By Michael Perelman, Counterpunch, October 28, 2014
Globalization, in some ways, resembles the process of climate change. Both are dangerous, out‑of‑control processes that move along virtually unhindered. Both are global in nature with very diverse local effects. In one respect, they are different; climate changes had little effect on globalization, while globalization has had a major impact on climate change. One obvious example is the commodification of forests around the world that are being destroyed provide raw materials for a globalized world.
Some sources suggest that the explosive growth of China has indeed reduced the extent of global inequality, whereas China itself has become increasingly unequal.
Similarly, despite the idea that globalization suggests homogenization, the effects and interpretations of globalization are anything but homogeneous, ranging from the shared prosperity imagined. In reality, we find a reinvigorated global process of primitive accumulation in which the world is cruelly dividing much of the world into populations of the expropriators and the expropriated.
Worse still, globalization is facilitating a redistribution of power that will be discussed later.
Diverse interpretations of globalism date back to the time of Montesquieu and other philosophic interpreters of the economy, proposed the idea of what they called “sweet” or “gentle” commerce. The idea was that because merchants would profit from a peaceful environment, the growth of commerce would mean the end of war. Thomas Friedman’s picked up on Montesquieu’s theme with his unrealistic vision of flat world of shared prosperity and world peace, claiming that no two countries with a McDonald’s fast foot outlet have ever gone to war.
History has not been kind to this kind of analysis. A century and a half after Montesquieu, Lenin witnessed the buildup to World War I as a result of a surplus of capital and a burst of technological progress, which meant that the capitalist nations engaged in a frantic struggle to acquire new markets and sources of raw materials. Since the supply of new candidates for colonial conquest was limited, struggle eventually evolved into outright war.
Since the time of Lenin, there has been so much babble about globalism that the current understanding of the term is reminiscent of the common children’s game of thoughtlessly repeat a word innumerable times, then observing how quickly it loses all meaning.
Globalization may be experiencing something similar. This now nebulous word, “globalization,” commonly blends together with the concepts of economic development, imperialism, neoliberalism, and financialization.
The modern origins of the expression, “globalization,” makes globalism seem even more fuzzy. In writing his review of John Urry’s book Offshoring, Scott McLemee searched the online database of academic journals, JSTOR for the term. He found that the earliest use appeared in an article by a Belgian doctor, H. Callewaert in the September 1947 issue of The Journal of Education Research, “A Rational Technique of Handwriting,” which criticized the influence of a Belgian educational philosopher, Jean‑Ovide Decroly, who proposed that around the ages of 6 and 7, the experiences of play, curiosity, exercise, formal instruction, and so on develop their “motor, sensory, perceptual, affective, intellectual and expressive capacities.” Callewaert’s complaint was that teaching kids to write in block letters at that age and trusting “globalization” of those early experiences will enable them to develop the motor skills needed for readable cursive is an error.
As a result, in the couple of decades that have passed since the glib use of the word, globalization, has become commonplace, yet globalization remains a confusing subject that rarely seems to have generated the kind of thoroughgoing treatment that it deserves.
Part of the problem is that the nature of globalization is generally framed according two conflicting ideological perspectives. On the one hand, the anti‑globalization side emphasizes the effects of self‑interested intentionality, in which major powers want to extend their access to markets or resources. The opposing story of globalization emphasizes a complete absence of intentionality in which people merely respond to presumably efficient, impersonal market forces in a way that supposedly allows the invisible hand to spread shared prosperity throughout the globe.
During the 19th century, the pattern of emergent globalization reflected power of states to muster strong navies and, to a lesser extent, armies. Over time, the nature of globalization has become more abstract. If the term, globalization, had been coined at the time, it would have emphasized the work of great imperial powers states crudely acting to expand national influence, at the expense of both the territories that they conquered and rival imperial states, while promoting, at the same time, the welfare of major corporate interests. While not praiseworthy, it was far simpler, and probably less dangerous than modern globalization, given that warfare was less common then. In this vein, John Maynard Keynes gave an elaborate reverie of nineteenth century globalization, which began:
What an extraordinary episode in the economic progress of man that age was which came to an end in August, 1914! …. The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep [Keynes. Economic Consequences of the Peace]
World War I was, indeed, a war of globalization. Industry’s ability to harness the productive capacity of fossil fuel dramatically escalated in the late 19th century, so much so that domestic markets were no longer able to absorb this new level of productivity. This burst in production took the form of a serious depression accompanied by deflation. Colonial conquest seemed to offer a resolution to the current economic problems, providing new access to both markets and resources. Eventually, this mad scramble for colonial power broke out in the form of World War I. Keynes’ gentleman seemed to have sensed the way that globalization was going to shuffle production from one location to another.
Sheer brute force has become even less effective than it had previously been, in part because the exhaustion of the supply of potential colonies. World War I suggested the limits of brute force. The war had many losers, but the United States may have been the only winner. This outcome was not a victory in a conventional sense, but an opportunity to pick through the remains of the other great powers. The United States was not so much able to do so because of its overpowering military and industrial power. Instead, the country was able to take advantage of its decision to enter the war after its participants had exhausted themselves. France and Britain found themselves deeply in debt to the United States, allowing that country to be able to call the shots when the war ended. The debt burden of France and England to American bankers, allowed the United States to become a center of world finance.
Recently, United States, for example, fought three disastrous wars in Vietnam, Afghanistan, and Iraq. In all three cases, the United States’ massive military capacity proved incapable of winning anything like a victory. Even the earlier Korean War has yet to be resolved with a peace treaty. The Austrian satirist, Karl Kraus quipped: “War: first, one hopes to win; then one expects the enemy to lose; then, one is satisfied that he too is suffering; in the end, one is surprised that everyone has lost.”
Such wars are the exception rather than the rule. Colonial and neocolonial powers have learned to control far off places more effectively by using more subtle means than outright war. Countries, such as France and Britain, learned during the age of rapid colonial expansion to give ostensible power to compliant figureheads from minority groups, while stirring up antagonism between religious or ethnic groups. In this way, these nominal rulers became dependent on the colonial powers to protect them from the majority of their population. The United States chose a different tactic in its sphere of influence, by becoming adept at overthrowing leaders who display too much independence.
These tactics not only weakened governments; they prevented the development of strong institutions that would serve the population. Instead, they created a culture of corruption that made people even more vulnerable. Even earlier, representatives of colonial power would entice people with no official power to sign treaties which gave away their peoples’ rights without any compensation whatsoever. Violations of these treaties would be regarded as tantamount to an act of war.
A recent variant of this practice is becoming common. In Africa, states are allowing large financial enterprises and Chinese operations to sign long term leases on large swaths of land for a few dollars and acre, even though these indigenous farmers are working the land. The American investments are betting that the price of food would rise. The Chinese have a somewhat similar motive, except their objective is their domestic food supply. In this respect, Benjamin Kidd’s 1894 benign perspective on the future tropical takeover sounds like the product of a present‑day public relations operation, anticipating the contemporary logic of humanitarian intervention:
… in the near future the growth of world population would make the development of the tropics essential as a source of food, and that since the natives of tropical countries had shown themselves incapable of organizing such development, it was incumbent upon the more advanced nations to take control. The British and Americans he thought peculiarly adapted to this task, since they, above all others, had developed a sense of social responsibility and could be expected to exploit the tropical lands with a due regard to the welfare of the natives. [Pratt 1932, p. 239]
Countries, especially the United States, have learned to induce countries to take on debt, which was on virtually unpayable. On May 20, 1904, in a letter to Secretary of War Elihu Root, President Theodore Roosevelt made the stakes of these debts explicit with what became known as the Roosevelt Corollary to the Monroe Doctrine. “Roosevelt asked Root to read the letter aloud at a dinner banquet celebrating the second anniversary of Cuban independence at the Waldorf‑Astoria in New York City” (Maurer 2013, p.68):
If a nation shows that it knows how to act with reasonable efficiency and decency in social and political matters, if it keeps order and pays its obligations, it need fear no interference from the United States. Chronic wrongdoing, or an impotence which results in a general loosening of the ties of civilized society, may in America, as elsewhere, ultimately require intervention by some civilized nation, and in the Western Hemisphere the adherence of the United States to the Monroe Doctrine may force the United States, however reluctantly, in flagrant cases of such wrongdoing or impotence, to the exercise of an international police power. [Roosevelt 1904, p. 58]
In the words of the famous American folk singer, Woody Guthrie, “some people rob you with a gun, some with a fountain pen.” Recently, the United States developed the capacity to impose severe damage on other countries through financial sanctions, which prevent governments, businesses or individuals in nations, which the United States views unfavorably, from engaging in international financial transfers. Besides being extremely effective, such financial sanctions cost almost nothing compared to mobilizing armies and navies.
As globalization became more abstract, Keynes’ gentlemen sipping their morning tea have fallen from the picture. Rich rentiers gave way to financial behemoths. In the process, the nature of state power has radically changed. Over and above the earlier emphasis in some quarters to understand globalization in terms of the efforts to conquer markets and resources, the financial dimensions of globalization have become more pronounced. Finance, of course, was always part of early globalization, when gunboat diplomacy, based on force or threats of force, would be used to enforce what might be called odious debt. For example, one of the worst examples of odious debt came in the early nineteenth century when France demanded that Haiti compensate the country for its lost property rights in slaves. Payments on that debt still continue, representing a heavy burden on that already impoverished country.
Alongside the enhanced abstract power of a few advanced states, globalization has also diminished state power. For example, international agreements limit what nations, even nations as powerful as the United States, can do within its own borders. Most obviously, rich people and corporations can avoid paying taxes by virtue of globalization.
One of the ironies of globalization concerns the reach of the World Wide Web in which information passes with the speed of light from one corner of the world to another. The technological prowess of the web creates a common impression that globalization makes international prosperity possible and even contributes to the destruction of the gap between rich and poor, almost like Thomas Friedman’s flat world. In reality, globalization does not act in this way. Instead, globalization allows the rich and powerful to enjoy the benefits of secrecy, made possible by layers and layers of subsidiaries in far off places. One might conclude that the major product of such tax havens is secrecy, which they market effectively. The attraction of the Grand Cayman Islands is magnified by a legal system that prohibits even asking about the ownership of companies registered there.
Even illicit actions enjoy secrecy that prevents anyone from tracing them to their ultimate owner. For example, Enron, which was the darling of investors in the United States because of its high profitability, turned out to be one of the largest bankruptcies in American history. Although the reported profits were public, much of the company’s activities were hidden in offshore locations, which guarantee secrecy. For example, Enron had 692 subsidiaries just in the Grand Cayman Islands, which were crucial in extended Enron’s fraudulent practices. The Grand Cayman Islands are a favorite of American hedge funds, but they not unique. Countries around the world compete with each other in order to attract people and corporations that have something to hide. In this dark underworld international finance, those who can afford it the most can avoid paying taxes. The consequences are profound for the nature of the modern state.
Schumpeter proposed that “the budget is the skeleton of the state stripped of all misleading ideologies.” The globalized state, stripped of the taxes from the rich and powerful, shift the national tax burden onto the backs of ordinary people, who lack the means to replace the effects of tax avoidance. In response, governments slash their contributions to programs that support general public needs, including welfare programs, education, and infrastructure. This stripping takes on a more human dimension in which the national tax burden is shifted onto the backs of ordinary people, who lack the means to replace the effects of tax avoidance.
In effect, in dismantling the state, from Schumpeter’s perspective, globalization reveals dismantling of that part of the state that serves the people as a whole. Lacking sufficient taxes, governments slash their contributions to programs that support general public needs, including welfare programs, education, and infrastructure, which takes still more from the less fortunate parts of society.
In the long run, this diminution of domestic state power via globalization ultimately threatens to profoundly weaken great powers domestically in terms of doing anything to significantly benefit society as a whole. This same process is also weakening the already weak powers, but in different ways. Here, financialization comes into play again. In the United States, for example, money, which could be used to develop the domestic economy, earns greater profits by unproductive speculation. Moreover, by taking advantage of cheaper labor and commodities, business in the United States is hollowing out the core of the domestic economy. Growing up in Western Pennsylvania, this once great industrial center suddenly became the rust belt once the steel mills began to shut down. In addition, the inability to collect sufficient taxes because of the secrecy and tax loopholes made possible by globalization, makes it impossible to support both an enormous military and provide essential infrastructure, including education, necessary for a strong economy. Of course, the United States chose to invest its money in the military. So while the core of the economy shrivels, despite some incredibly high salaries for a select few, real wages have been in decline for many people. College‑educated students, find themselves reduced to working in Starbucks or fast food outlets. None of this augurs well for the future.
On the other side of globalization, the process is far less abstract. China has seen an explosion of superrich individuals, along with a relatively impressive expansion of the middle class. Nonetheless, an obscene number of people are left behind economically, while often being subject to dangerous levels of pollution. This pollution is dangerously degrading the country’s soil and water. In addition, globalization in China, like in the United States, has led to increases in inequality, which are not conducive to a strong economy.
Some countries, such as Vietnam, are following a Chinese‑like path creating a growing population of the superrich by means of a kind of economic development that takes a serious toll on the environment. In the United States, as well, our great presumably step forward, has been our recent status of energy independence, but like China and Vietnam, its long‑term costs are frightening. Companies are leveling mountains to get access to coal, which destroys waterways while filling them with pollution. With great pride, United States has developed hydraulic fracturing in order to extract gas and oil. The key to this technology is the injection of toxic materials into the ground, which poisons the water. In many cases, residents are able to burn water coming out of their faucets because the water is so contaminated with methane, which, incidentally, is a far more destructive gas than carbon dioxide.
As mentioned earlier, globalism is the result of both intentional and unintentional actions. Some unintentional aspects of globalization do far more damage than the immediate effects of selfish, profit‑seeking actions. Such effects are generally incidental to the profit‑oriented strategies that generally guide globalization. These negative outcomes may begin locally, but eventually they can have global impacts that seriously threaten human welfare. In scouring the world in search of new profit opportunities, globalization mindlessly inflicts incalculable damage to the resources upon which all humanity depends. The scars left on the earth by extractive activity are painfully obvious to anyone willing to pay even modest attention. Other unintentional consequences are less obvious, such as when invisible toxic substances are spread by commercial activity.
To soothe people’s minds regarding these damages from this madcap rush for profits, economists, scientists and public relations specialists use their skills to explain away any damages or risks. Although such ideological efforts mean little for the people who actually experience them, they frequently seem to work in electoral politics. Moreover, nonetheless, these explanations seem to work fairly well in soothing the consciences of comfortable people in far‑off places.
Because extractive industries generally rely on very expensive, heavy equipment, such industries offer few good opportunities for local business and workers, except for low wage, low skilled workers, while enormous profits often accrue to foreign investors. In effect, these extractive industries do not just extract minerals and fossil fuels; they also extract possibilities to develop the capacities of their people and their environment.
Another effect of the intensification of globalization is the spread of infectious diseases and destructive invasive species, which is intensified when international economic activity uproots large numbers of people or moves them about in transporting goods around the world. These kinds of undesirable consequences of globalization will differ in their local effects, depending upon the existing healthcare infrastructure or the fragility of the environment.
Climate change is, of course, the most global and perhaps the most threatening, of all of these unintentional global consequences of globalization. No part of the world is unaffected by climate change, especially because the environmentally destructive extraction and consumption of fossil fuels takes place in both rich and poor countries, although rich countries managed to concentrate extractive activities in regions populated by less affluent people, with little political power. The costs of climate change are not spread evenly across the planet. For example, people living on islands or seacoast with little elevation are at risk for rising levels of ocean water, but no part of the world is safe from the long‑term consequences of climate change. Given such powerlessness, the climate‑change deniers have been surprisingly successful in dismissing the threat of climate change; however, the effectiveness of their rearguard activity seems to be diminishing, but not nearly fast enough to begin to take serious action to diminish dangers threatened by climate change.
What Then is Globalization?
The correlation between globalization and widening income inequality has led to a growing concern about the distributional impact of globalization.
Nobody, to my knowledge, has taken on the challenge of calculating the comprehensive worldwide regional effects of globalization within a theoretical context. Numerous barriers prevent such an analysis, beginning with the paucity of regional data. Individual studies do exist. For example, Zhang and Zhang have done a good job of showing how foreign trade and foreign direct investment have exacerbated regional inequalities in China. Extending such work to a comprehensive theoretical analysis would probably require decades of serious work, the product of which might resemble Marx’s planned volumes on international trade and world markets, brought up to date to take account of the changes that have occurred in the most recent century and a half. To make the challenge even more daunting, the system changes faster than one person or even a team of researchers could write. Adding more detailed local effects of globalization complicates the analysis even more. I do not have to tell you that, in what follows, I do not pretend to meet the standards that I have just suggested for the subject. Instead, much of this paper will be somewhat anecdotal.
All too often, however, discussions of globalization seem to treat the subject as identical to contemporary capitalism. If globalization only means a marginal development of capitalism then the concept would degenerate a catchy phrase without much meaning. If globalization means a significant break then what would that break be?
To make matters even more complicated, globalization, as it is currently understood has many obvious dimensions, such as direct foreign investment, finance, trade, and the almost‑instantaneous access to massive amounts of information, which allows people to manage business taking place thousands of miles away.
Any serious analysis would require taking account of these dimensions of globalization, as well as a deep analysis of even more fundamental questions regarding the internationalization of the processes of production, especially with respect to the relationship between labor and capital, with special attention to what the business press refers to labor arbitrage, meaning the strategy of seeking out the cheapest sources of labor. Sweatshops pay young women a few pennies for producing brand‑name clothing that sells at ridiculously exorbitant prices.
Defenders of this process insist that workers appreciate the opportunity for work, but in many cases such appreciation must be seen in the context of the perverse effects of globalization, which have uprooted their more traditional way of life. The Somali fishermen who have turned to piracy after the destruction of their fishing grounds come to mind.
Globalization also remakes institutional structures to suit the needs of international capital ‑‑ the same institutional structures that undermine state power.
Adding other local effects to this mix makes the challenge of defining globalization even more difficult, especially without specifying whether the local changes are national or regional in nature. Globalization also affects local cultures, both in the developed and underdeveloped worlds.
In a sense, one aspect of globalization did create a new branch of analysis. More and more scholars are drawn to the subject of the interlinked world economy, paying particular attention to the way disruptions in individual national markets affect other economies throughout the globe, leading to worldwide business cycles, but worldwide business cycles are not new. The international linkages within the world economy are certainly a matter deserving of study, but the question remains whether the subject of these studies is the effect of recent globalization or capitalism in general.
The Summers memo and the economists who support it suggest that the globalization of toxic waste takes place as idealized transactions in which both buyers and sellers find their welfare improving. Such transactions imply that both parties have full knowledge about what the transaction entails, especially with regard to health and safety.
Of course, full knowledge is out of the question. One of the major characteristics of globalization is the degree of secrecy. Companies dump toxic waste, either in complete secrecy or by way of paying bribes to some officials. In either case, economic growth is perhaps the most unlikely outcome imaginable. The unpriced health effects on the people who are affected by the dumping are irrelevant insofar as the transaction is concerned.
Another effective globalization is the outsourcing of torture, where the victims’ pain and suffering is considered a benefit. The country that outsources the torture ‑‑ thankfully, only one such country exists to my knowledge ‑‑ benefits from the service provided as well as the veil of secrecy intended to prevent any kind of responsibility for such inhumane practices. The government that accepts these victims might get significant benefits from the outsourcer, while secrecy, again, can protect the reputation of the country that provides the services of torture. The export of torture services may infect the social environment by making such inhuman behavior seem more natural. One might easily imagine how this effect might degrade whatever elements of democracy might have existed.
Judging by the official discourse about globalization, one might imagine that we are witnessing a natural evolution of free trade that benefits everybody touched by globalization, as in Thomas Friedman’s vision of the flat world. In truth, much of the pressure to intensify globalization does not necessarily come from market successes, but often comes from disappointment in market outcomes. Dissatisfied that markets were not providing sufficient profits, powerful states adopted a strategy of pressuring their weaker counterparts to join in so‑called free trade deals.
In fact, free trade is, at best, a secondary consideration of the trade agreements. For example, tariffs on trade between the U.S. and Europe are only 3.5 percent. A treaty to eliminate such tariffs would not be of great importance ‑‑ certainly one that would not involve strong diplomatic pressure and threats.
In contrast, free trade agreements put enormous emphasis on intellectual property agreements, which are antithetical to trade, in general, because they grant monopoly status, which allows suppliers to set their own price without competition. In this sense, intellectual property is a violation of sacred market principles, according to which the price of a good should be the cost of producing one more unit, what economists call “marginal costs.” Intellectual property, however, generally costs virtually nothing to reproduce. Because of this violation of free market principles inherent in intellectual property, libertarians ‑‑ including libertarian economists ‑‑ had long opposed patents and copyrights, although less so now that few libertarians are leery of excessive corporate powers. Free trade treaties’ treatment of intellectual property is more accurately described as a transfer of power, rather than a promotion of free trade. Such intellectual property agreements can threaten public health. For example, people in impoverished countries cannot afford the exorbitant costs of pharmaceuticals. Diseases that could be relatively easily contained have more room to spread.
Free trade treaties include investment dispute provisions, adjudicated by a tribunal made up of judges (generally with strong corporate ties). In other words, they have a better understanding of corporate interests rather than a typical body of law.
Under many such treaties, corporations have the right to expect a static regulatory framework. In other words, the tribunals can find new regulations illegal because a corporation could not have predicted them when it first began planning its investment. At the same time, corporations are free to change their corporate policies. There is a surge of cases in which corporations have sued under this provision. Even when a country’s preexisting regulations prevent an investment, such creating a toxic waste, the company can take the government before a tribunal. They almost always win such cases. And, yes, a panel of supposedly neutral judges actually permitted the toxic waste dump in question to go ahead.
In effect, this new legal structure elevates elevated to the status of an independent government, or perhaps even a higher status, in that corporations can limit what a government might do, while governments lose significant power to limit what a corporation might do.
Of course, a real free trade agreement, regarding what most people understand as free trade ‑‑ would be a very simple matter, consisting of a paragraph or two. Instead, such arrangements, supposedly made in the spirit of free trade, are actually thousands of pages of severe restrictions on public policy measures in the weaker countries that are pressured to accept these impositions. But free trade treaties even limit strong countries because political leaders want to free business from regulations. They may do so because it is in their interests rather than the people whom they supposedly represent.
For example, signatories of free trade agreements surrender their right to regulate imports of cigarettes or junk food, which might affect the health of their populations. The United States is particularly insistent in demanding that no country can prevent the marketing of genetically modified seeds or the crops that Monsanto and other suppliers want to sell around the world. These so‑called free trade agreements also regulate the regulation of virtually everything that an independent government might do. They demand that states adopt regulatory structures regarding intellectual property rights or finance that please the dominant powers.
Such demands should not be surprising because in the United States, free trade agreements are actually written by corporate interests. Congress has no say in their content. Representatives can only vote to accept or reject the treaties. The final product, which might be celebrated in board rooms across the United States, requires poor countries to abandon all sorts of legal rights, while exposing their economy to market forces that can overwhelm their fragile economics.
The proposed Trans Pacific Partnership also seems to have been crafted with geopolitical policy rather than trade in mind by bringing many nations into the United States’ orbit, while excluding China. The hope is that once the treaty is in place, China will want to join even though the country had no say in the drafting. Should that happen, then the Chinese government would lose most of its control over the economy. In the meantime, corporate interests are busy writing this so‑called free trade agreements in so much secrecy that even members of Congress are not permitted to read what was being proposed. Recently, after strong protests both in and out of Congress, the Obama administration finally opened a tiny window, allowing congressional representatives to read a single chapter of the agreement, while forbidding them to make any record of what they have read or even to discuss it with others. The public at large remains completely in the dark, except for a few parts that whistleblowers have leaked. But then again, secrecy is one of the great benefits of globalization.
The agreement has little to do with trade. Instead, it gives wide‑ranging rights to corporations, while prohibiting states from enforcing regulations of health and safety, finance, the environment, and virtually anything else that might inconvenience business. Member states that violate this treaty receive severe punishment.
The Obama administration is pressuring Congress to vote on the unread agreement without the option to offer any amendments. Meanwhile, domestic businesses interests are more than happy to see restrictions limiting the state’s power to regulate them. So much for free trade! ‑‑ unless the meaning of free trade is expanded to include the votes of compliant politicians who serve corporate interests.
If anarchy constitutes the absence of government, this aspect of globalization might seem to be a move toward a special kind of anarchy ‑‑ what may be called anarchism for the rich and powerful.
Within this globalized anarchy, weakened states are incapable of addressing serious global problems, which require globalized responses. The most obvious example would be climate change. Largely because of the resistance of domestic business from accepting any responsibility for climate change, states are paralyzed in the face of taking action. One area in which governments do cooperate is in joining together to oppose any regulations that might be useful in reducing climate change. The effectiveness of this cohesive bloc suggests how much good statewide achieve.
Of course, not all states sign on to this defense of inaction. For example, small island states, such as the Maldives, face existential risk from rising oceans submerging their nations. However, when the Maldives attempted to draw world attention to the danger it faced at the international conference on climate change, coincidentally, the government was suddenly overthrown: a different form of anarchy, suggesting that many states still exercise enormous power, but they cannot use that same power when it is not in the interests of even more powerful corporations.
In 1969, Charles Kindleberger presciently observed the rise of corporate power relative to the government within the context of international trade, predicting, “the nation‑state is just about through as an economic unit.”
More recently Wolfgang Reinicke went further, concluding:
“Global corporate networks challenge a state’s internal sovereignty by altering the relationship between the private and public sectors. By inducing corporations to fuse national markets, globalization creates an economic geography that subsumes multiple political geographies. A government no longer has a monopoly of the legitimate power over the territory within which corporations operate, as the rising incidence of regulatory and tax arbitrage attests.”
Reinicke even suggested that this globalization was trending toward a form of anarchy. If anarchy constitutes the absence of government, this aspect of globalization might seem to be a move toward a special kind of anarchy ‑‑ what may be called anarchism for the rich and powerful.
In his “Politics as a Vocation,” Max Weber suggested a broader interpretation of this seeming anarchism. After citing Trotsky saying, “Every state is founded on force,” he went on to note, “The state is considered the sole source of the ‘right’ to use violence.” From Weber’s perspective, globalization is actually empowering the state.
The same progress in information technologies that that created a utopian belief in the possibility of worldwide democracy, facilitated the growth of globalization that made the new anarchy possible is also being used around the world to rapidly increase authoritarian powers, which now have the capacity to monitor virtually everything that ordinary people do. So, while one part of society enjoys the privacy that this new regime of secrecy provides, the rest of society has been rapidly losing what little remains of its privacy.
In effect, alongside the global redistribution of wealth and income, globalization also seems to be redistributing people’s rights. So far, I have been unable to detect any effective response to this troubling trend. What then, does free‑trade really mean?
Globalization of Food
Food, of course, has long been an integral part of the world of international politics. As far back as the beginning of historical records, belligerent countries have attempted to shut off food supplies for their enemies ‑‑ an early form of de‑globalization. The history of international food politics in the United States makes a fascinating study: with the recovery from the Great Depression, massively increased food demands needed for fighting the Second World War, together with enormous technical advances in food production in the postwar period, left the country saddled with substantial food surpluses. To dump the surpluses abroad, Congress enacted Public Law 480, which allowed countries to purchase food with their own currencies. At first, this policy displayed a humanitarian veneer, which seemed like a win‑win policy. Countries could get needed food and the cost of maintaining surpluses would diminish.
By 1957, Sen. Hubert Humphrey, later Vice President of the United States, let the cat out of the bag. Testifying before Congress about the program, Humphrey gloated:
“I have heard … that people may become dependent on us for food. I know this is not supposed to be good news. To me that was good news, because before people can do anything they have got to eat. And if you are looking for a way to get people to lean on you and to be dependent on you, in terms of their cooperation with you, it seems to me that food dependence would be terrific.” Part of the attractiveness of this dependence was the high priority given to efforts to stamp out Communist influence, especially in Asia. PL 480 exports increased by roughly 40 percent during the Kennedy administration. George McGovern, then director of the Food for Peace program and a former bomber pilot during the Second World War, believed that food aid was “a far better weapon than a bomber in our competition with the Communists for influence in the developing world.”
A Mexican Laboratory
The experience of Mexico provides a striking example of the effect of this perverted form of free trade in food. In the wake of the North American Free Trade Agreement (1986), heavily subsidized American agriculture, equipped with the most modern technology devastated Mexican agriculture, setting off a massive migration out of agriculture and out of Mexico.
Similarly, one can only wonder how much the Mexicans lost when the free trade agreement with the United States left Mexican consumers and farmers more dependent on relatively homogeneous, industrialized corn instead of the wide variety of indigenous corn that had been developed over centuries in Mexico. Ultimately, the homogeneity of a crop leaves it more vulnerable. A 1970 outbreak of corn leaf blight proved that point, by ravaging the U.S. corn harvest.
The loss of the heterogeneity of Mexican corn is another example of unintentional globalization. Because corn is such an important crop around the world, the plant’s loss of genetic diversity affects much of the rest of the world. Eventually, some pathogen will evolve a method to take advantage of some genetic weakness in a dominant strain of corn. Traditionally, corn breeders could themselves take advantage of the genetic heterogeneity of Mexican corn to find some particular strain that could fend off the pathogen. The inevitable homogenization of Mexican corn with the disappearance of small growers, who maintained the local strains, will deprive future generations of farmers of traditional methods of defense.
As mentioned earlier, a major priority of the free trade agreements that are currently being negotiated is a restriction on countries’ capacity to regulate the use of genetically modified organisms, either by restricting imports or preventing their farmers from planting such crops. Farmers also will be prohibited from replanting the GMO seeds they buy from the United States, something that resonates with Hubert Humphrey’s unpleasant celebration of dependence. Such policies mean that the world will become increasingly dependent on a handful of seed companies, which would displace the previously heterogeneous population of seeds. Such genetic homogenization of crops ultimately poses a threat to the world food supply.
While trade agreements limit the rights of nations, such as Mexico, to help their farmers, farmers in California receive highly subsidized water transfers to be able to plant cotton on arid land, which would otherwise be unsuitable for cotton. As a result, the Colorado River no longer reaches Mexico, which badly needs that river’s water. The resulting U.S. cotton harvest has managed to snuff out the demand for a good deal of African cotton production, thereby ensuring, or even increasing, poverty there.
The Cultural Effects of Globalization
Returning to Mexico for a moment, food offers an interesting window into agricultural globalization. In California, where I live, we can enjoy a wide variety of national cuisines as well as a cornucopia of fruits and vegetables that had been previously virtually unknown to American consumers. At the same time, the United States has successfully introduced unhealthy, fast food to the rest of the world. Hardly an even exchange!
The influx of exotic foods provides a rich diversity, while globalization ultimately threatens to contribute to a more uniform pattern of cuisines. One might expect a similar effect with the general globalization of culture. One can easily imagine how the contemporary fashion for world music, in which people partake of the exotic sounds and rhythms of other countries, will eventually give rise to a commercialized homogeneity that might extinguish some of the cultures that contributed to world music.
While globalization initially tends to add to the variety of diets in the more affluent parts of the world, a less noted affect is a tendency toward food homogeneity across the globe. Homogeneity poses a threat that diets might lack sufficient amounts of important nutrients.
The desire for more exotic foods can create destructive pressures in their places of origin. For example, the sudden fashion in the United States for the Bolivian grain, quinoa, had created a demand for the grain that cannot be met by the traditional method of production. In response, Bolivians have resorted to practices that are harming the local environment where the crop had been previously harvested in a sustainable fashion.
Finally, globalization creates does certain kinds of ugly cultural distortions, such as in the case of sex tourism and human trafficking of often young and vulnerable girls.
Recovering the Lost Promise of Globalization
The optimistic view of globalization is right in a sense. New techniques of transportation and communication should facilitate a world in which the entire population could be cooperating in the creation of the good society. Of course, nothing of the kind is taking place. Instead, the destructive anarchy of globalization reinforces the divides between countries, classes, and cultures.
In contrast, a cooperative globalization would put an end to the unchecked power and authority exercised by both governments and corporate powers. To do so obviously requires long and hard work of organization in the face of harsh opposition. Even so, one can still hope that something of the kind.
This essay is adapted from a keynote address to a Turkish conference on globalization. Michael Perelman teaches economics at Cal State at Chico. He is the author of Railroading Economics and The Invisible Handcuffs of Capitalism.
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