Atual sistema de comércio

Princípios do sistema de negociação.
Os acordos da OMC são longos e complexos porque são textos jurídicos que cobrem uma ampla gama de atividades. Eles lidam com: agricultura, têxteis e vestuário, bancos, telecomunicações, compras governamentais, padrões industriais e segurança de produtos, regulamentações de saneamento de alimentos, propriedade intelectual e muito mais. Mas vários princípios simples e fundamentais são executados em todos esses documentos. Esses princípios são a base do sistema comercial multilateral.
Um olhar mais atento a esses princípios:
Mais informações introdutórias.
Comércio sem discriminação.
1. A nação mais favorecida (NMF): tratar as outras pessoas igualmente De acordo com os acordos da OMC, os países normalmente não podem discriminar entre seus parceiros comerciais. Conceda a alguém um favor especial (tal como uma taxa de direitos aduaneiros mais baixa para um dos seus produtos) e terá que fazer o mesmo para todos os outros membros da OMC.
Este princípio é conhecido como tratamento da nação mais favorecida (MFN) (ver caixa). É tão importante que é o primeiro artigo do Acordo Geral sobre Tarifas e Comércio (GATT), que rege o comércio de mercadorias. A NMF é também uma prioridade no Acordo Geral sobre Comércio de Serviços (GATS) (Artigo 2) e no Acordo sobre Aspectos dos Direitos de Propriedade Intelectual Relacionados ao Comércio (TRIPS) (Artigo 4), embora em cada acordo o princípio seja tratado de forma ligeiramente diferente . Juntos, esses três acordos abrangem as três principais áreas de comércio tratadas pela OMC.
Algumas exceções são permitidas. Por exemplo, os países podem estabelecer um acordo de livre comércio que se aplique somente a bens comercializados dentro do grupo - discriminando bens de fora. Ou podem dar aos países em desenvolvimento acesso especial aos seus mercados. Ou um país pode levantar barreiras contra produtos que são considerados como sendo negociados injustamente de países específicos. E nos serviços, os países são autorizados, em circunstâncias limitadas, a discriminar. Mas os acordos só permitem essas exceções sob condições estritas. Em geral, MFN significa que toda vez que um país reduz uma barreira comercial ou abre um mercado, tem que fazê-lo pelos mesmos bens ou serviços de todos os seus parceiros comerciais - sejam eles ricos ou pobres, fracos ou fortes.
2. Tratamento nacional: Tratar estrangeiros e moradores da região igualmente Os bens importados e produzidos localmente devem ser tratados igualmente - pelo menos depois que as mercadorias estrangeiras tenham entrado no mercado. O mesmo se aplica a serviços estrangeiros e domésticos e a marcas comerciais estrangeiras e locais, direitos autorais e patentes. Este princípio de “tratamento nacional” (dando aos outros o mesmo tratamento que os próprios nacionais) também é encontrado em todos os três acordos principais da OMC (Artigo 3 do GATT, Artigo 17 do GATS e Artigo 3 do TRIPS), embora mais uma vez o princípio é tratado de forma ligeiramente diferente em cada um deles.
O tratamento nacional só se aplica quando um produto, serviço ou item de propriedade intelectual entrar no mercado. Portanto, a cobrança de um imposto alfandegário sobre uma importação não é uma violação do tratamento nacional, mesmo que os produtos produzidos localmente não recebam uma taxa equivalente.
Comércio livre: gradualmente, através da negociação.
A redução das barreiras comerciais é um dos meios mais óbvios de incentivar o comércio. As barreiras em causa incluem direitos aduaneiros (ou tarifas) e medidas como proibições de importação ou quotas que restringem as quantidades de forma seletiva. De tempos em tempos, outras questões, como a burocracia e as políticas cambiais, também foram discutidas.
Desde a criação do GATT, em 1947-48, houve oito rodadas de negociações comerciais. Uma nona rodada, no âmbito da Agenda de Desenvolvimento de Doha, está em andamento. Inicialmente, eles se concentraram na redução de tarifas (taxas alfandegárias) sobre bens importados. Como resultado das negociações, em meados da década de 1990, as tarifas dos países industrializados sobre produtos industriais caíram de forma constante para menos de 4%.
Mas, na década de 1980, as negociações se expandiram para abranger as barreiras não-tarifárias sobre mercadorias e para as novas áreas, como serviços e propriedade intelectual.
Abrir mercados pode ser benéfico, mas também requer ajustes. Os acordos da OMC permitem que os países introduzam mudanças gradualmente, através de “liberalização progressiva”. Os países em desenvolvimento geralmente recebem mais tempo para cumprir suas obrigações.
Previsibilidade: através de vinculação e transparência.
Às vezes, prometer não levantar uma barreira comercial pode ser tão importante quanto diminuir uma, porque a promessa dá às empresas uma visão mais clara de suas oportunidades futuras. Com estabilidade e previsibilidade, o investimento é incentivado, empregos são criados e os consumidores podem desfrutar plenamente dos benefícios da concorrência - escolha e preços mais baixos. O sistema multilateral de comércio é uma tentativa dos governos de tornar o ambiente de negócios estável e previsível.
A Rodada Uruguai aumentou as ligações.
Percentagens das tarifas consolidadas antes e depois das conversações de 1986-94.

Dependendo de quem você ouve, o comércio é o grande destruidor das comunidades, o meio ambiente e os países em desenvolvimento, ou o salvador imaculado de todos os acima.
Na realidade, não existe uma relação simples entre comércio, meio ambiente e desenvolvimento. Dependendo do setor, o país, os mercados e as políticas vigentes, o comércio e a liberalização do comércio podem ser bons ou ruins para o meio ambiente e o desenvolvimento. Eles geralmente serão os dois ao mesmo tempo - bons em alguns aspectos, ruins em outros.
No entanto, é possível agrupar a maioria dessas ligações em três temas:
1. Efeitos da Lupa: O comércio, na ausência de preços adequados, pode levar à degradação ambiental.
2. Efeitos da competitividade: O comércio pode exercer pressão sobre as normas ambientais de duas maneiras. Em primeiro lugar, pode estimular demandas por melhor desempenho ambiental por parte de compradores estrangeiros ou por multinacionais com investimentos diretos. Em segundo lugar, pode pressionar os padrões mais baixos ou não reforçar os já existentes, através do efeito de “refúgio policial”.
3. Efeitos de distorção de mercado: Mercados fechados ou protegidos podem prejudicar o desenvolvimento sustentável de duas formas: protegendo indústrias domésticas ineficientes e poluidoras; e negando aos exportadores, particularmente nos países em desenvolvimento, a oportunidade de vender no mercado protegido.
O efeito lupa é assim chamado porque envolve danos ao meio ambiente que são causados ​​não pelo próprio comércio, mas por meio do comércio atuando como um ampliador das inadequações existentes da política ambiental. Uma política ambiental perfeita determinaria o preço dos recursos e serviços ambientais em seu valor adequado; os produtores seriam forçados a pagar os custos sociais de emissão de efluentes que poluem o ar, a água e os solos, ou degradam os recursos ambientais renováveis, como as florestas e a pesca.
Estes preços podem ser anexados por vários meios, incluindo taxas, impostos, taxas de emissão e esquemas de depósito / reembolso. Se não forem, os recursos ambientais serão, na verdade, avaliados em zero.
E aí está o problema. Qualquer entrada é usada em relação ao seu custo. Se o óleo de palma for mais barato que o óleo de soja, os processadores de alimentos usarão óleo de palma. Da mesma forma, se é mais barato para um fabricante usar o rio próximo como lixão de efluentes do que usar um processo que não produz efluentes, a escolha é óbvia. Quando os recursos ambientais estão subestimados como resultado de uma legislação inadequada, os produtores de bens e serviços usarão excessivamente os recursos ambientais. Economistas ambientais chamariam isso de resultado ineficiente.
O comércio internacional permite que a escala dessa ineficiência seja ampliada além do que seria em um cenário doméstico fechado. Quanto menos custos ambientais forem suportados por um produtor, mais barato será o produto final e mais deles serão exigidos por um mercado global - especialmente se os concorrentes estrangeiros forem obrigados a pagar todos os custos ambientais da produção.
Isso nos leva à segunda ligação: o efeito da competitividade. Um elemento desse efeito é o resultado do efeito de ampliação. Se reguladores e produtores entenderem que a vantagem competitiva pode ser obtida evitando custos ambientais, haverá pressão para manter esses custos tão baixos quanto possível. Isso pode ser feito através da não-aplicação, ou mesmo do afrouxamento, das regulamentações existentes, ou através do “congelamento regulatório” - a relutância dos reguladores ambientais em propor novas regulamentações ambientais, mesmo quando todas as evidências mostram que são necessárias.
Isso gera “paraísos de poluição”, onde processos de fabricação intensivos em poluição se reúnem em países ou regiões que cobram os menores custos ambientais. A evidência da existência de tais paraísos tem sido difícil de encontrar. Isso pode ser porque a maioria das tentativas de encontrá-las buscou indústrias que se realocaram na busca por custos ambientais menores, em vez daqueles que têm suas demandas respondidas apenas pela ameaça de realocação. Além disso, uma empresa decidindo deslocar-se considerará uma ampla variedade de fatores, incluindo custos de mão-de-obra, segurança de investimento e disponibilidade de gerentes qualificados, e não apenas custos ambientais.
O outro tipo de efeito de competitividade funciona na outra direção, incentivando a melhoria do desempenho ambiental. O comércio internacional significa que os produtores domésticos podem encontrar uma demanda por produtos que sejam "mais verdes" do que os que, de outro modo, produziriam. Em mercados como a UE e a América do Norte, tanto os varejistas quanto os fabricantes exigem cada vez mais que seus fornecedores no exterior produzam mercadorias com os altos padrões que são a norma nesses mercados. Eles podem, por exemplo, exigir que certos corantes têxteis tóxicos não sejam usados ​​no processo de fabricação, ou podem até exigir que o algodão usado seja cultivado organicamente.
Há também o tipo regulatório de pressão - onde as leis de um mercado externo determinam que certas condições ambientais sejam atendidas como condição de acesso ao mercado. As regulamentações mais comuns desse tipo são os requisitos de embalagem e rotulagem. Os exportadores para a Alemanha, por exemplo, devem embalar seus produtos em materiais 100% recicláveis.
Finalmente, há o efeito de competitividade que vem dos investidores estrangeiros que estabelecem instalações de produção em um determinado país. Muitas vezes, eles trazem consigo técnicas de produção, tecnologias ou padrões de operação que são a norma em seu país de origem, mas que excedem as regulamentações ambientais no país de operação.
O terceiro tipo de ligação entre comércio e meio ambiente ocorre no contexto de mercados fechados ou protegidos. Pode ser um dos dois tipos.
Primeiro, um mercado protegido pode prejudicar o desenvolvimento sustentável no mercado interno, abrigando indústrias domésticas ineficientes e poluidoras. A indústria siderúrgica norte-americana, por exemplo, é muito menos eficiente em termos de energia do que muitas de suas contrapartes japonesas, mas ainda assim sobrevive devido a barreiras protecionistas. Os resultados são menos que ideais para os cidadãos dos EUA, que devem pagar a conta pagando preços mais altos do aço e impostos mais altos, e pelo meio ambiente.
Segundo, um mercado protegido ou fechado pode prejudicar o desenvolvimento sustentável em países estrangeiros, negando-lhes a oportunidade de exportar. Por exemplo, o Multi-Fiber Arrangement (MFA), uma exceção de longa data às regras multilaterais de comércio, limitou efetivamente as importações de têxteis e vestuário pelos países desenvolvidos. Os custos desta única peça de legislação, em termos de desenvolvimento econômico perdido nos países em desenvolvimento, são enormes. Um estudo recente da Agência Canadense para o Desenvolvimento Internacional descobriu que o custo para o Bangladesh somente da participação do Canadá no MFA excedia a quantidade de assistência oficial ao desenvolvimento canadense com destino a esse país.
Assim, a relação entre comércio e desenvolvimento sustentável não é simples. Além disso, pode ser positivo e negativo. Ele contém ameaças potenciais aos negócios, em termos de regulamentações nacionais que bloqueiam o comércio e o investimento por motivos ambientais. No entanto, também oferece oportunidades, em termos de novos mercados “verdes” e oportunidades de investimento.
O relacionamento de desenvolvimento sustentável no comércio é importante para os negócios? Essa questão pode ser respondida usando um exemplo concreto da política comercial internacional.
Em novembro de 2001, mais de 140 ministros do comércio de todo o mundo se reuniram no Catar. Na agenda estava um empurrão para o lançamento de uma nova rodada global de negociações comerciais - uma iniciativa que acabou sendo bem sucedida. Esta será a primeira rodada global de negociações desde a conclusão da Rodada Uruguai em 1995.
O que está sendo negociado? A agenda é extremamente ampla - como precisa ser para permitir as trocas necessárias. Na mesa será:
Agricultura, onde a UE concordou em eliminar progressivamente seus notórios subsídios à exportação; As regras comerciais, em que os EUA concordaram com um objetivo similar visando suas infames medidas antidumping; Liberalização do comércio de serviços; Uma revisão do acordo sobre direitos de propriedade intelectual relacionados ao comércio (por exemplo, quem tem o direito de chamar seu vinho Bordeaux e seu queijo Gruyère); Maior redução de tarifas industriais; Negociações sobre tratamento especial para países em desenvolvimento; Uma tentativa de negociar regras multilaterais sobre proteção de investimentos; Uma tentativa de negociar regras multilaterais sobre a política de concorrência; Negociações sobre transparência e processo justo em contratos de compras governamentais; Uma tentativa de negociar novas regras para facilitar a livre circulação de mercadorias transaccionadas através das fronteiras; Uma revisão do mecanismo de solução de controvérsias da Organização Mundial do Comércio (OMC); Negociações sobre comércio e meio ambiente, incluindo uma revisão crítica sobre os subsídios à pesca, uma negociação sobre a relação entre a lei da OMC e os acordos ambientais multilaterais e as negociações destinadas a eliminar as tarifas sobre bens e serviços ambientais.
Esta é uma agenda expansiva, com ramificações importantes para o desenvolvimento sustentável. Já havia uma agenda comercial e ambiental na OMC e uma agenda de comércio e desenvolvimento. Ambos foram perseguidos nos Comitês da OMC, mas com poucos resultados. Mas o Catar estabeleceu uma agenda mais concreta sobre questões ambientais e de desenvolvimento.
A maneira mais fácil de fazer com que as empresas se interessem por essa nova agenda é por meio de exemplos concretos.
1. Acordos Ambientais Multilaterais (MEAs) e a OMC.
Nunca ficou claro como o sistema internacional lidaria com os conflitos entre o direito ambiental internacional e o direito comercial internacional. E se, por exemplo, um signatário do Protocolo de Kyoto impusesse um imposto sobre bens importados relacionados ao carbono produzido em sua fabricação, alegando que estava fazendo isso para cumprir seus compromissos de Kyoto?
Neste exemplo, é provável que um país exportador busque reparação legal, mas onde ocorreria a disputa? Na OMC, onde a questão seria se as obrigações de direito comercial estavam sendo violadas? Ou sob o mecanismo de disputa criado pela Convenção sobre Mudança do Clima, em que o argumento seria sobre se o protocolo realmente permite tais medidas?
Não há uma hierarquia clara que ajude a responder a pergunta. O pior cenário seria a decisão da OMC contra um acordo ambiental negociado internacionalmente. Isso daria um impulso poderoso ao movimento antiglobalização.
Por outro lado, ninguém quer dar aos governos carta branca na imposição de medidas comerciais relacionadas a acordos ambientais multilaterais (MEAs), particularmente quando os acordos em questão não determinam especificamente a medida usada ou quando as medidas são usadas contra não-partes. acordo.
A OMC agora está comprometida em negociar uma resposta a essa questão de como ela se relaciona com os MEAs. Os resultados afetarão a capacidade das nações de impor todos os tipos de medidas relacionadas ao comércio, desde a proibição do comércio de espécies ameaçadas e resíduos perigosos até restrições a produtos geneticamente modificados e produtos químicos implicados na mudança climática.
2. Bens e serviços ambientais.
Sempre houve uma ou duas questões na agenda da OMC que pareciam incontroversas tanto do ponto de vista ambiental quanto comercial. A redução de tarifas sobre bens e serviços ambientais era uma delas. É uma boa notícia, portanto, que a nova agenda comprometa os países a negociar uma redução ou uma eliminação dessas tarifas.
As oportunidades para negócios conscientes da sustentabilidade nessa agenda são diretas: tarifas reduzidas significam maiores mercados de exportação, particularmente para os países em desenvolvimento, onde as tarifas sobre alguns bens industriais podem ser significativas.
Ainda não está claro como os bens e serviços ambientais serão definidos, e esta pode ser a vertente mais difícil das negociações. Por exemplo, uma central eficiente a carvão é um bem ambiental? Como sobre uma estação de tratamento de água? Claramente, a comunidade empresarial terá uma visão sobre o que deveria estar na lista e o que não deveria.
No geral, no entanto, não há dúvida de que os mercados internacionais de bens e serviços relacionados ao meio ambiente, incluindo engenharia ambiental e consultoria, se tornarão mais amigáveis ​​para os exportadores.
A agricultura tem sido tradicionalmente a mais difícil de quebrar para negociadores comerciais. Na verdade, ele recebeu um status especial de esculpir nas regras de comércio, desde o estabelecimento do GATT em 1947 até a criação da OMC em 1995. Mas as novas negociações procuram fazer algumas reformas radicais, as mais interessantes das quais se relacionam. subsídios.
De uma perspectiva de desenvolvimento, a maioria dos países em desenvolvimento adoraria ver limites impostos à capacidade dos países desenvolvidos de apoiar seus setores agrícolas - apoio que atualmente ultrapassa US $ 300 bilhões por ano. Muitos têm uma vantagem comparativa em produtos agrícolas e poderiam usar as exportações agrícolas como um motor de desenvolvimento, se não fossem as barreiras de mercado na América do Norte e na UE.
Do ponto de vista ambiental, é importante reduzir os subsídios vinculados aos níveis de produção. Estes tendem a incentivar a superprodução, muitas vezes em terras marginais. É igualmente importante assegurar que os governos sejam capazes de subsidiar os agricultores para 'mordomia' - ou seja, práticas ambientais sólidas, tais como preservação de áreas úmidas, baixa lavoura e prevenção de erosão.
Mas as lutas pela reforma serão confusas. Os subsídios são sacrossantos em muitos países, e é improvável que os políticos dos EUA ou da França estejam dispostos a enfrentar as conseqüências de matar essa vaca sagrada. É mais provável que eles negociem o direito de usar subsídios para objetivos “não comerciais”, como segurança alimentar, preservação ambiental e desenvolvimento regional.
É um mecanismo sobre o qual os países em desenvolvimento, compreensivelmente, estão nervosos. Eles vêem seu difícil acesso ao mercado desaparecer sob o disfarce de fumaça e espelhos do que a UE chama de "multifuncionalidade" da agricultura. Os exportadores agrícolas canadenses também estão preocupados com o resultado final das negociações, nervosos com a perda de mercados na UE, no Japão e em outros lugares, à medida que esses países embarcam em programas de auto-suficiência e proteção ambiental. Se alguma vez houve um exemplo claro de ameaças e oportunidades, é isso.
A Declaração de Doha, assinada no Quatar, dirigiu o Comitê de Comércio e Meio Ambiente da OMC para examinar várias questões-chave e recomendar em 2005 se as mudanças nas regras de comércio poderiam ser necessárias. Um dos temas para revisão foi rotular.
Há uma disputa de longa data na OMC sobre exatamente quem está sujeito à lei de rotulagem da OMC. Existe um código de prática na lei da OMC que estabelece como os padrões e a rotulagem devem ser implementados. Por exemplo, deve haver alguma forma de os exportadores estrangeiros poderem comentar sobre o projeto proposto.
O objetivo geral é evitar que normas e rótulos se tornem barreiras ao comércio, em vez de informações aos consumidores. O rótulo ecológico da UE para papel, por exemplo, dá preferência a papel reciclado sobre papel de florestas manejadas de forma sustentável - uma distinção que os gerentes de plantação brasileiros afirmam ter como objetivo proteger os fornecedores da UE.
É fácil ver como um rótulo simples pode ter enormes impactos comerciais. Considere o destino de um produto alimentício de consumo do Canadá que, em conformidade com os novos regulamentos da UE sobre rotulagem, se anuncia como possivelmente contendo organismos geneticamente modificados. Isso provavelmente deprimirá a demanda por esses produtos.
A grande questão, no entanto, é quem regula os rótulos ecológicos voluntários. A maioria é não obrigatória e imposta por organizações não governamentais. Por exemplo, o selo do Forest Stewardship Council para produtos florestais produzidos de forma sustentável está se tornando um padrão globalmente aceito, mas é completamente voluntário. A lei da OMC se aplica a esses padrões?
Alguns países argumentam que sim, sustentando que o código de boas práticas exige que os governos ajustem seus órgãos nacionais de definição de padrões. Outros argumentam que isso não acontece, sustentando que a lei da OMC se aplica somente aos governos. As discussões na OMC serão interessantes e trarão conseqüências pesadas para indústrias como a silvicultura.
Rotulagem traz oportunidades, bem como ameaças. Quanto mais legitimidade um rótulo tiver, mais poderosa se tornará a ferramenta de mercado. Isso é importante para as empresas que buscam explorar mercados de nicho verde no exterior.
Implicações para os negócios.
O que acontece na OMC em Genebra vale a pena ser monitorado. As empresas precisam saber o que está acontecendo nas negociações comerciais mundiais e como isso pode afetar seus interesses. Isso também se aplica às negociações regionais, como as negociações em curso sobre a Área de Livre Comércio das Américas.
O segundo segue do primeiro. Armados com o conhecimento do que está sendo negociado e como isso os afeta, as empresas precisam se insinuar fortemente no processo político em nível nacional. Eles precisam deixar os negociadores nacionais saberem o que eles deveriam estar pressionando, e contra o que eles deveriam estar se defendendo.
Algumas empresas e associações empresariais já estão bem informadas sobre o que está acontecendo nas negociações comerciais e estão constantemente praticando a arte do engajamento. Às vezes, seus interesses coincidem com os objetivos de desenvolvimento sustentável e, às vezes, não. Há perigos envolvidos no trabalho contra os objetivos de desenvolvimento sustentável na OMC e em outros fóruns de comércio internacional.
Os países desenvolvidos, como o Canadá, dependem fortemente da integridade do sistema multilateral de regras comerciais, a fim de proteger seus interesses comerciais contra os pesos-pesados ​​da economia, como os EUA e a UE. Mas a integridade desse sistema está cada vez mais ameaçada pela reação antiglobalização. Este movimento encheu as ruas de Seattle na terceira Conferência Ministerial da OMC em 1999, e tem se fortalecido desde então,
A influência deste movimento não deve ser subestimada. Nem o movimento deve ser descartado como equivocado. É motivada por desigualdades fundamentais no sistema global que não foram adequadamente tratadas pelos regimes de comércio e investimento e pela aparente insensibilidade das regras de comércio e investimento às preocupações ambientais.
Isso significa que qualquer tentativa de pressionar por um sistema de regras que funcione contra os objetivos ambientais e de desenvolvimento seria empurrar a OMC e outros regimes para mais perto do fogo do protesto.
Assim como um sistema seguro de regras comerciais, as empresas precisam de um ambiente político seguro e estável para que possam prosperar. O investimento e o comércio estão em desordem quando países, regiões ou a comunidade global sentem choques de instabilidade como o experimentado em 11 de setembro de 2001. É importante pressionar por um sistema multilateral de regras comerciais que fomente um desenvolvimento significativo nos países mais pobres.
Estamos cada vez mais reconhecendo que as grandes desigualdades globais não são sustentáveis. Elas podem estar relacionadas à migração, doença, instabilidade política, degradação ambiental ou mesmo à falta de mercados de exportação para nossos produtos e serviços. Em um mundo onde as forças da globalização estão nos tornando vizinhos cada vez mais próximos, o bem-estar de nossos vizinhos é cada vez mais nossa preocupação.

Comércio, economia e & amp; Assuntos relacionados.
Autor e informações da página.
por Anup Shah This Page Última Atualização Sunday, September 28, 2014 Esta página: globalissues / problem / 1 / trade-economy-related-issues. Para imprimir todas as informações (por exemplo, notas laterais expandidas, mostra links alternativos), use a versão de impressão: globalissues / print / issue / 1.
Não se pode separar economia, ciência política e história. A política é o controle da economia. A história, quando precisa e totalmente registrada, é essa história. Na maioria dos livros didáticos e salas de aula, estes três campos de estudo não só são separados, como também são compartimentalizados em subcampos separados, obscurecendo as interconexões próximas entre eles.
Esta seção tenta destacar alguns equívocos e injustiças no modelo atual de comércio global, economia e a atual forma de globalização liderada por corporações. Ele tenta dar uma olhada em como tudo isso afeta as pessoas em todo o mundo, especialmente as nações em desenvolvimento.
67 artigos sobre “Comércio, Economia, & amp; Questões Relacionadas ”e 10 questões relacionadas:
Crise financeira global.
Última atualização domingo, 24 de março de 2013.
Após um período de boom econômico, uma bolha financeira - global em escopo - estourou, mesmo causando a queda de algumas das maiores instituições financeiras do mundo. Com a recessão resultante, muitos governos das nações mais ricas do mundo recorreram a extensos pacotes de socorro e resgate para os grandes bancos e instituições financeiras remanescentes, ao mesmo tempo em que impunham duras medidas de austeridade para si mesmos.
Alguns dos resgates também levaram a acusações de hipocrisia devido à aparente socialização dos custos, enquanto privatizavam os lucros. Além disso, as instituições que estão sendo resgatadas são tipicamente aquelas que colocaram o mundo nesse problema em primeiro lugar. Para empresas menores e pessoas mais pobres, essas opções de socorro e resgate raramente estão disponíveis quando se encontram em crise.
A queda dos mercados de ações em um ponto acabou com 33% do valor das empresas, US $ 14,5 trilhões. Os contribuintes socorreram seus bancos e instituições financeiras com grandes quantias de dinheiro. Só os contribuintes americanos gastaram cerca de US $ 9,7 trilhões em pacotes e planos de resgate. O Reino Unido e outros países europeus também gastaram cerca de US $ 2 trilhões em resgates e pacotes de resgate. Mais é esperado. Muito mais.
Esses números, disponibilizados rapidamente, são suficientes para acabar com as hipotecas de muitos indivíduos ou eliminar a dívida do terceiro mundo muitas vezes. Mesmo os altos números de gastos militares são ofuscados pelos planos de resgate até agora.
Esse problema poderia ter sido evitado (em teoria), já que as pessoas vinham apontando para essas questões há décadas. No entanto, durante o boom, muito poucos querem ouvir esse pessimismo. Será que esta crise significa um fim para as formas descuidadas de banca e finanças e será que ela anuncia uma era económica melhor, ou estamos apenas condenados a continuar a esquecer a história e a repetir estes erros no futuro? Os sinais não são animadores, uma vez que as nações ricas estão resistindo a uma reforma significativa ...
Causas da pobreza.
Última atualização domingo, 28 de setembro de 2014.
A pobreza é o estado da maioria das pessoas e nações do mundo. Por que é isso? É suficiente culpar as pessoas pobres por sua própria situação? Eles foram preguiçosos, tomaram decisões ruins e foram os únicos responsáveis ​​por sua situação? E quanto aos seus governos? Eles seguiram políticas que realmente prejudicam o desenvolvimento bem-sucedido? Tais causas de pobreza e desigualdade são sem dúvida reais. Mas as causas mais profundas e globais da pobreza são menos discutidas.
Fatos e Estatísticas da Pobreza.
Última atualização segunda-feira, 7 de janeiro de 2013.
A maioria da humanidade vive com apenas alguns dólares por dia. Quer você viva nas nações mais ricas do mundo ou nos mais pobres, verá altos níveis de desigualdade.
As pessoas mais pobres também terão menos acesso à saúde, educação e outros serviços. Problemas de fome, desnutrição e doenças afligem os mais pobres da sociedade. Os mais pobres são também tipicamente marginalizados da sociedade e têm pouca representação ou voz nos debates públicos e políticos, tornando ainda mais difícil escapar da pobreza.
Em contraste, quanto mais rico você é, maior a probabilidade de se beneficiar de políticas econômicas ou políticas. A quantia que o mundo gasta em resgates financeiros e militares e outras áreas que beneficiam os ricos, em comparação com a quantia gasta para lidar com a crise diária da pobreza e problemas relacionados, é muitas vezes impressionante.
Alguns fatos e números sobre pobreza apresentados nesta página são reveladores, para dizer o mínimo.
Ajuste estrutural - uma das principais causas da pobreza.
Última atualização domingo, 24 de março de 2013.
Reduções na saúde, educação e outros serviços sociais vitais em todo o mundo resultaram de políticas de ajuste estrutural prescritas pelo Fundo Monetário Internacional (FMI) e pelo Banco Mundial como condições para empréstimos e pagamento. Além disso, os governos das nações em desenvolvimento devem abrir suas economias para competir entre si e com nações industrializadas mais poderosas e estabelecidas. Para atrair investimentos, os países pobres entram em uma corrida em espiral até o fundo para ver quem pode fornecer padrões mais baixos, salários reduzidos e recursos mais baratos. Isso aumentou a pobreza e a desigualdade para a maioria das pessoas. Ela também constitui uma espinha dorsal do que hoje chamamos de globalização. Como resultado, mantém as regras de comércio desiguais históricas.
Pobreza em todo o mundo.
Última atualização: sábado, 12 de novembro de 2011.
Em todo o mundo, em nações ricas ou pobres, a pobreza sempre esteve presente.
Na maioria das nações de hoje, a desigualdade - o fosso entre ricos e pobres - é bastante alta e freqüentemente crescente.
As causas são numerosas, incluindo a falta de responsabilidade individual, más políticas governamentais, exploração por pessoas e empresas com poder e influência, ou alguma combinação desses e outros fatores.
Muitos acham que altos níveis de desigualdade afetarão a coesão social e levarão a problemas como o aumento do crime e da violência.
A desigualdade é frequentemente uma medida de pobreza relativa. A pobreza absoluta, no entanto, também é uma preocupação. Dados do Banco Mundial sobre a pobreza no mundo revelam que um número maior de pessoas vive na pobreza do que se pensava anteriormente.
Por exemplo, a nova linha de pobreza é definida como vivendo com o equivalente a US $ 1,25 por dia. Com essa medida baseada nos dados mais recentes disponíveis (2005), 1,4 bilhão de pessoas vivem nessa linha ou abaixo dela.
Além disso, quase metade do mundo - mais de três bilhões de pessoas - vivem com menos de US $ 2,50 por dia e pelo menos 80% da humanidade vive com menos de US $ 10 por dia:
Hoje, cerca de 21.000 crianças morreram em todo o mundo.
Última atualização: sábado, 24 de setembro de 2011.
Cerca de 21.000 crianças morrem todos os dias ao redor do mundo.
Isso é equivalente a:
1 criança morrendo a cada 4 segundos 14 crianças morrendo a cada minuto Um número de mortos em escala de conflito na Líbia todos os dias Um terremoto no Haiti em 2010 ocorre a cada 10 dias Um tsunami em 2004 ocorre a cada 11 dias Uma taxa de mortalidade no Iraque a cada 19-46 dias 7,6 milhões de crianças que morrem todos os anos Cerca de 92 milhões de crianças morrem entre 2000 e 2010.
Os assassinos silenciosos são a pobreza, doenças e doenças facilmente evitáveis ​​e outras causas relacionadas. Apesar da escala desta catástrofe diária / contínua, raramente consegue alcançar, muito menos sustentar, no horário nobre, cobertura de manchete.
Fome Mundial e Pobreza.
Última atualização domingo, 22 de agosto de 2010.
O alívio significativo da fome a longo prazo está enraizado no alívio da pobreza, pois a pobreza leva à fome. A fome no mundo é um sintoma terrível da pobreza mundial. Se os esforços forem direcionados apenas para fornecer alimentos, ou melhorar a produção ou distribuição de alimentos, então as causas estruturais que criam fome, pobreza e dependência ainda permanecerão. Embora os recursos e energias sejam utilizados para aliviar a fome por meio de medidas técnicas, como o melhoramento da agricultura, e por mais importantes que sejam, questões inter-relacionadas como a pobreza significam que soluções políticas provavelmente também são necessárias para uma redução significativa e prolongada da fome.
Causas da fome estão relacionadas com a pobreza.
Última atualização domingo, 3 de outubro de 2010.
Há muitas questões inter-relacionadas causando fome, que estão relacionadas à economia e outros fatores que causam a pobreza. Elas incluem direitos e propriedade da terra, desvio do uso da terra para uso não produtivo, ênfase crescente na agricultura voltada à exportação, práticas agrícolas ineficientes, guerra, fome, seca, pesca excessiva, safra pobre, etc. Esta seção apresenta algumas das estas questões.
Resolvendo a Fome no Mundo Significa Resolver a Pobreza Mundial.
Última atualização domingo, 24 de outubro de 2010.
Resolver a fome no mundo no sentido convencional (de fornecer / cultivar mais comida, etc.) não irá combater a pobreza que leva à fome em primeiro lugar. Além disso, existe o risco de continuar a pobreza e a dependência sem perceber, porque o ato de tentar fornecer mais alimentos, etc., pode parecer tão altruísta em termos de motivação. Para resolver a fome no mundo a longo prazo, a redução da pobreza é necessária.
Despejo de Alimentos [Ajuda] Mantém a Pobreza.
Última atualização segunda-feira, 10 de dezembro de 2007.
A ajuda alimentar (quando não se destina a ajuda de emergência) pode, na verdade, ser muito destrutiva para a economia do país receptor e contribuir para mais fome e pobreza a longo prazo. Alimentos gratuitos, subsidiados ou baratos, abaixo dos preços de mercado, prejudicam os agricultores locais, que não podem competir e são expulsos do mercado de trabalho para a pobreza, aumentando ainda mais a participação de mercado de produtores maiores, como os dos EUA e da Europa. Muitas nações pobres são dependentes da agricultura e, portanto, essa ajuda alimentar equivale ao dumping de alimentos. Nas últimas décadas, nações mais poderosas usaram isso como uma ferramenta de política externa para o domínio e não para a ajuda real.
Ajuda Alimentar como Dumping.
Última atualização segunda-feira, 31 de outubro de 2005.
A forma como os programas de ajuda alimentar de vários países ricos são estruturados pode ser preocupante. De fato, a ajuda alimentar (quando não é para alívio de emergência) pode realmente ser muito destrutiva para a economia da nação beneficiária. Despejar alimentos em nações mais pobres (isto é, comida barata, subsidiada ou barata, abaixo dos preços de mercado) enfraquece os agricultores locais, que não podem competir e são expulsos do emprego e para a pobreza, aumentando ainda mais a participação de mercado dos produtores maiores, como os os EUA e a Europa.
Mito: Mais ajuda dos EUA ajudará os famintos.
Postado sábado, 25 de novembro de 2000.
Com a gentil permissão de Peter Rosset do Instituto de Política de Alimentos e Desenvolvimento (FoodFirst, como também é conhecido), capítulo 10 de Fome no Mundo: 12 Mitos, 2a Edição, de Frances Moore Lappé, Joseph Collins e Peter Rosset, com Luis Esparza (totalmente revisado e atualizado, Grove / Atlantic e Food First Books, outubro de 1998) foi publicado aqui. Descreve em detalhe a questão da ajuda alimentar e as políticas de ajuda dos Estados Unidos da América, os problemas que causa e quem realmente beneficia.
Corrupção.
Última atualização domingo, 4 de setembro de 2011.
Muitas vezes ouvimos os líderes dos países ricos dizendo aos países pobres que a ajuda e os empréstimos só serão concedidos quando eles demonstrarem que estão erradicando a corrupção.
Embora isso definitivamente deva acontecer, os próprios países ricos são freqüentemente ativos nas maiores formas de corrupção nesses países pobres, e muitas políticas econômicas que eles prescrevem exacerbaram o problema.
A corrupção nos países em desenvolvimento definitivamente deve estar no topo das listas de prioridades (e está se tornando cada vez mais na esteira da crise financeira global), mas também deve estar nas listas de prioridades dos países ricos.
Cimeira Mundial das Nações Unidas de 2005.
Última atualização domingo, 18 de setembro de 2005.
A Cúpula Mundial das Nações Unidas de setembro de 2005 deveria rever o progresso desde a Declaração do Milênio, adotada por todos os Estados Membros em 2000. No entanto, os EUA propuseram enormes mudanças em um documento final que deve ser assinado por todos os membros. There are changes on almost all accounts, including striking any mention of the Millennium Development Goals, that aim for example, to halve poverty and world hunger by 2015. This has led to concerns that the outcome document will be weakened. Developing countries are also worried about stronger text on human rights and about giving the UN Security Council more powers.
IMF & World Bank Protests, Washington D. C.
Last updated Friday, July 13, 2001.
To complement the public protests in Seattle, the week leading up to April 16th/17th 2000 saw the other two global institutions, the International Monetary Fund (IMF) and World Bank, as the focus of renewed protests and criticisms in Washington, D. C. The purpose of the mass demonstrations was to protest against the current form of globalization, which is seen as unaccountable, corporate-led, and non-democratic, and to show the link between poverty and the various policies of the IMF and the World Bank.
Economic Democracy.
Posted Sunday, November 26, 2000.
This next page is a reposting of a flyer about a new book from J. W. Smith and the Institute for Economic Democracy, whom I thank for their kind permission. The book is called Economic Democracy: The Political Struggle Of The 21st Century. Typically on this site, I do not advertise books etc, (although I will cite from and link to some, where relevant). However, in this case, I found that the text in the flyer provides an excellent summary of poverty's historic roots, as well as of the multitude of issues that cause poverty. (Please also note that I do not make any proceeds from the sale of this book in any way.)
Poverty Links for More Information.
Last updated Monday, April 28, 2003.
Links to other sites discussion issues on trade, the global economy, poverty and other related issues.
World hunger related links for more information.
Last updated Monday, December 10, 2007.
Links to web sites and articles that discuss world hunger, the relationship between populations and hunger, of poverty and hunger, agricultural issues, land rights and so on.
Third World Debt Undermines Development.
Last updated Sunday, June 03, 2007.
Causes of the Debt Crisis.
Last updated Sunday, June 03, 2007.
The causes of debt are a result of many factors, including:
The legacy of colonialism — for example, the developing countries’ debt is partly the result of the unjust transfer to them of the debts of the colonizing states, in billions of dollars, at very high interest rates. Odious debt, whereby unjust debt is incurred as rich countries loaned dictators or other corrupt leaders when it was known that the money would be wasted. South Africa, for example shortly after freedom from Apartheid had to pay debts incurred by the apartheid regime. In effect, South Africans are paying for their own oppression. Mismanaged spending and lending by the West in the 1960s and 70s.
In effect, due to enormous debt repayments, the poor are subsidizing the rich.
The Scale of the Debt Crisis.
Last updated Saturday, July 02, 2005.
Total debt continues to rise, despite ever-increasing payments, while aid is falling. Por exemplo:
The developing world now spends $13 on debt repayment for every $1 it receives in grants. For the poorest countries (approximately 60), $550 billion has been paid in both principal and interest over the last three decades, on $540bn of loans, and yet there is still a $523 billion dollar debt burden.
Debt kills. Some 11 million children die each year around the world, due to conditions of poverty and debt.
The Heavily In-debt Poor Countries Initiative is Not Working.
Last updated Thursday, August 30, 2001.
The Heavily In-debt Poor Countries (HIPC) initiative set up in 1996 by the rich nations through the IMF and World Bank calls for the reduction of external debt for the poorest countries through write-offs by official donors.
The IMF and World Bank have actually admitted that the HIPC initiative is backfiring in some cases and are confirming warnings that debt-relief advocates were making even before the scheme was launched. Difficult, and sometimes unfair conditions, are often associated with the initiative.
Debt Cancellation and Public Pressure.
Last updated Saturday, July 09, 2005.
As well as the admissions by some heads of international financial institutions such as the IMF that their various schemes are not working (as mentioned above), there have been some additional positive actions and decisions. The Jubilee 2000 initiative, for example, has been very beneficial here to raise awareness.
Various G8 Summits have seen promises of billions in debt-write off, but almost hardly are carried out, or contain a lot of spin. For example, a lot of debt relief promised may include moneys previously announced for such purposes, thus creating an impression of enormous write-offs. Bilateral debt relief also does not typically release actual money to be used for other purposes. Multilateral debt relief, however, could.
Debt and the Global Economic Crisis of 1997/98/99.
Last updated Wednesday, April 25, 2001.
The structural adjustment measures, global, unregulated free markets and lack of protection for emerging economies all contributed to the global economic and financial crisis in the late 1990s.
The Progress of Nations, 1999 report by UNICEF, suggests that debt is killing children. It is pointed out that as countries are diverting resources away from social provisions to repay debt, those most affected are the poor, especially women and children. UNICEF’s 2000 report says 30,000 children die each day due to poverty. That is just under 11 million children each year.
Debt and the Effect on Children.
Last updated Tuesday, July 04, 2000.
Debt and the Environment.
Last updated Friday, August 24, 2001.
At first glance, it may seem like separate issues, but environment issues and poverty/debt are very much related. Basically, the more the developing countries stay in debt, the more they will feel that they need to milk the earth’s resources for the hard cash they can bring in, and also cut back on social, health, environmental conservation, employment and other important programs.
Responding to environmental disasters is also made more difficult when the affected countries are in severe debt. Examples include Honduras and Nicaragua, where Hurricane Mitch devastated large parts of those countries, as well as Mozambue and Madagascar where floods have made hundreds of thousands of people homeless.
Tackling debt-related issues would also therefore indirectly help address environmental and other issues as well.
Free Trade and Globalization.
Last updated Sunday, March 24, 2013.
A Primer on Neoliberalism.
Last updated Sunday, August 22, 2010.
Global trading that allows all nations to prosper and develop fairly and equitably is probably what most people would like to see. Neoliberalism is touted as the mechanism for this. Margaret Thatcher's TINA acronym suggested that There Is No Alternative. But what is neoliberalism, anyway?
Criticisms of Current Forms of Free Trade.
Last updated Friday, March 31, 2006.
While internationalism and equitable global trading allowing fair development is probably what most people would like to see, the current model of corporate-led free trade and its version of globalization that has resulted, has come under criticism by many, many NGOs, developing nation governments and ordinary citizens.
The WTO and Free Trade.
Last updated Monday, July 02, 2007.
The World Trade Organization, (WTO), is the primary international body to help promote free trade, by drawing up the rules of international trade. However, it has been mired in controversy and seen to be hijacked by rich country interests, thus worsening the lot of the poor, and inviting protest and intense criticism.
WTO Doha “Development” Trade Round Collapse, 2006.
Posted Friday, July 28, 2006.
Supposed to be a Development round of trade talks, the almost five year-long Doha round collapsed at the end of July, 2006. The US found itself on the defensive as around the world blame was directed at the US, in particular by the EU. However, the EU has also been part of the reason for failure throughout the five years. This article looks at what happened at the end of 2006, and also introduces a collection of articles that were written at the time of each previous major WTO meetings from the initial Doha round in 2001 and since.
Deregulation or Protectionism?
Last updated Sunday, January 17, 2010.
Protectionism is often referred to as being a barrier to free trade. The word seems to conjure up negative images of isolationism and subsidizing industries that could otherwise not compete fairly against others. (This can help indicate why some industries would strongly support protectionism for themselves.) Complete deregulation allows corporations to benefit but at the possible expense of people in that nation or region if that deregulation means relaxation of environmental rules, health and educational services including control of natural resources and energy. (This hints at the powerful lure that the "freeing" of trade and liberalization of access to resources from regulation has to some proponents.) Neither seems to answer the notion of fairness, though. Often those nations that promote free trade for all, want protectionism for themselves.
Some Regional Free Trade Agreements.
Last updated Saturday, January 02, 2010.
There have been numerous regional free trade agreements. Some have been controversial, while others may be beneficial. Examples include the North American Free Trade Agreement (NAFTA), the Free Trade Area of the Americas (FTAA), US attempts at free trade agreements with African nations and so on. Critics argue that when these agreements include partners that have different levels of development, this will lead to unequal trade and favor the wealthier partners to the detriment of the poorer ones.
The Mainstream Media and Free Trade.
Last updated Sunday, July 14, 2002.
The mainstream media has been flooded by free trade proponents and heavily backed by those that will profit from it the most. This makes public debate more difficult.
Public Protests Around The World.
Last updated Monday, November 07, 2011.
The global financial crisis has spawned a global protest movement campaigning against things like inequality, corporate greed, lack of jobs, etc.
Although these protests have occurred for decades, they have typically been in the developing countries, or about the situation in developing countries.
As such, many Western nations, who have strongly influenced the conditions in developing countries, have typically not paid much attention to such protests, no matter how large (even the famous Battle for Seattle was more about violence than the underlying issues, for example). However, this time, the global financial crisis has hit the ordinary citizens of Western nations quite hard, and inspired by the Arab Spring and protests in Spain, a global movement seems to have sprung up.
WTO Protests in Seattle, 1999.
Last updated Sunday, February 18, 2001.
At the end of November 1999, Seattle saw major governments meet at a WTO ministerial meeting to discuss various trading rules. Seattle also saw free speech cracked down on in the name of free trade. Enormous public protests ensued. There were many differences in the perspectives of developing and industrialized nations on the current reality of free trade and how it affected them. It resulted in a WTO failure to agree on many issues, without adopting any resolutions. Developing countries were sidelined and one delegate even physically barred from a meeting.
General Agreement on Trade in Services.
Last updated Tuesday, July 24, 2001.
A similar agreement to the derailed Multilateral Agreement on Investment (MAI), the General Agreement on Trade in Services (GATS) at the WTO has a potentially wide ramification for the poor and developing countries.
Multilateral Agreement on Investment.
Last updated Wednesday, December 20, 2000.
We had a potential nightmare in the form of the Multilateral Agreement on Investment (MAI). An almost secret agreement about investment rights and opening up nations for freer trade. However many, many people feared that this would be accompanied by grave social and environmental consequences, due to the wording of the MAI text.
Corporations.
Last updated Monday, January 07, 2013.
The Rise of Corporations.
Last updated Thursday, December 05, 2002.
Today we know that corporations, for good or bad, are major influences on our lives. For example, of the 100 largest economies in the world, 51 are corporations while only 49 are countries. In this era of globalization , marginalized people are becoming especially angry at the motives of multinational corporations, and corporate-led globalization is being met with increasing protest and resistance. How did corporations ever get such power in the first place? What was the impact of giving corporations the same right as individuals in 1886 in the United States?
Corporations and Human Rights.
Last updated Thursday, September 19, 2002.
Large, transnational corporations are becoming increasingly powerful. As profits are naturally the most important goal, damaging results can arise, such as violation of human rights, lobbying for and participating in manipulated international agreements, environmental damage, child labor, driving towards cheaper and cheaper labor, and so on. Multinational corporations claim that their involvement in foreign countries is actually a constructive engagement as it can promote human rights in non-democratic nations. However, it seems that that is more of a convenient excuse to continue exploitative practices.
Pharmaceutical Corporations and Medical Research.
Last updated Saturday, October 02, 2010.
For a while now, pharmaceutical companies have been criticized about their priorties. It seems the profit motive has led to emphasis on research that is aimed more at things like baldness and impotence, rather than various tropical diseases that affect millions of people in developing countries.
Unfortunately, while a large market therefore exists, most of these people are poor and unable to afford treatments, so the pharmaceutical companies develop products that can sell and hence target wealthier consumers.
In addition, there is concern at how some pharmaceutical companies have been operating: from poor research and trial practice to distorting results, and politically lobbying and pressuring developing countries who try to produce generics or try to get cheaper medicines for their citizens.
Pharmaceutical Corporations and AIDS.
Last updated Sunday, June 02, 2002.
The AIDS crisis is one example that highlights the motives of some of the larger pharmaceutical corporations. When South Africa wanted to try and produce cheaper drugs to help its own people, by producing more generic and cheaper drugs, these companies actually lobbied the US government to impose sanctions on them!
Tax Avoidance and Tax Havens; Undermining Democracy.
Last updated Monday, January 07, 2013.
Through tax havens, transfer pricing and many other policies — both legal and illegal — billions of dollars of tax are avoided. The much-needed money would helped developing (and developed) countries provide important social services for their populations.
Some tax avoidance, regardless of how morally objectionable it may be to some people, is perfectly legal, and the global super elite are able to hide away trillions of dollars, resulting in massive losses of tax revenues for cash-strapped governments who then burden ordinary citizens further with austerity measures during economic crisis, for example. Yet these super elite are often very influential in politics and business. In effect, they are able to undermine democracy and capitalism at the same time.
As the global financial crisis has affected many countries, tackling tax avoidance would help target those more likely to have contributed to the problem while avoid many unnecessary austerity measures that hit the poorest so hard. But despite rhetoric stating otherwise, it does not seem to high on the agenda of many governments as you might think.
Corporations and the Environment.
Last updated Saturday, May 25, 2002.
Many industries such as the energy and fossil fuels industry leave many environmental problems in their wake. Because international lending schemes are tied with reforms that include cutting back on regulatory and safety measures such as health, education and the environment, problems can arise without many resources available to deal with them. While large corporations are able to profit, the costs from environmental and other damage has to be borne by the local population.
Responsabilidade social corporativa.
Posted Saturday, July 07, 2007.
Corporate Social Responsibility is a bit of a buzz word and some feel that it has been diluted from its original aims, while others are trying to find innovative ways to engage with businesses to be more responsible in their practices.
Corporate Influence on Children.
Last updated Saturday, June 02, 2001.
When companies see children as an enormous market with incredible purchasing power, it leads to a lot of advertising and marketing targeted directly at them. Some are concerned at the effect it has as children, teaching them to be consumers and overly conscious about materialistic things, perhaps even at the expense of human qualities from an early age.
Corporations and Worker’s Rights.
Last updated Sunday, May 28, 2006.
For many companies, the largest cost is often the work force. Hence, where profits are the bottom line, it is only natural for companies to seek out the cheapest labor possible. However, when international agreements are often designed to foster an environment where cheaper and cheaper labor is promoted, the workers themselves are often not paid enough to live on. When a nation tries to provide regulatory steps to improve workers conditions (which does mean more costs to the companies), multinational corporations naturally pick up and go to other places where there are less measures in place. In this way, improving working conditions will always be difficult, as it is not in the interest of the large companies.
Influence at the World Trade Organization.
Last updated Tuesday, May 15, 2001.
Transnational corporations are able to exert enormous influence in no less a powerful body as the World Trade Organization (WTO). These corporations are closely linked to the WTO decision-makers themselves.
Corporate Power Facts and Stats.
Last updated Saturday, November 12, 2011.
As transnational corporations grow in size and power, their influence and impacts affect more and more people. These stats provide an insight into the growing size and influence of corporations.
Consumption and Consumerism.
Last updated Sunday, January 05, 2014.
Creating the Consumer.
Last updated Wednesday, May 14, 2003.
This section looks at the rise of the consumer and the development of the mass consumer society. While consumption has of course been a part of our history, in the last 100 years or so, the level of mass consumption beyond basics has been exponential and is now a fundamental part of many economies. Luxuries that had to be turned into necessities and how entire cultural habits had to be transformed for this consumption is introduced here.
Children as Consumers.
Last updated Sunday, November 21, 2010.
The market for children’s products and food is enormous. Parents on the one hand have a hard time raising children the way they want to, while on the other hand, kids are being increasingly influenced by commercialism that often goes against what parents are trying to do.
Effects of Consumerism.
Last updated Wednesday, August 10, 2005.
Because consumption is so central to many economies, and even to the current forms of globalization, its effects are also seen around the world. How we consume, and for what purposes drives how we extract resources, create products and produce pollution and waste. Issues relating to consumption hence also affect environmental degradation, poverty, hunger, and even the rise in obesity that is nearing levels similar to the official global poverty levels. Political and economic systems that are currently promoted and pushed around the world in part to increase consumption also lead to immense poverty and exploitation. Much of the world cannot and do not consume at the levels that the wealthier in the world do. Indeed, the above U. N. statistics highlight that very sharply. In fact, the inequality structured within the system is such that as Richard Robbins says, some one has to pay for the way the wealthier in the world consume.
Last updated Sunday, January 05, 2014.
It is well known that tobacco smoking kills millions. But it also exacerbates poverty, contributes to world hunger by diverting prime land away from food production, damages the environment and reduces economic productivity. Second hand smoking also affects other people’s lives.
Despite many attempts to prevent it, a global tobacco control treaty became international law in 2005.
However, challenges still remain as tobacco companies try to hit back, for example, by targeting developing nations, increasing advertising at children and women, attempting to undermine global treaties and influence trade talks, etc.
Read “Tobacco” to learn more.
Wasted Wealth, Capital, Labor and Resources.
Last updated Sunday, September 23, 2001.
We are beginning to get just a hint of how wasteful our societies are. Sugar, beef, and bananas are just the tip of the iceberg in terms of examples of wasted industry and waste structured within the current system. Not only are certain wasteful job functions unnecessary as a result, but the capital that employs this labor is therefore a wasteful use of capital. As a result, we see waste and misuse of the environment, as well as social and environmental degradation increasing. Our industries may be efficient for accumulating capital and making profits, but that does not automatically mean that it is efficient for society. However, with such wasted labor what do we do? We can’t have such an enormous idle labor force, right? Well, as J. W. Smith points out, we should share the remaining jobs. This would also reduce our workweek. Something technocrats have kept promising us in rhetoric only!
Mathematics of Wasted Labor—an Example.
Posted Friday, September 07, 2001.
With kind permission from J. W. Smith, a part of the conclusion to Part I of World’s Wasted Wealth II (Institute for Economic Democracy, 1994) has been reproduced on this page. That part is titled The Mathematics of Wasted Labor . It is a vivid example of wasted and unnecessary labor using the United States as the case study. While the book was written back in 1994 and the numbers, facts and estimates are hence based on data from the early 1990s, the pattern and examples shown here are still very valid. His calculations suggest that with the elimination of wasted labor in the U. S. and sharing the remaining productive jobs between all those who can work, workers would need to work just 2.4 days per week!
Consumption and Consumerism Links and Resources.
Posted Friday, September 07, 2001.
Because this topic is vast, I cannot expect to write everything here! In addition, due to the overlapping and inter-related nature of so many issues, throughout this web site topics are presented which can also be looked at from this waste perspective. Such links as well as links to other web site, books and so on are presented here.
Sustainable Development.
Last updated Sunday, September 28, 2014.
Sustainable Development Introduction.
Last updated Wednesday, November 18, 2009.
The idea of sustainable development grew from numerous environmental movements in earlier decades. Summits such as the Earth Summit in Rio, Brazil, 1992, were major international meetings to bring sustainable development to the mainstream.
However, the record on moving towards sustainability so far appears to have been quite poor. The concept of sustainability means many different things to different people, and a large part of humanity around the world still live without access to basic necessities.
Poverty and the Environment.
Last updated Saturday, February 12, 2005.
The causes of poverty and of environmental degradation are inter-related suggesting that approaching sustainable development requires understanding the issues from many angles, not just say an environmentalist or economics perspective alone.
Non-governmental Organizations on Development Issues.
Last updated Wednesday, June 01, 2005.
What does an ever-increasing number of non-governmental organizations (NGOs) mean? NGOs are non-profit organizations filling the gap where governments will not, or cannot function. In the past however, some NGOs from the wealthy nations have received a bad reputation in some developing nations because of things like arrogance, imposition of their views, being a foreign policy arm or tool of the original country and so on. Even in recent years some of these criticisms still hold. However, recently some new and old NGOs alike, have started to become more participatory and grassroots-oriented to help empower the people they are trying to help, to help themselves. This is in general a positive turn. Yet, the fact that there are so many NGOs popping up everywhere perhaps points to failures of international systems of politics, economics, markets, and basic rights.
Foreign Aid for Development Assistance.
Last updated Sunday, September 28, 2014.
In 1970, the world’s rich countries agreed to give 0.7% of their gross national income as official international development aid, annually.
Since that time, billions have certainly been given each year, but rarely have the rich nations actually met their promised target.
For example, the US is often the largest donor in dollar terms, but ranks amongst the lowest in terms of meeting the stated 0.7% target.
Furthermore, aid has often come with a price of its own for the developing nations. Common criticisms, for many years, of foreign aid, have included the following:
Aid is often wasted on conditions that the recipient must use overpriced goods and services from donor countries Most aid does not actually go to the poorest who would need it the most Aid amounts are dwarfed by rich country protectionism that denies market access for poor country products while rich nations use aid as a lever to open poor country markets to their products Large projects or massive grand strategies often fail to help the vulnerable; money can often be embezzled away.
This article explores who has benefited most from this aid, the recipients or the donors.
G8: Too Much Power?
Posted Monday, August 25, 2008.
G8 Summits: Empty promises each year.
Last updated Monday, August 25, 2008.
The G8, is made up of the seven most powerful economies of the world, (United States, Japan, Germany, France, UK, Canada, Italy) and Russia. Together they form a very powerful and influential (though informal) group of nations. For example, they accounting for almost 50% of the votes at the IMF and World Bank. At their annual summits they attract a lot of criticism, increasingly now in the mainstream, for failing the world’s poor. This section introduces the G8 with an overview of recent summits and their outcomes.
G8 Summit 2007.
Last updated Sunday, June 10, 2007.
The 2007 Summit has gained some media attention in its buildup, but issues around climate change, similar to the efforts seen in 2005 to water down draft texts, have surfaced again. Protesters are gathering, and while mostly peaceful a handful have clashed with police. Issues such as the excessive farm subsidies of the rich nations seem less likely to get discussed, even though it is crucial for many poor countries.
G8 Summit 2005—One Year On.
Posted Saturday, July 01, 2006.
One year on from the G8 Summit of 2005 that seemed to promise so much, what has been the status? It seems that some progress was certainly made. For example, significant debt cancellation has allowed some countries to offer enhanced or even free health services to all. Yet, there are still many concerns. The fancy accounting and spin used by some countries to paint a positive picture or give the impression that more assistance has been delivered than what actually has risks discrediting the process, impacting the poor once more. This short article explores some of these concerns.
G8 Summit 2005.
Last updated Sunday, July 10, 2005.
The G8 Summit in July 2005 looked to be historic because of promised debt relief for some poor countries in Africa as well as action on climate change. But behind the media and government spin, was this really the case? Climate change was also under discussion, but leaked drafts revealed an extremely watered down text suggesting limited or no responsibility on rich countries to take leadership, and even questions around the science of climate change.
Water and Development.
Last updated Sunday, June 06, 2010.
Issues such as water privatization are important in the developing world especially as it goes right to the heart of water rights, profits over people, and so on. This article looks into these issues and the impacts it has on people around the world.
Brain Drain of Workers from Poor to Rich Countries.
Posted Friday, April 14, 2006.
Brain drain is a problem for many poor countries losing skilled workers to richer countries. In healthcare, the effects can often be seen vividly. For example, in many rich countries, up to one third of doctors may be from abroad, many from Sub-Sahara Africa, while many African countries have as little as 500 doctors serving their entire population. Reasons for this brain drain vary, ranging from poor conditions domestically to attractive opportunities and active enticement from abroad.
World Summit on Sustainable Development.
Last updated Saturday, September 07, 2002.
This section introduces some of the issues on the international summit (August 26 - September 4, 2002) where thousands of delegates met to discuss various issues comprising sustainable development. Of course, there was a lot of controversy including differences between the global North and South on all sorts of issues such as corporate-led globalization, privatization of energy, water, health, etc. In addition there was also concern about motives and influences of large corporations on the outcomes of the Summit.
United Nations on Development Issues.
Last updated Wednesday, July 25, 2001.
The United Nations is the largest international body involved in development issues around the world. However, it has many political issues and problems to contend with. But, despite this, it is also performing some much needed tasks around the world, through its many satellite organizations and entities, providing a means to realize the Declaration of Human Rights. Unfortunately though, it is not perfect and is negatively affected by politics of powerful nations that wish to further their own interests.
Fair Trade.
Last updated Sunday, August 06, 2000.
Child Labor.
Last updated Monday, January 01, 2001.
The Banana Trade War.
Last updated Sunday, January 03, 2010.
Bananas are widely consumed. Yet, they represent a wide variety of inter-related issues, from environmental, economic, social, and political. Nations and regions, such as the US and EU have in the past battled in a trade war over how bananas are exported and imported, affected the poorest in the producing countries the most.
Trade, Economic Links For More Information.
Last updated Wednesday, July 25, 2001.
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Current trade system

Globalization is the process, completed in the twentieth century, by which the capitalist world-system spreads across the actual globe. Since that world-system has maintained some of its main features over several centuries, globalization does not constitute a new phenomenon. At the turn of the twenty-first century, the capitalist world economy is in crisis; therefore, according to the theory's leading proponent, the current "ideological celebration of so-called globalization is in reality the swan song of our historical system" (I. Wallerstein, Utopistics , 1998: 32).
The modern world-system originated around 1500. In parts of western Europe, a long-term crisis of feudalism gave way to technological innovation and the rise of market institutions. Advances in production and incentives for long-distance trade stimulated Europeans to reach other parts of the globe. Superior military strength and means of transportation enabled them to establish economic ties with other regions that favored the accumulation of wealth in the European core. During the "long sixteenth century," Europeans thus established an occupational and geographic division of labor in which capital-intensive production was reserved for core countries while peripheral areas provided low-skill labor and raw materials. The unequal relationship between European core and non-European periphery inevitably generated unequal development. Some regions in the "semiperiphery" moderated this inequality by serving as a buffer. States also played a crucial role in maintaining the hierarchical structure, since they helped to direct profits to monopoly producers in the core and protected the overall capitalist economy (e. g., by enforcing property rights and guarding trade routes). At any one time, a particular state could have hegemonic influence as the technological and military leader, but no single state could dominate the system: it is a world economy in which states are bound to compete. While the Europeans started with only small advantages, they exploited these to reshape the world in their capitalist image. The world as a whole is now devoted to endless accumulation and profit-seeking on the basis of exchange in a market that treats goods and labor alike as commodities.
In the twentieth century, the world-system reached its geographic limit with the extension of capitalist markets and the state system to all regions. It also witnessed the rise of the United States as a hegemonic power-one that has seen its relative economic and political strength diminished since the last years of the Cold War. Newly independent states and communist regimes challenged core control throughout the century, and some formerly peripheral countries improved their economic status, but none of this shook the premises of a system that in fact was becoming more economically polarized. The nineteenth-century ideology of reform-oriented liberalism, which held out the hope of equal individual rights and economic advancement for all within states, became dominant in the twentieth but lost influence after 1968. Such twentieth-century developments set the stage for what Wallerstein calls a period of transition. New crises of contraction can no longer be solved by exploiting new markets; economic decline will stimulate struggle in the core; challenges to core dominance will gather strength in the absence of a strong hegemonic power and a globally accepted ideology; polarization will push the system to the breaking point. While this chaotic transition may not produce a more equal and democratic world, it does spell the end of capitalist globalization.
Definition . A world-system is any historical social system of interdependent parts that form a bounded structure and operate according to distinct rules, or "a unit with a single division of labor and multiple cultural systems" (1974a: 390). Three concrete instances stand out: mini-systems, world empires, and world-economies. The modern world-system is a world-economy: it is "larger than any juridically defined political unit" and "the basic linkage between its parts is economic" (1974b: 15). It is a capitalist world-economy because the accumulation of private capital, through exploitation in production and sale for profit in a market, is its driving force; it is "a system that operates on the primacy of the endless accumulation of capital via the eventual commodification of everything" (1998: 10).
Key feature . The capitalist world-economy has no single political center: it "has been able to flourish precisely because [it] has had within its bounds not one but a multiplicity of political systems," which has given capitalists "a freedom of maneuver that is structurally based" and has "made possible the constant expansion of the world-system" (1974b: 348).
Origin . The modern world-system has its origin in the European world-economy created in the late-fifteenth and early-sixteenth century (1974b: 15), but only consolidated in its current form by the mid-seventeenth century (1974a: 401). The crisis of feudalism created strong motivation to seek new markets and resources; technology gave Europeans a solid base for exploration (1974b: 39). Parts of Western Europe exploited initially small differences, via specialization in activities central to world commerce, to ultimately large advantage (1974b: 98).
Structure . The system consists of a single division of labor within one world market but contains many states and cultures. Labor is divided among functionally defined and geographically distinct parts arranged in a hierarchy of occupational tasks (1974b: 349-50). Core states concentrate on higher-skill, capital-intensive production; they are militarily strong; they appropriate much of the surplus of the whole world-economy (1974a: 401). Peripheral areas focus on low-skill, labor-intensive production and extraction of raw materials; they have weak states. Semiperipheral areas are less dependent on the core than peripheral ones; they have more diversified economies and stronger states. In the first centuries of world-system development, Northwest Europe constituted the core, Mediterranean Europe the semiperiphery, and Eastern Europe and the Western hemisphere (and parts of Asia) the periphery (1974a: 400-1). By the end of the twentieth century, the core comprised the wealthy industrialized countries, including Japan; the semiperiphery included many long-independent states outside the West; poor, recently independent colonies mainly constituted the periphery.
Strong states in core areas-i. e., those that are militarily strong relative to others and also not dependent on any one group within the state (1974b: 355)-serve the interests of economically powerful classes, absorb economic losses, and help to maintain the dependence of peripheral areas. Semiperipheral areas are a "necessary structural element" in the system because "they partially deflect the political pressures which groups primarily located in peripheral areas might otherwise direct against core-states" (1974b: 349-50), thus preventing unified opposition. Shared ideology solidifies the commitment of ruling groups to the system; they must believe the system's "myths" and feel that "their own well-being is wrapped up in the survival of the system as such" (1974a: 404). Lower strata need not feel any particular loyalty; however, they tend to become incorporated into the nationally unified cultures created by ruling groups, starting in core states (1974b: 349). An ideology for the system as a whole only developed later: "The ideology of liberalism has been the global geoculture since the mid-nineteenth century" (1998: 47). Different forms of labor and labor control suit different types of production, distributed across the three main zones; historically, they included wage labor, tenant farming, servitude, and slavery, (1974b: 86-7). Status and rewards match the hierarchy of tasks: "crudely, those who breed manpower sustain those who grow food who sustain those who grow other raw materials who sustain those involved in industrial production" (1974b: 86).
Expansion on the basis of European advantage and structural features of the system. In the period 1733-1817, the European world-economy "began to incorporate vast new zones into the effective division of labor it encompassed" (1989: 129)-namely, the Indian subcontinent, the man empire, the Russian empire, and West Africa. "The modern world-system became geographically global only in the latter half of the nineteenth century, and it has only been in the second half of the twentieth century that the inner corners and more remote regions of the globe have all been effectively integrated" (1998: 9). As a result, most goods are market commodities and most labor is wage labor everywhere. Cyclical crises that occur when, after periods of innovation and expansion, reduced profit rates and exhaustion of markets lead to recession and stagnation, to be followed by a new period of accumulation. These are reflected in multi-decade "waves" of increasing or declining growth rates. Shifts in dominance from one power to another due to advances in productivity, the fragility of monopoly, and success in war (cf. 1995: 26-7). The Netherlands was a "hegemon" in the mid-seventeenth century, the UK in the mid-nineteenth, the US in the mid-twentieth (1995: 25). Periods of clear leadership alternate with struggle in the core. Resistance by antisystemic movements that can lead to regime change, ideological shifts, and alternatives to the system. The most notable antisystemic force of the last two centuries was socialism, which forced core states to redistribute wealth and supported the formation of states challenging the capitalist world-economy. Transition from one type of system to another due to contradictions that cannot be contained. The capitalist world-economy is a historical configuration and therefore bound to be superseded. More intense crises in a now fully global system that is less able to meet those crises with traditional means will lead to transformation.
"We have entered into the crisis of this system . . . . an historic transition" (1998: 32-3). But the direction of the system is not clear: "We are face to face with uncertainty" (2000: 6). The main reason is that the world economy is in a phase of recession and stagnation, increasingly reflected in social unrest (1995: 19, 29). "[S]tructural limitations to the process of endless accumulation of capital that governs our existing world . . . . are coming to the fore currently as a brake on the functioning of the system . . . . [They] are creating a structurally chaotic situation . . . [A] new order will emerge out of this chaos over a period of fifty years" (1998: 89-90). US hegemony has been in decline since about 1970 (1995: 15ff.), increasing the likelihood of struggle in the core. The old antisystemic forces are exhausted, but so is liberalism. In fact, "[t]he true meaning of the collapse of the Communisms is the final collapse of liberalism as hegemonic ideology. Without some belief in its promise, there can be no durable legitimacy to the capitalist world-system" (1995: 242). But no current struggle against the inequities of capitalism poses a "fundamental ideological challenge" (1995: 245).
I. Wallerstein. 1974a. "The Rise and Future Demise of the of the World-Capitalist System: Concepts for Comparative Analysis." Comparative Studies in Society and History 16: 387-415.
--. 1974b. The Modern World-System: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century . New York: Academic Press.
__. 1989. The Modern World-System III: The Second Era of Great Expansion of the Capitalist World-Economy, 1730-1840s . New York: Academic Press.
__. 1995. After Liberalism . New York: The New Press.
__. 1998. Utopistics: Or, Historical Choices of the Twenty-First Century . New York: The New Press.
__. 2000. "The Twentieth Century: Darkness at Noon?" Keynote address, PEWS conference, Boston.

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Criticisms of Current Forms of Free Trade.
Author and Page information.
by Anup Shah This Page Last Updated Friday, March 31, 2006 This page: globalissues/article/40/criticisms-of-current-forms-of-free-trade. To print all information (e. g. expanded side notes, shows alternative links), use the print version: globalissues/print/article/40.
[T]he emergence of capitalism represents a culture that is in many ways the most successful that has ever been deployed in terms of accommodating large numbers of individuals in relative and absolute comfort and luxury. It has not been as successful, however, in integrating all in equal measure, and its failure here remains on of its major problems. It has solved the problems of feeding large numbers of people (although certainly not all), and it has provided unprecedented advances in health and medicine (but, again, not for all). It has promoted the development of amazingly complex technological instruments and fostered a level of global communication without precedent. It has united people in common pursuits as has no other culture. Yet it remains to be seen when the balance sheet is tallied whether capitalism represents the epitome of progress that some claim.
Richard H. Robbins, Global Problems and the Culture of Capitalism, (Allyn and Bacon, 1999), pp. 11–12.
A form of globalization and global trading where all nations prosper and develop fairly and equitably is probably what most people would like to see.
It is common to hear of today’s world economic system as being free trade or globalization . Some describe the historical events leading up to today’s global free trade and the existing system as inevitable . The UK’s former Prime Minister, Margaret Thatcher, was famous for her TINA acronym. Yet, as discussed in the Neoliberalism Primer page earlier, the modern world system has hardly been inevitable. Instead, various factors such as political decisions, military might, wars, imperial processes and social changes throughout the last few decades and centuries have pulled the world system in various directions. Today’s world economic system is a result of such processes. Power is always a factor.
Capitalism has been successful in nurturing technological innovation, in promoting initiative, and in creating wealth (and increasing poverty). Many economists are agreed that in general capitalism can be a powerful engine for development. But, political interests and specific forms of capitalism can have different results. The monopoly capitalism of the colonial era for example was very destructive. Likewise, there is growing criticism of the current model of corporate-led neoliberalism and its version of globalization and capitalism that has resulted. This criticism comes from many areas including many, many NGOs, developing nation governments and ordinary citizens.
On this page:
Simplistic Ideology; Rhetoric versus Reality.
Free trade and free markets are essentially about making trade easier by allowing the market to balance needs, supply and demand. Within a nation, it can be a positive engine for development. With the Cold War over, politicians, economists and others have been promoting unfettered free trade and free market ideology, pushing it to an even wider international arena to facilitate international trade. (Though, as will be suggested below, the current system in its reality is hardly the free trade that the theories describe.)
While these are not new ideas, their resurgance in the last few decades has led to naming the ideology as neoliberalism. Richard Robbins, quoted above, also summarizes (p.100) some of the guiding principles of this ideology, which include:
Sustained economic growth as the way to human progress Free markets without government interference allow for the most efficient and socially optimal allocation of resources Economic globalization is beneficial to everyone Privatization removes inefficiencies of the public sector Governments should mainly function to provide the infrastructure to advance the rule of law with respect to property rights and contracts.
Ideas such as markets being self-balancing to meet supply and demand, while increasing propsperity for those who participate freely sounds very appealing, in theory. However there are increasing concerns that go to the heart of the system itself such as,
What about the reality of the current form of globalization, compared to the theory? How has it affected various segements of society around the world? What has been the impact on the environment? Is it even free trade? How have the functions of power and politics (which cannot be ignored) affected the process of globalization? Have the old imperial powers just managed to (intentionally or unintentionally) devise a more sophisticated way of appropriating the world’s wealth?
Many in the developing world have been welcome to the ideas of globalization, but are wary of the realities as well. For example, on November 16, 2000, during a lecture at the British Museum Nelson Mandela said, We welcome the process of globalisation. It is inescapable and irreversible.… However, he added, …if globalisation is to create real peace and stability across the world, it must be a process benefiting all. It must not allow the most economically and politically powerful countries to dominate and submerge the countries of the weaker and peripheral regions. It should not be allowed to drain the wealth of smaller countries towards the larger ones, or to increase inequality between richer and poorer regions. These types of concerns have given rise to many criticisms of the current form of globalization, and given a bad name to free trade and free market capitalism in various circles.
Robbins goes on to point out some of the assumptions that are made to support the neoliberalism ideology:
Humans are motivated by self-interest, greed etc, expressed best through pursuit of financial gains Actions that result in greatest financial gains benefit society the most Competitive behavior is more rational for individuals than cooperation, hence societies should be structured around this motive Progress is measured by increased materialistic consumption and so ever more consumption should be favored.
There are elements in the above assumptions of what some have called Social Darwinism or others have described as survival of the fittest , in a literal sense, to human societies. Yet,
Cooperation is also often a survival mechanism as is competition, and sometimes these can go hand in hand or even overlap (e. g. cooperation within a species or group, but competition with others). While there are no doubts elements of self-interest in human nature, there are also elements of cooperation due to the perceived need for a stable society in which to live. (And cooperation also predates just modern civilization, and can also be seen in hunter-gatherer societies, as pointed out by anthropologists, such as Robbins, quoted above, and Jared Diamonds, author of Guns, Germs and Steel (W. W. Norton & Company, 1997).
Side note about Guns, Germs and Steel.
It is interesting to note that Diamonds' book received a lot of attention in the mainstream and even won an award. His book was indeed an interesting read. His basic premise was that geography was the main determinant of how various societies developed, and why some were poor as a result, and others grew. Journals like Foreign Policy magazine (I forget the exact issue in 2001) liked this, perhaps because it placed less burden of criticism on current power and economic configurations and put all the blame not even on the poor, but where they live.
Yet, it is interesting to note the heavy criticism of Diamonds' Guns, Germs and Steel in attempting to describe world history and his use of environmental determinism as to how we have arrived at where we have today.
For an example of deep critue of his work, see for example, Eight Eurocentric Historians , by J. M. Blaut (Guilford Press, 2000), an award-winning professor of geography. For example, amongst other things, he charges Diamonds of employing.
bad science wrong geography widely disputed and even discredited theories as fact using theories that were rejected forcefully by geographers before the middle of the twentieth century (p.15).
Blaut’s book is part of a volume called The Colonizer’s Model of the World .
He details how our understanding and interpretation of history is still influenced from colonial and imperial era thinking, which ultimately shows in various ways how Europe or people of European descent were somehow endowed with better qualities or better environment that led them to develop and others to stagnate. His above-mentioned book, for example, looks at both conservative and Marxist historians that hold what he describes as a eurocentric view on world history; that ultimately historical advances progress to Europe, and in particular, northwest Europe. In the first book in his volume, Geographical Diffusionism and Eurocentric History (Guilford Press, 1993), he details how prior to the beginnings of colonialism, various parts of the world showed similar levels of development that Europe had, including China, India, parts of Africa, and that they were not showing signs of stagnation, and some even showed signs of early market economies and even early signs of waged labor, just as Europe had. He suggests instead, consistent with many in the third world especially, that colonialism and wealth plundered from the Americas was the prime reason that the west rose more rapidly than other regions.
But on the issue of cooperation in earlier societies, there seems to be no criticism.
In addition, the definition of progress and success is measured in material terms, and other concerns such as environmental issues, or human perspectives of emotional richness or social well being, are not necessarily factored in. For example,
Different cultures also have a different meaning of progress and poverty, etc, as hinted to in the poverty section of this web site. Exporting one culture’s definition via such an ideology can risk causing societal problems if not done in an open and democratic way. (See Stiglitz, mentioned above for more details of why institutions such as the IMF and World Bank are not doing this in a very democratic way, even if it is claimed so. Also, see for example, John Gray’s False Dawn: The Delusions of Global Capitalism , (The New Press, 1998). Gray was an influential conservative political thinker, influencing Margaret Thatcher and the New Right in Britain. Yet, he has argued that the current form of global capitalism is not a naturally occurring process, but an imposed Anglo-American political project. Where the market has become so detached from society and does not meet its needs, this project is doomed for failure he suggests. Those cultures that realize the market works best when it is embedded in society will, if given the chance by the powerful countries, be likely to succeed.) Environmental concerns are typically not taken into account of directly. It is argued that the environment will benefit indirectly because the same process of individual greed will create markets that address environmental problems. Yet, this creates unnecessary jobs (which also uses more resources) because sustainable development that would not have to adversely affect the environment in the first place would be a more efficient form of development. This site’s section looking deeper behind consumerism and consumption highlights how economic interests do not match or deliver on environmental concerns or human needs and also leads to wasted labor.
These additional aspects are also described in this creative video by author and social thinker, Jeremy Rifkin. He argues that we are not necessarily driven by aggression, violence, self-interest and utilitarianism (which also results in narcissism and materialism), but that we are soft-wired towards sociability, attachment, affection, companionship and the drive to belong.
The lack of empathy to fellow humans, animals and the environment means we bring out the worst in us, rather than the best, he implies, as we are ultimately, all the same.
Furthermore, and very importantly, those who are wealthier tend to wield more economic and political power and influence. Hence,
Leaders and elite of powerful nations or segments of society are more able to exert their influences, if needed This can happen not only in places where rule of law and strong institutions are lacking, but also the most democratic of societies In more developed economies, such influence can be subtle, or appear to be distant because it may not affect the local society as much as it does to people half way around the world Hence, what can be promoted in the interest of some political and business elite, may not necessarily be the same as society’s interests in general and it can also distort markets As explained in the corporations section of this web site, the rise of corporations included giving them the rights that ordinary individuals have. This has allowed even more concentrated power and influence to be exerted.
The use of political influence includes using the military as well, if needed. Such use and abuse of power has been there throughout history. Gun boat diplomacy for example, was a common tactic by the British Empire to force open other countries to trade in terms favorable to the Empire. Military power has also contributed to the processes in the current forms of globalization as well. (See for example, the Institute for Economic Democracy for more details on this aspect.)
Similar influences of power have given rise to disastrous policies of the International Monetary Fund (IMF) and World Bank, such as the Structural Adjustment Programmes that have forced poor countries to cut back on health and education expenditures for example, as discussed in detail on this web site. Such things, combined with the contentious rules of the World Trade Organization (WTO ) form a backbone to today’s globalization. As J. W. Smith of the Institute for Economic Democracy suggests, this maintains unequal rules of trade and, ultimately, continues to deepen inequality, poverty and exploitation. (For more on this perspective, see this web site’s section on structural adjustment.)
Old mercantilism nicely dressed up today?
It is argued that the way the more powerful countries have been pushing for various policies implies that the globalization process is a continual repeat of mercantilist processes seen throughout history.
The wealth of the ancient city-states of Venice and Genoa was based on their powerful navies, and treaties with other great powers to control trade. This evolved into nations designing their trade policies to intercept the wealth of others (mercantilism). Occasionally one powerful country would overwhelm another through interception of its wealth though a trade war, covert war, or hot war; but the weaker, less developed countries usually lose in these exchanges. It is the military power of the more developed countries that permits them to dictate the terms of trade and maintain unequal relationships.
In that context, the Cold War, for example, can be seen as battles over differences in how resources were going to be used to develop a country; most colonies that broke free around and after World War I and II were often trying to simply develop their nations. Because the imperial powers were to lose out, they would often cry communism and use that as justifications for military action or trade embargoes, overthrowing potential democratic regimes in favor of more stable dictatorships, and other malleable regimes.
Adam Smith, in his 1776 classic, The Wealth of Nations , (often regarded as a bible of capitalism) was highly critical of mercantilist practices of the wealthy nations:
Though the encouragement of exportation and the discouragement of importation are the two great engines by which the mercantile system proposes to enrich every country, yet with regard to some particular commodities it seems to follow an opposite plan: to discourage exportation and to encourage importation. Its ultimate object, however, it pretends, is always the same, to enrich the country by the advantageous balance of trade. It discourages the exportation of the materials of manufacture, and of the instruments of trade, in order to give our own workmen an advantage, and to enable them to undersell those of other nations in all foreign markets ; and by restraining, in this manner, the exportation of a few commodities of no great price, it proposes to occasion a much greater and more valuable exportation of others. It encourages the importation of the materials of manufacture in order that our own people may be enabled to work them up more cheaply, and thereby prevent a greater and more valuable importation of the manufactured commodities . (Emphasis Added)
Adam Smith, Wealth of Nations, Book IV, Chapter VIII (Everyman’s Library, Sixth Printing, 1991), p.577.
Reading the above, we could say that policies such as structural adjustment, certain types of rules and processes of the WTO, etc are also mercantilist. We are constantly told that we live in a world of global free trade capitalism, and yet we see that while free markets are preached (in Adam Smith’s name), mercantilism still appears to be practiced.
William Appleman Williams describes mercantilism at its zenith: The world was defined as known and finite, a principle agreed upon by science and theology. Hence the chief way for a nation to promote or achieve its own wealth and happiness was to take them away from some other country.
When the injustice of mercantilism was understood, it became too embarrassing and was replaced by the supposedly just Adam Smith free trade. But free trade as practiced by Adam Smith neo-mercantilists was far from fair trade. Adam Smith unequal free trade is little more than a philosophy for the continued subtle monopolization of the wealth-producing-process , largely through continued privatization of the commons of both an internal economy and the economies of weak nations on the periphery of trading empires. So long as weak nations could be forced to accept the unequal trades of Adam Smith free trade, they would be handing their wealth to the imperial-centers-of-capital of their own free will. In short, Adam Smith free trade, as established by neo-mercantilists, was only mercantilism hiding under the cover of free trade.
Of course, today it is a bit more complicated too. We have, for example, products being exported from the poorer countries (albeit some facing high barriers in the rich nations). However, with labor being paid less than their fair wages in the poorer nations, wealth is still accumulated by the richer nations. While it might appear that free trade is taking place, the wealth that is accumulated by the richer countries suggests this is still the age-old mercantilism processes being played over again; a system that Adam Smith criticized so much.
The geopolitical and economic ramifications are far-reaching. The processes of fighting over control and dominance of wealth and power have continued well into this century, even when we are used to believing the older ways are gone. As mentioned in the geopolitics section of this site, and on the previous page on neoliberalism, wars throughout history have typically had trade, commerce, resources at their core, and political systems have been geared towards power play. J. W. Smith highlights well how, for example, the US broke away from British colonial rule, recognizing the unfairness and harshness in Imperial Britain’s policies. However, the U. S. has now taken on that role and is doing the same things that the British once did to others:
Shortly after the War of 1812 was fought to defeat British mercantilist trade practices, U. S. statesman Henry Clay pointed to the necessity of the United States developing a defensive capability by quoting a British leader,
[N]ations knew, as well as [ourselves], what we meant by free trade was nothing more nor less than, by means of the great advantage we enjoyed, to get a monopoly of all their markets for our manufactures, and to prevent them, one and all, from ever becoming manufacturing nations.
This is one of the most important aspects of history, and is conveniently ignored.
J. W. Smith, The World’s Wasted Wealth 2, (Institute for Economic Democracy, 1994), p. 123.
And with today’s more complex and sophisticated global system, it is perhaps harder to see these aspects at play, especially in those regions of the world that have benefitted from the current system. J. W. Smith also captures this aspect quite well:
Although in [the] early years the power brokers knew they were destroying others' tools of production (industrial capital) in the ongoing battle for economic territory, trade has now become so complex that few of today’s powerful are aware of the waste and destruction created by the continuation of this neo-mercantalist struggle for markets. Instead, they feel that it is they who are responsible for the world’s improving standards of living and that they are defending not only their rights but everybody’s rights.
This illusion is possible because in the battle to monopolize society’s productive tools and the wealth they produce, industrial capital has become so productive that — even as capital, resources, and labor are indiscriminately consumed — living standards in the over-capitalized nations have continued to improve. And societies are so accustomed to long struggles for improved living standards that to think it could be done much faster seems irrational.
J. W. Smith, The World’s Wasted Wealth 2, (Institute for Economic Democracy, 1994), p. 158
S. Brian Willson, a U. S. Vietnam War veteran, now a peace activist highlights an aspect of this quite well, in terms of how some global problems end up being dealt with by power holders:
The most highly decorated Marine Corps General in U. S. history, Smedley D. Butler understood all too well the real nature of the U. S. Marine Corps and U. S. foreign policy in general when he concluded after his retirement in 1931 that during his 33 years as a Marine officer operating on three continents, he served as a high-class muscle man for Big Business, for Wall Street and the bankers.… a gangster for capitalism [Smedley D. Butler, America’s Armed Forces , Part 2, Common Sense, Vol. 4, No. 11 (Nov. 1935)]. But it seems that that understanding is easily forgotten. General A. M. Gray, former commandant of the U. S. Marine Corps, in 1990 identified threats to the United States as originating from the underdeveloped world’s growing dissatisfaction over the gap between rich and poor nations, creating a fertile breeding ground for insurgencies which have the potential to jeopardize regional stability and our access to vital economic and military resources (Marine Corps Gazette, May 1990). Gray understands the structural social and economic problems, but it apparently does not occur to him that the solution might be to directly address the injustices rather than perpetuate them with the use of military force.
The ramification of all this is that the current global system, which takes on various names such as globalization, free market capitalism, free trade, etc may not actually be the free trade or free market capitalism that people like Adam Smith started promoting some 200 years back, even though various power holders and major institutions may claimed it to be.
Adam Smith was highly critical of big government , which we often hear criticism of today (some very valid, for sure). However, less common is how highly critical he was of the undue power and influence of big business as well (which is briefly introduced on this site’s corporations section).
Neo-mercantilism may be a more appropriate name for the system, rather than free trade.
This issue of the current globalization process being a continued mercantilist process of monopoly capitalism could be a significant point, on things like whether people are really anti-capitalist, or anti corporate-led globalization. It even raises the question of whether or not the current system can even be called free trade.
While many who support the current forms of globalization may genuinely believe that the globalization process is free trade, it seems to be more of the older monopoly capitalism, or mercantilism. Hence, one could still be anti corporate-led globalization but for a more cooperative or democratic capitalism. This also raises questions on the difference between free trade in theory and what is trumpeted today as free trade. A lot of criticisms from all angles of society seem to be directed more at the realities and the effects. Because free trade is preached but mercantilism/monopoly capitlism is perhaps being practised, this suggests that the theory of free trade itself may still have some valuable insights to offer that shouldn’t necessarily be rejected automatically just because the phrase free trade has gained such a negative reputation in many segments of society. There are some decent points in the free trade theories — as well as valid criticisms. This site too in places uses the term free trade in the more rhetorical sense, trying to look more at the reality. This is also partly because a lot of this section was written early on when this distinction was not made, though use of terms withstanding, the points made still hold.
Growing criticisms.
Globalisation is institutionalising a new balance of power between states that hardens the sovereignty of some while reducing the autonomy of the others. The worldwide free market accentuates the disparity between the centres of capital and the peripheries. The players with knowledge and power lay down the rules; the others fall into line.
Noelle Burgi and Philip S. Golub, The States we are in, Le Monde Diplomatue, April 2000.
There is something to be said about markets and capitalism as being positive engines. But when comparing reality and theory, they are far apart. First we will look at some criticisms we often hear, then we will see some trends in critue of these criticisms from the likes of the Economist and suggest that the reality is far from rhetoric or theory.
Blind Allegiance to Ideology.
As will be seen in the protests section on this site, there is growing vocal concern around the world at the negative impacts that the current form of globalization is having on people’s lives. The mounting criticisms against current neoliberal policies and ideology are in face of the existing realities versus the almost utopian theory.
Amongst a growing chorus of dissent are also some influential economists who have occassionally been heard in the mainstream. One example is Joseph Stiglitz, former Chief Economist of the World Bank, former Chairman of President Clinton’s Council of Economic Advisors and Nobel prize winner (basically a good authority on the issue!), and another is Paul Krugman a well-known economist who writes columns in the New York Times . On various issues, they too have been critical of numerous aspects of corporate-led globalization.
As one example of the critue, consider this lengthy quote from the Nation magazine on Joseph Stiglitz:
Stiglitz, 58, is hardly the first person to accuse the IMF of operating undemocratically and exacerbating Third World poverty. But he is by far the most prominent, and his emergence as a critic marks an important shift in the intellectual landscape. Only a few years ago, it was possible for pundits to claim that no mainstream economist, certainly nobody of Stiglitz’s stature, took the criticism of free trade and globalization seriously. Such claims are no longer credible, for Stiglitz is part of a small but growing group of economists, sociologists and political scientists, among them Dani Rodrik of Harvard and Robert Wade of the London School of Economics, who not only take the critics seriously but warn that ignoring their concerns could have dire consequences. In his new book, Globalization and Its Discontents (Norton), Stiglitz argues that many of the complaints voiced by protesters in recent years — that IMF structural adjustment programs have caused widespread suffering; that free-trade agreements mainly benefit the rich; that privatization has proved disastrous in many countries — have a solid basis in fact. Unless the rules of global capitalism are radically altered, he warns, the gap between the world’s rich and poor, and hence the social conditions that have fueled instability in places like Pakistan, will not go away anytime soon.
… Asked once what developing countries should do with the annual reports the IMF prepares on member nations, Stiglitz recommended picking it up, saying thank you very much and dropping it straight in the garbage can.
… To some degree, the mounting criticism from Stiglitz and other quarters has had an impact. IMF officials recently acknowledged the potential risks of capital market liberalization, and both the IMF and World Bank have begun speaking more openly about debt relief and poverty reduction. But while the rhetoric has changed, Stiglitz maintains that a doctrinaire ideology of free-market fundamentalism continues to shape policy. The IMF and World Bank are pushing developing countries to privatize their pension systems, for example, which is highly controversial in the First World. The IMF demanded fiscal austerity in Argentina, where unemployment had reached 20 percent and, in December, sparked riots that led to the government’s collapse. It preaches the gospel of free trade to developing countries--even though most Western countries built their economies by protecting certain industries and continue to subsidize some domestic producers. The blind push to privatize and deregulate has not only failed to fuel sustainable development, Stiglitz contends, but reflects an idealized vision of how markets function that neither economic theory nor concrete experience supports.
… Stiglitz has done more to damage the IMF’s reputation than any other living economist.
Eyel Press, Rebel With a Cause, The Nation, June 10, 2002.
In March 2003, the IMF itself admitted in a paper that globalization may actually increase the risk of financial crisis in the developing world. Globalization has heightened these risks since cross-country financial linkages amplify the effects of various shocks and transmit them more quickly across national borders the IMF notes and adds that, The evidence presented in this paper suggests that financial integration should be approached cautiously, with good institutions and macroeconomic frameworks viewed as important. In addition, they admit that it is hard to provide a clear road-map on how this should be achieved, and instead it should be done on a case by case basis. This would sound like a move slightly away from a one size fits all style of prescription that the IMF has been long criticized for.
As mentioned on the structural adjustment page on this web site, and as many critics have said for a long time, opening up poorer countries in an aggressive manner can leave them vulnerable to large capital volatility and outflows. Reuters , reporting on the IMF report also noted that the IMF sounded more like its critics when making this admission.
In theory there may indeed be merit to various arguments supporting global integration and cooperation. But politics, corruption, geopolitics, as well as numerous other factors need to be added to economic models, which could prove very difficult. As suggested in various parts of this site, because economics is sometimes separated from politics and other major issues, theory can indeed be far from reality.
Additional concerns and criticisms have from a variety of people for many years, and common themes include:
Increasing Unaccountable Concentration of Power and Decision-Making.
There has been growing concern at the increasing corporate power and their influence in the industrialized countries and international trade agreements, while their accountability is very small.
Furthermore, some international organizations and treaties are leading to erosion of influential decision-making from publicly elected governments to privately owned corporations. For example.
Some even call large transnational corporations and their drive to open up markets around the world as the modern form of colonialism. Specific policies such as structural adjustment are criticized for undermining national sovereignty.
Argentina is a vivid example.
Environmental Degradation.
The effect on the environment is argued to be detrimental due to the over-consumption/throw-away model of most developed nations not allowing for much sustainable development.
For more on this aspect, see also this site’s sections on.
Eroding Worker’s Rights.
The stability of jobs, is feared to continue to fall as less regulation in the pursuit of free trade means that corporations can easily move from country to country in search of cheapest costs (and labor forces are often very expensive).
This also results in first world hostility to third world people in some ways, whilst also resulting in attempts at protectionist policies.
Brain drain from poor countries to rich countries.
There is the phenomena of brain drain whereby the poor countries educate some of their population to key jobs such as medical areas and other professions only to find that some rich countries try to attract them away. The prestigious journal, British Medical Journal (BMJ) sums this up in the title of an article: Developed world is robbing African countries of health staff (Rebecca Coombes, BMJ , Volume 230, p.923, April 23, 2005.) In a way, this is a form of subsidy for the rich!
Some countries are left with just 500 doctors each with large areas without any health workers of any kind. A shocking one third of practicing doctors in UK are from overseas, for example, as the BBC reports.
And yet, this is not just a problem Africa faces, but many other poor countries, such as various Asian countries, Central and Latin America, Eastern Europe, the Caribbean, etc. Other industries also suffer this issue. Yet, at the same time, it is understandable that individuals would want to escape the misery of poverty and corruption in their own country. A lot of the poverty and corruption results from structural adjustment programs and the current corporate globalization, which then contributes to this brain drain, thus twisting the knife in the back, so to speak, as some of what little rich countries allow the poor to spend on health is now lost to the already rich, and the poor have to bear the burden. (See this site’s section on structural adjustment for more on how the rich dictate to the poor how to structure their economies and run their countries.)
See also brain drain from this site for more details and statistics.
Protectionism For The Rich, Open Markets For The Poor.
Another concern is that most developing nations complain that the western nations themselves are very protectionist but want the developing countries to completely remove barriers to free trade which would cause an imbalance in the favor of the industrialized countries. While there have been recent statements to address such concerns, nothing has really happened. This further suggests that the current world system being pushed is not free trade in the sense that is typically understood. Por exemplo,
Europe and North America have long been criticized of subsidizing their farmers billions of dollars and making it harder for poorer countries to export to these markets. Aid to poor countries is dwarfed by the effects of First World subsidies, third world debt, and Unequal Trade Recently in the I. T. industry in the U. S. and some parts of Europe, there has been a growing trend to outsource development efforts to poorer countries that have a well-educated, high technology, work force, such as India and China. On the one hand this has been because the rich countries have pressured the poor countries in past decades as well as recent years to open up their markets and liberalize further, but then protectionist policies result from the backlash in the wealthier countries as workers see the possibility of job losses and gain sympathetic senators and political leaders. For the poor countries this is hypocrisy, and for the ordinary workers in the first world, they risk their livelihoods. In the meanwhile, although companies point out they need to off source to remain competitive, in some circumstances they benefit either way, because higher costs of first world workers could be passed on to consumers if all companies face the same regulations and are forced to employ first world workers under certain conditions. This ties into the job stability issue raised further above. There are many, many more examples, some of which are discussed in the following pages on this web site: Foreign Aid for Development Assistance Deregulation or Protectionism?
Prize-winning author and Indian activist, Arundhati Roy, also captures some of the stark contradictions implying that what is called free trade globalization is hardly free trade:
In the new era, Apartheid as formal policy is antuated and unnecessary. International instruments of trade and finance oversee a complex system of multilateral trade laws and financial agreements that keep the poor in their Bantustans anyway. Its whole purpose is to institutionalise inequity. Why else would it be that the U. S. taxes a garment made by a Bangladeshi manufacturer 20 times more than it taxes a garment made in the U. K.? Why else would it be that countries that grow 90 per cent of the world’s cocoa bean produce only 5 per cent of the world’s chocolate? Why else would it be that countries that grow cocoa bean, like the Ivory Coast and Ghana, are taxed out of the market if they try and turn it into chocolate? Why else would it be that rich countries that spend over a billion dollars a day on subsidies to farmers demand that poor countries like India withdraw all agricultural subsidies, including subsidised electricity? Why else would it be that after having been plundered by colonising regimes for more than half a century, former colonies are steeped in debt to those same regimes, and repay them some $382 billion a year?
Christian Aid produced a video looking at how the current form of free market globalization affected Bolivia. It is an example where the playing field became unequal by introducing privatization of key resources that the poor could not afford otherwise (e. g. water, which, under privatization saw bills skyrockets).
In other areas, such as natural gas resources, multinationals were able to make enormous profit while the nation saw little benefit.
The other aspect, which also questions reality vs. theory is that under the guise of free market economics, the result was monopolization by multinationals in many of these sectors that excluded the enormous poor population and led to the massive popular uprising and eventual ousting of the government.
Free Trade Agreements Often Say Very Little About Trade.
Lori Wallach, Director of Global Trade Watch points out in a video clip (5 minutes, transcript ) that free trade agreements often include very little on trade. Many non-trade issues include patent laws, foreign investment, land purchase rights and many more. Furthermore, the way these agreements are enforced, they provide a kind of protectionism for large companies against poorer countries in particular:
Lori Wallach, Free Trade—How Free Is It?, April 13, 2005, © Big Picture TV.
Increasing Poverty and Inequality For the Majority.
Also argued by many is that only the wealthy nations will benefit, while the poorer ones will suffer the most in this. It will not just be poor people from developing nations, but poor people in industrialized countries too. For example, corporations will be freer to move around and avoid substantial taxes.
The way that the global financial system is structured benefits the core , compared to the periphery . George Soros for example, is worth quoting at length:
The international financial system is broken down in the sense that it fails to provide adequate capital to countries that need it most and qualify for it.
Global financial markets suck most of the world’s savings to the centre, but fail to pump money back out to the periphery. Indeed, since 1997, there has been a reverse flow of capital from countries on the poor periphery of the world economy to those in the wealthy centre.
…In practice, of course, international financial markets never have been left to their own devices. Rich countries, led by the US, are in charge. Their primary task is protecting their own interests. When these nations get into trouble, their authorities intervene forcefully.
Countries that cannot borrow in international markets in their own currency lack that power. They must turn to the International Monetary Fund (IMF), and the fund is more concerned with international financial stability than with enabling developing countries to pursue the countercyclical policies needed to avoid recession.
George Soros, The Will to Act Can Save Global Financial System, Business Day (Johannesburg), October 4, 2002 (Reposted by AllAfrica)
Inequalities and gaps between those who have and those who do not is already shown to be rising in these early years of globalization. Former Chilean President, Patricio Aylwin summarizes an aspect of this quite fiercely:
Only poverty has been truly globalized in our age. … The over-praised neo-liberalism and the omnipotent market is a mistaken vision and it is the root cause of some of the most serious problems that afflict us.
Patricio Aylwin, in an address at a U. N. Food and Agriculture Organization conference, November 2001, (quoted from this Yahoo! News report, 5 November 2001)
Neoliberal proponents, including the World Bank and IMF have reports suggesting that globalization is good for the poor.
While some points are obvious, such as that growth improves income for poor people, there are many unquestioned assumptions, some of which include the fact that IMF and World Bank are supposed to be the drivers of these policies (these economic policies and the group that has promoted and pushed them internationally are known as the Washington Consensus), and that the one policy fits all situations. The World Bank for example, reported in March 2000 that globalization is good for the poor. Growth generally does benefit the poor and that anyone who cares about the poor should favor the growth-enhancing polices of good rule of law, fiscal discipline, and openness to international trade, it noted. However, there have been many criticisms about the report for making far too many assumptions and not considering many interrelated issues. (For an example of detailed critue, this following link points to a responding article from the Center for Economic and Policy Research , called Growth May Be Good for the Poor — But are IMF and World Bank Policies Good for Growth?)
In reporting on the March 2002 UN Conference on Financing for Development in Monterrey, Mexico, the New York Times described feelings of some leaders on the effects of globalization:
Globalization, or the fast-paced growth of trade and cross-border investment, has done far less to raise the incomes of the world’s poorest people than the leaders had hoped, many officials here say. The vast majority of people living in Africa, Latin America, Central Asia and the Middle East are no better off today than they were in 1989, when the fall of the Berlin Wall allowed capitalism to spread worldwide at a rapid rate.
Rather than an unstoppable force for development, globalization now seems more like an economic temptress, promising riches but often not delivering, in the view of many of the leaders at the United Nations conference.
The reforms that rich countries forced on Africa were supposed to boost economic growth. However, the reality is that imports increased massively while exports went up only slightly. The growth in exports only partially compensated African producers for the loss of local markets and they were left worse off.
A Level Playing Field That Gives More Advantage to the Wealthiest.
Another aspect related to the above is how western nations, want their multinational firms to be treated the same as domestic firms in the foreign countries which they may enter. At first thought, this sounds fair and equitable. Contudo,
When considered from the view that this would mean that a much more established multinational corporation would be able to get treatment that allows them to outsmart the smaller domestic firms, this this sounds less fair and equitable. The discourse of level playing fields are those settings that allow the multinational corporations to dominate; hence, they are the massive proponents of such clauses in international trade and investment agreements. It is not level as such. It would imply that the balance is actually tipped in the favor of these transnational corporations. And, it would make it harder for a nation to help its industries develop (as throughout history, even during neoliberal eras, large government involvement has always been needed to nurture and protect growing industries.) Most mainstream media is dominated by multinationals themselves, so the major source of information for the general public can also be subtly distorted.
Positive or Negative Form of Interdependence?
One of the arguments made for globalization is that the world should move further towards becoming interdependent on one another.
This way, no one will want to war with others, because they depend on each other to keep their economies alive. This sounds like a wonderful solution to prevent future horrors such as the previous two World Wars. The argument probably bears some merits, if there was a truly free trade system which was fair. As argued above, the current global system appears to be more mercantilist. Furthermore, what is often overlooked is that given the current international institutions in place (WTO/IMF/World Bank, etc) who would benefit from the interdependence within the framework of the current form of globalization? It is the large multinational corporations and their governments. The governments of more influential and powerful nations have the ability to impose certain types of interdependence and easily force dependence in their favor if needed, using economic or military pressure. This helps explain why for some nations, even thought the Cold War has ended, their military budgets remain roughly the same. In fact, as pointed out by the Institute for Economic Democracy, many wars throughout history, hot or cold, have had trade, resources and related expansion at their core. History shows us that the more powerful nations have devised international economic agreements that promote more dependency upon those wealthier countries. In a twisted sense then, such an interdependency as implemented would be good for stability of the status quo. Real interdependency on the other hand, that deals with equity and cooperation as well, may have more likelihood of being good for all, but that would be less likely to happen because it would threaten to reduce the influence and power of the wealthier nations and multinational corporations.
Far from some altruistic motive to see those in poor countries improve their lot and thus narrow the gap between rich and poor, globalisation therefore merely serves as an efficient, low-cost method for TNCs [transnational corporations] to take advantage of low taxes, weak regulations and vulnerable labour whilst penetrating the economies of developing countries.
John M. Bunzl, The Simultaneous Policy, An Insider’s Guide to Saving Humanity and the Planet, (New European Publications, 2001), p. 48 For more about the dependencies of the developing countries and how it has come about, visit this site’s structural adjustment section.
Cultural Uniformity and Effects on Other Societies.
There are other subtle, but important impacts, to peoples, societies and cultures. While the current form of globalization has its benefits such as helping open otherwise authoritarian or restrictive societies, the ways in which cultures and societies may be opened can also have an impact, as summarized from this following quotation:
In order for free markets to be free, the exchange of labour, land, currency, and consumer goods must not be encumbered by elements of psychosocial integration such as clan loyalties, village responsibilities, guild or union rights, charity, family obligations, social roles, or religious values. Cultural traditions distort the free play of the laws of supply and demand, and thus must be suppressed. In free market economies, for example, people are expected to move to where jobs can be found, and to adjust their work lives and cultural tastes to the demands of a global market.
Bruce Alexander, The Roots of Addiction in Free Market Society, Canadian Centre for Policy Alternatives, April 2001.
As mentioned in this site’s mainstream media section, in India, for example, one important aspect of globalization, the liberalization of media, had seen some negative effects along side positive. For example, many women found that they faced more violence from their husbands, and lost more of their savings as their husbands bought things they saw on TV rather than save for their children’s education, for example. For companies, marketing got easier: in the past, in terms of demographics, it did not make much sense to talk about the average Indian . Now, with the introduction and dominance of a few large companies there is a significant proportion of Indians who fall into this category. While there appears to be more freedom of material choice, perhaps socially there is a reduction in diversity and an increase in conformity, as a result.
(Also check out this extensive speech from Noam Chomsky on many of these factors. While this speech was delivered in 1994, it is still relevant today.)
The rise in criticisms has created political opportunity for progressive critics of globalization, which, up to September 11, 2001, was certainly growing strongly. Side Note For a while following September 11 and the resulting War on Terror, criticism had been subdued somewhat, both as mainstream politics talked less about globalization and more about terrorism, but also as civil rights were beginning to be clamped down on more so under the cover of this war on terror . For more on this angle, see this site’s section on the war on terrorism.
However, in addition to a rise in progressive criticism, there is also a risk that a reactionary backlash will gain ground from extremists on both the Left and the Right.
Pressure by the wealthier classes to liberalize too quickly.
Often, in countries trying to develop more, in order to maintain equality to some extent, and to offset inflation, various controls are often needed. However, this may often affect the consumption patterns of the wealthier classes. As the affluent members of society face some controls, they and the institutions and corporations that they own will increase the pressure on their government to remove or reduce these controls, increase liberalization (in industries other than their own, of course), open the economy to access a larger variety of goods and so on. Together with western nations encouraging this, it often occurs prematurely. When and if this happens, the majority often lose out. To keep up then, often, large debts are also incurred. (And as debt increases, the measures and adjustments made to repay them affect the poorer further.) As with the global financial crisis when major international institutions reduced their loans, capital flight is a risk.
Ha-Joon Chang, the assistant director of development studies at the prestigious Cambridge University in England has consulted for numerous international agencies at the UN, the World Bank, and the Asian Bank. He makes an observation worth quoting at length:
It would be wrong to describe the advance of neoliberalism in the developing world purely as an imposition from the outside. Neoliberal reforms in these countries had their local defenders from the beginning; over time their number has multiplied and their influence has increased. An increasing number of developing-country companies have carved out positions as subcontractors or intermediaries of transnational corporations (TNCs) based in the developed countries. Moreover, neoliberal reforms have created a vast army of a new professional class that derives a large part of its wealth and power from its ability to understand and articulate the idioms of neoliberalism. This does not simply include the usual suspects , such as fund managers, international lawyers, accountants and management consultants. It also includes those who are working for NGOs financed by the rich country governments and international financial institutions, journalists with foreign links, government officials with experience in the IFIs and, last but not least, academic economists.
Reflecting these developments in the international and national politics of money and power, neoliberalism has established a near-total worldwide intellectual dominance during the last 25 years. In political debate, critics of neoliberalism are routinely dismissed as economically illiterate or worse, as those who are trying to defend their vested interests to the detriment of society—even when they are, say, garment workers in Mexico resisting plant closure or urban poor in Indonesia protesting against cuts in food subsidies. In this way, serious debates are avoided and dissenters systematically excluded.
Ha-Joon Chang, Rethinking Development Economics, (Anthem Press, 2003), p. 2
Defending Free Trade.
In 2001, during the height of free market protests and support, the Economist argued in favor of free markets by looking at some of the points from whom they call anti-globalists (even though some of the criticisms they looked at were not necessarily from those against globalism per se).
Fair wages for the poor will eventually be bad for everyone.
In an Economist article, Globalisation and its critics, September 27 2001, the following is offered in discussion of the issue of quest for profits, regulation, fair wages, etc:
For example, suppose that in the remorseless search for profit, multinationals pay sweatshop wages to their workers in developing countries. Regulation forcing them to pay higher wages is demanded. The biggest western firms concede there might be merit in the idea. But justice and efficiency require a level playing-field. The NGOs, the reformed multinationals and enlightened rich-country governments propose tough rules on third-world factory wages, backed up by trade barriers to keep out imports from countries that do not comply. Shoppers in the West pay more—but willingly, because they know it is in a good cause. The NGOs declare another victory. The companies, having shafted [British slang for something like betrayed ] their third-world competition and protected their domestic markets, count their bigger profits (higher wage costs notwithstanding). And the third-world workers displaced from locally owned factories explain to their children why the West’s new deal for the victims of capitalism requires them to starve.
What is wrong with this? The answer depends on how you look at it. From one perspective, the economist is right; if we do manage to get fair wages for the exploited, then we risk affecting everyone due to passing on these extra costs to consumers. But, does that suggest we should therefore resign ourselves to continue this exploitation? After all, it does pay those people, even if it is a small amount.
Well, in short, NO! Yet, that is what the Economist and possibly extreme versions of the liberalism ideology seem to hint (although it may be politically incorrect to actually ever say it explicitly).
So how can this seemingly be right and seemingly be wrong? Well, it is the range of discourse within which a point is made that affects how you view this. That is, the assumptions, etc affect perspectives:
If we talk about these wages within the confines of the current implementation of the globalization system, this is perhaps how it has to be. However, let’s just take a tiny step outside and just ask some simple questions such as: why do these corporations have to go outside their own region? why should the poor produce sneakers or other products mostly for export? What good is that going to do them to earn so little money? What good is that money going to do when there is not much else to buy? And so on. We start hitting a major difference in perspective that is at the heart of this.
That is, when we start asking things like why the poor don’t create their own industries, rather than be an extension of multinational’s, then we start to hit a key issue. Por exemplo:
The poor countries ideally have to build their own industries, with their own internal markets etc. With that, they will have their own distribution networks. Right now, they are a source of cheap resources (such as all those cash crops, the export-oriented economies—or mostly resource export-oriented, etc). With poorer nations selling resources and commodities elsewhere such as to wealthy nations, while buying from them the finished products made from those resources and commodities means the poor pay more than what they got! If products can be easily produced within the same region, it leads to better growth in those regions due to multiplying and circulation of wealth. It is worth quoting J. W Smith, again, on what was mentioned on this site’s structural adjustment page:
[I]f a society spends one hundred dollars to manufacture a product within its borders, the money that is used to pay for materials, labor and, other costs moves through the economy as each recipient spends it. Due to this multiplier effect, a hundred dollars worth of primary production can add several hundred dollars to the Gross National Product (GNP) of that country. If money is spent in another country, circulation of that money is within the exporting country. This is the reason an industrialized product-exporting/commodity-importing country is wealthy and an undeveloped product-importing/commodity-exporting country is poor . (Emphasis Added)
Developed countries grow rich by selling capital-intensive (thus cheap) products for a high price and buying labor-intensive (thus expensive) products for a low price. This imbalance of trade expands the gap between rich and poor. The wealthy sell products to be consumed, not tools to produce. This maintains the monopolization of the tools of production, and assures a continued market for the product. [Such control of tools of production is a strategy of a mercantilist process. That control often requires military might.]
J. W. Smith, The World’s Wasted Wealth 2, (Institute for Economic Democracy, 1994), pp. 127, 139. A multiplier effect of their money would be created as it circulates around their economy, not around someone else’s (i. e. the TNCs, and other countries) Wealth in the poor country would be created more rapidly. Much of the production and distribution we now see are wasteful of resources, capital and labor in this way because they are largely owned by foreign investors, or influenced heavily by foreign actors. Poorer countries are dependent on export-oriented economies, and much of the production flows to the wealthier regions. (And the effort that goes into maintaining these disparities and keeping real competition from the poor countries at bay is also wasteful.) Addressing this could eliminate much in terms of environmental degradation from distribution (although perhaps be offset by new local (national or regional) industries, which must be countered with alternative/sustainable/less wasteful use of resources, etc.) Free—but somewhat managed—trade between like nations, within regions etc would be beneficial to all involved. Free trade in its current form between unequal nations is itself unequal and continues inequality as a result. Furthermore, the freeing up of labor in wealthy countries through elimination of wasted distribution and wasted capital, combined with efficient job-destroying technologies that we have today, means there would be more unemployment—but that should be used to society’s advantage: we should share remaining productive jobs—that would reduce the workweek for all. This is detailed much more in this web site’s section behind consumption and consumerism.
Of course, other issues will arise and the above glosses over numerous other issues (which links below will address in more detail, or point to sources with much more detail.) Local populations will have to continue to demand fairness and just actions from the new capitalists in the poor countries—such as demanding wages are fair, that environmental and other social standards and concerns are observed and respected, there is no concentration of ownership in land, technology, money and so on, like there currently is in the global sense (which also needs to be addressed).
Some might fear these suggestions, thinking they are communist or something, but they are not. These are all capitalist theories. There is nothing anti-capitalist about this. Instead, it is addressing a key issue of enhancing rights (economic rights) to all . Of course, this is not saying that there should be no international trade whatsoever, but that at least for the development of the current third world, the international setting should be something along the lines of the first world assisting by trading tools that help create industry (what some call tools of production) in those countries. Adam Smith, Henry George and others have all pointed to aspects of this. Of course, politics has meant that some of these theories have been distorted from original intent, or there may even be problems within the original theories. J. W. Smith for example, highlights well that philosophically much of this is possible:
Elimination of poverty is simple:
The impoverishment of the developing world is understandable once one learns how plunder by trade locks the world into violence and war.
Eliminating poverty is not philosophically complicated; Eliminate the monopolization of land, technology, and finance capital and equalize pay for equally productive work, both within internal economies and between trading nations. Once all nations and all people have access to technology and their labor is paid equally for equally productive work, the buying power of labor in different nations, and within nations, will equalize. Eliminating those monopolies will instantly distribute a share of the wealth to all members of society even as economic efficiency increases and produces more wealth. This is a more cooperative and democratic capitalism that will assure all rights for all people.
(J. W. Smith quote above, describes in detail over 800 years of history of plunder by trade that is mentioned above, and how at the world level, the subtle monopolization of land, technology, capital etc have all come about, including the waste of wars and other factors to maintain such systems. Furthermore, he provides details on how society has unwittingly supported what has amounted to plunder of the poorer regions of the world.)
(For more about the waste aspect, also see the latter parts of this site’s section on behind consumption and consumerism, especially the page on waste.)
So, one might naturally ask, if it is this simple why haven’t the poor done this? There is in some respects, a simple answer but one that demands a lot of explanation! The simple answer to this can be found in in things like politics, greed, dominance-politics, etc. For example, international economic institutions like the World Bank and IMF, with the influence of economically and politically powerful nations, have been able to push through policies, which are known to be destructive (as even admitted by former Chief Economist of the World Bank and Nobel prize winner. (See this web site’s section on Structural Adjustment Policies or SAPs, for more including links to article from Joseph Stiglitz (that former Chief Economist) and others on how SAPs creates poverty and destroys any real chance of developing one’s own nation.)
In fact, instead, things like SAPs open up poor countries economy for Foreign Direct Investment , for constructive engagement etc. But these are often constructive for the multinationals, not always for the host country, because there is investment to create sweatshops, constructive engagement to extract resources, and so on. There is little constructive investment in helping these countries build their own industries. So, such investments might look like they create jobs in the poor countries, but compared to the real potential of what the poor countries could achieve, this is very little, and much potential for poverty alleviation instead is lost. And while some mainstream commentators may not like to talk about it, the effects of colonialism etc are still felt—the same countries are still poor; their resources are still plundered away (instead of through force it is now largely through unequal trade). (See also this site’s section on corporations and human rights for more on this issue of constructive engagement.)
Furthermore, the above argument from the Economist lends well to corporations who do not actually wish to engage in competition that will threaten their current success:
Because people everywhere are pretty much equally productive, then factors like access to industry, technology, education etc can enhance that productivity. Structural Adjustment is almost an assault on such things, and the poor are not only poorly paid for the work they already do, but are denied technology, industry, education, health etc, to build their own industries and economies. Furthermore, you get companies closing off in the first world and establishing in the third world, where they can say they are being constructive because they bring technology, know-how etc. However, this is a con; it is not to really and effectively help the poor build their own industries, their own buying power, and their own wealth. Instead, it is a way for companies to reduce costs but with social effects on all sides—the workers of the wealthy country lose out, while workers of the poor get exploited. Because on both sides then ordinary people lose out, and the poor cannot build their own industries etc, as a result, the threat of real competition leads to what J. W. Smith describes aptly as capital destroying capital.
In fact, Adam Smith, who criticizes both big government and concentrated big corporations in his 1776 classic The Wealth of Nations , what some regard as the free trade/capitalism bible, is worth quoting here:
Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their good both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.
Adam Smith, The Wealth of Nations, Book I, (Everyman’s Library, Sixth Printing, 1991), pp. 87-88.
There are numerous other political factors, and geopolitical/military factors as well, related to the historic struggle and control for resources, and the wars that have revolved around that to maintain such disparities. (The poverty section on this web site introduces many of these angles, with many links to other sites and sources.)
The Economist article doesn’t really consider political aspects in this, and instead uses only some aspects of these capitalist theories, which, contrary to what seems to be popular belief, are not magical or natural forces without alternatives! Regardless of whether or not the theories themselves are sound, or not, or partially, (which is a huge topic unto itself!), they are heavily manipulated by political interests as has always happened throughout history. Hence, while in theory there may be many good points, in reality politics (power play) leads to supporting only those aspects of those theories that fit one’s interests and so rhetoric and reality are far apart.
Effects or Influence on Culture?
In the Economist article, Is globalisation doomed?, September 27, 2001, there is the following mentioned in addressing the impact on culture:
But what about the view that globalisation is a kind of cultural conquest? This too is plainly wrong. Under a market system, economic interaction is voluntary. This is the market’s greatest virtue, greater by far than its superior productivity. So there is no reason to fear that globalisation itself threatens traditional non-western cultures, such as Islam, except in so far as individual freedom threatens them. McDonald’s does not march people into its outlets at the point of a gun. Nike does not require people to wear its trainers on pain of imprisonment. If people buy those things, it is because they choose to, not because globalisation is forcing them to.
What does free choice in this context mean? In a narrow range of discourse , yes, this is a choice one makes. However, in a wider sense, it is not really that much of a choice, because in a wider discourse and debate we would see that other real choices have been denied. For example, think of all those non-choices because there is no internal market allowed to develop, as suggested above; no industry of their own for their own people etc. The WTO, IMF, WB, SAPs, etc. have all help create economic policies have in effect limited the possible choices a nation/region/peoples can make. Hence, within the confines of a limited choice, you have a choice.
There is also the interesting point about McDonalds not using a gun. Again, this depends how you look at it. Of course, McDonalds does not have an army, so in that respect, they are right. But it is of course oversimplified.
For globalism to work, America can’t be afraid to act like the almighty superpower that it is.… The hidden hand of the market will never work without a hidden fist — McDonald’s cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies is called the United States Army, Air Force, Navy and Marine Corps. — What the World Needs Now , by Thomas Friedman, New York Times, March 28, 1999.
(Thomas Friedman is a popular columnist in the New York Times , and a very staunch advocate of the current form of globalization.)
Yet, war or, using the old phrase of gun boat diplomacy , can be conducted in many ways — political, economic, and military. That is, the gun has been used by a company’s parent country (part of the foreign policy to help enhance one’s own country). These means have included military, IMF/WB, WTO or some other means. The historic plunder by raid or, now increasingly, by trade, has led to the same effects for the poor. As pointed out in the structural adjustment page, there is immense dependency created upon the poor. Hence, their choices are limited, but within those confines, they have a choice .
Defense Secretary William Cohen, in remarks to reporters prior to his speech at Microsoft Corporation in Seattle, put it this way, [T]he prosperity that companies like Microsoft now enjoy could not occur without having the strong military that we have. … The defense secretary is making the case that conflicts in faraway lands such as Bosnia, Korea and Iraq have a direct effect on the U. S. economy. The billions it costs to keep 100,000 American troops in South Korea and Japan, for example, makes Asia more stable—and thus better markets for U. S. goods. The military’s success in holding Iraq in check ensures a continued flow of oil from the Persian Gulf, concluded the Associated Press dispatch reporting on Cohen’s Seattle appearance [February 18, 1999].
As mentioned above, one cannot separate politics from economics; to do so would be naive. Politics in this respect includes institutional abuse of power, which affects the purpose for which economic policies are carried out, as well as their effectiveness. (See also the military expansion page on this site for far more on the economic links and purpose of military expansion, and how this has a direct effect on people’s choices far away from us.)
Because most of us in the wealthy world are fortunate to have far more choice, and our politicians keep reminding us that, we instinctively think that what we are therefore doing in other countries has to be offering them a choice as well, because we as individual people are decent at heart. Yet, we often don’t see that our own leaders and institutions will be involved politically around the world to help enhance our national interests which may or may not be in the interests of others. A classic example of this is food charity in non-emergency situations, which has increased world hunger, as detailed on this site’s section on food dumping.
This is a good example of the ideology of neoliberalism taken to an extreme and shutting off the complexities from the discourse. It is naive to assume that politics isn’t a factor. In that light then, choice can be seriously affected.
So, in a way, that people choose the products they purchase, etc. But that choice is not as free as it initially seems; it happens in the surrounding context; what choices have been made available, what choices have been denied or forced out the market (by both market and non-market forces). The Economist used the example of McDonald’s and Nike, two global cultural icons, but didn’t mention any brands from developing nations. It could be argued that they are not mature enough but it can also be added that various international policies, under the name of free markets, have prevented them from competing even-handedly with the established powers. There’s also the geopolitical angle which can be seen on the resource struggle page on the Middle East section on this site. While in a slightly different context, the support of dictators, overthrow of democracies etc is discussed here with links to numerous sources and books for more details.
Is Globalization in its current form imposed on the poor?
In another article by the Economist , All too familiar, September 27, 2001, there is the following in describing similarities and differences in the 1920s for globalism and today where:
One resides in, as he [Harold James, author of The End of Globalisation: Lessons from the Great Depression , Harvard University Press (June 2001).] writes, the difference between an order imposed by treaties and an order built in sustained reflection about appropriate policy — and the gains to be derived from it. In the 1920s internationalism was imposed; after the 1960s it developed, in the main, spontaneously, as a result of calculations about advantage . That seems right, though today’s anti-globalists would deny it. In their view, the Washington consensus is also imposed, selfishly and undemocratically, on unwilling victims. If that were true, the portents really would be bleak.
One can only respond to this by saying that later on, when we look at the protests page, we will see that protests at the effects of the current forms of globalization have occurred around the world for years. Many people, not just what the Economist defines as anti-globalists, but many others have protested because they face the brunt of these policies, and can often see right through them, by virtue of being the recipients of these. (Just as people of ethnic minority will see through policies that are racist, for example, whereas the instigators of that policy may not realize, and where it genuinely may not have been the intention for the policy makers to be racist.)
As mentioned above, SAPs, and other such policies are imposed on the poor. For the wealthy, it might not need to be so imposed, as it is beneficial to them and therefore there may be less need to impose it in the same way, so to speak. (Though some will even point out that in the wealthiest of nations, there are similar policies causing high disparities within those nations as well.) Just because in one culture or a class of people we might not see so much imposition, doesn’t mean that there isn’t that imposition in other cultures or classes (from that dominant culture or class). The previously mentioned page on the resource struggle in the Middle East section on this site, while in a slightly different context, talks of the support of dictators, overthrow of democracies which has gone in hand with globalization, and from that perspective can be seen as examples of imposition.
Economics helps the environment.
In the Economist article, Economic man, cleaner planet, September 27, 2001, the point is made that economic theories, market systems etc are good for the environment.
The title of being economical meaning better environment is almost too obvious. Indeed, Shocking as it may seem to most anti-globalists, market forces can help the environment , says the Economist . Of course, market economies may help create incentives for doing various things too, including incentives to reduce environmental degradation, if appropriate policies are in place, if concerns of people are respected by the large pollution-causing industries, and so on.
But as well as helping, it often does not. climate change and global warming is perhaps the ultimate example where markets have contributed to this problem rather than help the environment. The U. S., the ardent promoter of free markets has also historically been hostile against the Kyoto Protocol to deal with threat of climate change and global warming. For a long time it refused to accept what its own scientists had told the world. Numerous cases appeared where big business interests of the threat of profit loss was found to be influencing decisions affecting the planet. The value of the planet’s biodiversity has rarely been factored into prices, for example, even though the price signal is very important to our functioning economies. To be fair, in these examples, maybe it could be argued that this was a failing of free markets because they weren’t really free markets: free markets perhaps unleashed powerful forces (because they helped some entities become unduly powerful and influential beyond their democratic accountability) and it was these entities that are the problem, not free markets per se.
But, as stated before, power politics directs economic functions, because while economics can be about how best to use money, politics is about the control of that money. Given the earlier points made about political influence, the following also highlights this very well:
In 1991, then Chief Economist for the World Bank Lawrence Summers, (and US Treasury Secretary, in the Clinton Administration, until George Bush and the Republican party came into power), had been a strong backer of structural adjustment policies. He wrote in an internal memo:
Just between you and me, shouldn’t the World Bank be encouraging more migration of dirty industries to the LDCs [less developed countries]?… The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable, and we should face up to that… Under-populated countries in Africa are vastly under-polluted; their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City… The concern over an agent that causes a one in a million change in the odds of prostate cancer is obviously going to be much higher in a country where people survive to get prostate cancer than in a country where under-five mortality is 200 per thousand.
Lawrence Summers, Let them eat pollution, The Economist, February 8, 1992. Quoted from Vandana Shiva, Stolen Harvest, (South End Press, 2000) p.65; See also Richard Robbins, Global Problems and the Culture of Capitalism (Allyn and Bacon, 1999), pp. 233-236 for a detailed look at this.
Even what appeared in an Economist article, by a foremost pusher of Structural Adjustment, neoliberal globalization, etc we see that politics can affect markets to help or worsen environmental issues.
Furthermore, this gives a further excuse for corporations to prevent refitting factories in the first world with the costly environmentally oriented measures and protections (put in by democratic governments and environmentally oriented citizen pressure — not necessarily free markets by themselves), and move elsewhere where regulations have been reduced or removed. As a result, we may see a relatively cleaner environment in the industrialized world, but it is not all explainable by those nations and their industries being cleaner.
On this site’s section on consumption and consumerism, it has been detailed how many industries use resources efficiently to produce profits. However, if measured from an angle of how well the environment has faired, the efficient use of resources has led to a lot of environmental degradation. Measures like GDPs don’t fully factor in such angles (and are treated as externalities ). Hence, as described on that section, there is a lot of waste in the economy that isn’t accounted for.
What we are seeing here then is economists, politicians, business leaders, etc offering such critue as the above but falling back to their theories , while anti-globalists are generally (not always) crituing the realities . So, in some respects, sometimes, neither are really talking to each other. And yet, there is some critue to be made of some of the anti-globalists too:
First though, it should be pointed out (as we will also see later on in the protests page in this section of this web site) that anti-globalists are not necessarily against globalism and internationalism.
That is, they are not anti-globalists in a strict definition of that term. More accurately, it would seem that they are mostly against the current forms of globalization due to the observed (and in many cases, predicted) effects. This means that some, especially many in academic and intellectual circles, including many from the developing world, may be for capitalism, or at least market-based economies to varying degrees.
While capitalism could be argued as a good way (some may say the only, or the best), there are many forms of capitalism. So, at the least, the current form which is seen as overly corporate-led and/or over competition oriented (i. e. destructive rather than healthy competition) may be criticized, and people may in effect be demanding a more cooperative or democratic capitalism. As mentioned above, it is even suggested that the current form of globalization is a more predatory form of capitalism, such as mercantilism/imperialism, but just nicely dressed up.
But there are also other types of anti-globalists . For example (and not limited to)
Some many indeed be anti-internationalism, isolationist, xenophobic, etc. Others, notably extremist/alarmist environmentalists are often anti international trade for often legitimate (sometimes alarmist) environmental concerns. Other forms of extremism may want to go to pre-agricultural civilization (Although the insights into how pre-agricultural civilizations really lived etc are interesting, and useful to learn from and even apply, but conclusions to go back to it is an extreme conclusion). Others wish to do away with capitalism and may prefer instead communism, anarchism and so on. These all have some valid points and also some questionable ones, just as the current system has such a mix.
Other protestors see the current system being so bad for the poor around the world, and most people in general, that they are passionate enough to raise their voice. But, because it is difficult to read into so many issues it is hard to always offer alternatives that take in all these aspects. Hence, such people may either only offer critue (which is still valid, even if there was somehow no alternative) or may go with whatever organizations they turn to offer them.
Others will also critue capitalism to the core, which may be very valid, while others will critue different aspects.
The point is that not all anti-globalists will even agree on the points above which the Economist tends to say either most, or indicate that all, anti-globalists have as certain beliefs. It is easy to try to break complex issues into more tangible black and white issues, which is a problem, as discussed in the mainstream media section on this site, as well as the protests page later on here. It is a problem because it affects the debates, which in turn risks polarization and animosity, rather than dialogue and understanding. It also influences a large segment of society’s views and opinions.
Of course it is hard to quantify and views and perspectives will continue to change. But one thing noted here is that in all those articles from the Economist , many critues from developing countries were not included. Some of these critues are very, very good, and differ with those from the North in various ways. One can go on and on to show differences, various perspectives, etc. The point then is multi-fold — that for protestors/activists etc, to read as widely as possible and from diverse cultures as well, not just widely within one culture, and for mainstream to listen in detail to these voices, especially from the South. (And, not just governments and other political/business leaders from the South, as many have their education in the Western universities, that teach the same theories. Of course, that is not to say because they got that education they have no credibility, but just that diverse perspectives need to be understood. The education can have an effect on perspectives, such that talking to someone else from another part of the world but who may have studied at the same or similar university, might have the same perspective.)
Another aspect all this touches upon is hinted to when I mentioned the narrow range of discourse . This occurs from cultural and ideological premises etc and is an issue for all societies. In the West, there is a common culture, even though there are differences between countries, and a common ideology to varying degrees is of liberalism, (from where we get powerful concepts such as individual rights etc). An ideology can be taken to an extreme, liberalism being no exception. Individualism can be at the expense of society, rather than combined, for example. In such contexts then, differing explanations can occur.
As a small example, what the Economist doesn’t recognize here are complex things such as excessive and concentrated property rights and monopolies (in a global sense) combined with all the waste that accompanies this in order to maintain the inequalities this results in.
As a result, when the range of discourse debated is limited in the mainstream, it can affect the views of society in general. If the education system itself has this problem as well as mainstream publications, then we get a strange situation where many educated people are more indoctrinated (paraphrasing Noam Chomsky) into these views more easily than those who are not. Noam Chomsky offers an explanation of why this may be so; that they are more exposed to other aspects of mainstream politics, media, newspapers, publications that fortify each other. (Of course, those without appropriate education risk getting criticized for talking about economics) In addition, this glosses many issues, but the links below provide more insights, as does this quote:
One cannot separate economics, political science, and history. Politics is the control of the economy. History, when accurately and fully recorded, is that story. In most textbooks and classrooms, not only are these three fields of study separated, but they are further compartmentalized into separate subfields, obscuring the close interconnections between them.
J. W. Smith, The World’s Wasted Wealth 2, (Institute for Economic Democracy, 1994), p. 22.
Dr. Nancy Snow, an assistant professor of political science describes one of her previous jobs as being a propagandist for the U. S. Information Agency. She is worth quoting here, in discussion of propaganda and belief systems, which are an integral part of political aspects of economics:
The USIA [United States Information Agency] targets the educated elite [in other countries], despite some negative sentiments, because propaganda is thought to be most effective on the small minority of powerful influential peddlers. As Noam Chomsky explains, One reason that propaganda often works better on the educated than on the uneducated is that educated people read more, so they receive more propaganda. Another reason is that they have jobs in management, media, and academia, and therefore work in some capacity as agents of the propaganda system — and they believe what the system expects them to believe. By and large they're part of the privileged elite, and share the interests and perceptions of those in power.
Nancy Snow, Propaganda Inc; Selling America’s Culture to the World, (Seven Stories Press, 1998), p. 31.
I am only scratching the surface here, of a very deep and large subject matter; the critue or understanding of the culture and ideology of neoliberalism and how this impacts the way various issues such as poverty, economics, other cultures, etc, are understood and articulated to others. I have hardly touched on this topic on this site, although a section will come soon. However, the following links cover aspects of this issue, as well as provide a lot more depth and perspective than what I have offered here in terms of critue:
Poverty section on this site, which includes pages on SAPs, food dumping, hunger causes (related to economic policies and the issue of choice etc) Behind consumerism and consumption looks at the waste in the current system and how elimination of waste and addressing related issues would actually allow more rights to all around the world while also reducing environmental degradation, etc. Mainstream media on various factors that lead to a concentrated ownership in the media which then affects the range of views we get. Struggle for Resources; Supporting dictators and overthrowing democracies from the Middle East section on this site (while slightly on a different topic, a lot of relevant information as well.) Noam Chomsky Archive provides many articles and online books written by Noam Chomsky, a prominent political analyst. He is a professor of linguistics at MIT. Institute for Economic Democracy provides a detailed account of the last 800 years or so of the battles over the control of resources and the causes of poverty world wide (as well as ideas on how to solve them based on a more democratic and cooperative form of capitalism). There is much deep criticism of the current forms of free trade here, and in detail points out how the rich nations today never got their wealth by following Adam Smith principles, but instead followed protectionsit policies, while preaching Adam Smith to everyone else. Food First has published many books and articles that describe the political, economic and social aspects of hunger, poverty, and related development issues. Peter Gowan, Global Gamble , (Verso Press, 1999), has much on political economies, and good insights into the ideology of liberalism. ZMagazine provides a vast number of articles on all sorts of issues. In particular, look at their Global Economics section which offers many articles from various people around the world. Walden Bello, Shea Cunningham, Bill Rau, Dark Victory; The United States and Global Poverty , foreword by Susan George, (Food First, Pluto Press, 1994, 1999) is a great book on the impacts of Structural Adjustment on the majority of the poor nations. Richard Robbins, Global Problems and the Culture of Capitalism , (Allyn and Bacon, 1999) has a detailed look at the success and problems of capitalism, covering a multitude of issues.
Effects on political parties and political diversity.
Globalization in its current form, which is overly corporate-led, as mentioned above, reduces decision-making capabilities from peoples and governments and places more influence on corporations. If there are concerns or attempts to legislate regulations, the opened up markets mean that corporations can simply threaten to move elsewhere, because globalization in its current form has allowed them to be free to do so. It then means that even if a government has good intentions, it cannot always implement them. Or, as is often common, corrupt government officials often have much to gain by opening up their economies even if it is detrimental to most people.
In the mid-1990s, Europe saw a wave of social democratic parties come to power, such as UK’s Tony Blair and the Labour Party, the Green coalition in Germany, social democracy in France and similar happenings elsewhere. Yet, when looking at their policies, they have been almost the same as their former right wing counter parts. Take just the following as an example:
Tony Blair has been considered by many commentators to be another Thatcher (or even worse, as he has gone further in some policies). In that respect, the New Labour approach seems similar to the Old Thatcher policies from an economic and political perspective. In the United States, (ignoring the debacle of the 2000 elections and what would in other countries be labeled all sorts of things, from fraud, to illegitimate, to a farce etc!) the actual policies of Gore and Bush were very similar — they only diverged on how to carry them out. And, if their foreign policy claims during their election campaign are anything to go by, they even openly agreed on the same policies, without any debate between each other at the televised debates ! In Germany, Oskar Lafontaine attempts to control corporations by increasing their taxes and giving the population a break by reducing theirs, resulted in so much ridicule by the respectable institutions and mainstream press, such as the Financial Times and others, as well as threats from major corporations to pull out etc., that he was forced to resigne. People lost out.
John Bunzl, of the International Simultaneous Policy Organisation is worth quoting at length concerning the effects on political parties and electorates of the drive for over-competition:
By their inability to deviate from these policy constraints, governments of whatever party and their electorates must now submit to what are, effectively, permanent political conditions. Conditions in which whatever party elect, the policies we receive inevitably conform to market and corporate demands and not necessarily to what the electorate desires.
Certain electorates around the world still generally believe they live in truly democratic countries, a misapprehension which is leading to a marked and increasing mis-match between voter expectations and political-economic reality. Voters are led to believe that in selecting a particular party they are voting for a particular political approach. But they become confused when, once in power, their party fails to deliver what they might have expected.
Once in power, therefore, politicians of whatever party effectively have no choice but to remain confined within the policy parameters dictated by global markets and competition. Now subject to pseudo-democracy, the simple conclusion we must reach is that it no longer matters much for which party we vote . This predicament and resulting voter ambivalence consequently presents our political parties with a distinct problem: how to make themselves and their policies different from those of other parties when in fact the markets allow no such differentiation. How can they maintain to the electorate the illusion that they have the power to improve society, or preserve what is best in society, when the markets preclude such value judgements ? In a vain and desperate attempt, they are forced to employ increasingly elaborate rhetorical tricks and stunts commonly known as spin . Hence the rise to prominence of Spin Doctors. For centre-left governments, attempting to reconcile their traditional social democratic values with free-market realities is resulting in the most pathetic exercises in rhetorical hair-splitting in an attempt to distract traditional left-of-centre supporters from the reality of having to submit to the liberal dictates of world markets. (Emphasis added).
Since our politicians and their parties must now position themselves according to what free-market competition dictates and not necessarily to what the electorate desires they have, to a great extent, ceased to represent a mechanism through which political choice can be expressed. Instead they have become puppets of the quasi-dictatorship serving principally to preserve among the electorate the false illusion of political choice; the false illusion of democracy. …
The electorate too, has been infected by this paralysis. Voters are not stupid. They understand only too well what competition means. … Whist they may not be able to precisely identify what is argued here, they certainly know that their nation cannot ignore world markets on the wider international economic environment. They know that their jobs depend to an increasing degree on their nations’s competitiveness in world markets. … real political choice … is abandoned to the unstable and insecure forces of competition whilst believing its fate to be inevitable, unavoidable or simply, perhaps, as just a sign of the times .
John M. Bunzl, The Simultaneous Policy (Simpol), An Insider’s Guide to Saving Humanity and the Planet, (New European Press, 1999), pp. 17 - 21.
Prize-winning author and activist from India, Arundhati Roy, also captures this in an article that made front page of the Indian daily, The Hindu :
No individual nation can stand up to the project of Corporate Globalisation on its own. Time and again we have seen that when it comes to the neo-liberal project, the heroes of our times are suddenly diminished. Extraordinary, charismatic men, giants in Opposition, when they seize power and become Heads of State, they become powerless on the global stage. I’m thinking here of President Lula of Brazil. Lula was the hero of the World Social Forum last year. This year he’s busy implementing IMF guidelines, reducing pension benefits and purging radicals from the Workers' Party. I’m thinking also of ex-President of South Africa, Nelson Mandela. Within two years of taking office in 1994, his government genuflected with hardly a caveat to the Market God. It instituted a massive programme of privatisation and structural adjustment, which has left millions of people homeless, jobless and without water and electricity.
Why does this happen? There’s little point in beating our breasts and feeling betrayed. Lula and Mandela are, by any reckoning, magnificent men. But the moment they cross the floor from the Opposition into Government they become hostage to a spectrum of threats - most malevolent among them the threat of capital flight, which can destroy any government overnight. To imagine that a leader’s personal charisma and a c. v. of struggle will dent the Corporate Cartel is to have no understanding of how Capitalism works, or for that matter, how power works.
Will Corporations Rule the World?
For all the vivid examples of modern corporate power, such as the annual income of Motorola being equal to the annual income of Nigeria's 118 million people, it is folly to believe that big business on its own is shaping the new world order. This allows the argument against globalisation to be depoliticised, reducing it to single issues of ethical trading and codes of conduct , and inviting its co-option. Above all, it misses the point that state power in the west is accelerating.
A common perception is that due to the enormous influences and power of many major multinationals, corporations are therefore going to rule the world ; that corporations will reduce the need for a government and will dismantle the state. Yet, this is not completely true.
Corporations still require the state to provide them the environment conducive to their needs. The state may reduce its functions and obligations and thus roll back its commitment to its people, but that doesn't mean that they won't be needed and become obsolete. Such rollback will also enable decision-making (and therefore control) to be further concentrated. This rollback happens both in the North and the South. The South has been structurally adjusted to open up the economy and roll back the functions of the state, and even concentrates further the decision-making. That is, these IMF-, World Bank-prescribed policies have reduced democracy. (See this web site's section on SAPs for more.) In the North, in countries ranging from New Zealand, to the United Kingdom, and most aggressively in the United States, the functions of the government have been constantly rolled back. Less is spent on health, education etc, while more on military, policing and so on. (See Walden Bello, Dark Victory , (Food First, 1994, 1999 Second Edition) for more on this.) Yet governments will still be required to provide repressive functions to keep the rabble in line so to speak, as described by Noam Chomsky. They will also be required to help create or open up markets, or even provide military support for such things (as described in the military expansion section on this site). Also, an interception of society's wealth is sometimes provided to large businesses to just survive. Western nations provide a lot of protectionism to their industries, while forcing the poor countries to completely open up. If there was true free trade and fair competition, many wealthy western corporations might not be able to survive, as John Pilger suggests. (See also the corporate welfare and evasion of responsibilities section on this site.
So, while corporate influence increases and continually drives many aspects of our lives, from influencing and even buying elections, public policy and so on, they still require a government that functions to serve their needs as well. International institutions such as the IMF, World Bank, and World Trade Organization, are also needed. The irony is that by often using tax payer money, the tax payer unwittingly supporting a process that is leading to more exploitation of tax payers. For the poor countries, the multinational corporations of the west are seen as further extensions of those western nations.
As the post September 11, 2001 corporate scandals have shown in the U. S., even U. S. multinationals are not exempt from all issues. Corporate accountability has come to the fore especially for shareholders due to accounting and other scandals (though there are still concerns of corporate welfare going on by using the war on terror as an excuse -- sometimes legitimate, sometimes not). As one example, the L. A. Times reported that In a setback for multinational corporations, a federal appeals panel ruled [18th September 2002] that they can be held liable in U. S. courts for aiding and abetting human rights violations committed by others abroad. A number of multinationals have been accused for gross human rights violations around the world, as briefly discussed in various sections on this site, and as that L. A. Times provides an example of.
It is possible therefore, that with the drive for real democracy and accountability at all levels of society that the interests and influences of big multinationals and others that are currently regarded by many as having a negative impact may perhaps be checked appropriately, though history has shown that this is no easy task. The above example from the L. A. Times is just one small step.
Increasing charities are a sign of fundamental, structural flaws.
We hear more and more about philanthropic organizations set up by mega-successful business elites, where millions of dollars are donated to seemingly worthy causes. However, the fact that such donations are needed also serves as an indication that development policies and globalization policies in their current form are not sustainable. The following quote summarizes this notion quite well:
It is all very well for Bill Gates to charitably donate $750m to pay for immunization programmes for certain diseases, as he recently announced he would do, and for James Wolfensohn to urge transnational companies setting up in poor countries to contribute financially directly to local education services. Societies which depend on such largess to meet their basic health and education needs are neither sustainable, democratic nor equitable — yet new dimensions of power are ceded to large companies.

Current International Monetary System.
Following the collapse of the Bretton woods system on August 15, 1971, the EEC countries agreed to maintain stable exchange rates by preventing exchange fluctuations of more than 2.25%. This arrangement was called " European snake in the tunnel " because the community currencies floated as a group against outside currencies such as the dollar.
By 1978, the snake turned into a worm (with only German mark, Belgian franc, Dutch guilder, Danish krone). However, a new effort to achieve monetary cooperation was launched. By March 1979, EC established European Monetary System, and created the European Currency Unit (ECU).
The European Monetary Cooperation Fund, now part of European Central Bank, allocates ECUs to members' central banks in exchange for gold and dollar deposits. 20% of the quota must be paid in gold (and 80% in USD). ECU was an artificial currency and used in all intrasystem balance of payments settlements. ECU was replaced by euro (at 1:1) on January 1, 1999.
provision of credit facilities for compensatory financing.
Then the EMS created the European Central bank (June 1998) and a single European currency (euro 2002).
Since its inauguratation in 2002, euro has gained ascendancy, but sovereign debts of PIIGS (Portugal, Ireland, Italy, Greece and Spain) nations weaken the euro.
As a general rule, small countries (whose trade shares are less than 1% of world trade) should peg their currency to a major currency or a basket of major currencies. But there is little harm in floating their currencies. The peg should be set at a level to ensure balanced trade. (Remember Greece's debt crisis)
Countries whose trade shares exceed 1- 2 % of world trade (27 countries) should adopt floating rates to insulate their economies from excessive foreign shocks.
If intervention is desired, the pegged exchange rate should be negotiated between the two countries to insure stable and balanced trade.
If trade share exceeds 5% of world trade, the country should definitely float its currency.
For example, China's export share is about 12%, and it should float yuan to protect consumer welfare. (As the reserve asset increases, its real value in terms of yuan or imported goods declines.)
In the foreseeable future (by the next decade, if not sooner), four major currencies (USD, euro, yen and yuan) will float their currencies. India and Russia may follow suit eventually. Large countries may not only hurt themselves (profit from currency intervention will be negative) but also disrupt world trade when their currencies are pegged to another currency to gain a large trade surplus.
Foreign exchange reserve should be less than half of export volume. At most, it should not be more than the annual export volume.
Japan: pop = 127 million, GDP = $4.6 trillion,
share in global exports = 3.6%, $683 billion.
Foreign exchange reserve = $1,233 billion.
Japan's foreign exchange reserve exceeds this limit.
China: pop = 1.36 billion, GDP = $10.4 trillion (2014),
share in global exports = 12.3%, $2,342 billion.
China's foreign exchange reserve = $3,526 billion. (down)
US: pop = 319 million, GDP = $17.4 trillion (2014)
share in global exports = 8.5%, $1,620 billion.
US foreign exchange reserve = $119 billion (less than 10% of exports).
Euro area:$340 billion in 2014.
Prolonged undervaluation of one's currency necessarily results in an ever-increasing reserve of overvalued currencies, and inescapable loss from currency intervention.

The current trade dispute between the US and China is part of an unfolding reality in international trade that has its origins in the early 1970s when relations first began to thaw between the two countries.
Past economic isolation has taught China’s leadership that the technology required for many high-tech sectors could not be developed indigenously. Subsequently, technological and supply chain advantages have allowed US firms to gain a strategic foothold in key sectors of the Chinese economy.
This indicates that threats to limit trade with each other is a red herring. US complaints (and those of the EU for that matter) about the business operating conditions in China are longstanding and hardly provide the basis for a trade war.
What the US seeks is a more dynamic economic recovery, while China is bent on modernisation. Technology and intellectual property concerns are real but will not provide the solution that each side needs. Rather, a long overdue rethink of the global trade system is required. Only this can produce the dynamism and growth that both the US and China seek.
Economic sanctions and technology.
China US economic relations have long been characterised by economic sanctions. In 1950, following the outbreak of the Korean War, US firms were instructed to suspend oil sales to China. Shortly afterwards, China began the requisition of the properties of US-owned oil companies including the Standard Vacuum Oil Company and the Texas Company. Then, when China fell out with the Soviet Union in 1960, China increasingly turned towards Japanese and European companies for technology.
US president Richard Nixon’s visit to China in 1972 witnessed a turning point in China’s economic relationship with the US. A lack of access to advanced technology proved costly and expensive for China. For example, a lack of appropriate technology in advanced chemical refining meant that during the 1960s crude oil had to be transported from western China to Japan for refining and then reimported back into China. This proved an early and costly lesson in China’s bid for technological self-sufficiency.
US companies were quick to take advantage of China’s demand for technology. The engineering technology firm Lummus first supplied China with crucial ethylene technology in 1973 for its Beijing Yanshan oil refinery. Lummus’s critical role in supplying the complex technology is illustrated by the fact that approximately 60% of China’s ethylene and styrene production is based on its technology today.
Unsurprisingly, US firms continue to perform well in China. Although it is difficult to get an accurate picture of their performance, the table below shows that the returns of US majority firms operating in China has been impressive, especially compared to other regions.
China’s long game.
China too has played a long game in terms of modernisation. When China started opening up its economy to the rest of the world in 1979, it welcomed foreign investment as part of a more substantial drive to transform the nation.
This had its origins in the “Four Modernisations” policy, which was a long-term programme designed to modernise China’s agriculture, industry, science and technology, and military. Although it was first announced by Zhou Enlai in 1954, its central tenets have appeared in China’s planning documents ever since.
The recent Made in China 2025 initiative and emphasis on domestic innovation, which appears to have become the target of president Trump’s trade sanctions, are a continuation of these policies. The government is committed to drastically improving the quality of its manufacturing output.
But this plan conceals weaknesses in China’s growth model. Since the global financial crisis, FDI’s role in financing growth has been declining. This is significant since FDI typically comes with technology and know-how.
China’s opening has also not delivered the type of progress that would allow it to compete on an equal footing with the US. Specifically, it lacks the large transnational firms through which trade, investment and innovation take place. In 2016, China had just two companies that ranked in the top 100 transnational corporations by foreign investment. The US had 22.
Even without trade sanctions, China may well find it difficult to meet the targets of Made in China 2025. The strategy assumed average labour productivity growth in the region of 7.5 to 6.5%. These targets will be difficult to achieve under slowing growth. Labour productivity growth in 2016 was around 6.5%.
Market access works both ways.
Given the above, it is reassuring that China has continued to defend the idea of globalisation and unsurprising that is has demanded new trade governance structures. In the aftermath of the 2007-08 financial crisis, China went to great lengths to avoid the return of protectionism in its major export markets.
President Xi repeated this view at Davos in 2017 when he said that “China has no intention to boost its trade competitiveness by devaluing the RMB, still less will it launch a currency war”. He reiterated it again at the recent Boao Forum of Asian leaders. Xi’s plea for reforming the global economic governance system to reflect new dynamics in the international economic architecture, reflects the real challenges China faces in international trade.
Concealed in the broader trade dispute is that neither country’s growth model is sustainable in the long term. China, with its slowing productivity growth, and the US, with its urgent need to renew its economic dynamism, could find considerable common ground in building a new global trade system.
This article was originally published on The Conversation. Read the original article.