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Sept 22, 1999

Fighting Corporate Sponsored Globalization

By Robin Hahnel

During the first two thirds of the twentieth century Marxists called it the anti-imperialist struggle. In the 1970s the Movement of Non-Aligned Nations called it their campaign for a New International Economic Order. In the 1980s and 1990s thousands of local environmental, labor, indigenous, consumer and women's groups in the first and third worlds, led by a hodge-podge of Non-Governmental Organizations, have attempted to coordinate their struggles to protect their various constituencies from the ravages of corporate sponsored globalization gone wild. All of which means that different people, in different places, at different times, have struggled against different detrimental effects of the global expansion of capitalism in different ways, guided by different analyses. What have we learned from all this that might help us at the beginning of the new millennium? I offer no comprehensive program here, only a few observations and suggestions some will no doubt find controversial.

Crisis prone? Yes.

Apologists for capitalism would have us believe that private enterprise market economies always hum along providing maximum incentives for socially useful activities and innovations, allocating scarce productive resources to wherever they are most useful. Beside ignoring the fact that capitalism inevitably places the economic destinies of the many in the hands of a few, and the fact that capitalism is incapable of distributing the burdens and benefits of social labor equitably, these apologists err in two further ways. (1) Even if all markets were competitive and equilibrated instantaneously, capitalism would still allocate productive resources inefficiently, embrace socially counter productive innovations while failing to implement socially productive ones, and drive us to work too long and hard, consume too much, and overly despoil the natural environment. (2) But capitalism is not merely a system that connects private producers and consumers through markets for goods and services. It is an economic system where the logic of wealth management in a system of credit and finance ultimately determines what will be produced and consumed, i.e. what happens in the "real" economy. Combined with disequilibrating dynamics that can occur even in markets for ordinary goods, the capitalist credit system inevitably holds the seeds of potential crises. Failing to understand that even well regulated financial systems -- much less highly leveraged, unregulated financial systems like the present system of global finance -- are prone to crises, apologists for capitalism are invariably surprised by each crisis that occurs, and easily convince themselves that it will be the last, taking the winds out of the sails of financial reform efforts. The truth is unpredictable financial crises will occur in capitalism, and only their frequency and severity are amenable to prudent financial policy reforms.

Programmed to Break Down? No.

Not a few Marxists have theorized that intensive capitalist growth contains the seeds of its own destruction, and therefore capitalism must conquer new global markets or collapse. But all theories tracing the demise of capitalism to its own dynamics - for example, the substitution of unexploitable "dead" labor for exploitable "living" labor, or overproduction as restraints on wages prevent consumer demand from keeping pace with the growth of productive potential -- have proved theoretically and empirically bankrupt. And while capitalists will always want to extend their reach to find cheaper raw materials and labor, and more buyers for their commodities, it is simply not true that capitalism must conquer new markets or collapse. Unfortunately capitalism does not destroy itself. Instead it destroys the natural environment, degrades the lives of the exploited majority, and even warps the lives of those who exploit them, all the while spinning a myth that commercialism is both inevitable and superior to all other ways of life. Unfortunately corporate dominated globalization will not stop creating more environmental destruction and human misery until those negatively affected combine to prevent it from doing so. But stopping global expansion will not destroy national capitalist economies. It will simply strengthen labor relative to capital in the more advanced economies, and reduce exploitation of third world economies through international trade and investment that aggravate global inequalities.

Progressive? No.

Many opponents of global capitalism nonetheless consider it "progressive" and see no reason to support pre-capitalist forms of resistance to its onslaught. This is a terrible mistake and unforgivable betrayal. Commercialism is a way of life as much as a system for making economic decisions. It is a way of thinking and relating to others, a system of values. It is a life driven by fear and greed, a life of forever competing against others and fearing the consequences, a life whose guiding motto is "do in others before they do you in." It is not a life of consciously coordinating our interrelated economic activities, a life of equitable cooperation with our fellow human beings. Therefore globalization is not just the spread of the market into new countries and regions, penetrating deeper into areas of life that were previously governed by other systems of social rules. Globalization is also the replacement of diverse modes of human intercourse with the single mindset and values of universal commercialism. True enough, not all social relations that commercialism undermines are themselves laudable. When commercialism undermines feudal or patriarchal relations, for example, the effects are not altogether negative. But there are two reasons why globalization as the spread of commercial values cannot be considered progressive. While not the only inferior way of life the human species is capable of enduring, we can do far better. Equitable cooperation is humanly feasible, politically achievable, and superior to the commercial way of life. But commercialism is also the enemy of diversity in our time. We no longer need worry that cultural homogenization will be imposed by totalitarian Communism. Even in China, universal commercialism is the most serious threat to cultural diversity as the new millennium begins. Unfortunately, the danger of all encompassing commercialism is real. This means we must distinguish between helping the less successful in the world economy become more economically successful, from helping those who are less commercially oriented to become more so. We progress if we achieve the first. We regress if we promote the latter.

We Must Demand Equitable Terms of Trade and Interest Rates, Not Merely Uniform Environmental and Labor Standards.

I fear that some who fight for stronger international labor and environmental standards in proposals to liberalize trade and investment deceive themselves about what can be accomplished through these means. Of course higher and more universal standards are better than lower standards with more exemptions. But even if we won high universal environmental and labor standards, more free trade and international investment would continue to aggravate global inequalities as long as living standards are lower in some countries than others. Therefore, we must demand terms of trade and international interest rates that reduce global inequalities by distributing more of the efficiency gains from globalization to the lesser developed economies rather than to the more developed economies as occurs under free market conditions today.

In the first world capital is relatively abundant. In the third world labor is relatively abundant, and a great deal of it is employed unproductively in traditional agriculture. Suppose working conditions and environmental laws were made the same in all countries before we liberalized investment and trade? Capital would still move from first to third world countries because labor there is cheaper. And free trade in goods and services would still lead businesses to specialize in producing capital-intensive goods in the high-wage countries and labor-intensive goods in the low wage countries. How would all this affect income distribution? As long as capital is scarce relative to labor globally, free market interest rates for international loans and free market prices for goods traded internationally would continue to distribute more of the benefits from trade and investment to the advanced economies than the underdeveloped economies, and thereby aggravate global inequalities. Inside the advanced economies both capital outflows and shifting production to capital intensive goods would reduce the demand for labor and depresses wages while raising profits, and thereby aggravate inequalities within the advanced economies. The effects inside underdeveloped economies would be a little more complicated. On the one hand increased capital inflows and shifting production to labor-intensive goods would increase the demand for labor. On the other hand the shift from traditional to export oriented agriculture that liberalization of trade and investment stimulates would throw peasants out of work in traditional agriculture. In most third world countries many more have been thrown out of work in traditional agriculture than have been able to find jobs in labor intensive manufacturing in overcrowded cities as a result of liberalization of trade and investment. Strengthening third world environmental and labor standards would only increase net supply in third world labor markets, and thereby depress wages and aggravate inequalities within those economies more than has been the actual case. In sum, even with uniform labor and environmental standards liberalized trade and investment would aggravate inequalities between first and third world economies, aggravate inequalities within first world economies, and aggravate inequalities within most third world economies as well.

Pragmatic Liberals Have Made Themselves the Greatest Present Enemy.

The fact is that Bill Clinton, Tony Blair and Gerhard Schroeder are leading the charge for corporate sponsored globalization. It is no longer Ronald Reagan, Margaret Thatcher, and Helmut Kohl who are the most consistent and effective political mouthpieces for global corporate interests. Moreover, there is no reason to expect Al Gore or Bill Bradley would be better than George Bush Jr. on this issue. So it is not our fault that we must hate pragmatic liberals as much as we have always hated reactionary conservatives. They made us do it. They seized control of ossified reformist political parties and placed them at the beck and call of corporate interests, using traditional reformist rhetoric to play upon the sympathies of traditional supporters who are now their victims. They blatantly serve their corporate donors at the expense of the interests of their traditional voting constituencies. There is no longer any need for progressives to debate among ourselves whether liberal politicians are any better than conservatives on the issue of globalization. At the moment they are not, and we must ignore their hypocritical, empty rhetoric and regard them with equal contempt and skepticism. The fact that the same now holds true for the issue of war and peace has the advantage of prompting mental clarity on the important issue: know your enemy.

The Movement is Everything.

It is more important to build a social movement correctly than to have "correct" analysis or a correct set of demands. Organizing opposition to corporate sponsored globalization "from the bottom up" is the right approach. Organizing all constituencies negatively affected to fight for their own interests while they learn why their own success necessarily hinges on the successes of other constituencies against whom global corporations will constantly pit them is the right approach. Incorporating first world constituencies together with third world constituencies in the campaign against the global "race to the bottom" is the right approach. Basing the movement on grassroots organizations, unions, and independent institutes and coalitions rather than principally on politicians and governments is the right approach. Adopting the "Lilliput strategy," where each constituency struggles to tie its own string to contain the Gulliver" of global capital knowing (correctly) how weak and vulnerable that single string is without the added strength of tens of thousands of similar strings, is the right approach. Our biggest advantage is that somehow the international movement against corporate sponsored globalization in the 1980s and 1990s has largely taken on this form. It is noticeably different from the campaign for a New International Economic Order in the 1970s where heads of states made grand speeches at conferences only to be ignored by first world powers. If there is some group of wise activists who deserve responsibility for this fortuitous turn of events, I would like to nominate them for the progressive movement equivalent of a Nobel prize. But even if the improved composition, form and strategy of the movement are largely accidental it is important to appreciate and nurture our one great advantage for the moment.