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  Issue No 107 Official Organ of LaborNet 17 August 2001  

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Review

Globalisation Is Globalisation


In an extract from his book, Christopher Shiel argues that the official Australian perspective on globalisation is strikingly narrow.

 
 

GLOBALISATION

Christopher Sheil

At lunch in Tokyo on 6th July 1999, the Australian Prime Minister, John Howard, spoke to an audience of Japanese business representatives about globalisation.

'Economies wishing to grow and provide more and better jobs and higher living standards must become more flexible and competitive globally,' he said, ruling out what he implied was the only alternative: 'We do not have the option of dropping out of the world economy.' This is Australia's official policy on globalisation in a nutshell.

'Globalisation, however,' Howard acknowledged, 'is creating deep social pain and political costs as sensitive sectors are opened up to outside competition and go through difficult adjustments.'

This is Australia's official concession to the critics of globalisation; a concession accentuated on this occasion in order to acknowledge Japan's concerns about its protected industries.

'The human costs are hurtful and governments have a responsibility to help people through the process,' allowed Howard. 'Calls for protection are understandable,' he bowed one last time, 'but they are self-defeating.' It followed, the prime minister said, as he usually does, that it is up to governments and businesses to spread this truth, and to maintain the momentum for trade liberalisation, through both the regional body, the Asia-Pacific Economic Co-operation (APEC) forum, and the globe's central trade agency, the World Trade Organisation (WTO).

There is more to the Australian government's policy on globalisation than this, but not much more. The high-water mark in the Howard Coalition government's policy development in relation to globalisation was probably its 1997 White Paper on foreign trade and investment, which acknowledged the effects of new technology, the increase in global financial flows and the growth of transnational corporations.

Other more informed and variegated official analyses of globalisation have been issued from time to time by, for example, the Reserve Bank, and there are also domestic contexts within which the term has been officially invoked in ways that convey different kinds and shades of meanings. Yet none of these usages cuts across the central article of faith propagated in Tokyo. Globalisation primarily features in Australia's national policy as an expression of the classical economic theory of free markets and free trade: 'globalisation', the prime minister summarised at the World Economic Forum in Melbourne on 11 September 2000, 'is simply an extension of the tendency throughout human history towards increasing specialisation and trade.

Unlimited economic competition, Australia's official theory holds - in an undistinguished domestic and international perspective - is the most effective way of weeding out inefficiently utilised resources in firms, industries, nations and the world, no less.

Losses here will be source of gains there, which will produce a better outcome all round. A 'balance of gain' will be produced by further specialisation within the national and international divisions of labour. The responsibility of governments, as the prime minister told Japan's business leaders in 1999, is to spread this good word among citizens, to lobby regional and international authorities in support, and to help people overcome, at least to some extent, difficulties they may have adjusting. The prime minister concluded the substantial part of his 1999 Tokyo address by urging Japan 'to accept its responsibility to show leadership in progressively opening up its economy and demonstrating faith in an open world system'.

The official Australian perspective on globalisation is strikingly narrow. If we ignore the actual term 'globalisation', which is unquestionably novel, and, perhaps, leave aside the insistence that there is no other option, the prime minister could have been speaking not in Tokyo in 1999, but virtually any time since Australia was colonised in 1788, which was twelve years after the publication of Adam Smith's The Wealth of Nations. More trade will raise living standards, claims Howard, because, as liberal economic theory explains, resources scrapped as a consequence of competition will be reallocated to other more productive activities, and this will yield a net gain in production. Only two amendments need be made to the classical doctrine to accommodate the present. Firstly, free trade has been given a powerful, new five-syllable name, and secondly, there is a notable absence of doubt, not only about the doctrine's verity but also about its progress, which is compulsory, no less. Other policy extensions and embellishments can be found in the riddled landscape of government policy documents, and we may also imply various official stances from particular policies, or the lack of them. Governments are not geometric figures. An Adam Smith-style perspective is, however, Australia's 'core' policy.

The official Australian perspective on globalisation is deeply unsatisfying. Those with only a passing interest in the public debate on 'globalisation' will know that it is a term that harbours many important issues, issues that go well beyond the limits of even the government's most expansive policy statements: from globalisation's effects on the distribution of power, wealth and risk in society through to the endangerment of the world's languages and climate. And those who have become acquainted with the burgeoning, daunting literature on the subject will know that 'globalisation' is nothing if not pregnant with important questions, demanding questions. The questions go to the usefulness of the nation-state as an instrument of economic policy to protect and improve living standards, to the future viability of national labour organisation, to the need for new public accountabilities to be placed on corporations, to the potential for different political and administrative forms of internationalism ¾ to the possibility that we are living through the construction of a qualitatively new or postmodern form of world capitalism and social life. This book brings together research, expertise and opinion on a selection of these issues.

SMITH, MYTH OR MARX?

Fleetingly consider only some of the questions that may be raised within even the narrow terms of Australia's July 1999 call for Japan to allow more international competition in the interests of an open world system. The presumption of a domestic gain to Australia from a more open Japan economy immediately begins to become problematic when we notice that six of the fifteen largest firms, which export goods from Australia, are subsidiaries of Japan-based companies. The presumption of a local advantage becomes even more uncertain when we notice that these six firms are also among the world's largest transnational corporations, with a combined annual revenue of about $740 billion, which is more than the total capital listed on the Australian Stock Exchange, and about a third more than the gross annual value of the Australian economy's entire production. Theoretically, lower Japanese tariffs may well result in a measurable net increase in global wealth, but it is impossible to guarantee a benefit for 'our' economy in this context. After the benefit is distributed, the final result may be lower living standards for Australian labour ('to become more flexible and competitive globally'), higher dividend payments for international shareholders, and an exacerbation of the 'imbalance of gain' between social classes around the world. This is an era when 'competition' is less between firms for nationally repatriated returns from a country's specific endowments, and more between denationalised firms for the highest rates of return based on corporate decisions determined in a globally organised financial, investment, production and distribution context. From this perspective, perhaps John Howard is right when he said that 'we' do not have the option of dropping out of the world economy. Perhaps 'we', in our capacities as governments or citizens of nations, have nothing at all to do with the options any longer. Perhaps our only remaining operational capacities are to labour and consume.

But this is to get ahead of this book's arguments. The point is that globalisation is a larger and more complex subject than is allowed, not only by the prime minister, but also by most contemporary Australian politicians. The dimensions of the questions that globalisation has prompted have resulted in a prodigious output of intellectual work. Even five years ago, the authors of a major book on the subject felt that they could partly excuse themselves from reviewing the literature 'because it would be a never-ending enterprise given the scale and rate of publishing on the topic'. There has been no sign of any slackening in the number of globalisation books appearing in the meantime, and several have become international bestsellers. Likewise, the term has exploded into general journalistic use. Indeed, to say today that writing on globalisation has itself become a global industry is to mouth a cliché. In contrast to the official Australian perspective, so vast and diverse are the questions raised in the literature that it is probably true to say that the only settled aspect of globalisation is the consensus that the word itself is still a new part of the language.

Recognising the newness of the word is not to say that older anticipations of globalisation cannot be found. On the contrary, as Australia's official perspective implies, one of the sources of the sense of inevitability attached to the government's view is the fact that the idea of unlimited trade can be traced so readily from at least the time of Adam Smith. Although he recognised the significance of nations in practice, Smith directed his market theories precisely against nationally sealed economic policies, which he held to be self-defeating. Liberal economic theory was built upon the idea of individual people and firms maximising their gains and minimising their losses in a market, which had no necessary territorial dimension. We may impute to Smith a smaller, more comfortable sense of economic scale than exists today by referring to his own sensibilities, his national and social context, and the nationally based illustrations he used throughout his famous book. Yet his theory could not but imply, at its limit, a world market. 'A merchant, it has been said very properly,' wrote Smith more than 200 years ago, 'is not necessarily the citizen of any particular country. More explicitly, and with the advantage of evidence from another 70 years of history, Karl Marx positively anticipated globalisation, fully expecting that the quest for constantly expanding markets would propel capitalism 'over the whole surface of the globe'. Marx's sense of the inevitability of this process was, of course, famously exceptional. 'It must nestle everywhere, settle everywhere, establish connections everywhere', he and Friedrich Engels wrote of capital in The Communist Manifesto in 1848. All nations will be compelled to embrace capitalism, they forecast, 'on pain of extinction'. The progress of capitalism creates, they wrote so presciently over 150 years ago, 'a world after its own image'.

Just as globalisation was anticipated in at least some theoretical senses by both Smith and Marx, so we can also readily trace anticipations in practice. In the 60 years between 1720 and around the time when The Wealth of Nations was published (and Australia was colonized), international trade more than doubled in value (as measured by the European statistics of the time). In the next 70 years, which covered the period of both the Industrial Revolution and the French Revolution, and which take us up to the time when Marx and Engels wrote their famous pamphlet, the value of international trade increased threefold again. Within just 20 more years (1850-70), trade increased more than another two and a half times. This last period ¾ 'the Great Boom' ¾ laid the foundations for an increasingly interdependent world economy, and was followed by a nearly continuous, if less spectacular, period of expansion and interaction that extended through to the eve of the Great War.

During this time, almost all the globe became known to the expanding industrial powers, and the technologies that had facilitated the Great Boom ¾ the railway, the steamship and the electric telegraph ¾ were joined by the telephone, the phonograph, the cinema, the motor vehicle and the aeroplane. These innovations continued to shrink the world's time and space, while mass migration and urban population growth allowed for the establishment of the mass consumer market for mass production and the mass media. In this view, the two world wars, and the Great Depression that fell between them, can be retrospectively reduced to temporary setbacks in the march of progress. Industrial economic development was marked from the beginning by fluctuations, recessions, depressions and upheavals, and the scale of the catastrophes between 1914 and 1945 was so unprecedented that world economic interaction stagnated and even regressed. Nonetheless, after World War II, the increasingly dense network of global flows quickly resumed its earlier growth path.

Understandably, the readiness with which this history can be assembled as a continuous if uneven and periodically interrupted story of technological change, economic growth and interdependence, has encouraged the view that globalisation embodies little more than the continuing expansion and interlinking of the world economy ¾ the official view proffered by Australia. Against this historical background, globalisation can be interpreted as having no inherently defining characteristics at all; as being no more than a currently fashionable term for continuing quantitative change of a longstanding kind. Indeed, so compelling can this history seem that a major sub-theme, primarily concerned with limiting interpretations of globalisation, partly by making comparisons and drawing parallels with the 1870-1914 era, has emerged in the literature. The conjunction of powerful theoretical anticipations and a lengthy, readily composed, compelling historical story has also led to many of the contemporary debates about globalisation becoming confused by the term itself. Ironically, it is now just as easy to find liberal and social democrats who are prepared to call globalisation a myth, as it is to read of Wall Street bankers declaring that Marx was correct. John Howard will never declare himself to be a Marist, but the penchant for vulgar economic determinism is now a pronounced characteristic of the political right.

What, then, is globalisation, and what, if anything, should or can we do about it? Given that the debate is not just about more international trade, what does differentiate the present era from the past, and what are the social, environmental, economic and political implications of those differences? In what sense, if any, can globalisation be accepted as inevitable, and what should be the role and policies of government in relation to it? What have been or will be the consequences of globalisation for Australia, both as an empirically identifiable territory and as a coherent and effective nation-state? What are globalisation's Australian 'impacts'? This book does not pretend to supply definitive answers to these questions, but it does insist that the questions are important. In raising them, the book's aim is to help broaden the Australian public debate about globalisation.

Globalisation - Australian Impacts is publisked by UNSW Press


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*   Issue 107 contents

In this issue
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*  Interview: What's The Deal?
Labor's IR spokesman Arch Bevis explains how a Beazley Government will rebuild our broken system.
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*  E-Change: 2.3 The State of the Union
White hope or white elephant? The future of trade unions is by no means guaranteed in the networked society.
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*  Industrial: Into the 21st Century
ACTU President Sharan Burrow looks at the landmark deal delivering workers 12 months paid maternity leave.
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*  Unions: The Black Hole
Jim Marr goes inside Stellar to discover the human cost of a management philosophy that says: you are on your own.
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*  History: The Age of Dissent
The Sydney Branch of the Australian Society for the Study of Labour History has organised a Conference on Social Protest Movements and the Labour Movement, 1965-1975.
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*  Media: ABC and the Knowledge Nation
Tony Moore looks at how the national broadcaster's fortunes are closely linked to the Knowledge Nation Agenda
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*  International: Brazil´s C.U.T. - When Big Is Beautiful
The CFMEU´s Phil Davey drops in on Brazil´s equivalent to the ACTU, the Central Unica Dos Trabalhadores (CUT).
*
*  Satire: Bracks Disputes Cabramatta tag
Victorian Premier Steve Bracks has called for a national council to decide on a location for Australia's drug capital.
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*  Review: Globalisation Is Globalisation
In an extract from his book, Christopher Shiel argues that the official Australian perspective on globalisation is strikingly narrow.
*

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