What Is Globalization Anyway?
Source Doug Henwood
Date 99/11/30/23:41

If there's one thing that analysts and activists across
the political spectrum agree on today it's that we live
in an era of economic globalization. This is taken by
both critics and cheerleaders as self-evident and largely
unprecedented. We should think twice about this

The concept that has now entered daily speech as
"globalization" is both exaggerated and misspecified.
It's described as an innovation, when it's not; it's
described as a weakening of the state, though it's been
led by states and multistate institutions like the IMF;
it's been indicted as the major reason for downward
pressure on U.S. living standards, even though most of us
work in services, which are largely exempt from
international competition; and it's been greeted as an
evil in itself, as if there were no virtue to

Let me expand a bit on each of my opening claims. First,
the novelty of "globalization." One of my problems with
this term is that it often serves as a euphemizing and
imprecise substitute for imperialism. From the first,
capitalism has been an international and
internationalizing system. After the breakup of the Roman
Empire, Italian bankers devised complex foreign exchange
instruments to evade Church prohibitions on interest.
Those bankers' cross-border capital flows moved in tandem
with trade flows. And, with 1492 began the slaughter of
the First Americans and with it the plunder of the
hemisphere. That act of primitive accumulation, along
with the enslavement of Africans and the colonization of
Asia, made Europe's takeoff possible.

Not only is the novelty of "globalization" exaggerated,
so is its extent. Capital flows were freer, and foreign
holdings by British investors far larger, 100 years ago
than anything we see today. Images of multinational
corporations shuttling raw materials and parts around the
world, as if the whole globe were an assembly line, are
grossly overblown, accounting for only about a tenth of
U.S. trade. Ditto trade penetration in general. Take one
measure, exports as a share of GDP. By that measure,
Britain was only a bit more globalized in 1992 than it
was in 1913, and the United States today isn't a match
for either. Japan, widely seen as the trade monster,
exported only a little larger share of its national
product than did Britain in 1950, a rather provincial
year. Mexico was more internationalized in 1913 it than
was in 1992. Exports are just one indicator, for sure,
but by this measure, the distance between now and 1870 or
1913 isn't as great as it might seem.

Indeed, it's probably more fruitful to think of the
present period as a return to a pre-World War I style of
capitalism rather than something unprecedented, and to
rethink the Golden Age of the 1950s and 1960s not as some
sort of norm from which the last 25 years have been some
perverse exception, but the Golden Age itself as the

Another thing that must be rethought is the role of the
state, which we constantly hear is withering away under
a new regime of stateless multinational. While there's no
question that the state's positive role has been either
sharply reduced or under sharp attack, its
negative/disciplinary role has grown. In the U.S., we've
experienced a mad, cruel incarceration boom, accompanied
by increased snooping and behavioral prescriptions.
Elsewhere, the neoliberal project has been imposed by
states, whether we're talking about the Maastricht
process of European union, or structural adjustment in
the so-called Third World - states acting in the
interests of private capital, of course, but that's the
way states have been acting for centuries. And, over the
last 20 years, we've seen an almost entirely new role for
the state, preventing financial accidents from turning
into massive deflationary collapses - our S&L bailout of
the 1980s, far from being unique, was replicated in
scores of countries around the world, most extravagantly
in Mexico right now, where a massively expensive (and
controversial) bank bailout is underway.

OK, so what about pressure on living standards? We First
Worlders have to be very careful here, since, as I argued
earlier, the initial European rise to wealth depended
largely on the colonies, and while we can argue about the
exact contribution of neocolonialism to the maintenance
of First World privilege, it's certainly greater than
zero. It was embarrassing to hear Ralph Nader and the
Fair Trade Campaign describe NAFTA and the World Trade
Organization as threats to U.S. sovereignty, echoing the
rhetoric of Pat Buchanan; Washington has been abusing
Mexican sovereignty for over a century - which is why
it's a good idea to stop saying globalization when you
mean imperialism.

But I'm not going to deny that plant relocations to
Mexico and outsourcing contracts in China have put a
sharp squeeze on U.S. manufacturing employment and
earnings, and the threat of those things has greatly
reduced the bargaining power of U.S. workers. How much
has this contributed to downward mobility and increasing
stress? The econometricians say that trade explains, at
most, about 20-25% of the decline in the real hourly wage
between 1973 and 1994. (The real wage has actually been
rising for the last five years.) That still leaves 75-80%
to be explained, and the main culprits there are mainly
of domestic origin. I'd say an important reason that
trade doesn't explain more of our unhappy economic
history since the early 1970s is that 80% of us work in
services - and a quarter of those in government - which
is largely exempt from international competition. What
did "globalization" have to do with Teddy Kennedy and
Jimmy Carter pushing transport deregulation, or with
Reagan's firing the air traffic controllers, with
Clinton's signing the end-of-welfare bill, or with Rudy
Giuliani being such a repressive pig? What does
"globalization" have to do with cutbacks at public
universities or the war on affirmative action? While lots
of people blame the corporate downsizings of the 1990s on
the twin demons, globalization and technology, the more
powerful influences were Wall Street portfolio managers,
who were demanding higher profits - which they have
gotten, by the way, which is one of several reasons why
the Dow has done so well.

And when did internationalization become something feared
and hated in itself? I got a piece of email a few months
ago from a feminist group claiming that globalization was
threatening to undermine commitments made at the Beijing
women's conference. But what is the Beijing women's
conference but a kind of globalization? A couple of women
who attended that conference told me that contacts made
there by some Latin American women's groups allowed them
to organize for the first time against domestic violence.
Isn't that both global and good?

Now there's no reason, as Keynes said, why a British
widow should own shares in an Argentine railway. Nor is
there any reason why Bankers Trust should run Chilean
pension funds, nor is there any good reason why GM should
be taking advantage of Korea's crisis to buy up that
country's automobile industry. The case is a bit murkier
when it comes to relative peers - what precisely is so
horrible about Toyota running plants in Tennessee, aside
from the ecological horrors of the automobile and the
social horrors of capitalist production relations?

Surely there are things being traded now that wouldn't be
traded in a more rational, humane world. The only social
gain in Nike's producing shoes in Indonesia is claimed by
Phil Knight and the shareholders of Nike. Indonesian
resources and labor would be much better devoted to
feeding, clothing, schooling, and housing Indonesians
than making $150 running shoes while being paid pennies
an hour. It's a tremendous waste of natural resources to
ship Air Jordans halfway around the world.
Export-oriented development has offered very little in
the way of real economic and social development for the
poor countries who've been offered no other outlet.

But does that mean trade itself is bad? Does that mean
the movement of people across borders is bad? I thought
the left opposed xenophobia and embraced intercourse of
all kinds among the people of the world. Why do we find
so many people lost in fantasies about self-reliance,
pining away for a lost world that never really existed?
Why, in other words, do so many people treat
globalization itself as the enemy, rather than capitalist
and imperialist exploitation?

But we can hardly say "capitalism" anymore, much less
socialism. Instead, we say "globalization," and
"technology." And that's bad for both intellectual
analysis and transformative politics.

Doug Henwood is the editor of LBO, author of Wall Street
(Verso, 1997) and the forthcoming A New Economy? (Verso,
2000), which has a chapter on "globalization," that
develops these arguments at some length.

Copyright (c) 1999 Doug Henwood. All Rights Reserved.

[View the list]

InternetBoard v1.0
Copyright (c) 1998, Joongpil Cho