For quite some time, serious doubts have been expressed about the continuance of the present era of globalization, based on the Washington Consensus or neo-liberalism. After John Ralston Saul’s well-argued book, The Collapse of Globalism, Walden Bello has come out with his research paper “The Capitalist Conjuncture: over accumulation, financial crises, and the retreat of globalisation” in the prestigious Third World Quarterly (Vol. 27, No.8, December 2006), underlining that the fortunes of the ongoing globalization have been on the decline.
Professor Bello of the University of Philippines is a well-respected researcher, who was declared as one of the “stars in our human cosmos” by the 2003 jury of the Right Livelihood Award, known as the Alternative Nobel Prize. When such a scholar is skeptic about the continuance of the on-going globalization, he must have solid reasons. Let us see what they are.
In the early 1990s, when the present era of globalization began, it was asserted that its course was irreversible. The New Economy, given birth by revolutionary changes in the sphere of information technology was immune to business cycles. There was no challenge to capitalism because the Soviet Union had collapsed and China had begun adapting itself to the new era. All the national economies were sooner or later going to be integrated into one global entity, and the world was sure to become borderless as nation-state was on its way out. This process could neither be held back nor reversed. The people opposed to this march of history were dubbed as lunatics or modern day Luddites. What is the situation after one and a half decades? No integrated global economy is visible even on the distant horizon. Bello says, “…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.”
When the present era of globalization was on ascendancy, it was declared by propagandists like Thomas L. Friedman from housetops that state policies had become irrelevant and MNCs were going to be domineering and driving force. Yet, the European Union, the US government and the Chinese state are stronger today than what they were a decade and a half ago. The nation- states in Latin America have become more assertive now. The MNCs have to obey their dictates even if they do not like to do so. Bello underlines: “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 controls also insulated China from the economic collapse engulfing its neighbours.”
When the present era of globalization began, it was asserted that it would lead to the rise of a transnational capitalist elite that would manage the global economy. This new elite would be led by its American component. Thus American dominance would be established. This scheme has, however, failed. National components still maintain their separate identity and are motivated by their national outlook and interests. They do not bother whether their nationalist approach leads to harmful consequences for other nations. The high hopes of the representatives of the IMF, the World Bank and the WTO, who met in Singapore in December, 1996 could not be realized. They thought, they were very near the goals of global governance and the imposition of well co-ordinated neo-liberal policies to bring about smooth, technocratic integration of the global economy. Sebastian Mallaby of the Washington Post, a pro-globalization journalist laments that these hopes have failed to be realized. According to him, “trade liberalization has stalled, aid is less coherent than it should be, and the next financial conflagration will be managed by injured fireman.” Bello thanks, in reality, the situation is worse for the protagonists of globalization. The IMF, a strong pillar of neo-liberalism is 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 repayment from these big borrowers, this boycott is translating into what one expert describes as ‘a huge squeeze on the budget of the organization.’”
As far as the World Bank is concerned, the legitimacy of its existence is in question, because, for decades, it imposed on developing countries its structural adjustment policies that brought poverty and sufferings to them. With the grounding of the Doha Round of negotiations, the WTO is losing its credibility and there are no indications that it would be able to take off in the near future.
Bello enumerates a number of factors that have brought globalization to a halt. First, the merits of globalization were overstated. The enthusiasts forgot that the bulk of the production by MNCs is carried on and sold in their countries of origin. There are not many corporations whose activities are widely dispersed over various regions. Second, the national capitalist elites have failed to adopt a truly global outlook and rise above their national interests and considerations. They have competed with one another in increasing their national benefits rather than evolving a rational approach to tackle the problems of over production, stagnation, environmental crisis, liberalization of trade and the free flow of labour. The USA and the European Union have sabotaged the Doha Round because they fear that its successful completion would anger their farmers. None of the developed countries have lifted fully the impediments obstructing the free flow of labour across the globe. In America, one can see how the Hispanics are discriminated against. Obviously, the double standard adopted by the USA has led to doubts in the minds of developing countries as regards its real intentions in championing globalization. To give a concrete example, it adopted somewhat strict attitude towards Enron but was very lenient and soft towards Union Carbide whose negligence resulted in the Bhopal tragedy in which thousands died and many more became condemned to suffer for life from various ailments.
The fact that neo-liberal policies have led to growing inequalities, and unemployment and poverty for certain sections of the society has antagonized people. The obsession with economic growth has resulted in disastrous consequences like ruining the environment and suspending labour laws and curtailing workers’ rights. The bid to eliminate capital controls and make national currencies fully convertible on both current and capital accounts has brought about the collapse of a number of economies. Lastly, the growing resistance by people has frustrated the attempts to foist globalization on all nations unmindful of their specific conditions. “One size fits all” has failed. This is crystal clear in Latin America where pro-globalization dispensations have been democratically overthrown by voters. Read Hugo Chavez’s recent speech and it will be obvious how discredited is current globalization.
Commenting on the attempts by certain people to impart a human face to globalization, Bello says: “Globalization … is a spent force. Today’s 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 … 1914. The urgent task is not to steer corporate-driven globalization in a “social democratic” 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.”