos and
runaway conflicts that marked its demise in that earlier era.
Walden Bello is professor of sociology at the University of the Philippines and
executive director of the Bangkok-based research and advocvacy institute Focus
on the Global South. An extended version of this piece titled "The Capitalist
Conjuncture: Overaccumulation, Financial Crises, and the Retreat from
Globalization," appears in the latest issue of Third World Quarterly (Vol. 27,
No. 8, 2006).
--
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