Globalisation: A Challenge for Peace Solidarity or Exclusion?

1 October 1998
 

Paper presented at the conference organised by the Instituto Internazionale Jacques Maritain
Milano, 29-31 October 1998


The Jacques Maritain International Institute keeps alive the spirit of the French Catholic "personalist" philosopher Maritain, bringing together scholars and officials to reflect on international affairs. I had given a talk once before a long time ago for the Institute, in Rovigo and in a completely different context. This seminar was, for my taste, too heavy on officials, some of whom droned on endlessly reading papers which were boring to begin with and in any case available on tables outside, boring rigid this and many other members of the audience. On the plus side were three or four interesting papers, a couple of old friends I was happy to catch up with and - let s face it - anything in Italy is going to be more fun than the same thing somewhere else, if you see my point. I am pleased to say that this paper woke them up, at least judging by the applause at the end of my allotted twenty minutes.


The value, or worth of a man... his price... is so much as would be given for the use of his power, a thing dependent on the need and judgment of another... And as in other things, so in men, not the seller but the buyer determines the price."
Thomas Hobbes, Leviathan [1651], Chapter X

 

All of us use the word 'Globalization'; it figures in the titles of countless seminars and conferences like this one, it has been repeated so often that we tend to accept it uncritically. Allow me to suggest that by doing so, we all become victims of a particularly successful ideological hijacking of language.

The word "globalization" conveys the sense that all people from all regions of the globe are somehow caught up in a single movement, an all-embracing phenomenon and are all marching together towards some future Promised Land.

I will argue that precisely the opposite is the case, that the term "globalization" is in fact a word which masks rather than reveals present reality and is convenient shorthand for de facto exclusion. It has nothing to do with the creation of a single, somehow integrated world or a process from which all earth's inhabitants will somehow benefit. Rather than encompassing everyone in a collective march towards a better life, globalization allows the world market economy to "take the best and leave the rest".

To use Hobbes' words, cited above, globalization allows "the buyer to determine the price of a man" on a massive scale, unprecedented in human history. When the buyer can choose his men anywhere, that price may well be zero. Whole regions are being left out of the globalization process, including most of Africa. Individuals may be jettisoned at any time. Politics in the twenty-first century will no longer be mostly about who shall rule whom, nor even about who shall receive what share of the pie. Politics, if neo-liberal globalization is allowed to succeed, will rather be about the deadly serious issue of survival-who has a right to live and who does not.

Although it is impossible fully to justify my position in the twenty minutes allowed, I should like to defend briefly three major assertions concerning the neo-liberal globalization model:

  1. Globalization inevitably transfers wealth from the poor to the rich and increases inequalities both within and between nations;
  2. Globalization shifts sovereignty from more-or-less democratic States to non-elected, non-transparent, non-accountable entities which consider democracy irrelevant and obstacle to economic efficiency. (1)
  3. Globalization generates far more losers than winners yet those most responsible for its spread have absolutely no plans for the losers.

The first statement-that globalization implies the transfer of wealth from poor to rich is easy enough to prove. At the level of world wealth distribution, I assume all the participants in this Conference are familiar with the UNDP's Human Development Index and the "champagne-glass graph" which shows that the top 20% of humanity now captures 86% of all wealth [compared to 70% thirty years ago], while the bottom 20% has seen its already meager portion of this wealth reduced to just 1.3%.

The North-South differential was about 2 to 1 in the 18th century, 30 to 1 in 1965 and is now 80 to 1 and rising. Many of you will also have heard the comparison between the billionaires and the billions-not a scientific comparison, but striking. The combined assets of the world's 440-some dollar billionaires is equivalent to the net worth, as measured by GDP share, of roughly half the world's people.

If we look at wealth disparities within nations as opposed to global disparities between North and South, we discover the same tendencies. Twenty years of neo-liberal policies-structural adjustment programmes in the South and East and Reaganite or Thatcherite policies in the North-have resulted in huge transfers of wealth from the bottom of society to the top and in a "hollowing out" of the middle classes. Here are a few citations from the UNCTAD 1997 Trade and Development Report to make this point: (2)

In the 1990s, income inequality has increased sharply from relatively low levels in the former socialist countries of Eastern Europe and also in China".

[This is also true in Latin America and in many OECD countries, particularly the US, Britain, Australia and New Zealand].

A recurrent pattern of distributional change in the 1980s was an increase in the income shares of the rich which was almost invariably associated with a fall in the income shares of the middle class. For many countries, this was a reversal of trends before 1980...

A[n] important feature of these patterns is the degree of synchronization in the timing of distributional changes in countries with very different economic structures and cultures. Synchronized shifts can be taken as an indicator that income inequality trends are increasingly being influenced by forces common to all the countries, i.e. forces which are global in character...This phenomenon [of rising inequality despite, in some cases, growth] appears to be related to a sudden shift in policies giving much greater role to market forces."

These trends towards greater inequality are neither accidents nor acts of God. They are built-in effects of liberalization, privatization, forced integration into world markets through structural adjustment and much greater reliance on market forces which reward capital to the detriment of labour. Dozens of empirical studies document the stagnation of wages and the growth of disparities between rich and poor so there is no need to labour this point.

The second assertion I want to argue-that globalization is accompanied by a grave and growing democratic deficit-is becoming more obvious daily. We are constantly being told of the need for "deregulation". Like "globalization", "deregulation" is another trap word. No system can function without rules-the real question is who makes the rules and for whose benefit. At present, only States are being made to "deregulate", to liberalize and in particular to make labour markets less "rigid" so that workers will have to compete even more fiercely with each other while being deprived of social protection.

Although States are being downgraded, new rules are constantly being put in place at the international level. Once enacted, almost invariably without citizens' knowledge or debate, they are enforced by non-elected, opaque institutions like the International Monetary Fund, the World Trade Organization and other international or regional bureaucracies [e.g. NAFTA].

Globalization has been led by corporations and banks so it is not surprising that the new rules benefit their interests and ensure even greater freedom for market forces. The Multilateral Agreement on Investment [MAI] is a particularly pernicious example of the attempt to transfer sovereignty from elected governments to transnational corporations and financial speculators. Thanks to international citizen involvement and protest, this treaty has almost certainly been defeated at the OECD but will just as certainly reappear in another form, probably at the World Trade Organization.

Under the new rules, there is no protection for ordinary people, even skilled people. Anyone can be ejected from the system at any time. Global, transnational corporations are constantly downsizing their staffs; the top 100 corporations accounting for over 15% of World Product employ only 12 million people and they sacked a further 4% of their personnel between 1993-1995. Nor are there any rules to prevent the establishment of transnational oligopolies and monopolies: in the past three years, three-quarters of all foreign direct investment has been devoted to mergers and acquisitions which invariably result in job losses, not to new, job-creating investment.

If human betterment were the object of globalization, its instigators would have to admit it has been a colossal failure. Market forces and unelected international bureaucracies have been allowed to dictate the rules, with consequences that are spread all around us. Following the Mexican crisis and devaluation of 1994-95, half the Mexican population has dropped below the poverty line. A year or two ago, the Asian tigers were singled out as paragons. Today, literal starvation has returned to Indonesia. A sharp increase in suicides has taken hold in Korea where workers no longer see any hope for themselves and their families: locally, their deaths are called IMF suicides. In Russia, life-expectancy rates for men have plummeted by 7 years in less than a decade, an unheard of occurrence in the 20th century.

Uncontrolled financial speculation in so-called "emerging markets" has led to disaster for the majority of the population in the affected countries, yet the IMF is still seeking to change its statutes for the first time since it was founded so that it can oblige member countries to liberalize completely their capital accounts.

Citizens and their governments are, however, sometimes useful to the prime movers of globalization. For example, when the US hedge-fund Long Term Capital Management was on the edge of collapse after borrowing at least a hundred times its initial capital base, the Federal Reserve Bank of New York leaned heavily on US banks to bail out this fund, made up of multi-millionaires, as the Fed was afraid that its failure could destabilize the entire global economy.

Citizens are also unwittingly forced to contribute their taxes to IMF bailouts-most of which do not go to the people who are suffering but to the very speculators who caused the crises in the first place-this is particularly flagrant in the case of Russia. Citizens are further obliged to save reckless private firms that are considered "too big to fail" [Savings and Loans in the US, Credit Lyonnais in France, large firms or banks in Japan]. One could say this is a certain kind of solidarity, but I doubt it is the kind the organizers of this Conference have in mind.

The third statement I want to argue is that globalization as now conceived creates far more losers than winners and no one has any plans for the losers.

It creates innumerable losers because:

  • It places in direct competition people who will never meet, so that as Hobbes said, "Every man is enemy to every man";
  • Such competition creates the well-known "race to the bottom" concerning labour and environmental standards as countries compete for foreign direct investment;
  • It allows capital total freedom to cross borders, whereas labour is rooted and cannot migrate freely;
  • It allows transnational capital almost entirely to escape taxation; (3)
  • By not taxing capital, it makes social protection much more difficult to pay for. Governments then tax local salaries, wages and consumption more heavily to make up for the loss;
  • It strips well-endowed regions of their natural capital, and moves on when those resources are exhausted, leaving ecological devastation in its wake;
  • It systematically externalizes environmental and social costs;

Economic globalization is no accident. Naturally technology made it possible, but it was deliberately designed by neo-liberal economists and governments, international financial institutions, corporate and banking leaders-in other words, the sort of people who meet every February in Davos at the World Economic Forum. They claimed everyone would benefit from globalization and this claim has been revealed as a lie. Neo-liberal globalization is a vast, planetary experiment but it is not the natural or desirable condition of mankind.

Above all, it cannot include everyone. As already mentioned, transnational corporations employ very few people compared to their sales. (4) They also contribute to the destruction of local employment. Open borders in agriculture will bankrupt more and more local farmers. Local communities are losing their autonomy: they can no longer protect their resources or their inhabitants. National elites in the South are given opportunities for enrichment and on the whole cooperate with this system.

Such a system, operating in the interests of a tiny minority, should not be expected to concern itself with the plight of the majority. However, the social misery and upheaval already surfacing as a direct result of globalization will eventually strike the minority as well. The fatal flaw of the perpetrators of globalization is their inability to protect durably the very system that sustains their power and profits.

This brief talk is diagnostic and descriptive rather than prescriptive, but I should still like to conclude with a few words concerning remedies. This does not mean that they have any chance of application without broad political mobilization of the type that has won an initial victory by defeating the MAI at the OECD.

The first task is to force decision-makers to recognize that the current model will necessarily produce and exacerbate poverty, exclusion and social conflict. The point is to demolish the reigning ideology which claims that neo-liberal globalization is inevitable and will eventually shower its benefits on all, in some far-off future time. This is doctrine, not political reality and it is best to leave matters of religious faith to religion.

Second, since globalization is withdrawing economic and therefore social power from citizens, communities and nation-States while simultaneously decreasing their capacity to protect themselves from the onslaughts of the market, one must seek to re-empower communities and States while working to institute democratic rules at the international level. A new Bretton Woods Conference is urgently required in this regard and future attempts to institute the MAI in any context should be fought.

Finally, at a more fundamental level, a re-examination of the meaning of legitimacy should take place. Fully exploring this notion would require another talk: here I can only note that the major actors in the present world system exert enormous influence on the basis of self-conferred legitimacy. Corporate directors and bankers, fund managers, IMF economists, WTO trade lawyers and arbiters, the "Davos People"-all are unelected, all exert enormous power over other peoples' lives, all are unaccountable.

Through their self-conferred legitimacy, they seek to exclude all other voices. "Exclusion", a major subject of this Conference, does not only concern exclusion from material benefits but also from the decision-making process and the right to control vital aspects of one's own life and humanity. Restoring the right to a voice is another challenge to establishing genuine solidarity.


References

1. Professor Lubbers appears to see this as inevitable since democracy in his view is based solely on territory. In the age of the Internet, need this necessarily be the case? Technology works for the presently disenfranchised as well as for the "Masters of the Universe".
2. Part Two, Chapter III. UNCTAD's work is based on 2600 income distribution observations "filtered to give high-quality data" including 682 observations from 108 countries and is the best succinct examination of the inequalities issue I know.
3. Corporate taxation twenty years ago supplied half of European countries' tax base but now less than 35%; in the US corporate taxes supply only 17% of the total.
4. Every employee of one of the top 100 Transnational Corporations is responsible for an average $333.000 in annual sales [calculated from data in United Nations, World Investment Report 1997].

About the authors

Susan George

Susan George is one of TNI's most renowned fellows for her long-term and ground-breaking analysis of global issues. "How to win the Class War - The Lugano Report II" is the newest of her sixteen widely translated books. She describes her work in a cogent way that has come to define TNI: "The job of the responsible social scientist is first to uncover these forces [of wealth, power and control], to write about them clearly, without jargon... and finally..to take an advocacy position in favour of the disadvantaged, the underdogs, the victims of injustice."