October 2000


Only a few years ago, a few lonely voices and countries were speaking out on the dangers and ill-effects of Western-imposed globalisation. Now, with the series of recent street protests from Washington to Prague, the tide is clearly turning. Even Western leaders and the mainstream media are increasingly voicing their doubts and criticisms.

By Martin Khor

Is the tide turning, at last, on globalisation?

It would appear so, in the light of the series of huge street protests whenever and wherever world leaders meet to further the global economic agenda.

And also, counting the increasing number of columnists and journalists in Western mainstream media who are themselves casting doubt and even throwing eggs at the globalisation process.

Only a few years ago, ‘globalisation’ seemed to be an inevitable process that no one should challenge, or else risk being labelled old-fashioned, reactionary and unrealistic.

There was a consensus at the top levels of the global elite, especially at the secretariats of the international financial agencies (the IMF and World Bank) and the World Trade Organisation (and the governments of rich countries that control them), that globalisation is good for all and that those that did not join in would miss the train.

What they meant by globalisation was a  policy prescription that all countries,  big or small, rich or poor, should open up their borders to the free flow of money, capital, goods and services. Countries should no longer protect their local firms, banks, farms or money markets from the inflow of investment or speculative funds, from cheaper imports or bigger foreign enterprises.

The infusion of foreign money, goods and companies would fuel growth, inject efficiency, and help poor countries take off, so the argument went.

However, most developing countries that undertook this process did not improve. Foreign credit that went in led instead to a debt crisis. Cheaper imports displaced local goods and industries.

On the export side, the situation was equally bad. Prices of commodities sold by developing countries slumped. And markets of the North remained closed for products (such as textiles and agricultural goods) that poorer countries are good at producing.

The result was a widening trade deficit in many developing countries, leading them into further debt, and curbing their development.

Only a few developing countries, mainly in East Asia, seemed to escape this no-growth or low-growth trap. They were held up as models of growth led by exports and foreign investment, two of the instruments of globalisation.

But even some of them succumbed to one aspect of globalisation. The liberalisation of finance and financial markets led to a rapid build-up of short-term private foreign debt. It also enabled speculation of the local currencies and stock markets by foreign financial institutions such as hedge funds.

The resulting financial crisis of 1997-99, which also spread to Russia, Brazil and other countries, seriously damaged the image and reputation of globalisation.

In the developed countries, meanwhile, increasing numbers of people felt insecure with the intense competition engendered by globalisation. The drive for companies and countries to compete, so intrinsic in the global market economy, meant that social and environmental considerations were sidelined whilst the demands of the big corporations were given top priority.

Executives and lobbies representing the large companies became so powerful that they influenced or even dictated the financial and trade policies of some of the developed nations. For example, many of the treaties of the WTO originated with demands by big financial and industrial companies, some of which even helped to draft the texts.

Many citizens in the West are now angry that their wages have not risen (or have not risen in line with economic growth or with the high profits and income packages of their bosses), that their jobs are insecure, and that the environment is deteriorating.

After 20 years of the rapid globalisation process, the tide has turned, not because of ideology or theory, but simply because globalisation has not delivered the goods for a large part of humanity, and has caused financial and economic instability as well as adverse social and environmental effects.

The first large public demonstration against globalisation came in Seattle last November at the WTO Ministerial Conference. This was followed by street protests in Bangkok in February (during the UNCTAD Conference), Washington in April (during the World Bank-IMF spring meeting), in Melbourne (during the Asian Summit of the World Economic Forum) and most recently at Prague (during the World Bank-IMF annual meeting).

Just as the Seattle protests shook the global trade establishment, the Prague demonstrations shook the global financial establishment. The World Bank-IMF meeting ended a day earlier; an unprecedented measure, carried out probably to avoid demonstrators who had threatened not to allow the officials to leave the conference centre on the last day.

The effects of the street protests at all the major global economic events have led Western leaders to move away from the previous congratulatory and exuberant stance on globalisation.

Many Western leaders, and chiefs of international agencies such as World Bank President James Wolfensohn, are now talking of the need to combine the workings of the market with policies that cater to the poor and to the environment.

And most recently, mainstream Western newspapers and magazines are highlighting the negative effects of globalisation. Some famous columnists are even condemning globalisation outright as a failed experiment.

The International Herald Tribune carried an article, prominently displayed in the opinion page on 29 September, by its regular columnist William Pfaff titled ‘The West’s Globalisation Drive is Proving a Massive Failure’.

The street happenings in Prague intimidate the IMF and World Bank, says Pfaff, yet what the demonstrators do not understand is that their battle has in principle been won.

‘Globalisation - the aggressive program for the imposition of Western norms of national economic management, economic deregulation and market opening, and facilitating takeovers of indigenous industries and agriculture by multinational companies - was launched by the Clinton administration during its first term. After its sensationally successful promulgation, it met a series of defeats,’ says the article.

Pfaff cites the defeats as the Asian economic crisis, the failure of the multinational investment agreement at the OECD (Organisation for Economic Cooperation and Development), the Seattle protests, and defeats within the organisations themselves and in the public debate.

‘The globalisation model is no longer the unchallengeable Western orthodoxy,’ says Pfaff, adding that ‘the Washington consensus on lending policy had proved defective in practice and often destructive in its social and political consequences.

‘The gap in income between rich and poor has not improved in the poor countries, and has worsened in the United States and Britain. The intellectual consensus on global economic policy thus has broken down. The Asian economic crisis two years ago virtually wiped out globalisation’s much-touted growth gains.’

Pfaff also comments that ‘China and Malaysia survived the crisis because the former had refused to be globalised, and the latter defied the IMF about how to deal with the crisis.’

He notes that UNCTAD (the United Nations Conference on Trade and Development) now advises Asian economies to focus on national development, domestic savings and raising domestic demand through higher wages and public spending - the exact opposite of IMF doctrine.

Pfaff says that globalisation’s values are entirely materialistic. Its sponsors define progress wholly in terms of wealth accumulation and the ultimate purpose of economic activity is described as solely to reward business investors, from which all other benefits flow.

‘It has been a self-serving ideology, elevated to the status of economic principle,’ concludes Pfaff. ‘The assumptions that have underlain globalism’s promotion and international economic deregulation and integration are recent in origin and will eventually pass into economic history.’

This article by an influential columnist in one of the most prestigious of Western newspapers is one of  the most hard-hitting and  fundamental attacks on globalisation,  all the more impactful because it is written and published from within the global establishment.

It is, however, just one of several articles that have in the past few weeks appeared in leading media journals of different countries.

Hardly a few years ago, only a few voices and a few countries, Malaysia being about the most prominent, were speaking out to question globalisation. The tide, it is clear, is now turning. - Third World Network Features

About the writer: Martin Khor is Director of the Third World Network.