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2 Globalization in
retreat By Walden Bello
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 "irreversible". And the people who
opposed globalization
were
disdainfully dismissed as modern-day Luddites who
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
globalization's 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 US 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 to build up industrial
structures or protect employment still make a
difference. Indeed, over the past 10 years,
interventionist government policies have spelled
the difference between development and
underdevelopment, prosperity and poverty.
Malaysia's 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 "grand strategy" of the
administration of US president Bill Clinton, which
envisaged the US elite being the first among
equals of a global coalition leading the way to
the new, benign world order.
Today, this
project lies in shambles. During the
administration of President 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
another's 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 "global
governance" as the achievement of "coherence",
that is, the coordination of the neo-liberal
policies of the three institutions 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 "trade
liberalization has stalled, aid is less coherent
than it should be, and the next financial
conflagration will be managed by an injured
fireman". In fact, the situation is worse than he
describes. The IMF is practically defunct.
Knowing how the IMF 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 fund's budget
greatly depends on debt repayments from these big
borrowers, this boycott is translating into what
one expert describes as "a huge squeeze on the
budget of the organization".
The World
Bank may seem to be in better health than the IMF.
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 US refusal to budge on its enormous
subsidies for agriculture.
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
directors general once described as the "jewel in
the crown of multilateralism" 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
transnational corporations 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 one another to shift the burden
of adjustment. The Bush administration, for
instance, has pushed a weak-dollar policy to
promote US economic recovery and growth at the
expense of Europe and Japan. It has also refused
to sign the Kyoto Protocol, to push Europe and
Japan to absorb most of the costs of global
environmental adjustment and thus make US 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
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