[Paleopsych] Guardian: Myths and corrections

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Myths and corrections
http://books.guardian.co.uk/print/0,3858,4966888-99939,00.html

[Something else worth recycling, so as to get refutations.]

     Will Hutton analyses two very different approaches to the
     globalisation debate in Martin Wolf's Why Globalisation Works and
     David Held's Global Covenant
     Saturday July 10, 2004

     The Guardian
     Why Globalisation Works
     Martin Wolf
     398pp, Yale,
     £19.99

     Global Covenant: The Social Democratic Alternative to the Washington
     Consensus
     David Held
     216pp, Polity,
     £12.99

     It was not long ago that every international economic gathering was
     punctuated by fierce protests at the sins of globalisation; famously
     the World Trade talks at Seattle got nowhere in part because of the
     teargas and mayhem outside the conference. Who was prepared to
advance
     the cause of globalisation when so many people found it offensive?
At
     the Genoa G8 summit in 2001, protester Carlo Giuliani was killed by
     the Italian police - a martyr to the cause. A small cottage industry
     emerged of authors decrying the sins of the turbo-charged capitalism
     that globalisation was creating. It seemed that having won the
battle
     of ideas against communism, the west was having a crisis of ideas
     about its own economic organisation. Those who believed in the
virtues
     of markets and capitalism were on the retreat.

     Not Martin Wolf, chief economic commentator of the Financial Times.
     There is something of Wayne Rooney about Wolf. You would not want to
     defend any but a rock-solid economic position against his absolute
     self-confidence, his honesty and almost joyous marshalling of
economic
     data; if there is a chink in your armour he will find it. His book
is
     a swaggering assertion that the antiglobalisers are wrong. This is
not
     a man to suffer those he considers fools, and plenty of reputations
     are the worse after this.

     He attacks the antiglobalisation brigade in all its manifestations -
     and early on lists the charges. Globalisation is allegedly
     impoverishing peasants and workers worldwide, empowering faceless
     corporations and destructive finance, brutalising our environment,
     promoting inequality and destroying democracy and the state
structures
     through which it works. The emergence of a single global market with
     ever lower tariffs, ever greater capacity to produce and distribute
     goods (and increasingly services) wherever there is economic
     advantage, and ever easier movement of capital in and out of
whichever
     country, has unleashed the capitalist tiger, say the critics. It
must
     be resisted or we all face perdition.

     Wolf will have none of this. He shows how trade and foreign direct
     investment are engines not of poverty but of wealth-creation; the
     problem for too many of the world's peasants and workers is not too
     much globalisation but too little. There is a rich man's club of
     western nations that largely invest in and trade with each other,
     ratcheting up their incomes by specialising in what they are good at
     and exploiting their exponentially expanding stock of physical,
human
     and intellectual capital. What the rest of the world wants and needs
     is not to resist this process but to share in more of the action
     itself - and those countries that join in on the right terms can do
     astonishingly well.

     Wolf cites China as an example - in a way perhaps the most
     extraordinary convert to the principles in which he believes.
China's
     economic growth is already the stuff of legend, and for those
critics
     who accuse the country's export processing zones and burgeoning
     industrial belts of being new bywords for exploitation, Wolf has a
     ready reply: it was even worse living on the land on less than a
     dollar a day. Infant mortality has fallen dramatically; numeracy and
     literacy are rising sharply; food consumption is climbing. The 10
     million peasants who leave the countryside every year looking for
work
     in the cities are proof positive that they regard what is happening
as
     an improvement - and one born of opening up to the very trade,
     investment and financial flows that the antiglobalisers decry.

     Western corporations are the crucial handmaidens of this
     transformation; the idea that western consumers and third-world
     workers have become slaves to the tyranny of brands, logos and their
     callous production methods as they move production offshore is
     complete baloney to Wolf. He shows how they pay better wages than
     local producers, how their investment is essential for development
and
     how the trade they foster benefits all parties.

     And so it goes on. The financial markets as a source of instability?
     Yes, crisis runs on currencies have been costly and sometimes poorly
     managed by the IMF - but better this than no global financial market
     at all. Governments undermined by the newly powerful footloose
     companies? Government spending and taxation in the west have been
     rising over the past 20 years, and even taxation on companies is up.
     Inequality on the march? Among individuals maybe, but the big story
is
     hundreds of millions being lifted off the breadline. Environmental
     degradation? Standards are rising, not falling, and where there are
     problems they are due not to trade but to authoritarian political
     regimes impervious to complaints about pollution and toxicity -
often
     produced by domestic manufacturers protected from global
competition.

     Wolf is convinced and convincing, but to a degree he is tilting at
     easy targets; the argument is moving on from where it was even two
or
     three years ago.

     David Held is a gold-carat social democrat and man of the liberal
     left, and intriguingly he begins his book with almost the same list
of
     myths about globalisation as Wolf and consigns them to the dustbin
     with no less enthusiasm. But while Wolf believes that globalisation
     works, Held has profound reservations. It certainly has the
potential
     to produce the opportunity and sustained wealth-generation in which
     Wolf believes - but only if the politics and governance are right.
The
     argument migrates to new ground, where Wolf's certainties and
mastery
     of economic data are less secure.

     Held's position is that globalisation is undermining national social
     settlements. Tensions between capital and labour, whose past
     resolution on a national basis led to social democratic bargains -
     legitimising capitalism, promoting the rule of law and underwriting
     the circumstances and opportunities of ordinary people - are, he
     argues, re-emerging in the global framework. While Wolf can only
     explain the ability of totalitarian fascism and communism to check
the
     last great beneficent, liberal global opening in the late 19th
century
     as the triumph of bad ideas and power-grabbing authoritarians, Held
is
     not puzzled at all. Rather he is worried that economic instability,
     inequality and palpable unfairness were recruiting-sergeants for
     massive political dissent, and that the only way to head them off
now
     is to ensure that a global system of governance is developed on
social
     democratic principles to govern globalisation. He calls this a New
     Global Covenant.

     Held may be dismissed as an idealist; to achieve either a
     representative UN or even to establish a global financial authority
as
     part of his covenant seem very distant dreams - but perhaps the
darker
     side of globalisation will provoke this response as a necessity. In
     his recent Financial Times columns, Wolf has pointed to the
     unsustainability of the growth of the US's international debts and
the
     likelihood of a painful adjustment - an analysis that is little
     ventilated in his book. This unsustainability is due to the
     willingness of Asian central banks to acquire an endless supply of
     dollars - a willingness that is driven by political as much as
     economic judgment. Globalisation is not just created by the
invisible
     hand of the market and its viability ensured by the law of
comparative
     advantage; its success so far has depended on a series of fragile
     political bargains, notably between Asia and the US.

     Wolf seems most ill at ease in his ho-hum judgment on the IMF's
record
     managing currency crises and on the way corporate lobbying is
     undermining democracy. Scratch a bit and in these areas he is not so
     far away from those he criticises.

     Wolf may have set the bar high for those who want to attack the
     economics of globalisation - but he has not engaged with what
     governance structures will be needed to organise any adverse
fall-out
     from the processes at work, for example a potentially colossal run
on
     the dollar. For that we have to turn to Held. If you want to
     understand globalisation you need to read both.

     Will Hutton is chief executive of The Work Foundation. To order Why
     Globalisation Works for £17.99 or Global Covenant for £10.99, both
     plus p&p, call Guardian book service on 0870 836 0875.