The Economist September 23,
2000
The case for globalisation
The anti-capitalist protesters who wrecked the Seattle trade talks last
year, and who hope to make a great nuisance of themselves in Prague
next week when the city hosts this year's annual meeting of the World
Bank and the International Monetary Fund, are wrong about most things.
However, they are right on two matters, and the importance of these
points would be difficult to exaggerate. The protesters are right that the
most pressing moral, political and economic issue of our time is third-
world poverty. And they are right that the tide of "globalisation", powerful
as the engines driving it may be, can be turned back. The fact that both
these things are true is what makes the protesters-and, crucially, the
strand of popular opinion that sympathises with them-so terribly
dangerous.
International economic integration is not an ineluctable process, as
many of its most enthusiastic advocates appear to believe. It is only one,
the best, of many possible futures for the world economy; others may be
chosen, and are even coming to seem more likely. Governments, and
through them their electorates, will have a far bigger say in deciding this
future than most people appear to think. The protesters are right that
governments and companies-if only they can be moved by force of
argument, or just by force-have it within their power to slow and even
reverse the economic trends of the past 20 years.
Now this would not be, as the protesters and their tacit supporters
must reckon, a victory for the poor or for the human spirit. It would be just
the opposite: an unparalleled catastrophe for the planet's most desperate
people, and something that could be achieved, by the way, only by
trampling down individual liberty on a daunting scale. Yet none of this
means it could never happen. The danger that it will come to pass
deserves to be taken much more seriously than it has been so far.
Pandering as they go
The mighty forces driving globalisation are surely, you might think,
impervious to the petty aggravation of street protesters wearing silly
costumes. Certainly, one would have hoped so, but it is proving
otherwise. Street protests did in fact succeed in shutting down the Seattle
trade talks last year. More generally, governments and their international
agencies-which means the IMF and the World Bank, among others-are
these days mindful that public opinion is anything but squarely behind
them. They are not merely listening to the activists but increasingly are
pandering to them, adjusting both their policies and the way these policies
are presented to the public at large. Companies too are bending to the
pressure, modest as it might seem, and are conceding to the anti-
capitalists not just specific changes incorporate policy but also large parts
of the dissenters' specious argument.
These outbreaks of anti-capitalist sentiment are meeting next to no
intellectual resistance from official quarters. Governments are apologising
for globalisation and promising to civilise it. Instead, if they had any
regard for the plight of the poor, they would be accelerating it, celebrating
it, exulting in it-and if all that were too much for the public they would at
least be trying to explain it.
Lately, technology has been the main driver of globalisation. The
advances achieved in computing and telecommunications in the West
offer enormous, indeed unprecedented, scope for raising living standards
in the third world. New technologies promise not just big improvements in
local efficiency, but also the further and potentially bigger gains that flow
from an infinitely denser network of connections, electronic and
otherwise, with the developed world.
The "gains" just referred to are not, or not only, the profits of
western
and third-world corporations but productive employment and higher
incomes for the world's poor. That is what growth-through-integration has
meant for all the developing countries that have achieved it so far. In
terms of relieving want, "globalisation" is the difference between South
Korea and North Korea, between Malaysia and Myanmar, even (switching
time span) between Europe and Africa. It is in fact the difference between
North and South. Globalisation is a moral issue, all right.
If technological progress were the only driver of global integration,
the
anti-capitalist threat would be less worrying. Technological progress, and
(it should follow) increasing global integration, are in some ways natural
and self-fuelling processes, depending chiefly on human ingenuity and
ambition: it would be hard (though, as history shows, not impossible) to
call a halt to innovation. But it is easier to block the effects of
technological progress on economic integration, because integration also
requires economic freedom.
The state of the developing countries is itself proof of this. The world
is still very far from being a single economy. Even the rich industrialised
economies, taken as a group, by no means function as an integrated
whole. And this is chiefly because governments have arranged things that
way. Economic opportunities in the third world would be far greater, and
poverty therefore vastly reduced, right now except for barriers to trade-
that is, restrictions on economic freedom-erected by rich- and poor-
country governments alike. Again, the protesters are absolutely right:
governments are not powerless. Raising new barriers is as easy as
lowering existing ones. Trade ministers threaten to do so on an almost
daily basis.
The likelihood of further restrictions has increased markedly of late.
Rich-country governments have all but decided that rules ostensibly to
protect labour and the environment will be added to the international
trading regime. If this comes about, it will be over the objections of
developing-country governments-because most such governments have
come round to the idea that trade (read globalisation) is good. Europe
and the United States are saying, in effect, that now that the poor
countries have decided they would like to reduce poverty as quickly as
possible, they can't be allowed to, because this will inconvenience the
West.
If that reason were true, it would be a crime to act on it. But it isn't
true, or even all that plausible. Rich-country governments know very well
that the supposed "adjustment problems" of expanded trade are greatly
exaggerated: how convincing is it to blame accelerating globalisation for
the migration of jobs from North to South, when America has an
unemployment rate of less than 4% and real wages are growing right
across the spectrum? Yet even under these wonderful circumstances,
politicians in Europe and America (leftists, conservatives, Democrats and
Republicans alike) are wringing their hands about the perils of
globalisation, abdicating their duty to explain the facts to voters, and
equipping the anti-capitalists with weapons to use in the next fight.
It would be naive to think that governments could let integration
proceed mainly under its own steam, trusting to technological progress
and economic freedom, desirable as that would be. Politics could never
be like that. But is defending globalisation boldly on its merits as a truly
moral cause-against a mere rabble of exuberant irrationalists on the
streets, and in the face of a mild public scepticism that is open to
persuasion-entirely out of the question? If it is, as it seems to be, that is
dismal news for the world's poor.