Corporations Are Losing the Globalization Debate
28 Aug 2001
Corporations Are Losing the Globalization Debate
August 17, 2001, Friday London Edition - Financial Times
A poor case for globalisation: The world's leaders are failing to
address legitimate questions raised by protesters about the effects of
global capitalism
by PHILIP STEPHENS <philip.stephens@ft.com>
The protesters are winning. They are winning on the streets. Before
too long they will be winning the argument. Globalisation is fast becoming
a cause without credible champions.
This week we saw the Washington consensus make way for Washington's
retreat. The International Monetary Fund and the World Bank are
scaling back the annual jamboree at their headquarters in the US capital. It
seems that the US has had its fill of angry protests a few blocks from the
White House.
It's a nice irony. The US can count itself author, architect and principal
beneficiary of globalisation. Guided by the US Treasury, the IMF sets
the rules of the multilateral game. Now both are bowing before the critics
of liberal capitalism.
Sure, no great harm will come of the IMF's decision to meet over two days
rather than a week. The opulence of the event has always jarred.
Happily, a tight timetable should deflate a few egos and shorten the
speeches. We shall not miss the save-the-world rhetoric of all those
finance ministers.
Who cares if the champagne stays corked, the canapes uneaten?
It is, though, more serious than that. The organised uproar and violence that
the anti-globalisation protests brought to Seattle back in the autumn
of 1999 have now become a permanent backdrop. The numbers of protesters have
swollen. Italy has still to recover from the - albeit mostly self-inflicted
- wounds of the Group of Eight summit in Genoa. Belgium, the current
president of the European Union, fears similar chaos at December's Laaken summit
of EU leaders. The political kudos that once came with playing host to such
gatherings has been replaced by the fear that all they bring now is a
bad press.
Yet the response to the protests has been largely one of spluttering
indignation. Instead of listening, even learning, the politicians
have lectured.
The knee-jerk response has been to tar all the critics with the brush
of thuggery. The tone is hectoring. Liberal markets are good for us, all
of us.
Anyone who says otherwise is a subversive or a fool. Free trade is an
unalloyed blessing, for poor countries as well as rich. The multinational
behemoths bring precious investment to developing nations.
There are important truths in all these propositions. It is obvious,
too, that the counter case is often shot through with confusions and
contradictions.
These are people, after all, who are waging a global war against
globalisation. The anarchists have no need of consistency. But the
broader coalition often seems just as inchoate.
Non-governmental organisations want the multinationals tamed. Governments
must reclaim the sovereignty lost to unaccountable and unscrupulous
business executives. The IMF, the World Trade Organisation and the rest are
agents of a new imperialism. And yet then we hear the protesters call for new
global rules to protect the environment and prevent exploitation of labour.
Self-interested trade unions stand with self-proclaimed idealists in
demanding that rich nations protect jobs by imposing their own labour
standards on poor ones.
Somewhere in all this there is a cry for a different set of values. It
is often hard to find.
(sic) constituency stretches well beyond the mostly young activists we
see on the streets. Many who abhor their tactics share their unease.
Globalisation is unsettling, for the comfortable middle classes as
much as for the politically disaffected. The threats, real and
imagined, to national and local cultures are widely felt.
So, too, are the unnerving shifts in the boundaries between
governments, business and multilateral institutions. As consumers we
are stronger; as citizens, weaker. International economic integration does
generate wealth. It also redistributes it. There are losers as well as winners.
In good times, unfettered capital markets funnel rich-nation finance to the
poor countries that need it. In bad times they carry the curse of contagion.
Shareholder value is a fineconcept for those who own those giant
corporations.
But what of those who merely toil for them? As Stanley Fischer, the
thoughtful, though soon-to-depart, deputy managing director of the
IMF, has said, free trade can indeed make everyone better off. But
that does not mean that everyone is made better off.
What it does mean is that it is not enough for political leaders to dust off
the economic textbooks, recite a few mantras about comparative advantage
and the division of labour and expect the rest of us to applaud. The case for
liberal markets is not self-evident.
What is required from advanced nations is a mixture of humility and
leadership. (These two, incidentally, are not mutually exclusive.) A
starting-point would be an admission that they have often got it
wrong. The afore-mentioned Washington consensus imposed on developing
nations the liberal economic orthodoxy of the times. These
one-size-fits-all adjustment programmes ruined more fragile
economies than they repaired. But they bailed out the west's banks.
Governments caught up in the financial brush fires of the 1990s were
told to slash spending on health and education. Such policies were
as economically foolish as they were socially destabilising. But US
banks got their money back.
Western politicians may also admit that trade liberalisation has been
skewed to their advantage. Developing nations have been pressured to
open their markets.
Rich ones have kept the doors slammed shut to their agricultural
products and textiles.
There is only one ground on which these politicians can successfully
engage with the protesters. Globalisation, they should shout from every
rooftop, is a means. There is no intrinsic merit in capitalism without
frontiers. The purpose is to raise everyone's living standards.
Global capitalism, they should then proclaim, requires civilising
rules. It must be seen to be fairer. Poor countries cannot pay rich
nations' wages - but the weakest must be helped and multinational
corporations must observe basic standards of human decency.
Advanced economies must lead by example and open up their markets.
And yes, we all benefit from strong international institutions - as
long as they represent a mutual not a
single interest.
The champions of liberal markets are in full retreat. There is only
one way they can make themselves heard again over the angry shouts of the
protesters.
They must stop making the case for globalisation - and start fighting
the cause of better globalisation.
Any text written by other authors which may be quoted in part or in full
within this coverage of this issue is provided according to U. S. Code
Title 17 "Fair Use" dictates which may be reviewed at
http://www4.law.cornell.edu/uscode/17/107.html If you're an author
of an article and do not wish to allow it to be mirrored or otherwise
provided on The Skeptic Tank web site, let us know and it will be
removed fairly promptly.
Return to The Skeptic Tank's main Index page.
The views and opinions stated within this web page are those of the
author or authors which wrote them and may not reflect the views and
opinions of the ISP or account user which hosts the web page. The
opinions may or may not be those of the Chairman of The Skeptic Tank.