Chapter X (1)
Globalization is not a new phenomenon, and interaction among societies is without doubt as ancient as the history of humanity itself. At least two millennia ago, "silk roads" not only facilitated transportation of merchandise but also encouraged the transfer of scientific and technical knowledge, as well as that of religious beliefs, which at least partially influenced the development of all Asian, African and European old-world regions. These types of interaction and their impacts certainly differed from those of this day and age. Nevertheless, globalization cannot be separated from the logic of the systems that helped deploy it.
Global development models revolve around those established by central industrialized countries. No peripheral development models allow the use of these countries' and regions' comparative and competitive advantages.
Central elites managed to ensure that their peripheral counterparts set aside the import substitution models, even though they were mostly restored in these countries, following a decade marked by serious social, economic and labor-related problems.
According to John Kenneth Galbraith, former adviser to presidents Franklin D. Roosevelt and John F. Kennedy: [Translation] "Globalization (.) is a term that we Americans invented to disguise our economic advancement policy in other countries and to justify speculative capital movements." Former Secretary of State Henry Kissinger also agreed that: "What is called globalization is really another name for the dominant role of the United States."
In an effort to impose its dominance at a worldwide level, the United States uses its political, economic and military might not only with its own instruments of power such as the Treasury, the Pentagon and its national banks and enterprises, but also through international institutions, such as the IMF, the World Bank or the World Trade Organization, over which it has control. These international organizations are only operative to the extent that they benefit the U.S. strategy. In principle, these organizations were designed to help regulate financial and commercial relations on an international level; however, they were co-opted from the beginning by the hegemonic force, and went on to serve this country in its international strategy. After the 1989 Washington Consensus, so-called "neoliberal" programs were used to impose the submission of their economies to the "globalizing" policy on peripheral nations. Thus, protection of their economies was reduced to make way for the invasion of foreign production; they were persuaded to hand over their most strategic companies, under the assumption that privatization would make them more efficient, especially those in mining, oil, energy and telecommunication industries. Labor rights became more flexible in an effort to reduce the cost of labor force and thus increase company profitability and "competitiveness". The promotion of financial deregulation favored these mostly speculative free-capital flows.
The rise of the World Trade Organization came as reinforcement to the empire. The institution emerged as a continuation of former GATT, also created in the context of the Bretton Woods Agreements. Rather than a mere change in nomenclature, GATT's transformation into WTO represented, above all, an increase in the North American empire's authority over this organization, and consequently, over all international trade.
WTO uses its authority to sanction countries that may not comply with its rules. Its methods include financial or commercial retaliations, intended to open these economies to international trade. However, the organization's rules and resolutions favour transnational enterprises, rather than support the advancement of developing or less developed countries.
Whatever the case may be, the WTO conferences held in Seattle (1999) and in Doha (Qatar, 2001) failed to reach their objectives. No meaningful agreement was signed because the United States refused to further open its market, especially for agricultural products. Although governments of the remaining countries had already opened their markets to North American products, the United States failed to provide the expected compensation. Nevertheless, most peripheral countries have maintained policies that serve the interests of the overriding ideology.
The so-called globalization is a unilateral process. While on the one hand, the United States is forcing other countries to open their economies to American products, on the other hand, it continues to increasingly reinforce protectionist para-tariff barriers while increasing subsidies. The European Union and Japan are following the American example.
Although the U.S. may be lowering tariff barriers, they are merely substituting them with non-tariff ones that only lead to hidden protectionism. For this purpose, they use domestic production subsidies, import quotas, antidumping measures and an endless series of phytosanitary and environmental bans, among others.
According to the Organization for Economic Cooperation and Development (OECD), the 24 richest nations have been paying subsidies to their producers; however, the U.S. government is imposing duties on foreign products, which are said to be subsidized. The recent Steel War, initiated by the Bush government to establish quotas and tariffs on imported steel, illustrates this clearly.
Only peripheral-country governments carried out the economic opening process and, consequently, are subject to great external vulnerability, together with an explosive foreign debt, denationalization, massive unemployment, public-financing issues, hunger, poverty and misery. This situation resulted not only from the application of an abstract model, without considering the particular characteristics or each economy's comparative and competitive advantages, but was also the outcome of peripheral managing elites' functional nature; they overlooked national interests, as well as their countries' needs and blindly abided by the ideology, while allowing themselves to be pressured by business and financial lobbies.
The consequences of globalization for the peripheral countries include external vulnerability, an explosive foreign debt, denationalization of the economy, deindustrialization, mass unemployment, public finances in deficit, hunger and poverty.
Although merchandise from the industrialized countries is invading peripheral economies, the latter are facing obstacles when trying to access the central markets, and workers are losing their jobs.
The predominance of purely speculative financial capital is the main characteristic, which also led to the vulnerable state of the world economy.
Economists in charge of building an imperial order falsely claim that economic globalization is the result of the existence of free international movement of capital, technology, labor and merchandise. However, advanced technologies are monopolized by the central countries' cartels. Merchandise from these economies invades their dependent counterparts, whereas merchandise from the peripheral countries faces obstacles when trying to access central markets. Workers lose their jobs when foreign goods enter their markets, but do not have access to work in these developed countries and to a better perspective on life.
Although financial capital flows worldwide, it is not entirely mobile. In fact, this mobility specifically characterizes the capital controlled by financial oligarchies that pertain to developed countries and that try to profit, to appropriate the riches of other countries, or to speculate. What prevails over this capital movement is not its productive investment, but rather that related to speculation.
The predominance of purely speculative financial capital is a central feature of the globalized economy. This speculative capital established financial ties in all parts of the world and thus generated great vulnerability of the global economy, a phenomenon never before experienced. The withdrawal of capital from production, mainly seeking profitability in speculative form, caused the layoff of millions of workers, generated poverty and misery. Massive unemployment, hunger, poverty and misery are globalizing.
As expected, globalization involved market integration on both sides of the border, on three basic levels:
1) in trade, the market for raw materials;
2) with migration, the labor market;
3) the capital market.
The issue is not so much related to the volume of trade, labor migration or capital flows, as it is the ease with which people and capital can move. With little to no state intervention, if the cost of these movements is low, we can therefore conclude that they are well integrated and that there are global ties among countries.
The main expectation was that a completely open economy would benefit economic growth. The outcome, however, was disappointing: what was supposed to be overall a shared process did not pan out, nor did the introduction of egalitarian liberalization trends.
Every country that develops an economic policy based on globalization criteria, should consider whether it can avoid having to compromise with certain order and institutions, as well as a political style that defines its national identity. Many peripheral nations are not prepared for such a course of action, nor do they need to open up their economies on all three above-mentioned levels at once. They can liberalize markets for raw materials, but at the same time, stop capital financial flows, regulate foreign currency transactions, limit capital flows over its borders and regulate them until they are ready to further expand their markets. Liberalization of trade should not be absolute and unconditional.
China is an example of high economic growth over the past 25 years. With annual rates reaching 10%, this country escaped preindustrial primitivism to become one of world's major producers. Chinese development is uneven because it is concentrated on its coastal boundaries where the money-makers are. This country does not allow the unlimited flow of capital across its borders. Nevertheless, the Chinese practise a more liberal policy in areas of technology and multinational corporations to improve technology and trade. India is also experiencing uneven development.
Most Latin American countries are not ready to open their economies indiscriminately. Aside from the two previous examples, there is the case of Chile; this is a country that produces almost nothing and therefore imports most of its consumption goods, and experiences significant social inequality.
The crises which erupted in Mexico in 1994-95, as well as in Brazil in 1998-99 and Argentina in 1995, and 2001-03 broke out in countries that had received most capital inflows during previous periods of economic boom. The 1981-82 Argentinean and 1982 Chilean crises may be added to the above list because they occurred in the context of capital account opening and liberalization, similar to those that would become widespread in the following decade. Certain common traits stand out:
The trend towards an increase in the country's risk premium and in the interest rate can be attributed to either the countries' external accounts status or, alternatively, to progress in the area of public finances. Moreover, reports by various analysts or risk-assessment agencies associated the trend with both situations.
It is difficult to maintain certain rules or controls in the economy due to risk assessment or multilateral funding agencies that create considerable pressure and end up marginalizing these generally isolated economies. The only alternative is to create "strategic alliances" to function as part of a globalization characterized by a dominant ideology and operated not only according to the interests of the more powerful states, but by transnational actors. Right now, this requires new leaders that comply with national and regional interests, rather than those of the dominant ideology and transnational actors. They should not subject themselves to pressure from external actors more than necessary.
conflict between globalization and anti-globalization
seems to be replacing the one between capitalism and
communism with new denominations. Opponents complain
that the globalized world is aggravating the injustices
and widening the gaps between developed and developing
world, as well as between the rich and the poor within
each society of these countries. They also argue that at
the national, regional and personal level, global
violence is on the rise and the gap and differences
between the rich and the poor is widening - the former
growing increasingly richer, while the latter,
The Davos Forum, which beckons the world's rich and powerful, also attracts demonstrators and anti-globalization groups. Incidentally, the Forum was held in New York at the beginning of February 2002, only months after the terrorist attack on the Twin Towers. On this occasion, George Soros stated: "We are facing a bumpy economic globalization process. We cannot leave everything up to the market.[Translation]" "The United States is the unquestioned dominant power in the world today, both economically and militarily, but the asymmetric threat from people who find the world in which they live in to be unacceptable means that terrorism and anti-globalization violence can become manifestations of this frustration." "Unless we face the social needs of the entire world, and we build international institutions to solve them, the very system may not survive. [Translation]"
During the same summit that debated "the paradigm of the future," former Secretary of State to President James Carter and Vice-President of the Centre for Strategic and International Studies Zbigniew Brzezinski made the following prognosis for the next 20 to 30 years: "Three trends may stand out: 1) The U.S. will remain the world superpower and the disproportion between this country and the rest of the world will widen. 2) By using weapons of mass destruction, small groups will inflict violence, once an exclusive ability of countries. 3) Disparities in human conditions will increase, with rich countries improving quality of life due to technological development, while the rest of the world remains behind. [Translation]"
Both Soros and Brzezinski pleaded the U.S. to put an end to its unilateral behaviour in the world, and build an international coalition that would treat issues other than the war against terrorism.
Samuel Huntington stressed the role of religion in present-day conflicts: "Religion has become a key element, an escape for those displeased with the economic globalization process. Moreover, it is used as a cause and intensifier of conflicts, as well as exploited by politicians to further their personal interests. [Translation]"
New York State Senator and Former First Lady Hillary Clinton supported the notion that the U.S. adds social priorities to the economic and military hegemony. She advised her national government to leave aside "selfish policies" that generate resentment: "Nobody has anything against North Americans per se or our values, but against our attempts to impose them on others. I believe that the September 11 attacks have given us a better perspective of the world we live in and now we are given another opportunity to take charge of the forgotten social issues. [Translation]"
The main problem that globalization is facing is more political than economic. Amidst the globalization process that threatens to swallow everybody, it is essential to defend the identity of peripheral countries and perhaps their survival as sovereign nations. It is a question of determining whether a country is independent or not. Some leaders and intellectuals - or pseudo-intellectuals - insist on the integration of regions such as Latin America under conditions that will bring about their disintegration. If free trade is desirable, independence is even more so. This involves carrying out national and regional projects that may not necessarily respond to "globalizers'" interests, be they industrialized states or transnational actors. In this sense, integration should not only serve the liberalization of trade, which would benefit to a greater extent subsidiaries of transnational corporations situated in Latin American countries for example, rather than the development of these nations. It should serve to create a "strategic alliance" similar to the former European Economic Community, presently the European Union. Europeans based their unity not only on trade, but also on joint undertakings, such as the European Coal and Steel Community, the European Organization for Nuclear Research, European Space Agency, the Eureka program, "Green Europe", as well as projects such as the Concorde and the Airbus, etc. A different approach is taken as per the dominant ideology, to carry out the course of action required by WTO and other organizations of the sort, to benefit "globalizers" at the expense of the "globalized". If the global integration process fails to go beyond the trade aspect, it is doomed to disappear, taking along regional economies in its wake, and running the risk of being sucked in by the powerful U.S., for example through FTAA.
 © DALLANEGRA PEDRAZA, Luis, La Construcción de un Orden Mundial Imperial, (The Construction of an Imperial World Order) (Buenos Aires, Edic. del Autor, 2003), ISBN: 987-43-6267-7. Chapter translated by Sorina Cuperman, Master in Spanish Translation, Honours Bachelor of Arts in International Relations and Spanish, Canada. email@example.com - http://www.transitconsult.com