A reflection on GLOBALIZATION

A Reflection on Globalization


                                                             The Reporter (Ethiopia) July 12, 2000

By Asrat Bekele


This paper was presented at a panel discussion organized by the Ethiopian Economic Association recently. It has been shortened to fit the format of the paper.


 Since classification is by occupation, I can consider myself a member of the Ethiopian private sector. On the other hand, if I somehow fail to "fit the mold", so to speak, then you can take me for an impostor.


 I would like to start with the usual disclaimer. The view expressed here does not necessarily reflect the sentiment of the Ethiopian private sector, nor any of its institution.


 Today, it is difficult to find a single word in any human language, besides God and probably Globalization, whose very utterance purport to express, or even explain with frightening ease, the myriad relationships which exist within human societies.

 Important categorizations of social existence, which up to now have been established, more or less on stand-alone basis, such as economics, politics, culture, etc. have now succumbed to adorning this "new" phenomenon; emboldened by phrases such as economic globalization, cultural globalization, political globalization, etc. I believe the clarification better yet; the understanding of the basic tenets of this all too important phenomenon should become the paramount objective of our discourse. The applications and derivatives there of, will hence become less treacherous.


 Let us begin by heuristically defining globalization as, "The existence of relations between the different regions of the world; and hence as a corollary the reciprocal influence that societies exert upon one another." This general and intuitive definition sometimes fails to capture the actually existing relations in the world of today. For example, the definition runs into difficulty when one has to explain the following application of it. "Hollywood influences the Massai, and reciprocally the Massai influence Hollywood." Obviously, this statement sounds preposterous! However, if we look at the first assertion separately, and on its own, i.e., "Hollywood influences the Massai,..." then there is nothing ludicrous about it. The second part, i.e., "...the Massai influence Hollywood" surprisingly, also has a grain of truth, however invisible. In the above example, reality dictates that the assertion as a whole is at best tenuous. Let us now make this example slightly more provocative and action oriented.  Hollywood influences the Mafia, and reciprocally, the Mafia influences Hollywood." The hesitation to be definitive on this one, interestingly enough, recognizes the existence of a symbiotic relationship of a sort between the two enterprises. Hollywood has now become the single largest export industry in the United States. In 1997 alone is has exported 30 billion dollars worth of culture, or cultural products, if you will. Similarly, organized crime collectively is estimated to gross about $1.5 trillion a year, globally. Out of this, the Mafia brand name, with its well developed products and services can be expected to garner a significant share of the above. The moral of the above exercise is to emphasize the fact that in the actually existing reality of today, relationships are either skewed, as in the case of the Massai, or more complementary as in the case of the Hollywood-Mafia connection.


 Going back to the above definition and using the example which is explained somewhat pedantically above, one can then claim that today's Globalization can favor certain societies, nations, or even centers, while disfavoring others. For example, the United States, Europe and Japan can be taken as centers on their own rights and some relations which exist between the triad can be assumed to be more or less not-polarizing. In the case of military might between the triad, however, the relationship tilts to wards the US. (The US military budget is 30% higher than that of the total budget of NATO countries combined.) One can then say that the relation between the US and Japan, in this power-laden, but narrow field is not only lopsided, but is actually a polarized one, political rhetoric aside.


 The interest of this paper is to try to elaborate what a polarizing globalization is and how it impacts on all peoples of the world. I feel this ubiquitous phenomenon need to be split-up into its various categorization and scrutinized along its tendencies to

 polarize, ameliorate, etc. existing relations. But before I embark on these aspects of globalization, it is worth considering a more studied and biting definition of it.


 Globalization is, among other things;


1) The establishment of global markets for goods, services and capital. (Not labor).

 2) It is the progression towards a global system of production.

 3) It is the universal character of competing technologies (to mention some of the new tools-the Internet, mobile phones, media networks, etc.).

 4) It is the political weight that the global system carries in the competition for global or regional hegemonies (again to mention some of the new instruments  -NATO and increasingly the UN, etc.)

 5) It is the cultural aspect of universalism (ranging from Hollywood-pornography to sports, etc.)

 The existing global system which is fundamentally based on creating values, has in its core, the human labor as the prime maker of things. This "factor of production," however, has no meaningful freedom of movement within the existing global

 markets. To illustrate by example; today, investors can move billions of dollars across the oceans by literally clicking the mouse. At the same time, tons of goods can be shipped from one corner of the world to another without a lot of constraints.


 But it is impossible, (even is cases of EU type elaborate arrangements), to move millions of workers both, mental and physical, across borders of nations. Obviously, there is some internationalization of labor, here and there, but it certainly is not the norm (e.g. UN staff,...) One can then say that the market for labor is regulated on the global scale, while the markets for goods and capital are more or less deregulated. In trying to understand the above, problems arise, as is the case with other plethora of establishment lingua, in locating the deregulation liberalization/privatization nexus.


 Ordinarily, we can accept liberalization (deregulation) to mean a prescribed policy, which allows the strategies or large global enterprises (Transnational Corp, TNC for short) to escape the constraints imposed on them by state policies.


 Deregulation encompasses, among other things, trade liberalization, investment laws liberalization, liberalization of capital accounts, etc. Moreover, it is clear that deregulation does not happen on its own, but is rather a policy either willed or coerced which has to be put in action by all involved. The institutions which implement these strategies are from within, agencies of the impotent states, compromised and marginalized to a large extent; and from outside, depending on the agenda, it can be either IMF, WTO, etc.


 To start with, these powerful multilateral organizations, who basically run the global system, only have a semblance of democratic governance. They are run and controlled by G-7 countries usually acting as the steering committee of the assembly of rich nations, like that of the OECD. This power based governance structure systematically oppresses and stifles indigenous initiatives, which are usually geared towards comprehensive development, i.e. Human Development in its totality. This is particularly true of the powerless and poor nations.


 To this end, the recent bold attempt by Mahbub Haq and others (God bless his soul) to institutionalize the concept that there is more to development than GNP and its importing is to be welcomed.


 Let us now turn to capital, the foremost globalizer of the lot. One form of capital which has come to be associated with productive systems and development is FDI (Foreign Direct Investment). In this form, capital is usually productive, manageable and predictable. Unfortunately, its other versions have become increasingly fluid and disruptive.


 In this category, we can include portfolio investments and other self-serving speculative adventures. Most of today's global financial transactions are not proceeds of goods (services) bought or sold. In today's globalization, as was the case in previous polarization (pre-1929 crash). Finance capital has transformed itself from its original base, i.e., from being the means to becoming both the ends and means of transactions. This intense "financialization" of capital is one of the major problems of the existing global system. In 1975, international securities transactions represented less than 5% of GDP in the leading industrial countries. Twenty years later, they stand for example, at 1000% in the UK. To me, money is not just any other commodity, (the view of the neo-liberals), but is rather the encapsulation of raw power legitimized by economic and social systems. The

 assumption that it can be commodified relentlessly, without adverse consequences, the way nature is being ravaged and commodified is to me untenable. For example, the daily transaction in the currency market alone has now reached 1.% trillion

 dollars, which is about 7% of OEDC's GDP! Today, finance capital reigns not only supreme, but is becoming increasingly slimy and unpredictable, with an immense capacity to devastate a nation literally within hours of its onslaught. If it decides to

 abandon a particular market, thanks to deregulation, it can do so without constraints. Common Justifications for its departure include, "the fundamentals" not being right or not made right in given economy. the obvious moral peddled here is -  economies should adjust to this loose-footed and speculative predator!


 Now let us assume labor (physical & mental), has the luxury of this movement. Then like finance capital, it can move from one place to another looking for better remuneration. If a particular place becomes unattractive, then it can move en masse, to another domicile looking for better returns, so to speak. The initial impact of this would be the convergence of factor prices on a global scale and ultimately (among other things, since labor is human), the harmonization of the distribution of income on a global basis and the continuous establishment of equilibrium across economies.


 The reality on the ground is of course far from this supposition. Labor is regulated on a global basis, while capital is deregulated and hence globalizing freely. This is the fundamental problem of today's globalization. This global law of value, which restricts labor from meaningful mobility, is the source of today's polarizing globalization. The multilateral institutions mentioned above are basically functioning to support and clear the way for the globalization of capital, which is being spear headed by the TNC's. On the other hand, there isn't even one effective global institution whose agenda is the globalization of labor or the harmonization of global existence. Why such a vision is conspicuously absent amongst the privileged of this system is understandable. What is puzzling is the reaction, or more precisely the inaction of "the wretched of the earth! " What are the wretched doing in light of the prevailing globalization?


                                                      To be continued...