[Paleopsych] TLS: John Gray: Does globalization bring liberty?

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John Gray: Does globalization bring liberty?
The Times Literary Supplement, 0.11.17
http://the-tls.co.uk/archive/story.aspx?story_id=2098697&window_type=print

    A FUTURE PERFECT. The challenge and hidden promise of globalization.
    By John Micklethwait and Adrian Wooldridge. 386pp. Heinemann. £20. TLS
    £17. 0 434 00751 X

    THE CHALLENGE OF GLOBAL CAPITALISM. The world economy in the
    twenty-first century. By Robert Gilpin. 373pp. Princeton University
    Press; distributed in the UK by Wiley. £18.95. TLS £16.95. 0 691 04935
    1

    THE GLOBALIZATION SYNDROME. Transformation and resistance. By James H.
    Mittelman. 286pp. Princeton University Press; distributed in the UK by
    Wiley. £30 (paperback, £11.50). TLS £27; £9.50. 0 691 00988 0

    The pitfalls of identifying civil society with the free market

    When President Suharto of Indonesia resigned in May 1998, the response
    in the West was quiet satisfaction. A corrupt and murderous tyrant had
    been toppled - and free markets, with a little help from the
    International Monetary Fund, could take the credit. Never mind that
    the West had supported Suharto for decades. That fact belonged in the
    past, along with Asian "crony capitalism". A new epoch was about to
    begin, in which globalized free markets would act as pacemakers for
    democracy throughout the world. As could have been foreseen, things
    did not turn out quite in that way. Severe recession and the collapse
    of the currency provided a less than ideal background for democratic
    transition. The civil disorder that had forced Suharto's resignation
    continued, with the country's Chinese minority suffering persecution
    and murderous attacks, and the Indonesian State began a slow and
    violent unravelling. The new era was postponed.

    The collapse in Indonesia was a knock-on effect of a currency crisis
    that had erupted in July 1997, when hedge-fund activity forced the
    Thai Government to let its currency float, and the contagion spread
    rapidly to neighbouring countries. In the West, the crisis was
    routinely described as a sign that Asian capitalism had entered a
    terminal crisis. This was absurd. Until turmoil in global financial
    markets hit them, the East Asian countries were lauded by Western
    opinion. Are we to believe that they underwent a radical metamorphosis
    in the summer of 1997? No doubt many of their economies contained
    serious imbalances; but it defies common sense to suppose that
    long-established and - for the most part - highly successful varieties
    of capitalism can collapse overnight.

    The Western response to the East Asian crisis was a callow
    triumphalism that continues to this day. To be sure, the West's
    complacency was shaken by the devaluation of the rouble in August
    1998. The Russian default triggered the collapse of a colossally
    leveraged American hedge fund, Long Term Capital Management,
    threatening the stability of the world's financial system. The threat
    was swiftly neutralized by the American banking authorities, and it
    was soon business as usual in the global financial markets. As a
    result, the lesson of the default went barely noticed: in the most
    important case, the transition from central planning to market
    institutions had failed. In Russia, as in Indonesia, globalized
    financial markets have not assisted the transition to democracy and a
    liberal market economy. They have made the transition more difficult.

    There is a systematic mismatch between
    the goal of a worldwide free market and the anarchic workings of
    globalization in practice. If John Micklethwait and Adrian Wooldridge
    have written the most intelligent defence of
    globalization to date, it is because they readily acknowledge this gap
    between aspiration and reality. A Future Perfect does not shrink from
    detailing the increases in inequality that have gone with accelerating
    globalization. Nor does it pass over the ethnic conflict and
    fundamentalist revulsion that it has generated or aggravated in a
    number of countries. As a result, unlike a host of quasi-religious
    tracts that identify deregulated global markets with human progress
    and anathematize all criticism of them,

    Micklethwait and Wooldridge present a commendably tough-minded and
    exceptionally useful account of globalization as an actually existing
    economic regime. They are able to combine this realistic perception of
    globalization's flaws and risk with impassioned advocacy of its
    benefits because their core argument in its defence is not economic at
    all. For them, the promise held out by globalization is not increased
    prosperity. It is an increase in individual liberty.

    As Micklethwait and Wooldridge see it, the case for globalization is
    that it embodies a classical liberal ideal of personal freedom. In the
    introduction and the conclusion to A Future Perfect, they cite John
    Stuart Mill's principle that individuals should be free to act in any
    way that does not harm others, and contend that globalization is
    tending to bring about a worldwide open society of the sort that Mill
    and other liberals are bound to support. But here they deploy a
    misinterpretation of Mill to bolster a reading
    of globalization's actual impact that their own account suggests is
    suspect. Mill could never have defended a universal free market as a
    direct application of his principles regarding personal liberty.
    Indeed, he explicitly rejects any such implication. In his Principles
    of Political Economy (1848), Mill distinguishes sharply between basic
    principles of liberty and rules of thumb, such as the laissez-faire
    maxim enjoining non-interference by governments in the workings of the
    economy. The latter is a guide to policy which should not be followed
    slavishly, whereas the former concern core human freedoms. Mill
    amplified this position in On

    Liberty (1859). There he went out of his way to note that trade is a
    social act which may harm the interests of others, and so cannot be
    protected by his principle of liberty. In Mill's view, free trade may
    well be a very good thing; but not because restraining trade infringes
    basic human liberties.

    Applying Mill's distinction yields a more nuanced assessment in which
    the contribution made by globalization to personal freedom is patchy.
    Where they enable individuals to escape from the constraints of
    oppressive communities, the global flows of information made possible
    by new communication technologies enhance liberty. But the effects on
    freedom of a regime of unfettered capital flows are much more
    problematic. Where it weakens fledgling liberal regimes - as happened
    when markets moved against the South African currency - or strengthens
    anti-liberal forces, as it has manifestly done in
    Russia, its impact has been to create an environment less hospitable
    to basic liberties.

    As George Soros has observed, deregulated financial markets often
    behave more like wrecking balls than pendulums. Contagion spreads
    indiscriminately. In times of panic, free flows of capital can
    devastate authoritarian and liberal regimes alike. There is no
    systematic connection between globalized markets and liberal values.
    That so many of globalization's boosters have failed to notice this
    fact says as much about their ignorance of history as it does about
    their ideological enthusiasm. Throughout much of the Cold War, the
    defence of individual freedom went hand in hand with a Keynesian
    regime of managed markets. It was only with the rise of the New Right
    that the absurd notion that interventionist economic policies lead
    inexorably to limitations on personal and political freedom came to be
    a idee recue.

    One of the many virtues of Robert Gilpin's wide-ranging book is its
    deep sense of history. The Challenge of Global Capitalism is an
    exemplary guide to the geo-strategic environment
    in which world markets operate. More particularly, it is a penetrating
    examination of the sources of global financial vulnerability. Unlike
    many political scientists and most economists, Gilpin does not discuss
    the current regime in
    global markets as if it had always existed. He is clear that it has a
    history - if, in some respects, one that is quite brief. The regime of
    global free markets emerged with the Soviet collapse. It cannot be
    understood adequately, if its background in the strategic rivalries of
    the Cold War is not grasped. Equally, its prospects cannot be assessed
    except in the context of the unchallenged post-Cold War dominance of
    the United States. What is rather less clear in Gilpin's account is
    the depth of US commitment to the current global regime. He is
    emphatic that the future of the current global regime depends on
    continuing American leadership. On this he is surely right; but
    perhaps he underestimates the risks of unilateralism and incipient
    economic nationalism in American policy. US commitment to global free
    markets is recent, and - except in respect of its dependency on
    large-scale imports of capital - its economy is not, in fact, very
    highly globalized. Can we take for granted that, in the event of
    serious dislocation in world markets, America's commitment to free
    trade would not be compromised? Might it not tilt towards
    protectionism?

    An uncertainty which haunts all discussion
    of the world economy is the ambiguity of
    the terms in which it is analysed. The Globalization Syndrome by James
    H. Mittelman is distinguished from the overwhelming majority of recent
    writings on the subject by its sensitivity to the conceptual issues
    the subject raises. In

    Mittelman's view, globalization encompasses a configuration of trends
    and forces, not a single process, and political power is as central in
    this configuration as the growth of worldwide economic networks. One
    of the most refreshing aspects of Mittelman's thoughtful and subtle
    discussion is his critique of the discourse of civil society. In a
    chapter dealing with the underexamined subject of global organized
    crime,
    Mittelman notes that "the very idea of civil society is being
    corrupted . . . . At best, global civil society is a nascent, yet
    important, normative force for future world order." Here Mittelman
    registers a scepticism that is pertinent and overdue. In much recent
    discourse, civil society has acquired the role of a fetish. In the
    vulgar parodies of neo-liberal discourse, it is conceived as a wholly
    spontaneous formation, which emerges as soon as the State has
    retreated from social life, and which for all practical purposes can
    be identified with the practices of market exchange. As Mittelman
    points out, thinking of civil society in this way suppresses its true
    provenance in recent thought, which is in Marxian critical theory. The
    proper role of the idea of civil society in social and political
    thought is not to glorify the market. It is to show on what the market
    stands, and thereby mark its limits.

    It is worth recalling that when, not much more than a decade ago,
    central planning was overthrown in the first fully post-totalitarian
    country, the forces of civil society that accomplished this feat did
    not identify themselves with the institutions of the market. Indeed,
    they were as hostile to them as they were to Communism. If talk of the
    spontaneous forces of civil society means anything, it applies to
    Poland in the time when Solidarity and the Church were in conflict
    with the Communist state apparatus. Yet the fact is that achieving a
    market economy was no part of their aims. Indeed, as later
    developments demonstrated, they actively opposed it. In Poland, as in
    other countries, a market economy did not emerge as a side-effect of
    the reassertion of society; it was an artefact of state power. That is
    has proved remarkably successful does not invalidate the central
    point. Civil society and the market are not linked indissolubly
    together. Quite commonly they embody irreconcilably opposed interests
    and values.

    The wild expectations which Western opinion harboured regarding
    globalization only a few years ago are now muted. There have
    been too many near-catastrophes. Events in Indonesia and Russia have
    confounded the hope that free markets will act as pacemakers for
    democracy. Yet the illusion persists that advancing globalization
    somehow assures the future of liberal values. The reality - that the
    vast, chaotic and uncontrollable transformation on which the world is
    embarked is bound to be deeply mixed in its impact on human freedom
    and well-being - seems still too forbidding to be much contemplated.