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for a good summary of larger issues
http://www.nybooks.com/articles/18931
The Global Delusion
By John Gray
Globalization and Its Enemies
by Daniel Cohen, translated by Jessica B. Baker
MIT Press, 192 pp., $27.95
How We Compete: What Companies Around the World Are Doing to Make It in Today's Global Economy
by Suzanne Berger and the MIT Industrial Performance Center
Currency/Doubleday, 334 pp., $27.50
End of the Line: The Rise and Coming Fall of the Global Corporation
by Barry C. Lynn
Doubleday, 312 pp., $26.00
In the nineteenth century Karl Marx, Herbert Spencer, and Auguste Comte asserted that the advance of science and technology was leading to a single type of social organization, and unless modern societies foundered in a reversion to barbarism they were bound to converge in a global system.
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In each case it was a version of industrial society that enabled scarcity in the necessities of life to be overcome.
Despite their different political visions these thinkers were at one in assuming that with the advent of industrialization prosperity could be ensured for all. Once this had been achieved, war would cease and a universal economic system would replace the diverse and conflicting regimes of the past.
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Daniel Bell anticipated that centrally planned economies and market-based affluent Western societies would come together in a managerial mixed economy.
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societies everywhere were embracing "democratic capitalism."
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the Bush administration the United States has tilted toward a mix of protectionism, an unsustainable federal deficit, and crony capitalism.
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Yet a belief that a universally accepted type of society is emerging continues to shape the way social scientists and public commentators think about the contemporary condition, and it is taken for granted that industrialization enables something like the way of life of rich countries to be reproduced everywhere.
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In The Borderless World (1990), the influential management theorist Kenichi Ohmae declared:
The global economy is becoming so powerful that it has swallowed most consumers and corporations, made traditional national borders almost disappear, and pushed bureaucrats, politicians, and the military toward the status of declining industries.1
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the idea that national systems of government are becoming marginal is shared by theorists of cosmopolitan governance who believe that powerful new supranational institutions are emerging
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As Cohen sees it, the ongoing wave of globalization—the third in a series that began in the sixteenth century with the conquistadors and continued in the nineteenth with British imperial free trade—occurs largely in a realm of virtual reality and leaves much of everyday life untouched. Nineteenth-century globalization involved large-scale movements of population to new lands, while the present phase involves mainly commodities and images.
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There are politically controversial migrations of poor people from the Middle East and Africa to Europe and from Mexico to the United States, but immigrants still make up only around 3 percent of the world's population today, whereas in 1913 it was about 10 percent.
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The fifteen longstanding members of the European Union make up around 40 percent of global commerce, but two thirds of their imports and exports are traded within Europe itself. As Cohen puts it, "in wealthy countries globalization is largely imaginary."
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The basic reason that poor countries stay poor is that they have little that rich countries want or need.
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The poor of the world are not so much exploited as neglected and forgotten.
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For the poor, globalization is not an accomplished fact but a condition that remains to be achieved. The irony of the current phase of globalization is that it universalizes the demand for a better life without providing the means to satisfy it.
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It is all the more surprising, then, that Cohen gives very little attention to globalization's environmental limits. In a number of asides he acknowledges that the current phase may be endangering the planet's ecological equilibrium. "One cannot continue for long," he observes, "leaving to private regulation the question of global warming, the opening of the ozone layer, or the disappearance of species." Yet Cohen seems not to see clearly that ecological instability is an integral part of the vast economic change that is currently underway. As an example, China is undergoing the largest and quickest industrialization in history. At the same time it is suffering unprecedented levels of pollution. Environmental crisis and the present phase of globalization are different sides of the same process.
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The report suggested that impending climate change threatens to reduce the planet's capacity to sustain its present human population and trigger acute resource wars, and recommended that the challenge this presents be treated as a matter of US national security. Both the analysis and the recommendation were shelved by the Bush administration.
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The conjunction of intensifying scarcity in energy supplies with accelerating climate change is the other face of globalization. It poses a large question mark over Cohen's belief that the main problem with globalization is that it is incomplete, for it suggests that completing it may not be feasible.
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In any case it is doubtful that a human population of around eight or nine billion—the figure that is commonly projected for the middle of the present century—could be sustained by pre-industrial methods. Even if the present human population could be supported for a time by such methods, it would only be by devouring what remains of wilderness in the world and further destabilizing global climate systems.
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If there is a way forward it lies in the intelligent use of science and technology to develop less dangerous sources of energy; but it is a mistake to think that a large change in the way we live can now be avoided.
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An economy based on technological innovation is better placed than others to respond to these challenges but it cannot detach itself from the material environment of the planet.
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The global economy that existed prior to World War I was in many respects more open and borderless than the one that exists today. Even so it collapsed, and in a process culminating in the US in the Smoot-Hawley tariff law of 1930 was replaced by the semi-autarchic closed economies of the interwar years. However securely established it may seem, globalization is not irreversible. Indeed, over time its disruptive effects tend to result in deglobalization.
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but Berger believes a "race to the bottom" can be avoided if companies accept that employing cheap labor is not the most effective way of responding to global competition. The activities that succeed over time are those that involve conditions —such as long-term working relations with customers and suppliers and specialized skills—which companies whose main asset is cheap labor cannot match. A company policy of forcing wages down is not a recipe for long-term corporate success.
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As she acknowledges in a lucid discussion, capitalism comes in several varieties reflecting different cultural traditions and political systems. Within this wide variety two different kinds of market economy can be distinguished:
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liberal market economies, like Britain's and the United States', in which allocation and coordination of resources takes place mainly through markets; and coordinated market economies, like Germany's and Japan's, in which negotiation, long-term relationships, and other nonmarket mechanisms are used to resolve the major issues.
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DC: I do not believe this. it is different uses of money, not markets, that make the main difference.
If there is a way forward it lies in the intelligent use of science and technology to develop less dangerous sources of energy; but it is a mistake to think that a large change in the way we live can now be avoided.
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An economy based on technological innovation is better placed than others to respond to these challenges but it cannot detach itself from the material environment of the planet.
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The global economy that existed prior to World War I was in many respects more open and borderless than the one that exists today. Even so it collapsed, and in a process culminating in the US in the Smoot-Hawley tariff law of 1930 was replaced by the semi-autarchic closed economies of the interwar years. However securely established it may seem, globalization is not irreversible. Indeed, over time its disruptive effects tend to result in deglobalization.
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but Berger believes a "race to the bottom" can be avoided if companies accept that employing cheap labor is not the most effective way of responding to global competition. The activities that succeed over time are those that involve conditions —such as long-term working relations with customers and suppliers and specialized skills—which companies whose main asset is cheap labor cannot match. A company policy of forcing wages down is not a recipe for long-term corporate success.
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As she acknowledges in a lucid discussion, capitalism comes in several varieties reflecting different cultural traditions and political systems. Within this wide variety two different kinds of market economy can be distinguished:
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liberal market economies, like Britain's and the United States', in which allocation and coordination of resources takes place mainly through markets; and coordinated market economies, like Germany's and Japan's, in which negotiation, long-term relationships, and other nonmarket mechanisms are used to resolve the major issues.
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Succeeding in a world of global competition is a matter of choices, not a matter of searching for the one best way—we discovered no misconception about globalization more dangerous than this illusion of certainty.
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Lynn challenges the belief that by increasing interdependence among the world's economies globalization thereby enhances their stability. On the contrary, it is having the effect of reducing stability —not least in the United States.
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"Fifteen years of turbo-charged 'globalization' of industry, unchecked by any American state strategy or vision, has left the American people relying on a global industrial 'commons,'" Lynn declares, "that is largely out of their control and that is riven by fundamental structural flaws."
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As Lynn notes, the failure to confront the risks of global production is partly owing to the anachronistic revival of classical liberal ideologies in which it is believed that free trade promotes peace. In his celebrated book The Great Illusion, Norman Angell argued that growing economic interdependence made war unprofitable and improbable—a view that had been advanced in the nineteenth century by enthusiasts for free trade such as Richard Cobden. Angell's tract was published in 1909 and its argument was overturned five years later by the outbreak of the most destructive war in history. But the belief persists that as the economies of different nations become more integrated with one another their political systems will become more democratic, with the result that the world becomes more peaceful.
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"If anything, to protect our supply lines, we may find ourselves cooperating with Beijing hard-liners to suppress the will of the Chinese people."
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Free trade requires stability more than democracy,
Insofar as it is a prescription for policy, End of the Line is a plea for a reassertion of American national interests. Unlike many analysts in America and other countries, Lynn—a senior fellow in the New America Foun- dation—recognizes that the present global economic regime is not a spontaneous growth. It is largely an artifact of American power, which was constructed in the belief that it would serve American interests. But the system that has been established does not always work to America's advantage, nor is it self-stabilizing:
The global economy was created by the American state. Absent a clear-minded effort by the United States to manage this system—in ways amenable to the large majority of the peoples around the world who now depend on it—it will slowly fall to pieces.
The steadily deteriorating prospect in Iraq and the negative impact of outsourcing are undermining public faith that globalization works overall in the American interest. In conjunction with the spiraling cost of the war, this change in mood could well shift US policies in a more inward-looking direction. Having led the world to globalization, the US may not be far from taking the lead in retreating from it.
odels of economic development that anticipate societies converging in a harmonious universal system have deep roots in Western thinking. It is not surprising that they should have been revived in theories of globalization in the aftermath of the cold war; but they reflect the conditions of the nineteenth century, when the environmental limits of industrial expansion were hardly suspected. They fail to take account of the fact that industrialization on a global scale intensifies scarcity in vital natural resources while triggering a powerful ecological backlash. These developments, which form the other side of globalization, will shape its future course.
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