He offers alternative concepts and paradigms of development for policy makers and peoples' movements on wide-ranging issues. He challenges his readers to 'dare to think differently'. According to Professor Tandon, development is self-defined. It is primarily the responsibility of the South to develop itself; the North does not have a duty to develop the South, nor should the South expect it. Development, he believes, is about building confidence between governments and their people. It is not about winning the confidence of banks and global financial institutions such as the World Bank and the IMF, which is what globalisation is all about.
These essays expose Tandon's thinking on a cross-spectrum of issues including the reform of the Bretton Woods institutions; climate change and food security; industry, trade, innovation and intellectual property; the global financial crisis; ending aid dependence; and the Palestine-Israel question.
They are essential reading for those who believe that 'another world is possible'. Mkapa, President of Tanzania Visit Seller's Storefront. Please contact me if you are not satisfied with your order in any manner. Two global political-economic undercurrents have surfaced that may explain this dual phenomenon.
The second is the countervailing power emerging in the South that is challenging the old order. The world is going through a period of transition from one order to another.
Globalisation: the rise and fall of an idea that swept the world
The new order is still in the making, its essential features are in the twilight zone and are symbolised by the actions of the WTO and NAM. The negotiated texts of the WTO are binding, backed by the power of sanctions. Sanctions are an instrument more likely to be used by the developed than the developing countries. The latter, in turn, are seeking maximum market access in the older countries of the North US and EU , while protecting the home front. Both sides the old big guys and the new big guys are fighting principally for their own national interests.
This time around, in Geneva, the new big guys appear to be winning. China, which normally plays a low-key role at the WTO, decided to throw its weight behind the countries of the South. It has correctly read the signs of growing protectionism in the US and the European Union. The US and the EU are reluctant to change their regime of subsidies especially in agriculture unless they get substantial concessions from the South in manufacturing the so-called Non-Agricultural Market Access neogtiations and services.
But they are demanding too much. Here is where the South gets the material and ideological basis of their unity. These include not only the big countries such as India and Brazil, but also smaller ones in Africa, Asia and Latin America. Thus, despite many differences, even contradictions, among the countries of the South arising out of their different histories, geopolitical circumstances and varying levels of development, there is a greater sense of self-confidence and unity of purpose in the South than ever before.
China is not a member of NAM, but it is there in spirit with its newly acquired wealth and influence. To this economic dimension must be added a political one. The developed countries have become increasingly intrusive in the internal affairs of the countries of the South in the name of human rights, the rule of law and democratic governance as defined by the West. This is widely resented by the countries of the South.
The South values these norms, although admittedly many of them are having difficulties in realising these norms in their countries. But they do not like Western intrusion; they want to develop their own norms and institutions. Those, we must add, are still ongoing battles at the global level. In , it put in place a system of work called the Cartegena Document on Methodology of the Movement.
A troika of the past, present and future elected chairmen, represented by their ambassadors in New York, serve as a kind of secretariat and coordinating body of NAM. The Centre provides independent expert advice based on rigorous research and analysis to the G77 and NAM. The South Centre acts like a kind of midwife in this transition period where the old order is slowly dying and the new one is yet to be born.
In the introduction to the last chapter a question was raised: Should not the economic relationship between countries of the South South—South relations be built on a different model from the greed and profit-driven model of North—South relations? Should not the political relationship between countries of the South be built on a different model from the top—down, patronising and interfering model of North—South relations?
Often, they intervene directly but, equally often, they do so through the instruments of global governance, such as the United Nations, the Bretton Woods institutions and the Organisation of Economic Cooperation and Development OECD. The question is: To what extent can this be the model for global governance? The editorials in this chapter do not address all these issues. Fortunately, a negotiated deal between the rival political forces was concluded with the timely intervention of the heads of states of some of the neighbouring countries led by Kofi Annan.
In this context, it is important to recognise the role of civil society. The editorial asks: Do the civil society organisations CSOs of the South wish to repeat the tragedy for the next 30 years by surrendering their national democratic space to the donors, the OECD, the IMF and the World Bank, over whom they have no control? It has the power of the mighty, but it does not have the voice of the people.
That shrewd combination of power plus voice that the founders of the United Nations correctly forged in the world body is lacking in the G8. The G8 is a self-selected club of the rich and powerful. Nobody ever gave it the mandate or authority to decide on matters of the economy, climate change or security, or to impose sanctions on states that do not bend to their will. The editorial, written after the G8 summit in Hokkaido in July , criticised the decisions taken by the G8, including on climate change and Zimbabwe. It argues that this self-selected body has no legitimacy whatsoever and should therefore dissolve itself.
The UN is the embodiment of multilateralism, which is a good thing, but it comes with a price. Any multilaterally agreed text — whether it is within the UN framework or within the framework of, for example, peace negotiations — has to be negotiated between states. For example, the negotiated or diplomatic truth about globalisation is a compromise between those who view it as an opportunity and those who view it as a challenge.
It is an interim truth about a very complex reality on the ground. It is for this reason that there is never a definitive definition of globalisation in the diplomatic discourse. There cannot be one. However, despite its interim and negotiated character, diplomatic truth is not unreal, it is only a different kind of reality. The bottom line is that those that have more power will exact a desired outcome from those that are weak and vulnerable. Notwithstanding this underlying weakness in the institutions of the UN, it is still the most credible multilateral institution we have. It is generally known that many countries in the West, and in particular the United States and the United Kingdom, seek to weaken the UN.
They prefer to take matters outside the UN system, whether these deal with security, development or climate change. But this ploy, while self-serving in the short run, is also self-defeating. However, this is not happening. Imperial interests do not give in easily.
Having failed to provide legitimacy to the DAC, the OECD countries have effectively seized the DCF so that they can import their own agenda and perspectives into the forum, in particular the equation that aid equals development. Geneva throws a comfortable veil over proceedings, making them aloof from the real world. The negotiations feel abstracted from the reality of power politics. Geneva is a synthetic, sanitised place. In such an environment, thinking becomes universalised and idealised abstractions from reality. Coefficients and percentages parody life. It is in this surrealist atmosphere that the Doha round, based on the now clearly falsified ideology that free trade is good for all, has become stuck.
The existential reality of life has negated the diplomatic reality of trade negotiations. The WTO needs to be radically reformed and adjusted to the harsh reality out there. The WTO can bite. This — the enforcement pillar of the WTO — needs to be critically reviewed. This is even more critical in the present conjuncture when its second pillar — the ideological pillar — is now fully discredited.
Finally, to come to the last editorial in this chapter, the South recognises the role that the United States can play in the global arena. Sadly, however, the American elections are very parochial. Nonetheless, an enlightened American voter should define national interest broadly enough to include a global perspective.
It is a perspective that has jeopardised the lives and well-being of ordinary people in the rest of the world, the safety and sustainability of the natural environment — a milieu that knows no electoral boundaries — and the stability of the global financial system. The monopolisation and commercialisation of knowledge by private corporations for profit in the US, as in the EU, is the most critical obstacle to the development of the South.
Unfortunately, the American electorate and education system are not open enough to allow these kinds of issues to enter into the debate around the election of their president. At one level, this prescription is only common sense. Who can doubt the importance of good governance, or of efficiency in the use of capital, or of improving the investment climate? However, matters are not as simple as they appear at first sight. A couple of examples may help illustrate the point Take Kenya, for example. The much-heralded constitutional reforms had become bogged down in controversy over power sharing.
The post-independence project of nation-building was in peril. As we go to press, it is a relief to learn that outside mediation efforts led by Kofi Annan have finally succeeded in breaking the power and constitutional logjam. But there are still deeper issues that need to be addressed. These relate to poverty, land distribution and the evolving ethnic and class nature of society, the origins of which go back to the colonial period.
Take the war in Darfur as another example. The earlier civil war in the South of the Sudan had both ethnic and religious dimensions. In Darfur, the main fault lines appear to be ethnic and tribal. The conflict, however, has become internationalised. But again, matters are not as simple as they appear.
Anybody who is closely monitoring the current negotiations between the European Union and the African, Caribbean and Pacific ACP countries would be left in no doubt about the validity of this statement. The battle lines of the future in Africa are drawn in its oil wells, minerals and natural resources. These are resources the West needs. These are also the resources China and India need. What is needed is a new model of relationship between the developed and the less developed countries.
There are some good examples in Africa of wise political leadership that is healing the wounds of the past and creating indigenously accountable structures of governance. But there are others that are failing to do so. The challenge of the political leadership in Africa, above all, but also in the rest of the South, is to persist in the national project, the challenge of building viable nations out of the fragmented and divided societies left behind in the wake of the colonial period. It is also an ethical concept.
In Western philosophy a distinction is sometimes made between legality and legitimacy. Their decision was final. The French Revolution changed that. Last week, for example, the people of Ireland decided by referendum that contrary to the will of their government, they did not want to surrender their sovereignty to some supranational body called the European Union.
In June , the peoples of France and the Netherlands had also decided to reject the proposed European constitution. Most governments in Europe are therefore not keen to test the political will of their people on the European constitution. Of course, the international domain is different from the national. The UN, however, is a cleverly devised global body based on an adroit balance between power the Security Council with big power veto and the voice of the people the General Assembly, where this voice is presumably articulated through governments.
Fifty years after its formation, the General Assembly has more or less maintained its representative character. It still enjoys some legitimacy. However, the Security Council has lost its legitimacy; it no longer reflects the new reality of power. The UN is a rule-based institution, even if the rules are now applied by an anachronistic Security Council.
The G8, on the other hand, has no legitimacy whatsoever. That shrewd combination of power plus voice that the founders of the UN correctly forged in the world body is lacking in the G8. The G8 summit that met in the island of Hokkaido in Japan sat in judgment over the democratic credentials of the government of Zimbabwe, but itself had no legitimacy. The Western countries are understandably frustrated, but have only themselves to blame. They continue to harbour the illusion that their self-created G8 has legitimacy.
It is not that they are not conscious of their weakness, but illusions die hard. At the Heiligendamm G8 meeting last year, they tried to include the big five of the South to provide it with a veneer of legitimacy — the so-called Heiligendamm Process — but they failed. And they failed again in Hokkaido.
The G8 is no longer even the seat of the powerful. This is the de facto international community one often hears or reads about.
Development and Globalisation: Daring to Think Differently
As the immediate former president of Tanzania, Benjamin W. They constituted themselves into the coalition of the unwilling, and issued their own political declaration. They thought that if they finally got the US on board on climate change, the G5 would also rejoice. They were creating grounds for their own disappointment.
They did not realise that despite its weaknesses the AU has more legitimacy than the G8. There was at least one honest G8 leader. What is needed is a radical reform of the Security Council of the UN, not a patch-up job of the G8 that should, by now, dissolve itself.
Here, power, resources and access to knowledge are significant factors that influence the outcome of negotiations. Diplomatic truths, in other words, are truths as negotiated between states in the global system of asymmetrically positioned power relationships. Existential and diplomatic truths are two different things. The MDGs were a negotiated compromise text. They are not exactly what the G77 developing countries wanted.
They do not address the root causes of underdevelopment in many countries of the global South. They are the promise of hope over despair. And yet the reality on the ground may be very different from official reports. This means a delay of almost a century. In multilateral diplomatic forums e. Africans might argue that they have not seen many benefits of globalisation, that all they have seen are its negative consequences.
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They would present it as a challenge. Globalisation, they would argue, has not really been given a chance. Hence, while recognising that it might be a challenge, they would argue that it is also an opportunity, one that Africans may not have adequately seized. However, this compromise camouflages huge differences on political and policy issues that obscure the reality on the ground.
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It is an interim truth, a negotiated truth about a very complex reality on the ground. Nonetheless — and this is the point of this editorial — despite its interim and negotiated character, diplomatic truth is not unreal. Nonetheless, power in international relations is a reality. Equally real, therefore, is the diplomatic reality emerging from it. That reality has political and legal consequences.
In the World Trade Organisation, for example, once countries have signed on the dotted line, the agreed texts become legally enforceable instruments. Ultimately, if the diplomatic truths are totally at variance with existential reality, then those truths are unenforceable, as could happen with the EPAs that the EU is trying hard to conclude with the ACP states.
They have to be taken seriously.
Of course, this is not a uniform story. There are at least 60 bracketed paragraphs in the draft negotiated text sent from Geneva. Bracketed texts are those where there is no agreement as yet between member countries, or for which there are alternative wordings. The G77 countries want the present three commissions to be retained and a new commission added; the EU wants the three commissions to be merged into two; and some other developed countries want all commissions abolished.
There are also differences on the issue of policy space. The objective of this editorial is not to make a case for any one or more of these contentious issues. It is, rather, to argue a more general point, namely, that if the developed countries of the North wish to weaken UNCTAD or to disempower it in critical areas of its work, then they are on the wrong track. There are several reasons, but within the limited space of this editorial, one will suffice for now.
Let us start with a recognised reality of our times, namely that the global financial system is in serious crisis. The institutions of global financial governance the IMF and the World Bank have neither the means nor the credibility they had in the heyday of globalisation. The North must acknowledge this. They do not address the fundamental and underlying issues that are at the bottom of the financial crisis, of which the subprime mortgage meltdown was only a surface phenomenon. And here, then, is the question: At which forums, within or outside the UN system, can issues of this magnitude of global significance be discussed?
Let us face it: these summits have failed. At Gleneagles the G7 made many promises to the South, especially to African countries, for example, on the matter of aid and debt relief. As for aid, we are still where we have been for the last 40 years; the US and the UK are the least committed to dipping into their coffers to provide 0. At the next summit of the G7 in Tokyo there is talk of inviting up to 30 countries of the South. But that, in our view, would be an exercise in futility.
Two aspects of the changing reality must be acknowledged: one, things are falling apart; and two, there is a fundamental structural shift in economic and political power in favour of the South. It is no accident that the banks in the North are now being recapitalised by sovereign wealth from the South. Why not? For example, the post of deputy secretary-general has been vacant for more than a year; that and other vacancies must be filled soon. It is now a different world altogether. Let us do this now. There are five major expectations that embody this vision.
These are: 1. Three kinds of asymmetries were identified: power, economic and knowledge asymmetries. The DCF should link aid with broader issues of Financing for Development, and put aid into perspective e. The DCF should feed into the Doha process and be proactive in influencing its outcome. The DCF should facilitate or sponsor studies on exit strategies for aid-dependent countries of the South towards greater selfreliance, with target dates and indicators to assess progress. There were several other expectations, including that the UN needs to be more adequately represented in the aid discourse and that the DCF should strengthen links between the normative and operational work of the UN on matters related to aid and development.
It is a forum. That is its strength. It is not really part of the normal world, at least not the world of the South where twothirds of humanity lives. Geneva throws a comfortable veil over proceedings, making them seem aloof from the real world. The harsh and cruel realities of an often violent world out there, especially in the global South, become abstract and distant. This is both good and bad. But it has a reverse side to it. Thinking becomes universalised and idealised abstractions from reality.
Sadly, as trade negotiators take a walk in the woods, they count the trees and often lose sight of the whole forest. The forest becomes visible, often though hindsight, at least to some honest politicians. He reprimanded the World Bank, IMF and other global institutions, and cited corn subsidies and US food aid policies as key problems contributing to the global food crisis. In the WTO, however, food remains a tradable commodity, a market access issue. One hopes that one day, like Clinton, the former directors general of the WTO will admit their errors.
The present one, however, is pushing relentlessly along the same road. Trade and the conditions of trade are two different things. The first is simply a word in the dictionary. The second relates to the historical and present circumstances under which countries are integrated in the global system of production and exchange. That is, trade — when taken to mean trade liberalisation, as it is in the WTO — does not automatically nor necessarily equate to improvements in the conditions under which trade takes place. Trade does not automatically equate to development.
The conditions in which countries engage in trade, on the other hand, are a historically created reality that continues to the present. These conditions are daily reinforced because the powerful countries have carrots to dangle and sticks to whip the weak so that they conform to their will. This is legitimised by the WTO and enforced by threat of sanctions.
All multilateral agencies, including the WTO, are driven by a certain balance of forces in the global domain. Asymmetrical power relations are part of the dynamics of global negotiations, whether on matters of trade or the enforcement of intellectual property rights. As for the WTO, for all intents and purposes, it has become an extension of the European agenda.
The US has been in a state of semi-paralysis, in a diplomatic and moral crisis, over most of the last decade. Of all regional groupings Europe is the best organised and self-conscious political force. Of course, there is debate within Europe. Nonetheless, barring countries like Norway and Switzerland that are not part of the European Union and can often voice an independent view, and notwithstanding internal differences within the union, the countries of the European Union speak with a single voice in the WTO.
It should surprise nobody if Europe uses its mind and muscle to advance European interests. Despite outward opulence, Europe is in serious crisis. The financial meltdown in the US has endangered the comfortable life of its bankers and citizens. Europe is even more vulnerable than the US to the risk of loss of markets and access to oil and raw materials. In the European media, China is often derided, for example, for its apparent lack of concern for human rights violations in Africa.
However, the EU is well prepared to meet its challenges. It has a vigorous and aggressive secretariat in Brussels, driven by the Global Europe strategy, which is closely monitored and directed by Business Europe. Europe promotes its aggressive and offensive strategy with the cultured sophistication of an old empire.
The EU is more skilled in the diplomacy of soft power than the US. The rest of the world, especially those in the older grouping of African, Caribbean and Pacific ACP countries have watched in shock and incredulity. What is good for the goose must, surely, be good for the gander. The challenge for the South, then, is how to maintain its policy space and its development agenda.
The South is, of course, not so united as Europe. The latter speaks with one voice, the South with more than a hundred.
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Notwithstanding the cacophony, there is a song that the South can sing together, and it goes like this in prose. It is where most of the global poor live. The responsibility for development cannot be handed over to those who are responsible for having created poverty and underdevelopment in the South and their institutions. If you have no industries to produce goods, you have nothing to trade. If you do not have jobs and proper wages for the workers and peasants, you have no domestic market in which to sell goods and services.
None of these should be sacrificial lambs on the altar of the false gods of trade. The vacuous basis of its underlying premises has been amply exposed in the financial meltdown of the casino economy as well as by the historical experiences of the South itself. The second — enforcement — pillar needs to be critically reviewed.
Has it really brought gains of development for the global poor? This is to ensure that it responds to their concerns — they after all constitute the vast majority of WTO members. The processes of decision-making must return to the WTO members through a stronger and more influential role for the general council. This is not a personal issue; it is a matter of institutional integrity. See www. I do this without pretending or seeking to influence the course of the present US elections.
Unfortunately, that perspective, because of the record of the US during the last decade, can best be described in largely negative terms. It is a perspective that jeopardises the lives and wellbeing of ordinary people in the rest of the world, the safety and sustainability of the natural environment — a milieu that knows no electoral boundaries — and the stability of the global financial system.
It follows that the president of the United States must have a vision that goes beyond a narrowly conceived national interest; it must be a national vision that embodies the global imperatives. It is this kind of enlightened vision that was so appealing about President John F. It is from such a perspective and from that of the two-thirds of humanity that live in the global South that we identify certain concerns which an aspiring presidential candidate must attempt seriously to address.
Openness to sharing global knowledge. The monopolisation and commercialisation of knowledge by private corporations for profit is the most critical obstacle to the development of the South. They must do so, even if this means a radical paradigmatic shift in their own thinking. That system of production and consumption has allowed the citizens of the United States to consume six per cent more than they produce, which translates into trillions of dollars that pour into the US every year, mainly from the global South. This is unfair.
Corrective measures need to be taken both at the national and global levels, for which proper consultative mechanisms have to be established with the political leaders of the global South, as well as of Europe, Russia and Japan. It must be explained to the voters in the United States that a monopolar world has now given way to a multipolar world.
There is not one centre but several: countries like Brazil, China, the Gulf states, India and Russia wield considerable control over global resources and their use and distribution. These new realities must direct a new US president to throw his or her authority to reconfigure the architecture of the major institutions of global governance, such as the United Nations system, the World Bank, the IMF and the WTO. These new realities, too, have not featured significantly enough in the election campaigns of most of the presidential candidates.
The environment and climate change have become political bywords in recent times. For example, the widely acclaimed documentary An Inconvenient Truth is uncomfortably silent about the developmental dimension. Of the million people living in the dryland areas, it is estimated that up to million will face water shortages by The new leadership of the United States must face up to its responsibility towards Africa beyond its present preoccupation with security and terrorist threats.
American philanthropy is a good virtue. But the need for philanthropy should not arise if wealth is shared fairly and equitably in the first place. This is true at the global level just as it is at the national. They must have the dignity of decent work and choices that make life meaningful. However, these policies were fundamentally flawed, as the wisdom of hindsight has shown. They led, instead, to rapid deindustrialisation of most of these countries, especially in Africa and Latin America.
The civil society organisations CSOs in these countries were the first to raise the alarm. The effects of SAPs were disastrous, especially for poorer people. In the s protests against the IMFinduced policies became widespread, and food riots spread from one country to another. That, however, did not end the domination of the BWIs, who decided that it was time to involve civil society.
Unable to provide better strategies, the donors and the BWIs shifted the blame for enduring poverty to Southern governments. Between and , the BWIs and donors shifted their aid conditionalities from purely macroeconomic policies to governance. According to figures computed from World Bank data, the financial and private sector development conditionalities levelled out, but the conditionalities associated with the public sector, governance and the rule of law steadily increased from 10 per cent in to 45 per cent in Note 1.
See Y. For sure, trade and finance are important, but both are only means to encourage production and industry and not the other way around. In the developed countries of the North the two are integrated; they have industrialised agriculture. In the developing countries there is a huge gap between mechanised, commercialised agriculture on the one hand and subsistence farming that employs hoes for ploughing and animals for traction. IP enforcement is a contentious terrain.
The developed countries have been pushing one-sidedly for the enforcement of IP right holders, while the developing countries have been demanding that IP rights be balanced against the right to development. The South Centre, its member states, and sympathetic non-governmental organisations NGOs have managed to block the attempts of the North to use the World Customs Organisation WCO to enforce a Standards Employed by Customs for Uniform Rights Enforcement SECURE , and thus enhanced the possibility for the developing countries to innovate their own technologies, for example, for their manufacturing, agriculture, communication and the pharmaceutical industries.
It should have been the other way round. Industry precedes trade; if there is no production there is no trade. One of the more hopeful side effects of the present crumbling of the Doha round of trade negotiations is that people will begin to prioritise production and industrialisation over trade. Certainly, a development friendly outcome of the Doha round would have been a good thing, but the fact that it is at stalemate is indicative of a deeper malaise in the system.
The simultaneous near-death, or at least illlegitimisation, of both the WTO and the Bretton Woods institutions the World Bank and the International Monetary Fund is related to a dual weakness in the global economic system — the dominance of trade over industry and of finance over production. Of the two, the latter is a more serious problem. Financialisation of production has put a premium on speculative profits, often made out of fictitious money or credit, rather than where the emphasis should be — on production itself.
Even reputable banks, mostly in the Western world, were fooled. This is the topsy-turvy world in which we live. This is not to underestimate the importance of either finance or trade. What is produced must be financed and traded. In the present global system of production, banks and entrepreneurs are inordinately privileged over labour and natural resources a CEO of a big multinational can earn a salary of over a million dollars a month whereas a worker gets a tiny fraction of this, especially if he or she — especially, she — is located in the countries of the South.
That fundamentally explains why rich countries become richer and poor countries stay poor. Trade is important too. After goods are produced they must be consumed. Of course, not all that is produced is necessarily traded; subsistence farmers in much of the South, for example, consume what they produce without going through the market. Nonetheless, markets are important for the distribution of goods produced, and for realising the value contained in the goods so that the production cycle begins again.
However, the present global trading system is heavily loaded against the countries of the South for both historical and structural reasons. The natural resources of the South are seriously undervalued in the global market. This is the second fundamental reason why rich countries further enrich themselves at the cost of the poor countries. Even when it comes to production, there is an anomaly in the present system of production. A study carried out by UNCTAD in on the least developed countries LDCs found that most LDCs have opened up their economies to global trade and are highly integrated in the global economy, but they are not climbing the economic and technological ladder.
Based on this, the report showed that the LDCs continue to import highvalue machinery and equipment, which are paid for out of lowvalue exports in the production chain and a long-term decline in the terms of trade. These days, as sizable constituencies have voted in country after country for anti-free-trade policies, or candidates that promise to limit them, the old self-assurance is gone. Millions have rejected, with uncertain results, the punishing logic that globalisation could not be stopped.
The backlash has swelled a wave of soul-searching among economists, one that had already begun to roll ashore with the financial crisis. How did they fail to foresee the repercussions? I n the heyday of the globalisation consensus, few economists questioned its merits in public. But in , the Harvard economist Dani Rodrik published a slim book that created a stir. Rodrik pointed to a series of dramatic recent events that challenged the idea that growing free trade would be peacefully accepted. In , France had adopted a programme of fiscal austerity in order to prepare for entry into the eurozone; trade unions responded with the largest wave of strikes since What was the pathology of which all of these disturbing events were symptoms?
Since the s, and especially following the collapse of the Soviet Union, lowering barriers to international trade had become the axiom of countries everywhere. Tariffs had to be slashed and regulations spiked. Trade unions, which kept wages high and made it harder to fire people, had to be crushed. These moves were generally applauded by economists. After all, their profession had long embraced the principle of comparative advantage — simply put, the idea countries will trade with each other in order to gain what each lacks, thereby benefiting both.
In theory, then, the globalisation of trade in goods and services would benefit consumers in rich countries by giving them access to inexpensive goods produced by cheaper labour in poorer countries, and this demand, in turn, would help grow the economies of those poorer countries. Workers were suffering more spells of unemployment, more volatility in the hours they were expected to work.
While many economists attributed much of the insecurity to technological change — sophisticated new machines displacing low-skilled workers — Rodrik suggested that the process of globalisation should shoulder more of the blame. It was, in particular, the competition between workers in developing and developed countries that helped drive down wages and job security for workers in developed countries. Over and over, they would be held hostage to the possibility that their business would up and leave, in order to find cheap labour in other parts of the world; they had to accept restraints on their salaries — or else.
Opinion polls registered their strong levels of anxiety and insecurity, and the political effects were becoming more visible. The inevitable result would be a huge political backlash. As Rodrik would later recall, other economists tended to dismiss his arguments — or fear them.
Over the course of the s, an unwieldy international coalition had begun to contest the notion that globalisation was good. Activists were intent on showing a much darker picture, revealing how the record of globalisation consisted mostly of farmers pushed off their land and the rampant proliferation of sweatshops. In , the movement reached a high point when a unique coalition of trade unions and environmentalists managed to shut down the meeting of the World Trade Organization in Seattle.
In a state of panic, economists responded with a flood of columns and books that defended the necessity of a more open global market economy, in tones ranging from grandiose to sarcastic. Language like this lent the fight for globalisation the air of an epochal struggle. Arguments against the global justice movement rested on the idea that the ultimate benefits of a more open and integrated economy would outweigh the downsides.
The fact that proponents of globalisation now felt compelled to spend much of their time defending it indicates how much visibility the global justice movement had achieved by the early s. Still, over time, the movement lost ground, as a policy consensus settled in favour of globalisation. The proponents of globalisation were determined never to let another gathering be interrupted. They stopped meeting in major cities, and security everywhere was tightened. Above all, there was a widespread perception that globalisation was working as it was supposed to. The local adverse effects that activists pointed to — sweatshop labour, starving farmers — were increasingly obscured by the staggering GDP numbers and fantastical images of gleaming skylines coming out of China.
With some lonely exceptions — such as Rodrik and the former World Bank chief and Columbia University professor Joseph Stiglitz — the pursuit of freer trade became a consensus position for economists, commentators and the vast majority of mainstream politicians, to the point where the benefits of free trade seemed to command blind adherence. In a TV interview, Thomas Friedman was asked whether there was any free trade deal he would not support.
I just knew two words: free trade. I n the wake of the financial crisis, the cracks began to show in the consensus on globalisation, to the point that, today, there may no longer be a consensus. Economists who were once ardent proponents of globalisation have become some of its most prominent critics.
Erstwhile supporters now concede, at least in part, that it has produced inequality, unemployment and downward pressure on wages. Nuances and criticisms that economists only used to raise in private seminars are finally coming out in the open. By , he was having doubts: the data seemed to suggest that the effect was much larger than he had suspected. In the years that followed, the crash, the crisis of the eurozone and the worldwide drop in the price of oil and other commodities combined to put a huge dent in global trade.
Among these implications appears to be a rising distrust of the establishment that is blamed for the inequality. You need to make policy which brings people to think again that their societies are run in a decent and civilised way. If the critics of globalisation could be dismissed before because of their lack of economics training, or ignored because they were in distant countries, or kept out of sight by a wall of police, their sudden political ascendancy in the rich countries of the west cannot be so easily discounted today.