Globalization: What's New about It?

Gone is the dream of the leisure society, along with that of full employment, that of a regular, secure job and that of a compassionate society. Is there an end to this? And where does barbarism begin?

Manfred Bienefeld

In corporate headquarters' corridors these days, they say that the only way to really insult an entrepreneur is by wishing him luck in creating a lot of jobs ... Modern entrepreneurs think globally. From this standpoint, the nagging unions who say that higher profits should mean more jobs in your own country sound provincial.

Jos Teunissen and Cees Veltman

In the literature on globalization one can schematically distingish three different opinions. For authors such as former US Secretary of Labour Robert Reich and the Japanese business guru Ohmae, globalization is a definite trend that is changing everything and against which national states or trade unions can do very little or even nothing. Partially in reaction, writers such as Ellen Meiksins Wood ('The concept of globalization as it is commonly used is the heaviest ideological albatross around the neck of the left today') and David Gordon strongly question the importance, newness and effects of globalization. Among other things, these authors stress that companies are not really 'footloose' – free to move whenever and wherever they choose around the world – or say that the world economy was at least as internationalised at the end of the nineteenth century as it is today. The 'g-word' has been given many different meanings, they say, and has become ideology.

Between these two extremes is a third position that can be summed up in the proposition that globalization is an exaggeration. Authors who subscribe to this position acknowledge that there are significant changes under way with important implications for the organisation and functioning of the world economy. But they explain at the same time that we are (still?) far from a truly globalised economy, that there are no linear developments and that many of the claims of globalization ideologues are untenable. This book can be situated within this current.

It is true that many ideologues, employers and politicians exaggerate the extent and effects of globalization. Many poor policy decisions are being justified with facile, inaccurate assertions about globalization, which is portrayed as a quasi-natural phenomenon to which we have no choice but to adapt ourselves. But neither fact should make us close our eyes to real, qualitative changes in the functioning and organisation of the world economy. Four aspects of globalization are of particular interest.

First, we are seeing an increase in the number of truly integrated global markets. For production, capital flows and trade, the world economy is increasingly one, and national markets are being replaced by global markets. Global markets are becoming the natural strategic horizon for major corporations, investors and speculators. It should not be forgotten that, not only in absolute figures but also as a relative share of the world population, more people are working today under capitalist relations than ever before in history. This is the result of changes that have come quickly. 'In little more than a decade most of the non-OECD world, comprising four-fifths of the world's population, has moved to privatize, liberalize and deregulate, and is moving to compete actively on world markets.'

Second, the weight of multinationals continues to grow. Globalised companies are emerging that try to plan and organise the conception, production and distribution of their products not only regionally, but also globally, with major consequences for these companies' structure. No multinational is really footloose; studies that show this are a useful antidote to the simplistic, fashionable claim by globalization ideologues that companies can move their activities instantly to other parts of the world. But there are limits to the insights afforded by this type of qualification:

[S]ome researchers have recently been able to show that the usual indices of multinationalisation (percentage of activity abroad, number of subsidiaries, etc.) of conglomerates do not show a break during the 1980s. This is the case for countries such as the US or UK, clearly less so for other countries (France for example). But in any event this misses the essential point: the qualitative mutations that occurred in the conglomerates' structure, their internal and external organisation, and the origin of their revenues. As early as the late 1980s J. Dunning was able to lay out clearly the characteristics of what he called 'the new type of multinational'.

Third, we are seeing an increase in problems of governance or regulation on a global level. This is a result of the fact that national states are becoming – making themselves – less effective, while the construction, reinforcement and legitimacy of supranational institutions, which are playing an increasing role, are lagging behind the development of the global economy. We are seeing a complicated, risky process of shifts in power and responsibilities among various levels of regulation, in which supranational 'unelected world governments' (the G7, IMF, WTO, BIS, OECD, etc.) and regional blocs (the EU, NAFTA, MERCOSUR, etc.) are getting to play a greater role while national states are still the most important entities.

Fourth and most obviously: if there is one thing that has globalised since the early 1980s, it is macroeconomic policies. Since the counterrevolution that took place in economics at the end of the 1970s, the monetarist and neoclassical paradigms have become unchallenged in official institutions and the political mainstream. Organisations like the IMF, the World Bank and WTO are applying variants of the same neoliberal prescriptions everywhere in the world. Austerity programmes in the OECD countries, shock therapy for the former bureaucratically planned economies and structural adjustment programmes for Third World countries all have the same characteristics – export-oriented growth, more market and less state social policy, free trade, deregulation, labour market flexibility, privatisation, priority to the holy war against inflation ('price stability') – while full employment is no longer a policy goal.

Looking at the facts in more detail makes clear just how extensive the changes under way are. Some of these changes do not in themselves have major effects, or are not historically unprecedented. But the combination and scope of these factors are new, and are changing the way in which the world economy functions.

Trade

Since the end of the Second World War, international trade has been growing steadily: from $60 billion in 1948, $110 billion...