Myths of Globalization: Noam Chomsky and Ha-Joon Chang in Conversation

By C.J. Polychroniou, Truthout | Interview - Since the late 1970s, the world's economy and dominant nations have been marching to the tune of (neoliberal) globalization, whose impact and effects on average people's livelihood and communities everywhere are generating great popular discontent, accompanied by a rising wave of nationalist and anti-elitist sentiments. But what exactly is driving globalization? And who really benefits from globalization? Are globalization and capitalism interwoven? How do we deal with the growing levels of inequality and massive economic insecurity? Should progressives and radicals rally behind the call for the introduction of a universal basic income? In the unique and exclusive interview below, two leading minds of our time, linguist and public intellectual Noam Chomsky and Cambridge University economist Ha-Joon Chang, share their views on these essential questions. 

C. J. Polychroniou: Globalization is usually referred to as a process of interaction and integration among the economies and people of the world through international trade and foreign investment with the aid of information technology. Is globalization then simply a neutral, inevitable process of economic, social and technological interlinkages, or something of a more political nature in which state action produces global transformations (state-led globalization)?

Ha-Joon Chang: The biggest myth about globalization is that it is a process driven by technological progress. This has allowed the defenders of globalization to brand the critics as "modern Luddites" who are trying to turn back the clock against the relentless progress of science and technology.
However, if technology is what determines the degree of globalization, how can you explain that the world was far more globalized in the late 19th and the early 20th century than in the mid-20th century? During the first Liberal era, roughly between 1870 and 1914, we relied upon steamships and wired telegraphy, but the world economy was on almost all accounts more globalized than during the far less liberal period in the mid-20th century (roughly between 1945 and 1973), when we had all the technologies of transportation and communications that we have today, except for the internet and cellular phones, albeit in less efficient forms.

The reason why the world was much less globalized in the latter period is that, during the period, most countries imposed rather significant restrictions on the movements of goods, services, capital and people, and liberalized them only gradually. What is notable is that, despite [its] lower degree of globalization … this period is when capitalism has done the best: the fastest growth, the lowest degree of inequality, the highest degree of financial stability, and -- in the case of the advanced capitalist economies -- the lowest level of unemployment in the 250-year history of capitalism. This is why the period is often called "the Golden Age of Capitalism."

Technology only sets the outer boundary of globalization -- it was impossible for the world to reach a high degree of globalization with only sail ships. It is economic policy (or politics, if you like) that determines exactly how much globalization is achieved in what areas. The current form of market-oriented and corporate-driven globalization is not the only -- not to speak of being the best -- possible form of globalization. A more equitable, more dynamic and more sustainable form of globalization is possible.

We know that globalization properly began in the 15th century, and that there have been different stages of globalization since, with each stage reflecting the underlying impact of imperial state power and of the transformations that were taking place in institutional forms, such as firms and the emergence of new technologies and communications. What distinguishes the current stage of globalization (1973-present) from previous ones?

Chang: The current stage of globalization is different from the previous ones in two important ways.
The first difference is that there is less open imperialism. Before 1945, the advanced capitalist countries practised [overt] imperialism. They colonized weaker countries or imposed "unequal treaties" on them, which made them virtual colonies -- for example, they occupied parts of territories through "leasing," deprived them of the right to set tariffs, etc.

Since 1945, we have seen the emergence of a global system that rejects such naked imperialism. There has been a continuous process of de-colonialization and, once you get sovereignty, you became a member of the United Nations, which is based upon the principle of one-country-one-vote.
Of course, the practice has been different -- the permanent members of the Security Council of the UN have a veto and many international economic organizations (the International Monetary Fund, the World Bank) are run on the principle of one-dollar-one-vote (voting rights are linked to paid-in capital). However, even so, the post-1945 world order was immeasurably better than the one that came before it.

Unfortunately, starting in the 1980s but accelerating from the mid-1990s, there has been a rollback of the sovereignty that the post-colonial countries had been enjoying. The birth of the WTO (World Trade Organization) in 1995 has shrunk the "policy space" for developing countries. The shrinkage was intensified by subsequent series of bilateral and regional trade and investment agreements between rich countries and developing ones, like Free Trade Agreements with the US and Economic Partnership agreements with the European Union.

The second thing that distinguishes the post-1973 globalization is that it has been driven by transnational corporations far more than before. Transnational corporations existed even from the late 19th century, but their economic importance has vastly increased since the 1980s. They have also influenced the shaping of the global rules in a way that enhances their power. Most importantly, they have inserted the investor-state dispute settlement (ISDS) mechanism into many international agreements. Through this mechanism, transnational corporations can take governments to a tribunal of three adjudicators, drawn from a pool of largely pro-corporate international commercial lawyers, for having reduced their profits through regulations. This is an unprecedented extension of corporate power.

Noam, are globalization and capitalism different?


Noam Chomsky: If by "globalization" we mean international integration, then it long pre-dates capitalism... read more:
http://www.truth-out.org/opinion/item/41037-myths-of-globalization-noam-chomsky-and-ha-joon-chang-in-conversation

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