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Fix It or Nix It?
Can the Wrongs of Globalization be Set Right?

What went wrong? Once touted as the economic nirvana for both rich and poor countries, globalization has generated worldwide resistance as a result of the economic destruction, plunder and untold poverty it wrought on peoples particularly workers, farmers and other marginal classes. This three-part series, taken from the author’s long analysis of globalization written last week for the Kilusang Mayo Uno (May 1^st Movement), takes the reader to the roots of the world capitalist system and how its crisis is leading into a collision with peoples across so many countries today.

BY PAUL QUINTOS
Bulatlat.com

Part I | Part II | Part III

First of Three Parts
The Globalizers are Nervous

The “globalizers” are in panic. Neo-liberal globalization has now been exposed for the unprecedented destruction of productive forces, collosal plunder, unheard of poverty, inequality, indebtedness, environmental degradation, economic and social insecurity, marginalization and disempowerment of the vast majority of the world while tremendously increasing the wealth and power of the global elite of monopoly capitalists.

Contrary to the claims of its defenders, the critics of globalization are not confined to the “noisy, unrepresentative mob” – the hundreds of thousands from a diverse range of organizations and nations -- who have greeted every major confab of the global economic elites since Seattle 1999 with massive street demonstrations. Even in the US -- whose government, mass media, academia and business elite are the most strident promoters of the “free market” ideology -- 58% of Americans believe that foreign trade reduced jobs and wages, according to a recent Wall Street Journal/NBC survey. In a similar Business Week/Harris poll, only 10% preferred “free trade” while 50% preferred “fair trade.” Another 37% described their stance on trade as “protectionist” (cited in Weisbrot et al, 2000).

In the industrialized countries of the North as well as in the underdeveloped South, there is an upsurge in industrial action by workers and other mass protests by social movements in opposition to neo-liberal policies and their iniquitous consequences. Labor journalist Kim Moody wrote in 1997 that there were at least two dozen political general strikes in Europe, Latin America, Asia and North America between 1994 and 1997 – more than at any time in the 20^th century (cited in Brecher et al, 2000).

This clearly suggests that the adverse effects of neo-liberal globalization are now better understood by many peoples than what elite and policy-making circles are willing to admit.

Even erstwhile “insiders” such as former World Bank (WB) Chief Economist and Nobel Laureate Joseph Stiglitz have publicly criticized the “market fundamentalism” of the IMF, WB and US Treasury Department which have imposed liberalization, privatization, deregulation, denationalization, deindustrialization and austerity policies on most parts of the world over the last two decades.

Crisis of legitimacy

All this points to the extent of the crisis of legitimacy now afflicting imperialist globalization and the success of social movements in exposing its plunderous and anti-people character. It also attests to the increasing militancy of workers and other progressive and democratic forces all over the world. It’s no surprise that every other international conference among social movements are now discussing “alternatives to globalization.”

But at this point, as we sharpen our strategies or combinations of strategies for combatting globalization, it is important to dissect neo-liberalism and the current crisis of imperialism in their historical context, lest we lose sight of the inherent contradictions in the global capitalist system that have wrought this crisis. To confine our critique of the present world disorder by examining only its current contours may lead us into fighting for superficial policy or institutional reforms that paper over these contradictions or serve to legitimize imperialist rule rather than exposing and dismantling this unjust, exploitative and oppressive system.

Crisis of world capitalism

Sluggish growth has characterized the economies of the advanced capitalist countries since the 1970s. Even as big business continues to invest in new technologies in their drive to extract ever greater profit, average national productivity rates have been on the decline, save for the US in the latter half of the last decade. From 1960 to 1973, the average annual growth rate in productivity for the G7 countries ranged from 2.8% to 8.6%. But between 1973 to 1995, not one of them exceeded 3% on average. (IMF, 1999)

The 1990s was marked by economic stagnation in the industrialized countries. In the OECD countries, GDP growth fell from 3.1% per annum in the 1980s to a meager 1.7% in the 1990s (Chossudovsky, 1997). Even in the US, the most vigorous of these economies in recent years, growth only picked up in the second half of the 1990s, partly due to over-investment in information technology and a speculative build-up in the equities markets.

In Germany and France, growth was under 2% in 1990s and until today their economies continue to battle recessionary pressures. After decades of stellar growth, the Japanese economy has been languishing in recession since the bursting of its real estate bubble in 1989. Today, nominal GDP growth in the G7 economies is running at just above 1% and is expected to dip further in the coming year. (The Economist, Oct. 20-26, 2001).

Around 1 billion people are either unemployed or underemployed, according to the International Labor Organization (ILO). This is equivalent to one-third of the world's labor force, or one-sixth of world population. The jobs that are being created are increasingly of the insecure and low-paying sort. Some 1.5 billion people survive on less than one US dollar per day while 3 billion subsist on two dollars per day. In the few Third World countries that produce and export low value-added manufactures, workers, particularly women and including children, toil in sweatshops of subcontractors, or in their own urban slum or rural dwellings. They work more than 14 hours per day just to earn below subsistence wages.

Third world debt has reached $2 trillion and is expected to worsen along with deteriorating terms of trade faced by non-industrialized countries. The prices of key commodities that make up the mainstay of many developing countries' exports, such as coffee, cocoa and cotton, fell between 45% to 50% in recent years (Crossette, 2000).[1] Non-oil commodity prices are expected to further drop by 8.9% next year.

Even the markets for information technology appear near saturation, with the world’s biggest IT and electronics firms slashing jobs and payrolls by the thousands and pulling down export earnings of even the tiger economies in Asia. Fujitsu has announced job cuts of over 20,000 between August and October, Alcatel by over 17,000, Siemens, with 15,000 and the list goes on (BusinessWorld, Oct. 31, 2001). Current over-capacity (the gap between actual output and its potential) in the world economy has increased to its widest level since the 1930s. (The Economist, Oct. 20-26, 2001)

Because of heightened overproduction and the centralization of capital, speculation in currencies, equities, bonds, financial derivatives and other portfolio investments have provided a maddeningly lucrative outlet for a rapidly growing share of surplus capital in the hands of the capitalist class, rather than direct investment in new productive capacity in the form of factories and employment. In 1976, 80% of all international transactions involved the buying and selling of goods and services. By 1997 only 2.5% of international transactions involved the buying and selling of the same. Some 97.5% were for speculation (ILRIG, 1998). This has taken finance capital to new heights of ascendancy, but has left national economies, and indeed, the world economy, extremely prone to financial ruin as demonstrated recently by the Mexican Currency Crisis in 1995, the Asian Financial Crisis in 1997 and the Russian Financial Crisis in 1998. Bulatlat.com

[1] Sugar prices dropped 30 percent within a year, and tropical beverages — cocoa, coffee and tea — fell 21 percent, with similar drops in the prices of vegetable oil seeds and oils. Agricultural material like rubber, cork, some wood products and textile fibers fell 10 percent. Only the prices of tropical timber, an increasingly scarce commodity, rose substantially (about 17 percent) from 1998 to 1999. This means peasants, farm workers and workers in the non-industrialized South must produce more commodities for export in order to earn the same dollars as before – dollars that go to paying for imports and foreign debt (Crossette, 2000).

Part I | Part II | Part III

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