What Can a Nation Do? Taming the Globalization Monster

By Alexander Jung

Unemployment epidemics, capitalism bashing, Europhobia: Unease over the borderless economy is spreading, and globalization is beset by crisis. Are nation states impotent in the face of market forces, or can the global economy be remastered?

Anti-globalization protesters marching in Hong Kong during the WTO conference there earlier this month. 
AFP

Anti-globalization protesters marching in Hong Kong during the WTO conference there earlier this month. 

It is sometime in the near future. The world is dominated by a handful of corporations. Taxes have been abolished; schools are sponsored by McDonald's or Mattel; and people take the name of the company that employs them.

Hack Nike has been assigned a contemptible task by marketing head John Nike. To boost sales of the new, ludicrously expensive Mercury shoes, he has been dispatched to murder over a dozen young shoppers. The message: People will do anything to lay their hands on these shoes.

Welcome to "Logoland," the nightmarish world of the terrorized consumer conjured up by Australian author Max Barry. Governments have long thrown in the towel. The world has been privatized. The police only pursue criminals if the victims are prepared to foot the bill. Companies have torn down all boundaries, physical and moral. Crimes are subject to market laws alone.

A vision of capitalism tomorrow? "It's a novel, not an essay," Barry confirms. But like all good science fiction, his book is also a critique of the present - and strikes a nerve as a result. It has been translated into eight languages and become required reading for all those who see globalization as a sinister plot concocted by a cabal of executives, politicians and economists. It seems to strike chords everywhere. A broad protest movement is gathering pace, a coalition of the deceived and disappointed who no longer trust the promises of a global market economy: German butchers and tile setters who suddenly find themselves competing with cheap labor from Poland or the Czech Republic; American engineers and programmers whose jobs have been offshored to eastern Europe or the Indian subcontinent.

"Make poverty history"

A motley army of blue- and white-collar workers, union members, environmentalists, church activists, pop musicians and writers has no intention of bowing to "the dictates of fleeting global capital," as literature Nobel Prize laureate Günter Grass puts it. Their dream is to "make poverty history," the rallying call of the huge Live 8 concert series held this past summer. And they fear a "total economization" of society, as recently articulated by Franz Müntefering, Germany's then-deputy chancellor.

They are united by a diffuse sense of discomfort spawned by a turbocharged capitalism which, powered exclusively by money, seems to have engulfed the world. They believe globalization serves companies, not people; that it destroys jobs and the environment, threatens cultural diversity, exploits the Third World, and deepens the divisions within our own societies.

"We have a real problem of justice," warns Claus Leggewie, a professor of political science at Germany's University of Giessen: "Growing social inequality poses a threat to democracy." According to a recent survey, two-thirds of the Germans think globalization hurts their country - and themselves - more than it helps. Only half of those polled said they felt the social market economy has proven its worth. And this growing disquiet is not limited to Germany. The French and the Dutch voted down the EU constitution this year primarily due to the perceived threat to their standards of living created by the European Union's eastward expansion. And in a textile dispute with Beijing, Europe and the United States are now adopting the selfsame protectionist stance for which they have been wont to lambaste China. German Chancellor Gerhard Schröder's appearance at the Protestant Church Convention in Hanover last May underscored the change in the nation's mood. Schröder won a big round of applause there with his support for the Tobin tax, a levy on cross-border financial transactions aimed at damming the flow of international capital. For a brief moment, he seemed to be in agreement with former adversary Oskar Lafontaine, now the leader of Germany's Left Party.

Economic liberalism has lost its gloss

Schröder's public pronouncement reflects the deep confidence crisis surrounding the principle of free trade. Apprehensive about the future, people are seeking sanctuary in national solutions. They are calling for customs duties and trade quotas. It is entirely possible that a new wave of protectionism will take hold, partitioning off individual economic blocs from the rest of the world.

More than 15 years after the fall of the Berlin Wall, economic liberalism seems to have lost its gloss. Yet in the early 1990s, the raising of the Iron Curtain fueled a surge in globalization. Seemingly overnight, Russia and the Baltic States, China and India - one third of the world's population - had adopted the market economy. Out of nowhere there were - to cite the title of Clyde Prestowitz's landmark book - "Three Billion New Capitalists."

Free trade had triumphed. The state was in retreat.

Powering this development was the information technology revolution which brought the spread of the Internet along with the digitization of words, sound and images. "Put those two together and, willy-nilly, you have a global platform for multiple forms of collaboration," said New York Times columnist Thomas Friedman; "The earth had been flattened."

In short, all workers - be they in Boston, Berlin, Bratislava or Bangalore - have an equal chance to grab their share of the world's wealth.

But while global affluence is growing, it is also being redistributed. Nations that are poor today could be rich tomorrow - and vice versa. So far there are only tentative signs of the tectonic shifts that would indicate a truly global economy. The rise of China and India will impact the United States and Europe. The question then becomes: Can the Western powers rise to the challenge, or will they falter?

At first people in the Northern Hemisphere seemed stunned by these developments, then paralyzed. Today the mistrust is growing. It is dawning on doctors at Massachusetts General Hospital in Boston that physicians in Bangalore too can interpret their patients' magnetic resonance images. Database experts at IBM Business Services in the German cities of Hanover and Schweinfurt have had to train their replacements in eastern Europe - before being laid off. And north Germany's apple farmers are concerned about their livelihoods, with China flooding the EU juice concentrate market.

"Greediest decade in history"

Even prominent proponents of capitalism are beginning to express doubts. Financier George Soros has complained that the world has been blinded by an un-questioning faith in self-regulating markets. And Nobel Memorial Prize laureate Joseph Stiglitz, a former chief economist at the World Bank, says he expects everyone to "pay the price for the greediest decade in history."

How, then, should people deal with globalization? Can they actually influence it? Few people believe they can, says Heiner Geissler, a former general secretary of Germany's conservative Christian Democratic Union party. He reverts to the apocalyptic phraseology of natural disaster when discussing the issue. Industrial workers and trade unions see themselves "at the mercy of anonymous powers controlled by men whose rampant greed is eating away at their brains," he says.

Or - as German President Horst Köhler muses - can the market be harnessed for everyone's benefit? In his eyes, the answer lies in forging intelligent policies. "Globalization is a reality, but one with the ability to mutate into a monster," says Köhler, who holds a doctorate in economics. For this reason, we have to "constrain it with carefully-considered rules of governance."

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