What is Globalization, Anyway
If there's one thing that analysts and activists across the political spectrum agree on today it's that we live in an era of economic globalization. This is taken by both critics and cheerleaders as self-evident and largely unprecedented. We should think twice about this consensus.
The concept that has now entered daily speech as "globalization" is both exaggerated and misspecified. It's described as an innovation, when it's not; it's described as a weakening of the state, though it's been led by states and multistate institutions like the IMF; it's been indicted as the major reason for downward pressure on U.S. living standards, even though most of us work in services, which are largely exempt from international competition; and it's been greeted as an evil in itself, as if there were no virtue to cosmopolitanism.
Let me expand a bit on each of my opening claims. First, the novelty of "globalization." One of my problems with this term is that it often serves as a euphemizing and imprecise substitute for imperialism. From the first, capitalism has been an international and internationalizing system. After the breakup of the Roman Empire, Italian bankers devised complex foreign exchange instruments to evade Church prohibitions on interest. Those bankers' cross-border capital flows moved in tandem with trade flows. And, with 1492 began the slaughter of the First Americans and with it the plunder of the hemisphere. That act of primitive accumulation, along with the enslavement of Africans and the colonization of Asia, made Europe's takeoff possible.
Not only is the novelty of "globalization" exaggerated, so is its extent. Capital flows were freer, and foreign holdings by British investors far larger, 100 years ago than anything we see today. Images of multinational corporations shuttling raw materials and parts around the world, as if the whole globe were an assembly line, are grossly overblown, accounting for only about a tenth of U.S. trade. Ditto trade penetration in general. Take one measure, exports as a share of GDP. By that measure, Britain was only a bit more globalized in 1992 than it was in 1913, and the United States today isn't a match for either. Japan, widely seen as the trade monster, exported only a little larger share of its national product than did Britain in 1950, a rather provincial year. Mexico was more internationalized in 1913 it than was in 1992. Exports are just one indicator, for sure, but by this measure, the distance between now and 1870 or 1913 isn't as great as it might seem.
Indeed, it's probably more fruitful to think of the present period as a return to a pre-World War I style of capitalism rather than something unprecedented, and to rethink the Golden Age of the 1950s and 1960s not as some sort of norm from which the last 25 years have been some perverse exception, but the Golden Age itself as the exception.
Another thing that must be rethought is the role of the state, which we constantly hear is withering away under a new regime of stateless multinational. While there's no question that the state's positive role has been either sharply reduced or under sharp attack, its negative/disciplinary role has grown. In the U.S., we've experienced a mad, cruel incarceration boom, accompanied by increased snooping and behavioral prescriptions. Elsewhere, the neoliberal project has been imposed by states, whether we're talking about the Maastricht process of European union, or structural adjustment in the so-called Third World - states acting in the interests of private capital, of course, but that's the way states have been acting for centuries. And, over the last 20 years, we've seen an almost entirely new role for the state, preventing financial accidents from turning into massive deflationary collapses - our S&L bailout of the 1980s, far from being unique, was replicated in scores of countries around the world, most extravagantly in Mexico right now, where a massively expensive (and controversial) bank bailout is underway.
OK, so what about pressure on living standards? We First Worlders have to be very careful here, since, as I argued earlier, the initial European rise to wealth depended largely on the colonies, and while we can argue about the exact contribution of neocolonialism to the maintenance of First World privilege, it's certainly greater than zero. It was embarrassing to hear Ralph Nader and the Fair Trade Campaign describe NAFTA and the World Trade Organization as threats to U.S. sovereignty, echoing the rhetoric of Pat Buchanan; Washington has been abusing Mexican sovereignty for over a century - which is why it's a good idea to stop saying globalization when you mean imperialism.
But I'm not going to deny that plant relocations to Mexico and outsourcing contracts in China have put a sharp squeeze on U.S. manufacturing employment and earnings, and the threat of those things has greatly reduced the bargaining power of U.S. workers. How much has this contributed to downward mobility and increasing stress? The econometricians say that trade explains, at most, about 20-25% of the decline in the real hourly wage between 1973 and 1994. (The real wage has actually been rising for the last five years.) That still leaves 75-80% to be explained, and the main culprits there are mainly of domestic origin. I'd say an important reason that trade doesn't explain more of our unhappy economic history since the early 1970s is that 80% of us work in services - and a quarter of those in government - which is largely exempt from international competition. What did "globalization" have to do with Teddy Kennedy and Jimmy Carter pushing transport deregulation, or with Reagan's firing the air traffic controllers, with Clinton's signing the end-of-welfare bill, or with Rudy Giuliani being such a repressive pig? What does "globalization" have to do with cutbacks at public universities or the war on affirmative action? While lots of people blame the corporate downsizings of the 1990s on the twin demons, globalization and technology, the more powerful influences were Wall Street portfolio managers, who were demanding higher profits - which they have gotten, by the way, which is one of several reasons why the Dow has done so well.
And when did internationalization become something feared and hated in itself? I got a piece of email a few months ago from a feminist group claiming that globalization was threatening to undermine commitments made at the Beijing women's conference. But what is the Beijing women's conference but a kind of globalization? A couple of women who attended that conference told me that contacts made there by some Latin American women's groups allowed them to organize for the first time against domestic violence. Isn't that both global and good?
Now there's no reason, as Keynes said, why a British widow should own shares in an Argentine railway. Nor is there any reason why Bankers Trust should run Chilean pension funds, nor is there any good reason why GM should be taking advantage of Korea's crisis to buy up that country's automobile industry. The case is a bit murkier when it comes to relative peers - what precisely is so horrible about Toyota running plants in Tennessee, aside from the ecological horrors of the automobile and the social horrors of capitalist production relations?
Surely there are things being traded now that wouldn't be traded in a more rational, humane world. The only social gain in Nike's producing shoes in Indonesia is claimed by Phil Knight and the shareholders of Nike. Indonesian resources and labor would be much better devoted to feeding, clothing, schooling, and housing Indonesians than making $150 running shoes while being paid pennies an hour. It's a tremendous waste of natural resources to ship Air Jordans halfway around the world. Export-oriented development has offered very little in the way of real economic and social development for the poor countries who've been offered no other outlet.
But does that mean trade itself is bad? Does that mean the movement of people across borders is bad? I thought the left opposed xenophobia and embraced intercourse of all kinds among the people of the world. Why do we find so many people lost in fantasies about self-reliance, pining away for a lost world that never really existed? Why, in other words, do so many people treat globalization itself as the enemy, rather than capitalist and imperialist exploitation?
But we can hardly say "capitalism" anymore, much less socialism. Instead, we say "globalization," and "technology." And that's bad for both intellectual analysis and transformative politics.
Doug Henwood is the editor of LBO, author of Wall Street (Verso, 1997) and the forthcoming A New Economy? (Verso, 2000), which has a chapter on "globalization," that develops these arguments at some length.