Globalization
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Globalization (or globalisation) as a concept refers both to the compression of the world and the intensification of consciousness of the world as a whole. It is a term used to describe the changes in societies and the world economy that are the result of dramatically increased cross-border trade, investment, and cultural exchange. The processes and actions to which the concept of globalization now refers have been proceeding, with some interruptions, for many centuries, but the main focus of the discussion of globalization is on relatively recent times. In specifically economic contexts, it refers to the globalization of financial markets and the globalization of production and investment. Manytimes, it almost exclusively refers to the effects of trade, particularly trade liberalization or "free trade". Between 1910 and 1950, a series of political and economic upheavals dramatically reduced the volume and importance of international trade flows. More specifically, beginning with WWI and until the end of WWII, when the Bretton Woods institutions were created (i.e. the IMF, World Bank, and the GATT, later re-organized into the World Trade Organization), globalization trends reversed. In the post-World War II environment, fostered by international economic institutions and rebuilding programs, international trade and investment dramatically expanded. By the 1970s, the effects of the flow of trade and investment became increasingly visible, both in terms of the benefits and the disruptive effects.
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Meanings of Globalization
"Globalization" can mean:
- The formation of a global village — closer contact between different parts of the world, with increasing possibilities of personal exchange, mutual understanding and friendship between "world citizens", and creation of a global civilization. The World Bank defines globalization as the “Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries”.
- Economic globalization — 'free trade' and increasing relations among members of an industry in different parts of the world (globalization of an industry), with a corresponding erosion of National Sovereignty in the economic sphere. The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology” (IMF, World Economic Outlook, May, 1997).
- The negative effects of for-profit multinational corporations — the use of substantial and sophisticated legal and financial means to circumvent the bounds of local laws and standards, in order to leverage the labor and services of unequally-developed regions against each other.
- The spread of capitalism from developed to developing nations.
- "The concept of Globalisation refers both to the compression of the world and the intensification of consciousness of the world as a whole" - Roland Robertson
It shares a number of characteristics with internationalization and is used interchangeably, although some prefer to use globalization to emphasize the erosion of the nation-state or national boundaries.
Globalism, if the concept is reduced to its economic aspects, can be said to contrast with economic nationalism and protectionism. It is related to laissez-faire capitalism and neoliberalism.
History of globalization
Since the word has both technical and political meanings, different groups will have differing histories of "globalization". In general use within the field of economics and political economy, is, however, a history of increasing trade between nations based on stable institutions that allow individuals and organizations in different nations to exchange goods with minimal friction.
The term "liberalization" came to mean the combination of laissez-faire economic theory with the removal of barriers to the movement of goods. This led to the increasing specialization of nations in exports, and the pressure to end protective tariffs and other barriers to trade.
The development of a consciousness of the world as a whole first came with the conquest of most of Eurasia, the biggest and long the most populous and culturally and technologically advanced continent, by the Mongols in the thirteenth century. Economist, Ronald Findlay argues that:
For the first and only time in history, a single regime presided over the entire length of the overland trade routes linking China and the Near East. This made it possible for merchants and goods to move safely over these vast distances, facilitating the transmissions of ideas and techniques. Since China was substantially ahead of both Islam and the West in the general level of its technology this flow chiefly benefited the lands at the western ends of the trade routes and beyond.
As such, the first era of globalization, according to Findlay, began with “the unification of the central Eurasian land mass by the Mongol conquests and the reactions this aroused in the sedentary civilizations that they were launched against.” Among other things, it brought awareness to the Europeans of the civilizations of east Asia and a stronger desire to reach them by going around the Islamic world that had for so long stood in between. That, in turn, brought forth the effort to improve naval technology which enabled the European voyages of discovery of the fifteenth and sixteenth centuries. So, instead of being the first, this can rightfully be called the second (and decisive) state on the way to globalization – first Eurasia, then the world.
The period of the gold standard and liberalization of the 19th century is often called "The Second Era of Globalization". Based on the Pax Britannica and the exchange of goods in currencies pegged to specie, this era grew along with industrialization. The theoretical basis was Ricardo's work on Comparative advantage and Say's Law of General equilibrium. In essence, it was argued that nations would trade effectively, and that any temporary disruptions in supply or demand would correct themselves automatically. The institution of the gold standard came in steps in major industrialized nations between approximately 1850 and 1880, though exactly when various nations were truly on the gold standard is a matter of a great deal of contentious debate.
This "Second Era of Globalization" is said to have broken down in stages beginning with the first World War, and then collapsing with the crisis of the gold standard in the late 1920's and early 1930's.
Globalization in the era since World War II has been driven by multilateral Trade Negotiation Rounds, originally under the auspices of GATT and the WTO, which led to a series of agreements to remove restrictions on "free trade". The Uruguay round led to a treaty to create the World Trade Organization or WTO, to mediate trade disputes. Other bilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement have also been signed in pursuit of the goal of reducing tariffs and barriers to trade and investment.
Signs of globalization
Although globalization has touched almost every person and locale in today’s world, the trend has spread unevenly, being most concentrated among propertied and professional classes, in the North (industrialized nations), in towns (urban areas), and among younger generations.
Globalization has not displaced deeper social structures in relation to production (capitalism), governance (the state and bureaucratism more generally), community (the notion and communitarianism more generally) and knowledge (rationalism). But, globalization has prompted important changes to certain attributes of capital, the state, the nation and modern rationality.
Contemporary globalization has had some important positive consequences with respect to cultural regeneration, communications, decentralization of power, economic efficiency and the range of available products. But, state government policies (pro-market) toward globalization have had many negative consequences in regard to increased ecological degradation, persistent poverty, worsened working conditions, various cultural violences, widened arbitrary inequalities, and deepened democratic deficits.
As such, globalization has become identified with a number of trends, most of which may have developed since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. The actual existence of some of these trends are debated.
- Increase in international trade at a faster rate than the growth in the world economy
- Increase in international flow of capital including foreign direct investment
- Increase in world production and output and consumption
- Greater transborder data flow, using such technologies such as the Internet, communication satellites and telephones
- The push by many advocates for an international criminal court and international justice movements (see the ICC and ICJ respectively).
- Greater international cultural exchange, for example through the export of Hollywood and Bollywood movies.
- Some argue that terrorism has undergone globalization through their use of global financial markets and global communication infreastructure
- Spreading of multiculturalism and increased individual access to cultural diversity, with on the other hand, some reduction in diversity through assimilation, hybridization, Westernization, Americanization or Sinosization of cultures.
- Erosion of national sovereignty and national borders through international agreements leading to organizations like the WTO, OPEC, and EU
- Greater international travel and tourism
- Greater immigration, including illegal immigration
- Development of global telecommunications infrastructure
- Development of a global financial systems
- Increase in the share of the world economy controlled by multinational corporations
- Increased role of international organizations such as WTO, UN, IMF that deal with international transactions
- Increase in the number of standards applied globally; e.g. copyright laws
Regional Economic Integration (Regionalism)
Economic integration is concerned with the removal of trade barriers or impediments between at least two participating nations and the establishment of cooperation and coordination between them. Economic integration helps steer the world towards globalization. Globalization refers to the growing economic interdependencies of countries worldwide through the increasing volume and variety of cross-border transactions in gods and services and of international capital flows, as well as through the rapid and widespread diffusion of technology and information.
The following forms of economic integration are often implemented:
- Free Trade Area: involves country combination, where the member nations remove all trade impediments among themselves but retain their freedom concerning their policy making vis-a-vis non-member countries. The Latin American Free Trade Area, or LAFTA, and the North American Free Trade Agreement, or NAFTA are examples of this form.
- Customs Union: is similar to a free trade area except that member nations must conduct and pursue common external commercial relations such as common tariff policies on imports from non-member nations. The Central American Common Market (CACM) and the Caribbean Community and Common Market (CARICOM) are examples of this form.
- Common Market: is a particular customs union that allows not only free trade of products and services but also free mobility of production factors (capital, labor, technology) across national member borders. ?The Southern Common Market Treaty (MERCOSUR) is an example of this form.
- Economic Union: is a particular common market that involves unification of monetary and fiscal policies. Participants introduce a central authority to exercise control over these matters so that member nations virtually become an enlarged single “country” in an economic sense.
- Political Union: requires the participating nations to become literally one nation in both an economic and political sense. This union involves the establishment of a common parliament and other political institutions.
Along with the above sequence from 1 to 5, the degree of economic integration increases. One form may shift to another rover time if all the participating nations agree. For example, the European Union, or EU, started as a common market and shifted over the years to an economic union and now to a partial political union.
The above forms reflect economic integration between or among nations within a region. Global economic integration also occurs through “multilateral cooperation” in which participating nations are bound by rules, principles, or responsibilities stipulated in commonly agreed agreements. Unlike the preceding five forms that all lead to regional economic integration, multilateral agreements are largely used to promote worldwide economic exchanges. They may be designed to govern either general trade, service, and investments (e.g., the World Trade Organization), capital flow and financial stability (e.g., The World Bank and the International Monetary Fund), or specific areas of trade such as dealing with particular commodities (e.g., the International Coffee Agreement).
International economic integration is propelled by three levels of cooperation: global, regional, and commodity. Global-level cooperation occurs mainly through international economic agreements or organizations (e.g., WTO) regional-level cooperation proceeds through common markets or unions (e.g., NAFTA); and commodity-level cooperation proceeds through multilateral commodity cartels or agreements (e.g., OPEC).
Barriers to international trade and investment have been considerably lowered since World War II at the multilateral level through international agreements such as the General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the WTO, for which GATT is the foundation, have included:
- Promotion of free trade
- Intellectual Property Restrictions
Anti-globalization
Main article: "Anti-globalization".
Various aspects of globalization are seen as harmful by public-interest activists as well as strong state nationalists. This movement has no unified name. "Anti-globalization" is the media's preferred term. Activists themselves, for example Noam Chomsky, have said that this name is meaningless as the aim of the movement is to globalize justice. Indeed, "the global justice movement" is a common name. Many activists also unite under the slogan "another world is possible", which has given rise to names such as altermondisme in French.
There is a wide variety of different kinds of "anti-globalization". In general, critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations and the working class into account.
Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.
Many "anti-globalization" activists see globalization as the promotion of a corporatist agenda, which is intent on constricting the freedoms of individuals in the name of profit. They also claim that increasing autonomy and strength of corporate entities increasingly shape the political policy of nation-states.
Some "anti-globalization" groups argue that globalization is necessarily imperialistic, is one of the driving reasons behind the Iraq war and that it has forced investment to flow into the United States rather than developing nations.
Some argue that globalization imposes credit-based economics, resulting in unsustainable growth of debt and debt crises.
Another more conservative camp in opposition to globalization are state-centric nationalists that fear globalization is displacing the role of nations in global politics and point to NGOs as impeding upon the power of individual nations. Some advocates of this warrant for anti-globalization are Pat Buchanan in the U.S. and Jean-Marie Le Pen in France.
The main opposition is to unfettered globalization (neoliberal; laissez-faire capitalism), guided by governments and what are claimed to be quasi-governments (such as the International Monetary Fund and the World Bank) that are supposedly not held responsible to the populations that they govern and instead respond mostly to the interests of corporations. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and occasionally violent, protests from opponents of "corporate globalism".
The anti-Global movement is very broad, including church groups, national liberation factions, left-wing parties, environmentalists, peasant unionists, anti-racism groups, libertarian socialists and others. Most are reformist (arguing for a more humane form of capitalism) and a strong minority is revolutionary (arguing for a more humane system than capitalism). Many have decried the lack of unity and direction in the movement, but some such as Noam Chomsky have claimed that this lack of centralization may in fact be a strength.
Protests by the global justice movement have now forced high-level international meetings away from the major cities where they used to be held, and off into remote locations where protest is impractical.
Some "anti-globalization" activists object to the fact that the current "globalization" globalizes money and corporations and at the same time refuses to globalize people and unions. This can be seen in the strict immigration controls that exist in nearly all countries and the lack of labour rights in many countries in the developing world.
Pro-globalization (globalism)
Supporters of democratic globalization can be labelled pro-globalists. They consider that the second phase of globalization, which was market-oriented, should be completed by a phase of building global political institutions representing the will of World citizens. The difference with other globalists is that they do not define in advance any ideology to orientate this will, which should be left to the free choice of those citizens via a democratic process.
Supporters of free trade point out that economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, they claim that this leads to lower prices, more employment, higher output and greater consumption opportuniites.
Libertarians and other proponents of laissez-faire capitalism say higher degrees of political and economic freedom in the form of democracy and market economies in the developed world produce higher levels of material wealth. They see globalization as the beneficial spread of democracy and market mechanisms.
Critics argue that the anti-globalization movement is not elected and as such does not necessarily represent or are held accountable by a broad spectrum of people. Also, it uses anecdotal evidence to support their view while, worldwide statistics instead strongly support globalization. One effect being that the percentage of people in developing countries living below $1 (adjusted for inflation and purchasing power) per day have halved in only twenty years [1]. Life expectancy has almost doubled in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Child mortality has decreased in every developing region of the world [2]. Income inequality for the world as a whole is diminishing [3].
Many pro-market (pro-capitalists) are also critical of the World Bank and the IMF, arguing that they are corrupt bureaucracies controlled and financed by states, not corporations. Many loans have been given to dictators who never carried out promised reforms, instead leaving the common people to pay the debts later. This causes "moral hazard" or hidden detrimental action by their external partners. Thus, they see too little use of markets, not too much. They also note that some of the resistance to globalization comes from special interest groups with conflicting interests like Western world unions.
Globalization in question
The principle policy concern of globalization is usually put in terms of issues of economic efficiency. Economist would tend to judge globalization largely in terms of the gains or losses that it brings to the productive development of scarce world resources. However, many would argue that economic growth should always be secondary to, and in service of, security, justice and democracy. On these issues the evaluations have been both positive and negative. In some respects globalization has promoted increased human security, for example, with disincentives to war, improved means of humanitarian relief, new job creation opportunities, and greater cultural pluralism. However, in other ways globalization has perpetuated or even deepened warfare, environmental degradation, poverty, unemployment, exploitation of workers, and social disintegration. Thus, globalization does not automatically increase or decrease human security. The outcomes are positive or negative depending on the policies that we adopt toward the new geography. Social justice can be looked at in terms of the distribution of life chances between classes, countries, sexes, races, urban/rural population and age groups. The bright sides of globalization has in certain cases improved possibilities for young people, poor countries, women and other subordinate social circles, to realize their potentials. More negatively, however, globalization has thus far sustained or increased various arbitrary hierarchies in contemporary society. For example, we see that gaps in opportunities have tended to widen during the period of accelerated globalization on class lines as well as between the North (industrialized) and the South (underdeveloped) and the East (current and former communist state socialist countries). The resultant increases in social injustice can be attributed at least partly to the spread of relations beyond territorial boundaries. The inequities have flowed largely from the policies that have been applied to globalization rather than from globalization per se. In terms of the impact of globalization on democracy, the positives are through new information and communications technologies and an expansion of civil society there are some promising development. The down side is that there is a lack of mechanisms to ensure that post-sovereign governance is adequately participatory, consultative, transparent and publicly accountable. Bold intellectual and institutional innovations are needed to refashion democracy for a globalized world.
There is much academic discussion about whether globalization is a real phenomenon or only a myth. Although the term is widespread, many authors argue that the characteristics of the phenomenon have already been seen at other moments in history. Also, many note that those features that make people believe we are in the process of globalization, including the increase in international trade and the greater role of multinational corporations, are not as deeply established as they may appear. The United State's global interventionist policy is also a stumbling point for those that claim globalization has entered a stage of inevitability. Thus, many authors prefer the use of the term internationalization rather than globalization. To put it simply, the role of the state and the importance of nations are greater in internationalization, while globalization in its complete form eliminates nation states. So, these authors see that the frontiers of countries, in a broad sense, are far from being dissolved, and therefore this radical globalization process is not yet happening, and probably won't happen, considering that in world history, internationalization never turned into globalization — (the European Union and NAFTA are yet to prove their case.)
However, the world increasingly shares problems and challenges that do not obey nation state borders, most notably pollution of the natural environment, poverty, and desease. As such, the movement previously known as the anti-globalisation movement has transmogrified into a movement of movements for globalisation from below; seeking, through experimentation, forms of social organisation that transcend the nation state and representative democracy. So, whereas the original arguments of anti-global critique can be refuted with stories of internationalisation, as above, the emergence of a global movement is indisputable and therefore we can speak of a real process towards a global human society of societies.
Related articles
Economy and trade
- Continental trading bloc
- G11n
- GATT, WTO
- Regional Trading Areas
- List of international trade topics
- Offshoring
- Tax competition
- Trade bloc
- Fair Trade
- Bretton Woods system
- Economic nationalism
- Mercantilism
Politics
- 20-80 Society
- Corporatism
- Corporatocracy
- Cultural imperialism
- Democratic globalization
- Global civilization
- International law
- New World Order
- World democracy
- One world policy
Communications
- Mass media
- Telecommunications
- No Border Network
Other
- Glocalization
- Localization
References and further reading
- Jagdish Bhagwati: In Defence of Globalization (2004), Oxford University Press, ISBN 0195170253
- David Held, Anthony McGrew, David Goldblatt, & Jonathan Perraton (1999). Global Transformations: Politics, Economics, and Culture. Stanford University Press, ISBN 0804736278 — The difinitive academic publication on globalization
- Hirst & Thompson: Globalization in Question (1996), Polity Press, ISBN 0-7456-2164-3
- Naomi Klein: No Logo (2001). A popular book which is very much against globalization. ISBN 0006530400
- Michael Hardt & Antonio Negri: Empire (2000), ISBN 0674006712. Hardt and Negri set out with a bold vision to describe the mechanisms of modern globalization and it's disconents, often refered to as the Communist Manifesto of the 21st century.
- Philippe Legrain: Open World: The Truth About Globalization (2002) ISBN 034911644X — A largely pro-globalization book which responds to many of the complaints of the anti-globalization movement, written by a former Special Adviser to the World Trade Organisation Director-General.
- Hans-Peter Martin: The Global Trap: Globalization and the Assault on Prosperity and Democracy (Die Globalisierungsfalle, 1996) ISBN 1856495302
- David Ransom: The Trojan Horse: A Radical Look at Foreign Aid (1975), pp. 93–116
- Arundhati Roy, Ordinary Person's Guide To Empire, Consortium Book Sales and Dist, September 15, 2004, hardcover, ISBN 089608728X; trade paperback, Consortium, September 15, 2004, ISBN 0896087271
- Manfred Steger: Globalization: A Very Short Introduction (2003), Oxford University Press, ISBN 019280359X - A good short introduction.
- Joseph Stiglitz: Globalization and its discontents (2002) — A book largely sympathetic to the theory of globalization from the 2001 Economics Nobel Prize winner. However, he is sharply critical of the global institutions, the International Monetary Fund, the WTO and the World Bank, regulating the process. ISBN 014101038X
- Thomas Friedman: The Lexus and the Olive Tree (2000), ISBN 0374185522. Deals with the conflicting processes of tradition and progress, which ultimately influence the progression of globalization throughout the Middle East and the world.
- Martin Wolf: Why Globalization Works (2004). Wolf uses data he has collected since the 1980s to put together a comprehensive defense of globalization by showing figures which show increased standards of living and income in nations which have globalized.
External links
- Global Politician: In Defense of Globalization, Free-Trade and Free-Market
- Yale Global Online
- Foreign Policy Magazine's Annual Index of Globalization
- The Real New World Order: A Practical Guide to Revolutionary Globalization
- Free Trade and Globalization — discusses the negative aspects of globalization, WTO and many others related to globalization
- "Globalization and the Future of Democracy"
- "Globalization:A World-Systems Perspective"
- Priority Wire — A daily source of news on globalization, corporate power, sustainable development, and global poverty/disease.
- A World Connected — links, information and resources on globalization.
- Association Globalisme — A french pro-political globalization association's website
- Globalism/Antiglobalism - The main points of a debate
- Stanford Encyclopedia of Philosophy entry
- Les Productions ISCA - Independent documentary film company based in Montréal, Canada that addresses issues related to globalisation
- Globalization: The Socialist Perspective
News publications
- Evaluating The World Bank's Approach to Global Programs: Addressing the Challenges of Globalization
- The Globalist | Front Page
- Pravda: a Russian's analysis of what he calls "World war IV", globalisation.
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