Is Economic Globalism a Positive Trend?
by John Matthew Davis
At the front of most academic discussion about the alleviation of 'third world' poverty is a debate over the term globalization. Michael Bell, from the International Monetary Fund (IMF), notes in his article that "some view it [globalization] as a process that is beneficial - a key to future world economic development - and also inevitable and irreversible. Others regard it with hostility, even fear, believing that if increases inequality within and between nations." A term that could produce this wide a variety of beliefs concerning a topic of such importance is obviously a vital one to be understood. By comparing two opposing viewpoints on the issue, one the Michael Bell article, and the other by Scott Marshall, entitled, "Imperialist Globalization," as well as examining other ideas about globalization, it will be shown that globalization in some form is inevitable, but that its current course is hazardous indeed.
Michael Bell writes as a spokesperson for the IMF, so his biases are obvious. He represents the height of the corporate and banking elites, and although he's working with a for-profit and highly secretive organization, he claims to be trying to help the poor peoples of the world. Of course, it is extremely important to examine his position, because the IMF is one of the central lenders to developing countries and it is exactly their model of economic development (or the way it is applied in practice) with which many people around the world have a problem.
Scott Marshall's article is supposed to represent those people's concerns, but is written from a traditional leftist (as far as I could determine, either a classical Marxist or possibly Trotskyist) perspective. His critique of the IMF and global capital finance in general is valid, but his own obvious bias makes his points harder to digest. When he makes comments about how "the relative lack of a socialist counterbalance has emboldened capitalism to new heights of globalization and savagery," he undermines his believability by ignoring the crimes of the 'socialist counterbalance,' as well as the unbelievable crimes committed by capitalist countries during the Cold War. He also seems to jump to the conclusion that "the system itself must be changed," without properly explaining why . The decision to use Marshall's article as the IMF critique in the Taking Sides book seems somewhat arbitrary, especially when much better spokespersons might have been selected. To cite only the most obvious example, former head of the World Bank and now fervent opponent to neo-liberal ideology Joseph Stiglitz, author of Globalization and Its Discontents, would have been a more logical choice, writing as an insider familiar with the techniques employed by these agencies and convinced that they are hurting poor people.
But first, before any examination of the articles is begun, we must begin by defining some of the terms to be used. Globalization is a term used so often in so many different contexts that a single definition must be reached for this paper's purposes. Economically, globalization is simply the worldwide integration of factors of production and the knowledge of these factors - meaning that people, materials, and facts can get from place to place more easily and quickly. Obviously, technology has been increasing this integration, from the construction of the automobile to the Internet. The ultimate goal of this globalization should be human development, or basically, making things better for the people on Earth. Agencies such as the IMF often associate economic growth (in gross national product, GNP) with development, but this is not a true measurement. Development occurs when the standard of living, including education, health, and wages, increases for the majority of a population. Using growth as a measurement of development means that if the richest one percent of the country gets $100 billion richer, and the poorest fifty percent gets $50 billion poorer, your nation has still developed $50 billion worth.
Thus helping poorer countries develop is the goal. Turning to Bell's solution first, he places most of the blame for underdevelopment squarely on the leaders of developing nations, both for not integrating quickly enough into the world economy and for not structuring their domestic economies in ways that encourage competition. The problem with his argument, of course, is that he ignores several vital factors. Some of the major ones are:
· How the developed world was able to develop
· How integrated developed countries' economies are
· How the IMF's policies work towards his ideals
First we must come to a realistic conclusion as to why developed countries have made such progress. As far is the United States and Western Europe is concerned, their development is a direct result of colonialism and the wealth that it brought. Britain's wealth was based on colonies all over the world, and American wealth comes from policies of slavery and extermination. These are not debated facts, and no one in the IMF is suggesting that developing countries try to utilize these same methods. But they do claim that their model of reducing trade barriers and encouraging investment (a model that has no historical basis) can save poor countries.
Fine then, let's assume that reducing trade barriers will increase prosperity. Why, then, are developed countries some of the most protectionist of the world? The UN Human Development Report of 1992 found that the increasing gap between rich and poor could be largely attributed to the fact that 20 of 24 developed countries (including the US) are becoming more protectionist . When we read about increased steel tariffs and immigration controls, these are all measures of integration. Even as the neo-liberals that run the country preach trade liberalism, our country's policies are headed the opposite direction. Similarly, as we preach small government, the U.S. federal budget has stayed close to even for many decades, though funds have been shifted from social services to the military and prison industrial complexes. Needless to say, poor countries that tried to protect their industries as the developed countries do would find it impossible, mainly because of institutions like the IMF.
So, exactly how does the IMF help poor peoples? Basically, they loan countries money in times of crisis, forcing them to accept 'Structural Adjustment Programs' (SAPs) for the money. These SAPs are strict regulations the government must follow to secure the loan, and follow a strict neo-liberal ideology. This means: lowering tariffs on imported items (often resulting in cheaper imports crowding out domestic industry), reducing government spending dramatically (generally resulting in cuts to education, health, and social spending), and privatizing public industries (leading to higher costs for basic needs like water). If local industry wants to remain competitive with foreign business, wages and labor rights must be contained to keep costs down, pitting local governments against the working poor. Also most capitalists in developing countries will invest in western countries where risk is lower. To top it all off, once these countries are indebted to the IMF, they are often overwhelmed with debt payments of billions per year.
Thus, when Bell tells developing countries that they can develop by promoting "education, training, and research and development to promote productivity," and providing "external debt management to ensure adequate resources for sustainable development," he ignores the fact that his institution is making these tasks impossible . The IMF has even gone as far as to say that "total debt cancellation would imperil the funds that multi-lateral creditors would have for future lending and would come at the expense of resources available to other developing countries, some of which are equally poor but have less external debt ." The circular logic seems clear - 'canceling the debt would hurt the IMF, and because we're helping developing countries, it would hurt them as well.'
As mentioned before, Joseph Stiglitz has been an outspoken opponent of the IMF, especially since the East Asian financial crisis. He discusses fighting from the inside trying to get the policy of opening up investment and shrinking government to be changed, noting that "It was maddening, not just because the IMF's inertia was so hard to stop but because, with everything going on behind closed doors, it was impossible to know who was the real obstacle to change ." Clearly, the undemocratic and unaccountable nature of the IMF makes it harder to fight against.
Despite Marshall's possible ideological bias, his prescription for change is valuable. He notes five main changes that should be made:
1. Capitalists must invest five dollars at home for every one-dollar abroad. This means elites in developing countries will be forced to put money back into their own economies.
2. Trade treaties should pass through the UN and the International Labor Organization (ILO), and the WTO should be abolished as these other groups could serve its purpose.
3. Congress should ratify ILO conventions that they're refusing now - allowing the right to "collective bargaining, the right to organize against all forms of racial, national and gender discrimination, against child labor, and against forced and slave labor ."
4. Cancel the debt; this one is self-explanatory.
5. Create a corporate code of conduct that Congress could enforce.
All of these solutions involve limiting the power of corporations, increasing labor rights (a valuable democratizing tool), and loosening the reigns on developing countries. To the people around the world who have been protesting against IMF policies, in places like Argentina, Ecuador, South Africa, South Korea, and Western Europe, it seems obvious that such steps are needed.
In summation, it is clear that increasing technology means
globalization will continue to occur. The possible paths we can allow it to
take, however, are almost infinite, and unless we have our sights clearly set
on alleviating human suffering and ending poverty throughout the world, this
goal will never be met. The job cannot be left to businesses and governments
alone - their corruptibility is self-evident.
Bell, Michael. "Globalization: Threat or Opportunity?" from Rourke, John. Taking Sides. Connecticut: McGraw-Hill, 2002.
Marshall, Scott. "Imperialist Globalization." from Rourke, John. Taking Sides. Connecticut: McGraw-Hill, 2002.
Chomsky, Noam. Year 501. New York: South End Press, 1993.
< http://www.zmag.org/chomsky/year/year-c02-s13.html > Dec. 4, 2002.
James, Paul. " 'Debt Cancellation Would Hinder Fight
Against Poverty' Claims IMF."
< http://www.globalpolicy.org/socecon/ffd/debt/2002/1024hinder.htm > Dec. 4, 2002.
Stiglitz, Joseph. "WHAT I LEARNED AT THE WORLD ECONOMIC CRISIS."
< http://www.thenewrepublic.com/041700/stiglitz041700.html > Dec. 4, 2002.