An argument that socialists ought to be prepared to meet, since it is brought up constantly both by Christian apologists and by neopessimists such as James Burnham, is the alleged immutability of ‘human nature’. Socialists are accused – I think without justification – of assuming that Man is perfectible, and it is then pointed out that human history is in fact one long tale of greed, robbery and oppression. Man, it is said, will always try to get the better of his neighbour, he will always hog as much property as possible for himself and his family … The proper answer, it seems to me, is that this argument belongs to the Stone Age. It presupposes that material goods will always be desperately scarce. The power hunger of human beings does indeed present a serious problem, but there is no reason for thinking that the greed for mere wealth is a permanent human characteristic. We are selfish in economic matters because we all live in terror of poverty. But when a commodity is not scarce, no one tries to grab more than his fair share of it. No one tries to make a corner in air, for instance. The millionaire as well as the beggar is content with just so much air as he can breathe. Or, again, water. In this country we are not troubled by lack of water … Yet in dried-up countries like North Africa, what hatreds, what appalling crimes the lack of water can cause! So also with any other kind of goods. If they were made plentiful, as they so easily might be, there is no reason to think that the supposed acquisitive instincts of the human being could not be bred out in a couple of generations. And after all, if human nature never changes, why is it that we not only don’t practise cannibalism any longer, but don’t even want to?
GEORGE ORWELL, Tribune, 21 July 1944
In his book Jihad vs. McWorld, having identified the dominant forces in the modern world as tribalism and globalism, Benjamin Barber proceeded to treat those two impostors just the same: ‘Neither needs democracy. Neither promotes democracy.’ To market triumphalists, who liked to attribute high moral purpose to the often grubby business of money-making, this was nothing less than blasphemy, an updated version of the moral equivalence displayed during the Cold War by jaded bien pensants who professed hostility to both Washington and Moscow. Yet it was borne out by the record of one of their heroes, Rupert Murdoch.
Murdoch, a sworn enemy of regulation and Big Government, often described his global media empire as freedom’s greatest messenger. In his commercial dealings with the autocrats of China, however, he shamelessly kowtowed to tyranny – or, as his defenders might prefer to say, applied the Real-politik techniques of give and take to international business. Murdoch took BBC World Service TV off his Star network; the Chinese government gave him permission to start a cable TV station in Guangdong. Murdoch ditched East and West, a memoir by the former Hong Kong governor Chris Patten; President Jiang Zemin returned the favour by allowing the film Titanic into Chinese cinemas, to the delight of 20th Century-Fox (prop. R. Murdoch). On the fiftieth anniversary of the Universal Declaration of Human Rights in December 1998, Murdoch travelled to Beijing to express his ‘admiration for China’s tremendous achievements in every respect over the past two decades’; President Jiang repaid this compliment ten months later by granting an exclusive interview to The Times on the eve of his state visit to London.
For such an important assignment the newspaper naturally sent its best reporter, Lord Rees-Mogg. This could have been a serious diplomatic faux pas. Five years earlier, the Chinese ambassador to London had written to The Times protesting at Rees-Mogg’s ‘gross misjudgments’, and as recently as April 1996 his lordship was still attacking China’s ‘insensitive and repressive’ regime. Luckily, however, he was fully on-message for the interview in the Great Hall of the People. ‘We are almost at the same age, but I’m two years older than you,’ President Jiang chuckled. ‘I was told you are a Lord. What’s the difference between a Lord and a Sir?’ They went on to chat about their families. ‘He obviously has a very warm affection for his grandchildren,’ Mogg wrote. ‘Overall I found the president very relaxed, very friendly, very intelligent, a man at ease with himself … Among world statesmen he reminds me most of President Eisenhower, a natural conciliator.’
Eventually the banter had to stop. Mogg knew there was a question he must ask, but wasn’t sure how to put it without causing offence. He phrased it thus: ‘With globalism, the whole world is involved with issues of nationality and ethnic tension. In Britain we have our own controversies with our national relationship with Europe. You have the problem of the minorities. I have met the Dalai Lama on a number of occasions and regard him as a distinguished religious leader. Is there any prospect of reconciliation?’ There was a moment’s tense silence. Had the man from The Times been too fearless, too hard-hitting? ‘I was not expecting to be asked that question,’ Jiang replied at last, ‘but you have asked it in a very friendly way, so I will answer it.’ The president then revealed that his country’s influence on Tibet had been entirely benign. Rees-Mogg was deeply impressed by this evidence of ‘humanity’ and ‘respect for religious beliefs’.
Perhaps he hadn’t read a 1,000-page report published by the US State Department the previous month, which highlighted the ‘particularly severe’ violations of religious freedom in China and six other countries. Political dissidents could also have told Lord Rees-Mogg a thing or two about their president’s ‘humanity’: at the time of his visit, hundreds of people were still in jail for their part in the pro-democracy movement that was crushed in Tiananmen Square in the summer of 1989. (Liu Baiqiang, who was already serving a ten-year jail sentence in 1989, had allegedly written ‘Long Live Freedom’ on tiny scraps of paper in his cell; according to the official indictment, he then ‘attached these to the legs of locusts and released the insects into the air’. He was given a further eight years for ‘counter-revolutionary incitement and propaganda’.) Instead, Rees-Mogg filled a whole page of The Times with sycophantic drivel about Jiang Zemin’s ‘peace and goodwill’ towards his people. ‘Confucius made it the first of his five universal rules that “justice ought to be practised between an emperor and his subjects”,’ he drooled. ‘This idea of a direct contract between ruler and people – one interpreted in a very different way from modern Western understanding – still stands at the heart of Chinese government.’
The example of Rupert Murdoch is merely one among many confirming Benjamin Barber’s point. The former British prime minister Edward Heath and the former US secretary of state Henry Kissinger, both of whom had extensive business interests in China, regarded the country’s pro-democracy campaigners as a pestilential nuisance. (‘No government in the world would have tolerated having the main square of its capital occupied for eight weeks by tens of thousands of demonstrators,’ Kissinger wrote after the Tiananmen Square massacre.) When President Jiang Zemin paid his state visit to Britain in October 1999, the London police were ordered to arrest any Chinese dissidents who exercised their freedom to demonstrate against Jiang – and this under a British government supposedly committed to an ‘ethical dimension’ in foreign policy. At the same time Margaret Thatcher and other ‘friends of freedom’ were battling vigorously to defend General Pinochet, a man who had demonstrated that a market economy can flourish under a brutal military dictatorship.
If capitalism required democracy, the economic record of Chile under Pinochet – as of Singapore and Hong Kong – would be wholly inexplicable. Nevertheless, Barber’s reasonable observation was all but drowned out by the fortissimo hosannas of those who regarded the global market as a benign universal deity – immortal, invisible, omniscient, omnipotent. No mere metaphor, this: the hot gospellers of the new age saw themselves as disciples of a literally divine power which compelled their worship. Books such as God Wants You to Be Rich and Jesus, CEO became bestsellers; the management guru Tom Peters wrote an essay entitled ‘The Market’s Will Be Done’. (Dozens of other examples are collected in Thomas Frank’s vigorous debunking of the religion, One Market Under God.) When the Harvard divinity professor Harvey Cox decided to start reading the business pages, he ‘was surprised to discover that most of the concepts I ran across were quite familiar’: myths of origin, legends of the fall and doctrines of sin and redemption, thinly disguised as chronicles about the creation of wealth, the seductive temptations of statism, captivity to faceless economic cycles, and ultimate salvation through the advent of free markets. Just as the prophets of Israel repaired to the desert and then returned to announce whether Yahweh was feeling benevolent or wrathful, so the market’s fickle will – sometimes ‘apprehensive’, sometimes ‘jubilant’ – was clarified by daily bulletins. Here, Cox concluded, was that true and sure faith described by St Paul as the evidence of things unseen. But one element was missing from the analogy:
One sometimes wonders, in this era of Market religion, where the sceptics and freethinkers have gone. What has happened to the Voltaires who once exposed bogus miracles, and the H. L. Menckens who blew shrill whistles on pious humbuggery? Such is the grip of current orthodoxy that to question the omniscience of The Market is to question the inscrutable wisdom of Providence. The metaphysical principle is obvious: If you say it’s the real thing, then it must be the real thing. As the early Christian theologian Tertullian once remarked, ‘Credo quia absurdum est.’ (‘I believe because it is absurd.’)
If the new faith had a single gospel, it was probably The Lexus and the Olive Tree (1999), by the New York Times columnist Thomas L. Friedman, which sold more than 150,000 copies in hardback alone and went straight to the top of President Clinton’s reading list. Perhaps because the title sounded like an echo of Jihad vs. McWorld, Friedman was eager to reveal that it had in fact occurred to him as long ago as 1992. Returning from a visit to the Lexus factory in Japan – where one of the most luxurious cars in the world is assembled largely by robots – he noticed a story in the Herald Tribune about yet another land dispute between Israelis and Palestinians. Eureka! In an instant, Friedman realised that this was the future division of humankind: between the modern masses of aspirant consumers who lusted after a Lexus, and a dwindling number of disgruntled dodos who were still (as he contemptuously summarised the Palestine question) bickering over who owned which olive tree.
Not that the dodos were all in the Middle East. A large flock of them could be found in Europe – in France, to be precise. To Friedman, as to so many American evangelists for globalisation, there was something uniquely irritating about the French – an apparently rich and civilised people who nevertheless seemed reluctant to join McWorld, clinging perversely to their own language, culture, institutions and economic habits. As he grumbled a few months after publication of The Lexus and the Olive Tree, ‘The book is coming out in Arabic, Chinese, German, Japanese and Spanish. There is only one major country where my American publisher could not find a local publisher to print it: France.’
And no wonder. Readers of the New York Times had often been entertained by Friedman’s tirades against Gallic stubbornness. Here, for instance, is a despatch he sent from Casablanca on 26 February 1997:
Although French culture and education has [sic] been imbedded in Morocco’s major cities since the early 1900s, there are now four American schools here, and they are in such demand they have waiting lists for the waiting lists. In addition, English-language schools are mushrooming all over. Visa requests to study in America, particularly for MBAs, are skyrocketing. What gives? It’s actually a fascinating cultural competition between America and France for the soul of the new generation in traditionally French-dominated North and West Africa. Now that the cold war is over, and the Western model has triumphed over Communism, all the competition now is between different Western models for succeeding in a free-market world. In this region, it’s a competition America is increasingly winning …
You can’t understand the tension between the US and France today over NATO if you don’t appreciate this cultural competition. It’s clearly making the French a little crazy. How else can one explain their recent attempt to prevent Georgia Tech’s overseas campus in France from using English on its Internet Web site? That’s insane! But it’s the act of people who feel the world is changing and they want to stop it, not master it.
The French can try to beat America at its own game, which they are quite capable of doing if they get focused, or they can play footsy with the enemies of America, who are often the enemies of modernity – in which case France risks becoming increasingly marginal.
Presumably in a spirit of mischief, in the summer of 1999 the journal Foreign Affairs invited Friedman to debate globalisation with Ignacio Ramonet, editor of Le Monde Diplomatique. Once the opening civilities were over, the American quickly lost patience. ‘Ramonet falls into a trap that often ensnares French intellectuals, and others, who rail against globalisation,’ he complained. ‘They assume that the rest of the world hates it as much as they do, and so they are always surprised in the end when the so-called little people are ready to stick with it … The fact is the wretched of the earth want to go to Disneyworld, not to the barricades. They want the Magic Kingdom, not Les Misérables. Just ask them.’
There are 1.3 billion human beings in the world who subsist on less than a dollar a day and have yet to make their first phone call, let alone send an email. Is their desire for food, clean water, education, shelter and employment really overshadowed by the desperate yearning for a holiday in the Magic Kingdom or a Lexus car? Has Friedman himself ever asked them? During the ceaseless travels recorded in The Lexus and the Olive Tree, and in his newspaper columns, he seems to mix only with the international elite. The opening sentences of his 1997 report from Morocco are all too typical: ‘The frigate USS Carr pulled into Casablanca harbour last week and the US Embassy held a reception on board, replete with Budweiser and chicken fingers, for local dignitaries. I dropped by and was soon conversing with a senior Moroccan official. Sporting a tailored suit and speaking elegant French, he explained why he was sending his two children to the American school …
But wait: close study of Friedman’s book discloses at least one occasion when he actually encountered one of those ‘wretched of the earth’. While visiting Hanoi, he paid a dollar every morning to have himself weighed by a Vietnamese woman who had installed herself on the pavement with a set of bathroom scales. This, he explains, was ‘my contribution to the globalisation of Vietnam. To me, her unspoken motto was: “Whatever you’ve got no matter how big or small – sell it, trade it, barter it, leverage it, rent it, but do something with it to turn a profit, improve your standard of living and get into the game.”’ It was another Eureka moment, convincing him that ‘globalisation emerges from below, from street level, from people’s very souls and from their very deepest aspirations … It starts with a lady in Hanoi, crouched on the sidewalk, offering up a bathroom scale as her ticket to the Fast World.’
Only someone with limitless dogmatic fervour could interpret this poor woman’s struggle for existence as proof that she had learned to love the god of the global market (and was, no doubt, already sending off for her Disney World brochure). But how could even the most blinkered zealot conclude also that ‘globalisation emerges from below’? The institutions which seek to impose the new economic orthodoxy – the International Monetary Fund, the World Bank, the World Trade Organisation – have been created and directed, with minimal public scrutiny or accountability, by a small elite conclave of capitalist cardinals.
Evangelists such as Friedman assume that the global economy severely restricts the scope of nation states and governments to direct their own affairs (though this assumption may well be exaggerated, as Paul Hirst and Grahame Thompson show in their book Globalisation in Question). They deduce from this that it transfers power to the people, creating a vast and ever-swelling army of ‘super-empowered individuals’. As soon as that Hanoi street-woman has a laptop and a few hundred dollars, she too can join the Electronic Herd (as Friedman calls it), roaming the world via cyberspace for luscious pastures on which to graze. Anyone can do it, from a Vietnamese beggar to a senior reporter on the New York Times. By way of example, Friedman quotes what he told the Thai prime minister when they met in 1998:
Mr Prime Minister, I have a confession to make. I helped oust your predecessor – and I didn’t even know his name. You see, I was sitting home in my basement watching the Thai baht sink (and watching your predecessor completely mismanage your economy). So I called my broker and told him to get me out of East Asian emerging markets. 1 could have sold you out myself, via the Internet, but I decided to get my broker’s advice instead. It’s one dollar, one vote, Mr Prime Minister. How does it feel to have Tom Friedman as a constituent?
The temptation to reply with a smack in the face must have been hard to resist. One dollar, one vote: this crass formula accidentally confirms that fund managers and speculators with billions of dollars at their disposal – the big beasts of the Electronic Herd – have effectively disfranchised everyone else. They are free to trample over entire continents without a care for the social dislocation, economic insecurity and environmental devastation they leave behind. Who, then, will clear up the mess? During his exchanges with Ignacio Ramonet in Foreign Affairs, Friedman hotly denied ever suggesting that it would all somehow be magicked away:
Ramonet says that I believe all the problems of globalisation will be solved by the ‘invisible hand of the market’. I have no idea where these quotation marks came from, let alone the thought. It certainly is not from anything I have written. The whole last chapter of my book lays out in broad strokes what I believe governments – the American government in particular – must do to ‘democratise’ globalisation, both economically and politically.
Naturally, one turns to Friedman’s final chapter in search of this democratising recipe – only to find an assertion that the American government must be willing to use military force on recalcitrant nations who resist the imperatives of globalisation: ‘The hidden hand of the market [yes, he did use the phrase] will never work without a hidden fist. McDonald’s cannot flourish without McDonnell Douglas, the designer of the US Air Force F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies to flourish is called the US Army, Air Force, Navy, and Marine Corps … With all due respect to Silicon Valley, ideas and technology don’t just win and spread on their own.’ In short, the Pentagon must loose the fateful lightning of its terrible swift sword against all who have no appetite for Big Macs; and what these people ought to understand is that they are being pulverised for their own good, since the forcible imposition of American burger joints is the guarantor of their future peace and security. For, according to Friedman, no two countries that have a McDonald’s ever fight a war against each other. This ‘Golden Arches Theory of Conflict Prevention’ (he has a real talent for glibly sonorous phraseology) was first propounded in his New York Times column on 8 December 1996, and recycled in The Lexus and the Olive Tree. Alas! By the time the book appeared the US Air Force was already bombing Belgrade, which had no fewer than seven branches of McDonald’s. Friedman then devised a cunning explanation to show that the Golden Arches Theory had in fact been confirmed. Why did Milošević withdraw his forces from Kosovo after only seventy-eight days? Not, as everyone else in the world assumed, because of Nato’s assault and the threat of more to come. The Serb leader was obliged to retreat because Belgrade was ‘a modern European city, a majority of whose citizens wanted to be integrated with Europe and the globalisation system … It turns out in the end the Serbs wanted to wait in line for burgers, not for Kosovo.’ The Balkan war of 1999 was, therefore, ‘only a temporary exception that proved my rule’.
Full marks for ingenuity, if nothing else. There is, of course, some truth in the general suggestion that countries which are assimilated into the world economy will be more reluctant to declare all-out war on one another than those which remain outside it. However, modern wars are usually fought not between states but within states. How does Big Mac diplomacy help there? ‘Civil wars and skirmishes’, Friedman replies hastily, ‘don’t count.’ The dismissive style is characteristic of the globalisers’ ruthless attitude to anything for which their simple prescriptions don’t appear to work. ‘Bosnia, Albania, Algeria, Serbia, Syria and many African states have been unable to make the transition,’ he notes sternly in his book. ‘But these states are weak enough and small enough that the system just builds a firewall around them.’ Farewell, Africa; see you again in a century or so, if you’re still alive.
For all their talk of ‘empowering individuals’, few masters of the modern world evince any human sympathy for those less potent than themselves. Like the machines of Kipling’s poem, they can neither love nor pity nor forgive. Almost the only emotion of which they are capable is glee – both at their own gilded success and at the misfortunes of others. ‘Think of participating in the global economy today like driving a Formula One race car, which gets faster and faster every year,’ Friedman writes. ‘Someone is always going to be running into the wall and crashing, especially when you have drivers who only a few years ago were riding a donkey.’ Even those countries which willingly obey the order to enter this lethal Grand Prix are not allowed the passing tribute of a sigh when they crash and burn. ‘I believe globalisation did us all a favor by melting down the economies of Thailand, Korea, Malaysia, Indonesia, Mexico, Russia and Brazil in the 1990s, because it laid bare a lot of rotten practices and institutions in countries that had prematurely globalised.’
If in doubt, blame the victims. For Friedman knows full well who encouraged these nations to globalise ‘prematurely’ and thus precipitated the meltdown. The Asian financial panic of 1997, a contagion that later spread as far as Russia and Brazil, was a direct consequence of American insistence that countries such as Thailand open their capital markets to foreign funds – even if the countries in question, with a tradition of high domestic savings, had no particular need of extra capital, and even though there was no evidence that unhampered capital inflows necessarily brought higher growth. Far from it: as the Asian economies learned in 1997, the foreign money that flows in so easily can rush out again with even more startling suddenness, as irrational exuberance gives way to equally irrational pessimism. Although the International Monetary Fund tells governments to accept the ‘discipline’ of capital markets, in practice these markets have routinely proved themselves to be undisciplined, reckless and downright fickle.
The exodus of dollars caused a problem which was soon transformed into a major crisis by the IMF’s austerity measures. In Indonesia, at Washington’s behest, interest rates reached 80 per cent and the government had to abandon its attempts to subsidise the cost of living of the poor through price controls on essential goods such as kerosene. The result of this externally imposed ‘cure’ was a 20 per cent fall in gross domestic product. Undaunted, the IMF quack-doctors were soon dispensing the same remedy elsewhere: Brazil was ordered to borrow $42 billion to prop up its overvalued currency, while Russia had to endure interest rates as high as 170 per cent for the same purpose – a pointless endeavour, since both currencies collapsed anyway. The IMF’s justification for this crazy attempt to hold back the tide was that devaluation would lead to hyperinflation. Even more irrationally, however, its programme also demanded an end to price-controls – which, when applied in Russia, led to an inflation rate of 520 per cent within three months.
Although the IMF is depicted by its enemies, and some admirers, as a posse of itinerant missionaries for free-market fundamentalism, the practice is often strikingly different from the theory – rather as business tycoons who praise the beauty of competition will, in their own corporate backyard, work tirelessly for the establishment of a monopoly or (failing that) a cartel. One of the few critics to have noticed the distinction is Mark Weisbrot, director of the Centre for Economic and Policy Research in Washington DC, who points out that the free-market solution in those countries which sacrificed their economies to maintain a fixed exchange-rate – Russia, Brazil, Argentina – would have been to abandon the peg and let the currency find its own level. Instead, he writes, ‘one of the few things that Washington actually did accomplish [in the Asian crisis] was to get the governments of the region to guarantee the privately held debt of foreign lenders, rather than letting the banks be subjected to the discipline of the market.’ The IMF and other Washington institutions are not so much evangelists seeking to convert the world as enforcers trying to prevent developing and transitional countries from threatening the financial interests of the West. Weisbrot cites the example of intellectual-property rights:
Patent monopolies are the most costly, inefficient and – in the case of essential medicines – life-threatening form of protectionism that exists today. From an economic point of view, they create the same kinds of distortions as tariffs, only many times greater. Yet the attempt to extend US patent and copyright law to developing countries has become one of the primary objectives of America’s foreign commercial policy.
The expansion of foreign intellectual-property claims not only drains scarce resources from developing countries but also makes it difficult for them to follow the more successful examples of late industrialisation, such as South Korea or Taiwan, where diffusion of foreign technology played an important role. This is part of a more general problem that is reflected in the economic failure of the last twenty years. There have historically been many paths to development, but none resembles the collection of policies that Washington foists on developing countries today.
Historically, economic development has been the essential precondition for trade liberalisation – and this economic development has often been made possible by a combination of import restrictions, tariffs, state subsidies and exchange-rate controls. Yet the Washington consensus now holds that poorer nations must somehow reverse the process, liberalising their trade policies long before they are ready or able to compete on the international market. In the words of the economist Ha-Joon Chang, the rich countries are ‘kicking away the ladder’.
Many ‘anti-globalisation protesters’ miss this essential point: the problem is not globalisation per se, but the fact that the rules of the game have been set by the winning side – which, while enforcing them elsewhere, feels no obligation to apply them to its own conduct. Upholders of the ‘Washington Consensus’, which argues that governments should play a minimal role in economic management and regulation, maintain that they are merely applying principles which have created prosperity in the United States. For all its justified reputation as one of the least statist industrial democracies, however, America has accepted the need for official intervention and supervision ever since the great globalisation of the mid-nineteenth century. As the economist Joseph Stiglitz records:
In the United States, government promoted the formation of the national economy, the building of the railroads, and the development of the telegraph – all of which reduced transportation and communications costs within the United States. As that process occurred, the democratically elected national government provided oversight: supervising and regulating, balancing interests, tempering crises, and limiting adverse consequences of this very large change in economic structure. So, for instance, in 1863 the US government established the first financial-banking regulatory authority – the Office of the Comptroller of Currency – because it was important to have strong national banks, and that requires strong regulation …
Agriculture, the central industry of the United States in the mid-nineteenth century, was supported by the 1862 Morrill Act, which established research, extension and teaching programmes. That system worked extremely well and is widely credited with playing a central role in the enormous increases in agricultural productivity over the last century and a half. We established an industrial policy for other fledgling industries, including radio and civil aviation. The beginning of the telecommunications industry, with the first telegraph line between Baltimore and Washington DC, was funded by the federal government.
This tradition endures: the Internet, lest we forget, was created by the Pentagon. And American agriculture is still heavily subsidised and protected, as are the steel industry and many other sectors of the world’s biggest ‘free-market economy’. At times of economic slowdown, even under presidents who denigrate the role of government, the US will increase its deficit to finance expansionary fiscal and monetary policies. Yet when a developing country encounters the same problem, the IMF insists on stern contractionary measures that push it further into recession.
At home, the US has long accepted the necessity of creating rules and institutions to govern the market economy in the national interest. As Stiglitz points out, economic decisions within the government are largely taken by the National Economic Council, which includes the secretary of labour, the secretary of commerce, the chairman of the Council of Economic Advisers, the treasury secretary, the assistant attorney-general for anti-trust, and the US trade representatives. All these officials are part of an administration that must face Congress and the electorate. Internationally, by contrast, only the voices of the financial community are heard, since the IMF reports solely to ministers of finance and the governors of central banks, even though its decisions affect every aspect of life. Hence its apparent heedlessness to the human and environmental cost of its diktats.
By imposing world governance without world government America is essentially demanding rights without responsibilities, promoting a global market while refusing to accept the political consequences. It imposes the New World Order on rogue states, yet opts out of its own international obligations elsewhere – the land mines treaty, the international criminal court and the Kyoto protocol on global warming, all of which have been denounced in Washington as intolerable infringements of America’s sovereign powers. When poorer nations try to assert their own national sovereignty, by contrast, they are punished for impeding free trade and the movement of capital.
The US is accused of two apparently contradictory crimes – imperialism and isolationism. Oddly enough, both charges have some validity. But the same criticism can be applied in reverse to America’s detractors, who support Kyoto and other attempts at international regulation while objecting to the World Trade Organisation not merely because of its secrecy and remoteness but because it tries to enforce common international rules and standards. Left-wing critics of the New World Order disapprove of attempts by Western nations to act as ‘world policemen’ – except when it suits them, as with the arrest in London of General Pinochet. Nevertheless, although they campaigned for Pinochet to be sent for trial in Madrid, they opposed Slobodan Milošević’s extradition to the Hague as outrageous interference in the internal affairs of Yugoslavia.
F. M. Cornford’s famous Principle of the Wedge holds that ‘you should not act justly now for fear of raising expectations that you will act still more justly in the future’. He meant it satirically – a point overlooked by figures such as Noam Chomsky and Harold Pinter, who argued that Nato’s failure to protect people in Rwanda somehow disqualified it from trying to save the Kosovars. In the words of another Cornfordism, the Principle of the Dangerous Precedent: ‘Nothing should ever be done for the first time.’ For almost twenty-five years after the invasion of East Timor in 1975, the crusading journalist John Pilger continually (and rightly) criticised the Western powers for not halting Indonesia’s illegal, genocidal occupation. So did Pilger rejoice when the United Nations finally despatched a peacekeeping force of British and Australian soldiers to confront the Indonesian militias after the bloody referendum of 1999, thus enabling the country to regain its independence from Jakarta? Especially since the foreign minister of the subsequent government was his old hero Jose Ramos-Horta, champion of the East Timorese resistance and winner of the 1996 Nobel peace prize? Of course not. To Pilger, Chomsky and countless others it is axiomatic that the West can never be right – damned if it doesn’t intervene, damned if it does. He duly condemned the UN peacekeepers as villainous imperialists whose only purpose was to keep East Timor ‘under the sway of Jakarta and western business interests’.
Much rhetoric from modern anti-capitalist pundits is equally contradictory or incoherent – apparently endorsing the imposition of certain universal standards while deploring most attempts to enforce them. ‘Act locally, think globally’ may be a fine-sounding slogan, but what does it actually mean? Do they want localisation, or world government? (Banners flourished by demonstrators at the WTO’s 1999 meeting in Seattle included several from the Worldwide Campaign Against Globalisation.) And what is their attitude to modernity? Kirkpatrick Sale, a ‘New Luddite’ guru who symbolically smashes computers with a sledgehammer at public meetings, has argued that ‘the computer, particularly the PC, will bring unmitigated disaster, simply because it enables the powers of this society to do faster and more efficiently the kinds of things it likes to do, with resulting social disintegration economic polarization, and environmental devastation’. Where did he say this? In one of his many online conversations, of course. The murderous recluse Ted Kaczynski, better known as the Unabomber, now disseminates his technophobic ravings via prison-cell interviews that can be read on the oxymoronic website primitivism.com.
Improved technology can’t be turned back or disinvented. In this sense Thomas Friedman and the IMF are half right: there is no alternative. But when they use the phrase they mean to imply that there is no alternative to allowing them to shape the world according to their own design. They detest the heterogeneity and infinite variety that exist even among capitalist economies, from Sweden to Argentina, Japan to India. What they want, however, is not homogenised capitalism – which would imply blending elements from different systems – but hegemony. The selfsame people who argued that the ‘command economy’ of the Soviet Union was against nature now wish to create a rigid command economy of their own; after years of mocking the Communist faith in ‘inevitability’ they now promote another determinist fallacy. Have they learned nothing from history?
Globalisation did not begin in the 1980s. It has been an increasingly dominant force since the great voyages of discovery in the fifteenth and sixteenth centuries, when the European empires began their long ascendancy, and by the time of the Enlightenment it had become an everyday subject of discussion among political economists. In 1770 the Abbé Raynal described a ‘revolution in commerce, in the power of nations, in the customs, the industry and the government of all peoples’, whereby continents were linked as if by ‘flying bridges of communication’ as traders ‘circulate unceasingly around the globe’. ‘The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country,’ Adam Smith wrote in 1776, the same year in which the Marquis de Condorcet characterised the owner of financial capital as someone ‘who, by a banking operation, within an instant becomes English, Dutch or Russian’.
There has been much talk lately of the economic ‘domino theory’, particularly since the devaluation of the Thai baht in 1997 triggered a financial crisis through much of Asia: even George Soros, the currency speculator who was accused by some Asian governments of precipitating the meltdown, warned soon afterwards that the power and capriciousness of the Electronic Herd now constituted a mortal threat to global stability. Similar comments were heard after the liquidity crisis of 1772, when the collapse of one small Anglo-Scottish bank in London led to the failure of Dutch banks, the bankruptcy of the chairman of the East India Company, and bankruptcies and suicides in Virginia. ‘One link gave way,’ a Hamburg linen merchant said. ‘The charm was instantly dissolved, leaving behind it consternation in the place of confidence, and imaginary affluence changed to real want and distress.’
Driven as it was by huge joint-stock corporations such as the East India Company, the commercial revolution of the eighteenth century has much in common with the modern form of globalisation exemplified by Microsoft and McDonald’s, and aroused many of the same anxieties and resentments. In 1997 the Institute for Policy Studies in Washington DC issued a report which claimed that fifty-one of the largest economies in the world were corporations and only forty-nine were countries: General Motors, with annual sales of $148 billion, was ‘bigger’ than Denmark or Thailand; the Ford Motor Co. was bigger than Turkey; Wal-Mart was bigger than Greece. Although the figures were misleading, since they compared a company’s turnover with a nation’s GDP (which measures value added rather than sales), the general point about the size and power of transnational businesses seemed undeniable, and prompted many alarmist headlines about this ‘new’ phenomenon. As the economic historian Emma Rothschild has reminded us, however, the East India Company collected more than £3.5 million in taxes at a time when the total expenditure of the British government was £7 million. Indeed, the extraordinary omnipotence of the East India Company is beyond the dreams of even the most rapacious modern corporation: a series of royal charters in the seventeenth century had granted it the right to mint its own coins, raise armies, declare war, form international alliances and exercise direct jurisdiction over millions of subjects in India. The term ‘civil servant’, now taken to mean a government employee, was originally coined to describe the massed ranks of administrators trained and employed by the Company. ‘In such a case,’ Edmund Burke observed, ‘to talk of the rights of [national] sovereignty is quite idle.’
It was the tea exported by the East India Company to Massachusetts that provoked the Boston Tea Party of 1773, which in turn sparked the War of Independence. The American revolutionary John Dickinson said his country might as well be ‘devoured by rats’ as succumb to the East India Company – whose Nabobs, having corrupted England and ravaged India, were now casting their eyes on America ‘as a new theatre whereon to exercise their talents of rapine, oppression and cruelty’. The British prime minister Lord North was quite baffled, asking why anyone ‘would resist at being able to drink their tea at ninepence in the pound cheaper’. Similar puzzlement is often heard from modern Americans who cannot understand why (for instance) the farmer José Bové became a French national hero in the summer of 1999, described by Le Monde as a new Vercingetorix, for driving a tractor into the McDonald’s restaurant in his hometown of Millau. Who could possibly object to a company that provides cheap and convenient (if pappily bland) meals to the world? But Bové’s protest was not a gastronomic criticism – or at least not solely – any more than the Boston eruption was prompted by a preference for chocolate over tea.
Just as the United States is now accused of seeking to dominate the world not only economically but also culturally and politically, so in 1793 the French revolutionary Bertrand Barère bemoaned the ‘ridiculous Anglomania’ that was sweeping through Europe in the wake of British export success. The German economist Adam Müller – himself such an Anglomaniac that he tried to pass himself off as a rich Englishman in Göttingen – noticed that his compatriots who bought English goods also began to revere ‘English manners, the English language, even the British constitution’. But the process had barely begun. As the joint-stock adventurers gave way to the more formal imperialist projects of the nineteenth century, and the cost of transport and communications fell rapidly, globalisation entered a new and astoundingly dynamic phase.
The most concise account of how the world was shrunk can be found in The Communist Manifesto of 1848, written by Marx and Engels:
The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.
The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood … In place of the old wants, satisfied by the productions of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property …
The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e. to become bourgeois themselves. In one word, it creates a world after its own image.
Although many evangelists for globalisation dismiss Karl Marx as a myopic ideologue who failed to understand capitalism, neither Marx nor Engels would have been at all surprised to see Microsoft and MTV bestriding the modern world. However, neophiliac hucksters for the ‘new economy’ of online shopping and global markets might well be surprised to read The Economic Consequences of the Peace by John Maynard Keynes. Writing immediately after the First World War, Keynes looked back at a lost world in which the internationalisation of social and economic life ‘was almost complete’:
What an extraordinary episode in the economic progress of man that age was which came to an end in August 1914! The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery on his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend.
He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country and climate without passport or other formality, could dispatch his servant to the neighbouring office of a bank for such supply of the precious metals as might seem convenient, and could then proceed abroad to foreign quarters, without knowledge of their religion, language, or customs, bearing coined wealth upon his person, and would consider himself greatly aggrieved and much surprised at the least interference. But, most important of all, he regarded this state of affairs as normal, certain and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous and avoidable.
What cars, aircraft, telephones and television were to the mid-twentieth century, the railways and steam ships and intercontinental telegraphs were to the mid-nineteenth. The laying of the first transatlantic cable in 1866, which allowed ‘real-time information’ to be exchanged between markets in New York and London, was at least as significant in the history of global finance as the creation of online share-trading.
This phase peaked in the period evoked so wistfully by Keynes, when one-fifth of the world’s land mass belonged to the British Empire and King George V reigned over 410 million subjects. Then it relapsed, as a consequence of two world wars and the Great Depression, resuming again only in the 1950s. But it has never regained that early impetus. Between 1870 and 1913 capital outflow from Britain as a proportion of GDP averaged 4.6 per cent; no country in the world has reached this level since. Even in the 1990s, when the global movement of capital was supposedly gathering pace, British capital flows were 2.6 per cent of GDP, while the figure for the USA was just 1.2 per cent. In short, there is actually less capital mobility now than a century ago. David Henderson, head of the Organisation for Economic Cooperation and Development’s economics and statistics department, reported in 1991 that the world economy ‘is clearly further away from full integration than it was in July 1914’, when there was more free trade, free capital movement, free migration and travel. Even the economic ‘liberalisation’ of Thatcher and Reagan had remarkably little effect: of OECD’s twenty-four industrialised member states, only four – Australia, Japan, New Zealand and Turkey – had more liberal trade regimes at the end of the 1980s than at the beginning.
The governments of the world’s richest countries demand the free movement of capital and goods (or at least of their capital and goods – perennial tariff disputes between the United States and the European Union confirm that this owes less to high principle than to simple self-interest). But their dislike of official barriers does not extend to the free movement of labour. This is perhaps the biggest difference from the globalisation of the late nineteenth century, when legal or bureaucratic obstacles to migration scarcely existed; and it is a fatal contradiction of the present order. In Britain, for example, ministers ceaselessly emphasise the distinction between ‘genuine asylum-seekers’ – who have to be accepted, even if with thoroughly bad grace and no welcoming ceremony – and ‘bogus’ incomers who are mere ‘economic migrants’ and must be deported forthwith. But then they bewail the shortage of doctors, nurses and schoolteachers, and hastily place advertisements all over the world begging foreigners to come and rescue Britain’s collapsing public services. (In 2000 the Guardian reported the case of a woman from Mauritius who had worked as a nurse in Britain’s National Health Service for six years until being told by the Home Office that she would be kicked out of the country as an ‘overstayer’. When she contacted her family back home to say that she might be returning, she discovered that the newspapers in Mauritius were full of adverts from the Department of Health in London – pleading for nurses to come and work in Britain.)
Economic migration has been a motive force of human history – and progress – since homo erectus first left Africa to see if the grass was greener elsewhere. It is what made the United States the wealthiest nation on earth. The market determinists assure us that there is no alternative to the Washington consensus (like sunrise, says Thomas Friedman), even though the world survived for many centuries without it. Yet when confronted with a rhythm that is as genuinely unstoppable as a tidal flow, they declare that it can and must cease.
During the nineteenth century about 60 million people left Europe for the Americas, Oceania or Africa; 10 million moved from Russia to Central Asia and Siberia; 12 million Chinese and 6 million Japanese emigrated to East and South Asia; 1.5 million left India for South-East Asia and Africa. No country in the world today has an immigration rate anywhere near this. The same politicians who demand the abolition of all impediments to the mobility of goods and services have been busily erecting mighty barriers to rebuff an accompanying wave of human beings. In the words of the economist Martin Wolf, ‘for all the changes that have occurred over the course of a century, neither the markets for goods and services nor those for factors of production are significantly more integrated than they were a century earlier … and [they are] far less integrated for labour’. Those determinists who maintain that globalisation is the inevitable consequence (and cause) of technological progress – as heedless of political interference as the waves were of King Canute – have some explaining to do here. Wolf, himself a prominent advocate of global integration, admits that governments proved more powerful than market forces, and were indeed able to stem the tide: ‘Globalisation is not predestined, but chosen.’
The zealots forget it happened before, a hundred years ago – and then had to be contained because it was too destructive and unstable. If anything, the new global market is less solid and substantial than that which crumbled with the start of the First World War. As Martin Wolf has to concede, we have lost ‘the stability and predictability inherent in the move from the gold standard of the 1870–1914 era to the generalised floating of today … Moreover, the vast scale of short-term finance [today] is probably both a consequence of exchange-rate instability and an important contributory cause.’
As the 1990s wore on, the dangers became apparent. The Asian meltdown of 1997 and the Russian collapse of 1998 were the beginning of the end for the triumphalism of the previous two decades, and for the IMF’s ‘one size fits all’ solutions. The countries that were almost bankrupted in 1997 – Thailand, Indonesia, South Korea, Malaysia, the Philippines – were precisely those ‘tiger economies’ which had played by the new rules of the game, only to find themselves trashed overnight by a few foreign speculators who, quite literally, sold them short. Similarly, during the mid-1990s Boris Yeltsin obediently handed control of the Russian economy to Jeffrey Sachs and a handful of other professors from Harvard (acting as agents for the US government), who imposed deregulation, privatisation and all the other things they teach you at Harvard Business School. His reward? George Soros wrote a letter to the Financial Times suggesting that the rouble was overvalued and the currency collapsed at once, thus reducing millions of Russians to near-destitution.
These severe jolts – along with corporate scandals in the West, and the pricking of the dotcom bubble – ought to puncture the complacency of Panglossian pundits such as Thomas Friedman. Even George Soros, who was blamed for both the Asian and the Russian débâcles, now sounds more like a banner-waving protester dodging tear-gas in Genoa: he warns that market fundamentalism is ‘a new global imperialism’, and that the herd instinct of the new moguls must be controlled before they trample us all underfoot. Bill Gates, too, has had a miraculous conversion. In the 1990s he often declared that the spirit exemplified by Microsoft could solve all the world’s problems. In October 2000, however, he astonished an audience of computer moguls and financiers at a conference in Seattle called ‘Creating Digital Dividends’, whose thesis was that technology can make entrepreneurs and consumers out of even the poorest people in the developing world. ‘Let’s be serious,’ he snapped. ‘Do people have any concept of what it means to live on less than $1 a day? There’s no electricity. Do they have PCs that don’t use electricity? There are things those people need at that level other than technology. You’re buying food, you’re trying to stay alive …’ The much discussed ‘digital divide’, he said, was far less important than the health-care divide, the human-rights divide, the education divide. In short, the richest man on earth no longer believed that unfettered capitalism would be the salvation of the 1.3 billion people whose daily income is a dollar or less – almost a quarter of the world’s population.
There is no historical evidence for the contention that simple laissez-faire is the prerequisite for trade and prosperity. The IMF may say so, but its own figures tell a different story. Its report on ‘The World Economy in the Twentieth Century’, published in May 2000, includes a graph – printed very small, perhaps in the hope that no one would notice – which shows that the period between 1950 and 1973 was by far the most successful of the twentieth century. This was an era characterised by capital controls, fixed exchange rates, strong trade unions, a large public sector and a general acceptance of government’s role in demand management. The average annual growth in ‘per capita real GDP’ throughout the world was 2.9 per cent – precisely twice as high as the average rate since then.
The myth that two decades of liberalisation have been accompanied by swift economic progress, particularly in the developing world, is hard to dislodge. ‘Few economists and almost no journalists have seen fit to make an issue out of what history will undoubtedly record as the most remarkable economic failure of the twentieth century aside from the Great Depression,’ writes Mark Weisbrot. Yet the data from the IMF and the World Bank are unambiguous. In Latin America and the Caribbean, GDP grew by 75 per cent per person from 1960 to 1980; in the next twenty years it rose by just 7 per cent. In sub-Saharan Africa there was an increase of about 34 per cent in the 1960s and 1970s; between 1980 and 2000 per-capita income actually fell by 15 per cent. Even if one includes the fast-growing economies of South and East Asia, average per-capita growth in 1980–2000 was less than half its average for the previous two decades. And, predictably enough, there has been a slackening in ‘social indicators’ such as life expectancy, literacy, child mortality and education.
Growth isn’t everything, of course, but as Weisbrot points out, ‘it’s all that the authorities who have directed policy for most of the developing world – the International Monetary Fund, the World Bank, the US Treasury department – have promised to deliver’. The prescriptions imposed by these authorities have created problems and then exacerbated them. Relative disparities in incomes are far wider than twenty years ago, and even in absolute terms there is little evidence of the ‘trickle-down’ effect in which Ronald Reagan and Margaret Thatcher believed so devoutly. The poorest 10 per cent of the world’s population – 400 million people – lived on 72 cents a day in 1980. Ten years later the figure was 79 cents, and by 1999 – after two decades of rampant liberalisation – it had slipped back to 78 cents. In seventy countries, people were on average poorer than they were in 1980. The income of the wretched of the earth hadn’t even kept pace with inflation.