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In the era of perpetual war
Globalisation is a notoriously difficult word to define. There is no 'proper' meaning for the term.1 'Globalisation' is not a settled part of our language but a site of unresolved conflict. Indeed, one might even be forgiven for concluding that the term is meaningless. This is not to suggest that there are no important issues caught up in the concept. There are, and we will come to them. In this address, we will pass through the main rhetorical puzzles associated with 'globalisation'. The trip will take us into history, which is my discipline, and the rival philosophical positions and political tactics that underlie the various meanings projected onto globalisation. My overall argument will be that the term is, broadly speaking, spent, at least for the moment, for 'globalisation' has not only been deeply marked by the conflict over its meaning; it has meanwhile been sidelined in the post-September 11 world. President George W. Bush is fond of saying that the world changed after September 11. One bit that certainly was changed is 'globalisation', such that we might soon discharge the term from active service altogether.
So profound have been the effects of the strikes of September 11 that it is only with some difficulty that we can now recall the world that the attacks eclipsed. Everywhere back then, you might remember, we were being told that the nation-state was withering away. In his 1995 book The End of the Nation State, Kenichi Ohmae, for example, declared that ‘the modern state itself – that artifact of the eighteenth and nineteenth centuries – has begun to crumble’. As Ohmae wrote, he became keener, claiming that ‘nations have already lost their role as meaningful units in the global economy of today's borderless world’.2
Ohmae was scarcely alone. Postmodern theorist Francis Fukuyama had already set the outer limits of the debate with his 1989 essay ‘The End of History?’ Fukuyama heralded the universal triumph of liberal democracy and the settling of history's big questions. Economic forces, he wrote in his follow-up book, ‘are now encouraging the breakdown of national barriers through the creation of a single, integrated market’. In part echoing Marx's famous predictions, Fukuyama assured us that we were being ushered into a world where technology would allow for ‘the limitless accumulation of wealth ... [with] an increasing homogenization of all human societies ... increasingly linked with one another through global markets and the spread of a universal consumer culture.’3 Locally, Paul Kelly emerged as the most prominent Australian globophile. ‘The old order is finished’, he wrote in his influential 1992 book, The End of Certainty. In what now reads as something of a period piece, Kelly declined to declare the end of history, settling for announcing the end of one era and ‘the challenge to create a new history’.4
All this hyperglobo-triumphalism – and the literature was, and is, immense – was being strongly challenged prior to al-Qaeda's strikes on the United States.5 If you can remember the ringing predictions of the borderless world, perhaps you will also be able to recall Genoa, Gothenburg, Prague, Melbourne and Seattle, for these cities were rocked by the largest demonstrations seen since the Vietnam War under the banner of 'anti-globalisation'. Mass protests over harsh economic policies, long a feature of the world economy's peripheries, were spreading contagion like through the metropolitan centres. In retrospect, it is now remarkable but true that world leaders were having serious difficulty finding a city on earth where they could safely meet in 2001.
September 11 was a circuit breaker on these politics. Globalisation was decisively pushed from the front pages of the world's media, and has not recovered its former position as a topic of widespread interest. Measured in terms of the dominant ideas of our times, we have moved decisively from the era of globalisation into one of perpetual war. The nation-state has not only failed to wither away, it is resurgent. Instead of a world regulated by markets, we have a world increasingly regulated by force of arms. Instead of smaller government, we have the biggest governments in history. Instead of the liberal utopia of a universal consumerist globalism, we have something disturbingly close to the reverse: resurgent unilateralism with fewer traditional restraints. International institutions, international norms, international law, and the logic and dignity of multilateralism itself have suffered repeated blows since September 11, as the ideologies and interests of states have once more been elevated to centre stage with all the attendant panoply of nationalism and patriotism, displacing the borderless individual economic agent of the globalisation era. Far from one world coming ready or not, we now have nations calling their own shots; notably one nation, the United States of America, declaring that all the others must be either ‘with us or against us’.
I will come back to war and globalisation. But first we will go back to the debate in the days prior to September 11. Secondly, I will outline some of the conclusions from my 2001 study, Globalisation: Australian Impacts. Finally, I will pull the strands together to make a practical observation for those who really do wish to understand how globalisation can be said to be driving Australian business. As a mode of proceeding, it will be convenient to define the pre-S11 globalisation debate with reference to the Australian government's rhetoric. Amid the multitude of official documents and utterances, anyone who has followed this rhetoric will know that the prime minister, John Howard, and the federal treasurer, Peter Costello, habitually press three claims in the speeches they make about globalisation. To define the debate, we will focus on these government constants; which are: first, that globalisation is about trade; secondly, that globalisation is inevitable; and thirdly, that globalisation is not new.
First, trade. The idea that globalisation just means more trade has some important dimensions. Yet the chief reason that the Australian government and many other globalisers tend to limit their preferred definition to 'more trade' is that they aim to frame globalisation within the traditional trade-versus-protection debate. This is more than a rhetorical debating trick, but not much more. Australia has always been a trading nation. The idea of nations specialising in what they do best, based on either their comparative or competitive advantages, is the most venerable theory in modern economics. The trade-versus-protection rhetoric, wherein globalisation is assumed to be wearing the white hat of trade, can be safely relied upon to enlist the support of the country's domestic trading interests and much of the public commentariat, who can draw reinforcement from conventional economic theory.
If the debate is framed this way, globalisers win the argument. Except under carefully defined situations, there is no reputable support for protectionism per se. Although public surveys still find popular support for protection, if you are publicly pegged as a protectionist, you will also be pegged as an ‘unrealistic sentimentalist’ by journalists such as Paul Kelly, or as someone who wants to take food off the tables of the world's poor by orthodox economists. There is no disputing that all countries have a mutual interest in an effective multilateral trading system. Theory says that an internationally competitive trading environment will weed out inefficiently utilised resources. Losses here will be the source of gains there. Resources scrapped as a consequence of competition will be reallocated by markets to more productive activities, yielding a net gain in production and a better result all round – 'a balance of gain' that will increase wealth and raise living standards. You cannot win a public debate on the theoretical merits if the debate is polarised into trade-versus-protectionism.
Yet there is more to the story of globalisation than international trade. A good example of the limitations of pure theory arose when I was researching my globalisation book. The prime minister was in Japan, from where he was broadcast exhorting Japanese business leaders to allow international competition in that country's protected markets. After listening to the prime minister, I looked up the top 15 companies which export from Australia and saw that six of these were in fact subsidiaries of Japanese based companies. These six firms were also among the world's largest corporations, with annual revenues worth over half the value of the stock listed on the Australian exchange, and about a third more than Australia's GDP. Theoretically, lower Japanese tariffs may result in an increase in global wealth, weeding out locally protected Japanese firms whose resources might be more productively employed elsewhere. But how can the prime minister be confident of a gain for Australia from such an exercise? Given that the major Australian exporters likely to gain would be Japan-based subsidiaries located in the antipodes, the removal of Japanese tariffs may amount to little more than the removal of an intra-company tax, the benefit from which may reside entirely in Japan, or go elsewhere.6
The domestic spillover from lower tariffs in these circumstances is not clear and depends on the extent to which global production systems are back-linked with the local economy. A lower tariff could mean higher returns to overseas shareholders. International competition could also mean that any increase in Australian-based production will depend on local labour accepting lower living standards. Either or both results may only exacerbate the 'imbalance of gain' between social classes around the world. The point is that we can no longer assume competition is between firms for nationally repatriated returns from a country's specific endowments, as the theory of comparative advantage assumes. The world may become wealthier if Japan reduces its trade barriers but there is no certainty that any particular parts of the earth will benefit. On the contrary, unlimited economic competition in an era of increasingly mobile capital is a license for a massive rationalisation of business, which can destroy local production in specific places, scorching those parts of the earth that will not be able to compete internationally on any basis.
At the extremes, this process is untenable. Imagine, for example, if economists could show that Australia would realise efficiency gains by importing everything currently produced in Tasmania and South Australia from New Zealand and Singapore. As unlikely as this scenario may sound, if the efficiency gains from such large-scale provincial closures (‘structural adjustments’) could be calculated, there would be no objection from liberal economic theory. In principle, there is no reason why the ghost towns of yesteryear will not reappear as countries in tomorrowland.
Of course, it is impossible to imagine closing entire Australian states. The theory may be spaceless and timeless but the real world is not. At the extremities, there are evident social and political limits on trade in practice, just as there are on protectionism. The public policy problem is not one of choosing openness or autarchy, but of arriving at the most effective mix of national policies and international integration.
Let me take another example that illustrates the phony presumptions implicit within the trade-versus-protection routine. Australian politicians frequently climb up on their high horses to lecture the world about European agricultural protection. The prime minister was in Davos lecturing Europeans on the topic only a month or so ago. There is a good deal of hypocrisy in this stance. Protection is not only achieved by artificially raising foreign prices. Protection can be equally powerfully implemented by artificially lowering local prices. One way producers can lower local prices is to trash their productive assets and pass the maintenance costs on to the public. I am talking about salinity, where land clearing for past agricultural production has put some 15 million Australian hectares at risk, is costing $250 million a year in lost production, may finish Australia as a producer of some cereal and grazing industries, is affecting up to 20 per cent of road and rail infrastructure, and is threatening the lives of many country towns.7 Estimates for publicly subsidising the cost of repairing the private damage to productive Australian land runs into tens of billions of dollars.8 To be sure, present citizens have an ethical duty of care for the land owed to future generations, even if this was overlooked in the past. The damage from salinity should be repaired. But let us not mince words. This salinity problem is the result of protectionism, and we should call the problem for what it is. In theory and practice, the artificial lowering of local agricultural prices by excluding the costs of maintaining the most basic capital asset in these industries amounts to protectionism as much as Europe's price maintenance schemes.
As I have said, no-one can sensibly oppose trade in principle because this would ruin living standards. But let us not pretend that the extremities under a laissez faire regime will always be socially, politically or indeed economically acceptable, or that Australia comes to this debate with clean hands. There are other arguments I could mount to illustrate the complexity of the trade debate. There are thorny issues associated with allowing the special case of water and other essential infrastructure to become sites of foreign direct investment.9 There are questions about ‘cultural products’. There are also instances of unabashed official doublespeak, as in the recent case of the US-Australia so-called ‘free trade’ agreement, which in fact unfortunately extended protectionism in several areas.10
Finally, it is not well appreciated that, for all the ideological and policy thunder that has accompanied the lowering of trade barriers around the world over the last two decades or so, world economic growth has not leapt forward. On the contrary, growth has dramatically slowed. Per capita world economic growth during the globalising 1990s was less than a third the growth rate of the 1960s.11 Whatever the contribution of the concurrent rapid growth of international trade over this time, it plainly has not brought the economic manna from heaven that globalisation's advocates would have us believe is axiomatic.12
All this is to say that the trade debate needs intelligence, not dogma. Blindly insisting that globalisation is only about 'free trade' and resting on the venerable theory of comparative advantage in order to paint 'anti-globalisers' as protectionists hides more than it reveals. This rhetorical tendency is a good example of why we might despair over the term 'globalisation'. The insistence on the 'trade-versus-protection' paradigm masks the issues in order to win public globalisation arguments, not reveal useful truth. Meanwhile, in the real world, the trade-versus-protection debate will not be about one or the other extremity, but continue to be about where the best policy combination lies.
Secondly, we have the notion that globalisation is inevitable. This is a conservative form of vulgar Marxism in that it is deterministic in a way that would never have been acceptable to conservative philosophers such as Karl Popper and Fred Hayek. The unvarnished truth here is that all practising politicians know that the strategic objective of running the 'inevitability' line is to confect a general feeling that any popular attempt to influence the march of globalisation is a waste. Politics is politics. More importantly, the inevitability slogan also goes to another polemical sleight-of-hand, and in this instance the jiggery-pokery is not only part of the Australian government's patter. The insistence on inevitability draws its rhetorical strength from the popular identification of globalisation with new technology, particularly the internet.
Technology-driven explanations for globalisation beg perspective. Certainly technology is making the world a smaller place in several respects, and this is re-configuring aspects of our social and economic relations, as technological innovation has for hundreds of years. Certainly globalisation, however defined, is occurring through the medium of technologies, new and old, and these are also conditioning the intensity with which we may be experiencing the phenomenon. But the effects of technology are not unlimited, as the NASDAQ discovered a few years ago with the bursting of the internet stock-market bubble, a bust that flowed through to the telecom carriers, their equipment suppliers and their component makers, pushing the United States into recession. During the peak of the preceding US stock-market boom, it has been estimated that enough fibre optic was laid to circle the globe 1566 times, not counting sub-oceanic links.13 Emblematic of how far the globalisers had inflated their concept, the present cable utilisation rate is less than five per cent.14 The bursting of the communication-information technology bubble also destroyed the parallel characterisation of the globalisation era as the 'Information Age', further diluting public and policy interest.
More deeply, globalisation cannot simply be reduced to an inevitable function of technology in an imaginary vacuum of power relations. As terrorist groups have frequently demonstrated, technology can be used in many different ways for good or ill. New technology by definition increases humanity's options, it does not determine them; since this depends on which way we chose, or are compelled, to use it. In looking closely into the government's 'inevitability' rhetoric, it thus eventuates that this is really only a second bid to embed the globalisation debate within a much older and more politically neutral history; in this instance, the history that explains the progress of technology through the ages. The strategic attractiveness of this rhetoric stems from there being a genuine sense of inevitability attached to this older story, as humans have convincingly shown themselves to be an inventive species. But, again, this pitch only avoids debate about globalisation, which must be concerned with what determines the specific ways in which today's technology is used to what effects. The inevitability rhetoric aims only to refuse debate by positioning globalisation critics as the enemies of technical progress, no less. Peter Costello is fond of this tactic, claiming on one well-publicised occasion that ‘railing against globalisation is like railing against the telephone’.15
To repeat, technological advances are continuing to make the world smaller, as they have for hundreds of years, and as they presumably will do for hundreds to come. My objection to this line is that it is not at all clear that recent developments in technology have predicated shrinkages in time and space equivalent in significance to the major advances of the past – as in the examples of the telegraph, telephone, aircraft and television – and nor is it clear that the recent advances will look dramatic in the future.16 That the world is getting smaller is a real story with significant consequences, and you may call that 'globalisation' if you wish, as many do. Yet, if this slide is allowed, it becomes impossible to know how the concept can be disentangled from the tautology of referring to the history of the world in general. Globalisation defined as everything may as well be globalisation defined as nothing.
It's nothing new
This brings us neatly to the third string of government rhetoric, which is the insistence that globalisation is 'nothing new'. In a sense, this rhetoric both rests upon and supports the other two lines. As trade and technology both date from antiquity, by insisting on them as defining characteristics of globalisation, it becomes possible to conclude that nothing new is happening at all. What we are experiencing is merely more incremental progress of a long established kind, so everyone should just get over it. Again, it is Peter Costello who is most fond of hyping this line, suggesting on one occasion that (non-Aboriginal) Australia was created as a ‘consequence of globalisation’.17 Those who are still alert will recall that this is not what they were taught at school and you may be disturbed by the fact that the word 'globalisation' did not exist until nearly 200 years after Australia became a colony of imperial Britain. Costello's nonsense merely reminds us that reading history backwards to favour a preferred version of the present has been a tool of propagandists for millennia.
It would be wrong to imagine that Howard and Costello are exceptional in their windy perfidy. When Costello said that Australia was a consequence of globalisation, I wrote a column in the Australian Financial Review suggesting that he might as well claim that globalisation began with Adam and Eve.18 A couple of weeks later, the president of the World Bank, James Wolfensohn, blew into town and revealed that globalisation did indeed begin with ‘Adam and Eve’. The World Bank's resort to creationism prompted me to write a further column, this time to point out that Wolfensohn must be wrong, for surely globalisation began as Genesis instructs when ‘the spirit of God moved on the face of the waters’.19
In sum, the official rhetoric does not aim to engage citizens on the distinguishing, difficult and disturbing developments of our era that are harboured within the debate over globalisation. On the contrary, the government's rhetoric has been overwhelmingly concerned with shepherding the debate past the public mind; with diverting the turbulent waters of protest into a stagnant lake of meaningless spin.
Particularly unfortunate are the connotations that come with the alleged continuity between globalisation and the Age of Imperialism – the 19th century attempt by a handful of rival states to formally conquer, annex and administer the world as a racist system of protected colonial empires. Still, there are some striking rhetorical parallels between 'globalisation' and 'imperialism.' In the same way that the concept of globalisation became a 1990s banner for convening contemporary discussion about world economic, social and political developments, so too did the concept of imperialism in the 1890s. Just as globalisation was being discussed everywhere in the 1990s, so too did people in the 1890s feel that imperialism was both a novel and central historical development of their times. Indeed, even when ‘imperialism’ was a topic ‘on everybody's lips’, there was a school of thought that trenchantly maintained that the concept was ‘nothing new’.20 And just as imperialism ended with war and took on the pejorative connotations that it has never shed, so too, it seems, has globalisation.
So, what is it?
We come back to the question of what is globalisation. Charged political rhetoric aside, there are two kinds of reasonable answers to this question. The first is to disaggregate the question into specific contexts, in which case we will find that the concept amounts to different things and ideas in different places with different policy implications. In my study, for example, it was apparent that the shipping industry, for example, was being rationalised on a world-wide basis, pretty much along the lines of neo-liberal globalisation as advertised. The industry has been rationalised in favour of an east-west 'main street' with multi-modal continental land bridges running across the northern hemisphere, from which avenues run down to southern hemisphere hubs, that in turn have feeder spokes to cul de sacs, of which Australia is one – giving us, as an example of the various policy implications, an enhanced geo-political interest in the hub of Singapore.21 As an island trading nation, the interdependence, or rank dependence, of Australia's economic infrastructure in this setting is stark.
On the other hand, this rationalising picture is not so true of the airline industry, where governments remain major players.22 The telecommunications industry presents a different picture, being at a much earlier stage of development, wherein government policy and protectionism still have considerable sway.23 Education presents a radically different example again. Public investment in education can, at once, improve opportunities to participate in the so-called knowledge-based industries, develop capacities that will enhance competitive international advantages, assist in preparing individuals to be thoughtful workers, reflective citizens and responsible adults, and provide a framework that can counter-attack adverse international effects on national institutions and relationships.24 Far from beckoning neo-liberal policy prescriptions, national public education systems beg old-fashioned public investment in the context of globalisation, however defined.
We could go on in this vein, reporting on investigations into different industries and parts of Australia's social and economic infrastructure, identifying stages and patterns of development, defining current limitations and pressures, and thinking this intelligence through in terms of the various meanings attached to globalisation. This is useful work. Alternatively, we can step back and attempt to aggregate the problem of 'globalisation'. We can put the official rhetoric aside and ask what is distinctly different about the recent period of the world's development. What are the features of our era that might 'pertain to or embrace the world', such that they could qualify this period in history for the application of a grand five-syllable word like 'globalisation'? I will now conclude more positively by suggesting that a substantive definition of globalisation must include three large – or 'global' – scale developments: the explosive growth of financial capital, developments in the organisation of productive capital, and the growth of inequality.
The recent growth of financial capital is unprecedented. In 1973 the value of foreign exchange transactions was less than twice the value of the transactions required to facilitate real international trade in goods and services. In 1980 the ratio reached about 10 to 1. By 1992 the ratio was some 50 to 1. By 1995 it was 70 to 1. More recently, it has been estimated that the value of foreign exchange transactions compared to the value of the real international trading economy is 100 to 1.25 This prodigious growth in financial capital amounts to the imposition of a giant roller upon the tiny pin of the real economy, with which the values must ultimately be reconciled. The free movement of financial capital has been with us before but not in these dimensions. In an important distinction with the Age of Imperialism, most of today's productive capital flows are between developed economies, as they were in the 1930s, with net outflows from developing countries.26
Worse, capital markets can move according to herd mentalities in line with Keynes' beauty contest assumptions, with scant regard for productive realities. Over 80 per cent of international transactions are 'round trip' operations of less than two weeks, driven by no more than arbitrage, hedging and speculation, but their sheer size and the inherent volatility of this most imperfect of markets has exposed the world's economies to massive new risks.27 The damage the financial gyrations can cause is amply demonstrated by Argentina and Chile in 1980, Mexico in 1982, 1994 and 1998, East-Asia in 1997-98, the United States (via the Long Term Capital Management hedge fund) and Russia in 1998, Brazil in 1999, Turkey in 2001, and by (neo-liberal poster-child) Argentina and Brazil (again) in 2002.
It is the free movement of financial capital that at least partly substantively defines globalisation, not old fashioned trade in goods and services. The financial volatility that has characterised the period of globalisation severely interrupts trade, sharply depreciating currencies, disrupting interest and exchange rates, and causing declining output, employment losses, increased poverty and contagion among competitor countries forced to match the depreciations. As a consequence, practically no developing country now has a truly free-floating currency, and even official economists today question the benefits of open capital markets. A coherent concept of globalisation would integrate multilateral exchange rate management with objectives for global economic growth, and there is no shortage of ideas on how this might be done.28
Productive capital has been progressively organised in novel international ways. To take advantage of differences in costs, resources, logistics and markets, production processes have been unbundled and spread across far-flung countries to create 'global value chains'. In 1970 there were an estimated 7000 transnational corporations, in 1980 some 39,000, and by 2000 over 60,000 with some 850,000 overseas affiliates, accounting for around 25 per cent of the value of world production and two-thirds of world trade, with over a third of world exports now intra-firm transactions.29 As mentioned above in the discussion of trade, the benefits of transnational corporations for host countries are problematic, as often as not yielding few spillover effects in terms of employment, technology and skills, and meanwhile crowding out local firms with their capacity to dominate markets.
The corporations are also markedly consolidating in ownership, with the largest having more resources than most nations. The growth of global production systems has been accompanied by a concentration of control over particular industries. In 1995, for example, just five corporations controlled around 50 per cent or more of world output in each of ten of the major world industrial sectors. In consumer durables, the top five corporations accounted for 70 per cent of world output.30 Most branches of industry are now dominated by a small number of large corporations, which have the power to determine access to their capital resources and technologies. Their dominance can allow them to directly or indirectly dictate market development, investment, innovation and employment conditions for the rest of their industry throughout most of the world. Again, at the least, a coherent concept of globalisation would include an international antitrust authority, if competition is genuinely (as distinct from rhetorically) integral to the concept.
The third defining characteristic of the world economy during the period of globalisation rhetoric has been the growth of inequality. It should not need to be said that a sustainable concept of globalisation must provide for the many rather than the few. The growth of inequality is so salient to the debate that it is also hotly contested. Yet it is telling that even hyperglobalists are forced to rely on improved living standards in China to allege poverty alleviation, meanwhile excluding sub-Sahara Africa as a special case.31 Yet China has not embraced the liberal policy package at the heart of official globalisation rhetoric, and especially not compared with the sub-Sahara.32 The awkward fact for all those who bowed at the last rites over the nation-state in the globalisation era is that a single nation – and communist China, at that – more than accounts for the entire decline in absolute worldwide poverty since 1990.33
While the contention that globalisation has alleviated absolute poverty appears as barren as the claims that it has fostered economic growth; the easier observation to make is that inequality between and within nations has exploded because the rich have gotten richer. In the United States, the income share of the top 1 per cent of earners has reached 17 per cent of gross income, a level not seen since the 1920s, and historians have busied themselves attempting to discover past eras when there have been single individuals commanding so much more wealth than average citizens as people such as Bill Gates and George Soros.34 The richest people of our time have long dwarfed the Carnegies and Rockefellers of legend. The polarisation has been occurring at many levels and in many dimensions. In the United States, for example, over the 20 years to 1998, the pay ratio of corporate executives to factory workers widened by a factor of ten, to stand at an extraordinary 419 to 1. Over the same period, the poorest 20 per cent of Americans received 9 per cent less income after inflation.35 Perhaps James Galbraith has most thoroughly mapped the global pattern of severely rising inequality from the early 1980s, with limited cheery exceptions in Scandinavia and pre-97 Southeast Asia. 36 Many observers have drawn attention to the gendered nature of the growth in inequality and the inequities that have fallen on children and especially indigenous populations.37
That said, as Amartya Sen has pointed out, the academic battles over whether the poor have become a little more or less poor are somewhat grotesque in the context of ‘the appalling poverty and the staggering inequality that characterises the contemporary world.’38 Incomes, moreover, are only one measure of wellbeing. In Australia, despite the pleasing current official 5 per cent unemployment rate, there remain many outer suburban and regional areas with high unemployment, most jobs created over the past 12 years have been casual, and the government is currently planning to weaken institutional support for job security and returns to labour. More fundamentally, the life expectancy of African Americans is still about the same as for the people of India and China, and for all three of these groups, their expectancy is substantially higher than for Australia's Aboriginal people.39
My definition of globalisation has three substantive attributes: the unprecedented growth and unruly power of financial capital; the unprecedented organisation, growth and concentration of productive capital; and the explosive growth of inequality. All three attributes have serious and complex issues associated with them, and the relations between each will withstand considerable ongoing research. Yet so thick is the official rhetorical fog surrounding 'globalisation' that, as I said at the outset, it must be doubted whether the term helps to bring these issues into focus, issues that have in any event been sidelined by the wars that have wracked the world since 2001 and show no signs of going away. In concluding Globalisation: Australian Impacts, I referred to the growing inequality, and wrote:
One conclusion is certain in a world that continues to shrink in time and space: these growing disparities, which are an integral part of the present meaning of globalisation, are not only morally repugnant and economically wasteful; they are also ultimately politically unsustainable.40
Twelve days after the book was published, the Islamic militants crashed those planes into those buildings in New York and Washington.41 The world changed that day, as George W. Bush says. 'Globalisation' was shuffled off into the background. Nations, war and religion retook the foreground, with the United States drawing on new lines of ideological supply, ignoring economic imbalances that would have sunk a developing nation, increasing protection, and marginalising appeals to universalism, whether neo-liberal globalisation or the international humanism embodied by the United Nations.42
In the 1980s and 1990s the world was conditioned to accept that governments could not manage an efficient cake-stall, let alone a national health service; today, we are exhorted to accept that these same governments can manage the destruction and reconstruction of entire nations in distant and dramatically different parts of the world. Whereas in the 1990s we were constantly being told that we were on the threshold of a borderless world, today we have a world dominated by a few national powers, as we have had for hundreds of years. Whereas in the 1990s the largest demonstrations seen since the Vietnam War were against globalisation, these have since been eclipsed by demonstrations against the Iraq War. It surely is a tremendous irony that, far from withering away, the era of globalisation has been succeeded by a period wherein powerful states have re-imagined themselves so prophetic that they can make history itself. Where is the neo-liberal doctrine of ‘government failure’ when we need it?
Australia has so far been fortunate in the circumstances; primarily because of its proximity to East Asia, and especially China, which has experienced a decade of extraordinary annual economic growth (in the vicinity of 10 per cent).43 Australia avoided the hi-tech boom and bust, and favourable trade of the traditional commodity variety has granted an unusually long period of economic growth, albeit at the cost of a housing bubble, the growth of foreign liabilities, work intensification, failing infrastructure, widespread insecurity and declining living standards for those trapped in the social margins. To illustrate how lucky – as distinct from astute – Australia has been, let me finish with a story about a proposal that the Australian Bureau of Statistics placed before the Howard government shortly after it was first elected in 1996. The story should be of interest to anyone concerned about the ways and means by which globalisation can be understood to be driving Australian business.
What the ABS put to the government was a discussion paper on Options for Australian Globalisation Statistics.44 A model of common sense, the paper proposed filling two gaping statistical holes. First, the ABS proposed identifying the foreign ownership characteristics of businesses located in Australia, which would have involved a shareholder survey linked to existing business data. Secondly, to balance this information, it also proposed developing statistics on Australian-owned businesses operating abroad. The shareholder survey would have allowed us to map and compare the separate impact of foreign and Australian owned businesses on production, income generation, exports and imports, net income from abroad, and more. With a real grasp on foreign ownership, we would have been able to discover the local industries that have been most deeply penetrated, and where the levels of penetration are changing over time. Through survey linkages, we would have also been able to trace the relationship between investment, trade and employment, to compare earnings and employment practices, to study the real empirical effects of global production systems on prices, technology transfer and R&D. By combining the statistics with industry experience, case studies and models, we would have been able to assess the impact of globalisation on particular regions and competition generally. We would have been able to identify the best sources of investment and compare the Australian experience with other countries that host the same investors.
In short, if the ABS surveys had proceeded, we would now be able to systematically empirically test all the bluster about the benefits of globalisation. The research would have hardly been a daring step. The same or a much deeper level of information is routinely collected by, for example, the governments of the United States, Canada and Japan. Indeed, the US not only comprehensively surveys its foreign owned businesses, with links to its census and labour statistics; it also collects information on the ultimate beneficiaries of these businesses which, unlike the foreign parent itself, may be a US resident. Australia's Howard government refused the trivial budget allocation to fund the surveys. Globalisation – not only does the government not want you to know what is happening: it doesn't want to know.
Christopher Sheil is a research fellow in the School of History at the University of New South Wales and the editor of Globalisation: Australian Impacts (UNSW Press, 2001). This is an edited version of his keynote address to CPA Business Jigsaw, convened in Adelaide by CPA Australia on 10 March 2005.
1. For the etymology of 'globalisation', see Christopher Sheil, Globalisation: Australian Impacts, UNSW Press, Sydney, 2001a, pp. 6-10.
2. Kenichi Ohmae, The End of the Nation State: The Rise of Regional Economies, Free Press, New York, 1995 (Ohmae's emphasis). Also by Ohmae, The Borderless World, Collins, London, 1990.
3. Francis Fukuyama, The End of History and the Last Man, Penguin, London, 1992, pp. xiv-xv.
4. Paul Kelly, The End of Certainty: The Story of the 1980s, Allen & Unwin, Sydney, pp. 661, 686.
5. See in particular, Paul Hirst and Grahame Thompson, Globalization in Question, Polity Press, London, 1996.
6. For a fuller discussion, see Sheil (2001a), pp. 3-4.
9. See Christopher Sheil, Water's Fall: Running the Risks with Economic Rationalism, Pluto Press, Sydney, 2000.
11. The per capita world annual GDP growth (mean per decade) for the 1960s was approx. 3.5 per cent, for the 1970s approx. 2 per cent, for the 1980s approx 1.3 per cent, for the 1990s 1 per cent, and for the 2000s less still, so far. See World Bank statistics, cited in World Commission on the Social Dimension of Globalization (WCSDG), A Fair Globalization - Creating Opportunities For All, International Labor Office, Geneva, 2004, p. 36. See also, Richard Kozul-Wright and Paul Rayment, ‘Globalization reloaded: An UNCTAD perspective, UNCTAD Discussion Paper, 167, United Nations Conference on Trade and Development, Geneva, 2004 (‘On a regional basis (excluding China) growth slowed everywhere between 1980 and 2000 and became more volatile’ p. 26). In a further contradiction, the recovery from the 2000 slowdown appears to be largely due to old fashioned Keynsian demand stimulus in the US combined with the China-centered boom in East Asia. The UK also avoided recession in the old fashioned way, by active counter-cyclical fiscal policy, distinguishing it from the euro zone where demand has remained weak.
12. The whole case in favour of trade to boost economic growth now looks to have been hugely exaggerated. See: Richard Freeman, ‘Trade wars: The exaggerated impact of trade in economic debate’, NBER Working Papers, 10000, Cambridge Mas, National Bureau of Economic Research, 2003 ; Also Kozul-Wright and Rayment (2004).
15. Christopher Sheil, ‘Exposing the rocks in the rhetoric’, Australian Financial Review (feature article), 31 August 2001b.
17. Sheil (2001b).
18. Christopher Sheil, ‘Costello and the march of globalisation’, Australian Financial Review, 30 July 2001c.
19. Sheil (2001b).
20. Eric Hobsbawm, The Age of Empire, 1975-1914, Weidenfeld & Nicholson, London, pp. 60.
21. See Peter J Rimmer, ‘A Cul-De-Sac off Main Street: Transport’, in Sheil (2001a), pp. 35-57.
24. Terri Seddon & Simon Marginson, ‘The Crisis Trifecta: Education’, in Sheil (2001a). 202-18.
25. John Eatwell and Lance Taylor, Global Finance at Risk: The Case for International Regulation, Polity, Press, Cambridge, 2000, pp 3-4; See also John Quiggin (2001), pp. 25, 31.
26. ‘[developing and transition economies] recorded a net export of capital of more than $200 billion to the rest of the world in 2003. Thus they further increased their net export of capital to developed countries by 45 per cent from the high of level of 2002.’ United Nations Conference on Trade and Development (UNCTAD), Trade and Development Report, 2004, United Nations, New York, 2004, p. 57.27. Ibid., p.vii.
28. See, for example, Eatwell and Taylor; Quiggin (2001); and Joseph Stiglitz, Globalization and Its Discontents, Allen Lane, London 2002.
29. See Michael Paddon, ‘Making Australia Home: Corporations’, in Sheil (2001a), pp. 98; and WCSDG, pp. 32-33.
30. Paddon, pp. 100-1.
31. ‘This debate has mainly turned around two variables - the definition of globalisation and the difficulties associated with the different ways of calculating poverty and inequality, particularly between countries. On measuring globalisation, the World Bank, for example, has often used changes in trade/GDP ratios, which has the convenient result of putting China and India in the globalisers' camp, while excluding poorly performing economies. On the measurement issue, the choices include ‘countries weighted by population or not; incomes converted to common currency at market exchange rates or with purchasing power parity (PPP) converters; an averaging co-efficient like the Gini as measure of polarization (e.g. income of the top 10 per cent over the bottom 10 per cent; or average income of different regions, e.g. Latin America, as a proportion of that of the North, or the US); national income accounts or household surveys; Penn World Tables or Angus Maddison; Geary-Khamis PPPs or Afriat PPPs; sample countries; time period; and more.’ (Robert Wade, ‘Inequality and Globalization: Comment on Firebaugh and Goesling’, November 12, 2004, Center for Global, International and Regional Studies, Paper CGIRS-2004-10). For a larger discussion, see Peter Svedberg, ‘Income distribution across countries: how it is measured and what do the results show?’, Paper 698, Institute for International Economic Studies, Stockholm University, September 2001. Whichever way you cut it, it seems, poverty success stories from 'globalisation' ironically turn on the ‘meaningful unit’ that is one nation, which is, in a further irony, communist China.
32. The distinction is between 'openness' (trade policy) and 'outwardness' (trade volumes). China's outward economic policies have violated virtually every neo-liberal rule and India likewise has refused to dismantle most of its protectionist regime and open itself to world financial markets. See Dani Rodrick ‘Globalization for Whom? Harvard Magazine, July-August 2002, Also see James K Galbraith, ‘Debunking the Economist - again’, Salon, 22 March 2004 (‘Is this the golden age of global capitalism, really? Or is it something closer to a golden age of reformed socialism in two places [China and India] - alongside an age of disasters for those who followed the prescriptions favoured by the Economist? In truth, countries that followed the IMF-World Bank prescriptions to the letter - Argentina, say, or Russia in the early 1990s - have seen catastrophe worse in every way than the Great Depression of the 1930s was for us.’)
33. ‘The number of people living in absolute poverty worldwide has declined significantly from 1,237 million in 1990 to 1,100 million in 2000 ... In China alone the number of people living in poverty declined from 361 million to 204 million.’ WCSDG, p. 44.
34. WCSDG, p. 42; Eric Hobsbawm, The New Century, Little, Brown and Company, London, 2000, p. 89. (respectively)
35. Hobsbawm (2000), p. 163-4.
36. James K Galbraith, ‘By the Numbers’, Foreign Affairs, July/August 2002.
37. See, for example, WCSDG, pp. 46-8.
40. Sheil (2001a), p. 287.
41. It would be just as foolish to suggest that the terrorists were products of globalisation as it would be to imagine that the gross inequalities globalisation has produced do not help account for the sympathetic contexts within which the terrorist are shielded and drawn.
42. Irving Kristol, the immediate ideological father of Washington's 'neocons' and the actual father of Republican identity, William Kristol, makes his antipathy to neo-liberalism plain in his 1995 book Neoconservatism: The Autobiography of an Idea (Free Press, 1995). Kristol dismisses liberalism outright as ‘a metaphysics and a mythology that is woefully blind to human and political reality’. He slams the ‘economic man’ of ‘modern economics’, distances himself from Friedrich Hayek and Milton Friedman, embraces populist democracy, and pleads for re-charging society with politics and religion. In an eerie statement when read from the present perspective, Kristol complains that ‘No mere utilitarian definition of civic loyalty is going to convince anyone that it makes sense for him to die for his country’. For the neoconservative direction, see Shadia Drury, Leo Strauss and the American Right, St Martin's Press, New York, 1998.
43. China's extraordinary annual GDP growth (percentage change over previous year), compared with world growth (in brackets) has been: 1990-2000: 10.3 (2.3); 1998: 7.8 (2.2); 1999: 7.1 (3.0); 2000: 8.0 (4.0); 2001: 7.5 (1.4); 2002: 8.0 (1.7); 2003: 9.1 (2.6); 2004: 8.5 (3.8). India's growth over the same period has been: 6.0; 6.0; 7.1; 4.0; 5.5; 4.6' 7.4; 6.5. See UNCTAD, pp. 4 & 6.
44. Australian Bureau of Statistics, Options for Australian globalisation statistics, Discussion paper, Canberra, 1997.
Read sample chapters from Globalisation: Australian Impacts:
- Globalisation is ... Globalisation: Introduction, by Christopher Sheil
- The Fall and Rise of the Global Economy: Finance, by John Quiggin
- Trade Wars in the Information Economy: Telecommunications, by Ros Eason
- Thank You Very Much and Good Luck: Media, by Terry Flew & Stuart Cunningham
- Managing the New Social Risks: Welfare, by Deborah Mitchell
- It Never Has Been Easy: Democracy, by Lionel Orchard