Globalization: Myth, Reality, Problems

The demonstrationunprecedented since the Vietnam war erathat convulsed normally laid-back Seattle late last fall had two results. It brought the work of the World Trade Organization to a halt, and it reintroduced the issue of globalization to the American political scene. Labor had unsuccessfully fought the Clinton administration over Nafta. Now new allies in the environmental and human rights movements had appeared. Though all four major candidates for the presidency in 2000 are free tradersonly the marginal Pat Buchanan carries the banner of economic nationalisma major test will occur next year as the president of the A.F.L.-C.I.O., John Sweeney, and Teamster head James Hoffa strive to scuttle the Clinton trade pact with China. They hope the common ties forged in Seattle will hold in that battle as well.

This despite apparent prosperity. America’s economy is on a roll. Jobs are plentiful. The stock market keeps rising. Unlike situations in the past, the electorate currently seems unconcerned about economic matters. Some economists warn that what goes up must come down. Others increasingly argue that we have entered a new era in which the old rules no longer apply. When asked why, they often refer to globalizationthe joining of all people the planet over into a single interrelated system of economic and cultural ties, increasingly mediated by the computer and above all by the Internet.


The conventional wisdom holds that globalization is a new and unique condition, that it is irresistible and that it is overwhelmingly beneficial to humanity. But conventional wisdom is wrong on the first two counts, and it may well be wrong on the question of benefits as well.

Global political and economic interaction is not all that new. Ancient Rome controlled and economically integrated most of the Western world, while China ruled the Far East. Beginning with the 15th century, Spain, Portugal, France, England and the Netherlands created worldwide empires in which goods, people and ideas flowed almost freely. Economic factors came first then, as they largely do today. Spices and sugar were the touchstones. In order to keep control of the small East Indian spice isle of Banda, the Dutch were happy to cede Manhattan to English rule. The French were just as willing to let the English keep Canada as long as France could hold on to the West Indian sugar island of Guadeloupe. Crops were diffused globally; the slave trade moved millions across oceans; indeed the Chinese demand for silver largely financed the Spanish slave trade. Ideas moved globally as wellChristianity, capitalism and, eventually, even democracy.

Thus in 1850 Marx and Engels could in the Communist Manifesto holdtruthfullythat the bourgeoisie had taken over the whole world, dissolving all previous cultures and allegiances, and "in place of the numberless indefeasible chartered freedoms, has set up that single unconscionable freedomFree Trade."

The leading international financier Baron Rothschild said in 1875, "The world is a city," as stock markets fell together across the globe. People moved freely. In 1900 the foreign-born constituted 14 percent of the American population, as opposed to only 8 percent today. Capital moved freely as well. Most of American growth was financed by Europeans, and defaulted loans were common. An International Monetary Fund report in 1997 noted that international capital movements as a proportion of economic output were still below the level of the 1880’s. The economist Alan Taylor of Northwestern University recently said in regard to the global economy that "these days, it’s just getting back to where it was 100 years ago."

Even now globalization is far from complete, as unresolved disputes at the recent W.T.O. meeting attest. The United States and Europe war over genetically enhanced crops, and France refuses British beef. On the cultural plane, local cultures reassert themselves in opposition to American domination, and ethnic conflicts persist in the Balkans, the former Soviet Union, Kashmir, Africa and elsewhere. The world is still far from one.

What happened to the world between the earlier period of globalization and the current move back toward it? World War I tore the economy of the world apart, and the postwar moves toward economic self sufficiencyabove all in Germany under Adolf Hitler and the United States under Franklin D. Roosevelthastened the process of economic nationalism. Some have facilely blamed the Great Depression on the new high tariff regimes, but that is at best an oversimplification. The economic downturn had a momentum of its own. In any event and whatever the cause, the events of the interwar period proved that globalization is not only not really new, it is also far from irresistible.

But if globalization is neither new nor invincible, is it desirable? Many critics conclude that it is not. Most argue that essentially it represents a rerun of the earlier colonialism and bourgeois world domination, with the United States as the overwhelming hegemon, the international market mediated by the Internet as its instrument, and the small upper class of Internet users in other nations as the contemporary equivalent of previous local elites who served the imperialists’ bidding. For many nations, becoming part of the world economy has high initial costs, as local economies are torn apart due to fluctuations in international financial markets. Consider Indonesia as an example. Austerity, usually recommended by international agencies, can be highly destabilizing politically. Closely related to this, globalization is the enemy of democracy, especially in weaker nations, as the electorate comes to realize that no matter whom they elect to power, their national leaders are impotent before the dictates of the international marketplace.

The free market is not only economically destabilizing; perhaps more important, it is socially destabilizing as well. Americans have seen some of this as old manufacturing industries have crumbled under competition from cheaper imported goods, and as a result whole cities have decayed. The fact that high employment in the service industries has masked some of the economic effect does not restore the social fabric often ripped asunder. What has happened to the United States is minor compared to the uprooting of farmers, migration to cities, changes in age and gender relations and, above all, the loss of community elsewhere. Some of these changes may be desirable in themselves, but the problem is not only with their speed but their often involuntary nature as the "creative destruction" of the free market spreads from the economy to the community and the family.

A primary negative consequence of globalization has been to increase economic inequality, both on a world scale and within nations. Last fall, an international meeting of Jesuits convened by the Woodstock Theological Center at Georgetown University to assess globalization noted that "the harms and benefits of globalization are not evenly distributed either among nations or within them." The economist Lester Thurow of M.I.T. is more blunt and has said that "almost everywhere we look we see rising inequalities among countries, among firms, among individuals.... Returns to skills are up; returns to unskilled labor are down." Public opinion surveys such as the Pew Report state that while the upper and middle classes in America are happy with globalization, the lower class is notwith good reason.

The inequalities they perceive domestically are even more blatant internationally. A United Nations development report last year stated that "globalization is compounding the gap between rich and poor nations and intensifying American domination of the world’s economic and cultural markets...." In 1985 the average income per person in the richest country was 76 times that of the poorest; in 1997 it was 228 times greater. Pope John Paul II has spoken of the "growing distance between rich and poor [and] unfair competition which puts the poor nations in a situation of ever-increasing inferiority."

Critics of the stand taken by organized labor in Seattle have argued that it is simply selfish for highly paid workers to object to the attempts of workers in poor nations to better themselves and hold that trying to improve working conditions of the exploited is ill-advised; but this assumes that the workers in developing nations have a real choice as to how they work and have no desire to organize to fight the corporations, often based in the West, that profit from their labor. The fact that in most of these third world countries labor unions are brutally suppressed makes the position of the labor critics seem hypocritical.

Inequality aside, there are other evil results of globalization. Economic growth always menaces the environment, but now the pace of peril has increased. The pope has also condemned "the destruction of the environment and natural resources." In time, economic growth can make progress in environmental protection possible (though not of course inevitable), but the race between growth and protection will be a difficult one. Meanwhile, as one observer has noted, while economic growth may make cleaner air possible, if current trends continue, the residents of Mexico City will breathe bad air for at least another generation.

Plagues have never respected national boundarieswitness the Black Death. But globalization, with its attendant speed of travel, makes bioinvasion by bacteria and viruses much quicker and more likely. So too with invasion by non-native plants, animals and birds. On introduction to new areas they have always caused problemsthink of rabbits in Australia and tumbleweed and kudzu in Americabut the ease of transportation brought about by globalization only speeds the process.

The increasing interconnectedness of the world also makes nations much more vulnerable to terrorism in all its variants, from the sabotaging of planes in the air to the poisoning of water supplies. The balance between the good effects of globalization and its evils is not easy to strike.

Most critics of globalizationand even some supporterswould hold that the greatest problem it has created is the loss of the ability of nations to control their own affairs in the midst of a global economy. Some commentators on the Seattle protests have cast them as reflex reactions rooted in a general disquiet about becoming the prey of changes imposed from outside. But such reflexes have merit. As journalist William Pfaff has put it, "The economy has been globalized but economic regulation has not. There is now a fundamental discrepancy between economic power and regulatory power. The latter has no international political foundation."

What can be done? The economist Robert Kuttner has suggested that nations reclaim their sovereignty by limiting cross-border transactions or pool their sovereignty in an international regulatory mechanism. The international financier George Soros holds that "to stabilize and regulate a truly global economy, we need some global system of decision-making. In short, we need a global society to support our global economy." But the nations of the world have a long way to go in that direction. Even in Europe, relatively advanced in merging national economies into a larger European Union, the British especially are balking at a final surrender of their full independence.

Whatever the solution, the turmoil in Seattle hasat long lastput the issue of globalization on the table. Only the most fanatic believers in the ability of free markets to solve all human problems can still hold that the questions raised are purely "economic" and not also political, matters of destiny rather than human choice.

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