|John Ralston Saul’s new book The Collapse of Globalism is saying what most economists have been afraid to say: The emperor has no clothes. He painstakingly reviews the mounting evidence from the past decade that the ideology of globalization has not only failed in almost everything it has tried to do, but is in rapid retreat in the areas of the world where the economy is most robust.
Saul is an excellent student of history, and his criticism of economic theory is not limited to any one economic ideology. He shows that, throughout the past two millennia, no economic theory has proved to be right for all places and all times, and the average lifespan of such theories before they are supplanted by more appropriate ones, suited to newer economic realities, is less than two decades. The ones that have died the hardest and caused the most social damage have been those which have been elevated to the status of near-religion, and were assumed to be inevitable and perpetual. Globalization has reached this status several times before, and each time it has collapsed as nation-states realized that global solutions were suboptimal for them and have reasserted national sovereignty, often militarily. Saul excoriates economists and politicians and their ‘adoring courtiers’ in the media for their lack of awareness of the lessons of history. De Toqueville warned in 1835 about the dangers of economic ideology, of seeing society through an economic rather than a political lens, asking “Can it be believed that the democracy which has overthrown the feudal system and vanquished kings will retreat before tradesmen and capitalists?” Much of the latter 20th century was a similar retreat, Saul says, as interest in democracy was subordinated to the ideology of globalization, and that period’s greatest economic ‘success’ was the emergence of China, a brutal and repressive totalitarian regime, as a new economic superpower.
When economic theories become religions, and grow in power, there is a growing disconnect between the global system (and its measurements of ‘progress’), and the quality of people’s lives. This ‘ideology of progress’, in its globalist flavour, manifests itself in several ways. First, global economic entities inexorably consolidate and centralize and become increasingly hierarchical and narrowly-controlled, isolating, marginalizing and under-serving smaller communities and markets in the process. Second, dumping, which is taboo in well-organized markets, becomes normal process — the underpriced offloading of surplus goods, which destroys healthy competition, is pursued as the ubiquitous means to distribute product at the cheapest possible cost, which is seen as invariably a good thing. At the same time, intellectual property is given protection that allows its owners to overprice their product. This produces such enormous distortions that, for example, a Wal-Mart store in upstate New York will sell a dozen pairs of men’s underwear for $10 and a pair of Nike shoes, which costs the same to make (and may be made in the same Chinese factory), for $150. Next, a large proportion of so-called ‘trade’ (as much as half of all trade today) becomes internal — transfers between branches of multinational corporations at artificial prices that bypass the competitive market and are designed to further reduce competition and to transfer profits from high-tax to low-tax jurisdictions. The UK divisions of multinational oil companies, for example, collectively lose money by using transfer prices to shift profits to countries with low tax rates. And as a consequence of this ability of rich multinationals to avoid taxes, the gap in wealth and power between rich and poor skyrockets.
The combined effect of all these market distortions, which make perfect sense to the multinational corporations that drive a ‘globalized’ economy, is unfair competition, oligopoly, price-rigging, elimination of small entrepreneurs, devastation to local labour markets and the environment, an unfair tax burden on the middle and lower classes, inability of national governments to afford a basic social safety net for all, and endemic poverty and economic slavery for workers and for poor nations. Saul points out that there are some excellent recommendations on how to mitigate some of these consequences, such as the ILO Fair Globalization Report, but there is no motivation for the multinationals and the Davos group to act on them. Why should they? It is in their best interests to allow these distortions to continue, and mitigating their negative consequences would also mitigate their profits. So these reports are ignored.
It is therefore up to national governments to act. But these governments have been so effectively lobbied by the multinationals and the neocons that they have come to believe that globalization, and its distortions, are inevitable, and that there are no alternative economic models. Their hands have been tied by layers of ‘free’ trade agreements that preclude them from passing and enforcing their own laws to protect domestic workers, their domestic economy and the environment. So they have become cowards, apologists for the globalization agreements they have been hoodwinked into signing, and tell themselves and their citizens we have no choice.
This, says Saul, is the ultimate lie of globalization’s religion of economic determinism. There is always choice. There always has been, and there must be. What is needed, he says, is:
Saul quotes Nelson Mandela, who understands these needs clearly:
Massive poverty and obscene inequality are such terrible scourges of our times — times in which the world boasts breathtaking advances in science, technology, industry and wealth accumulation — they have to rank alongside slavery and apartheid as social ills. Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life.
It is nothing short of religious delusion to believe that any monolithic economic ideology is capable of coming to grips with this or any other social or political problem. And it will take more than Live8 spectacles, evidence of what Saul calls “the decline of Davos from temple of globalization to circus, open to whatever fashion can capture fifteen minutes’ worth of attention”, to address it. Ultimately such problems must be solved locally, by courageous national leaders with grassroots solutions customized to the local context.
Saul calls this ‘positive nationalism’, which he contrasts with the negative nationalism of hate and fear:
If any confirmation of the seriousness of negative nationalism were needed, we need only go back to Samuel Huntington’s 1996 [anti-Moslem screed The Clash of Civilizations]. In large numbers, the disciples of globalization read his book and raised their voices in agreement with his argument that societies were driven and held together by shared cultures, not economies. They now understand what was happening around them, why things were not working out as expected. As for the US, its survival was dependent on “Americans reaffirming their Western identity”. The broad welcome this argument received in the West revealed how confused and obscure the vacuum [caused by the failure of globalism] is. But it also told us how people have become frightened in the growing disorder of the globalist era, how uncomfortable they are with the broad global sweeps of inevitability. After all, only a few years ago economic inevitability was on every tongue. Abruptly, the same people are insisting that exclusive culture is the key. [When you note that Huntington in his book hadn’t bothered to assign Africa a ‘civilization’] you realize how crudely racial his theoretically sophisticated argument is. The Aga Khan commented “The clash, if there is such a broad civilizational collision, is not of cultures but of ignorance“, either willful or as the product of fear.
Positive nationalism, however, is driven by altruism and knowledge, a desire for service and to see one’s fellow citizens thrive, rather than the ignorance and fear and intolerance of negative nationalism, or globalism’s blinkered self-interest. In a world in which 110 of the last 120 major conflicts were internal, rather than international, it is important to focus on bottom-up solutions and grassroots approaches to problems that are fundamentally local. This is not about values or civilizations or cultures or economies, Saul concludes, but about simply serving the public good, for which there are no easy or global answers:
The common call today is for an examination of values. I am not clear what this means. It has a slight ring of 19th century self-serving [negative] nationalism. It would be better to concentrate on something more real, such as serving the public good. Adam Smith put it that “he is certainly not a good citizen who does not wish to promote, by every means in his power, the welfare of the whole society of his fellow citizens.” If people who know each other well serve the welfare of their fellow citizens, they may learn something unexpected about each other, perhaps about how different they are. If people who do not know each other well, perhaps because they come from different cultures, serve the welfare of their fellow citizens, they may well discover how similar their values are. In both cases, this would be the process of positive nationalism.
Photo from McMaster U. prof William Coleman’s globalization clippings collection (from a Scandinavian newspaper)
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