Globalization: Perils, promises and prospects

Frans Verhagen - November, 2006

Creating Sustainable Communities

Frans C. Verhagen, M. Div., M.I.A., Ph.D. is a sustainability sociologist, co-founder of Earth and Peace Education International (EPE), and director of its sustainability education and research program. He is also the founder and president of the International Institute of Monetary Transformation.

A mining company moves to a Third World country after having obtained the license to operate by bribing a government official. Since labor laws are non existent or at least not enforced in this country, the working environment for local employees is unhealthy and pay is minimal-a condition which benefits the mining company. Environmentally, the company puts its toxic waste in the nearby river, depriving the local fishermen of their livelihood. After exhausting the mine, the company moves on….

  Recently, the New York Times reported on China’s decision to promote labor unions. Trying to deal with the enormous gap between rich and poor that emerged with the country’s tumultuous economic growth in the last two decades, China’s Central Committee decided, as a start, to give workers a greater say about their working conditions, particularly their compensation. Because of this policy change, local and international companies will have to pay higher prices for labor. This move is opposed by large international corporations, which threaten to move to other places in the world where they can still demand low wages. The US Chamber of Commerce in Hong Kong puts its might behind the opposition.

  Hundreds of such examples, in mining, manufacturing and other sectors of a country’s economy, can be given to show the disadvantages of corporate economic globalization, one type of globalization. However, there are many other types of globalization that are beneficial to people and planet. Examples are globalized cultural exchanges, scientific collaboration, non-exploitative economic cooperation…. Though the United Nations is still rather weak politically speaking, its scores of socio-economic programs are further evidence of an increase in globalized cooperation.

 Given the importance of all types of globalized behavior and institutions, it can be argued that no major economic, cultural or political policy, program or project can be effective if it is not placed within the context of a critically appraised structure of globalization and the process by which its force is extended. To some extent, all local, regional, and national issues are influenced by globalization in our increasingly interdependent world. Without a well-thought position on its perils and promises, its pro’s and con’s, individuals and organizations will find themselves flailing about in a world that is in urgent need of social transformation and ecological responsiveness.

 In my view, the present form of corporate economic globalization is socially and ecologically unacceptable: it has to be resisted and countered by a countervailing vision and the hard work of thoughtful and committed citizens. The global socio-political system must be transformed so that it offers a level playing field for all its actors and, preferably, it should be slanted towards the social and ecological well-being of people in the South, who constitute the neglected majority of the human population on this planet.

 Let me now elaborate on some of the perils of corporate economic globalization and the promises made by its proponents.

The world economy and its fundamentalist market system supported by the Washington Consensus at the US Treasury Department, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO) is the cause of the greatest social and ecological peril that faces people and planet. It enriches the few, impoverishes the many, and endangers the planet. These international financial institutions set the rules of the game that are, unashamedly, slanted towards their own economic self-interest. For example, legally, multinationals are able to sue nation-states and the outcome is secretly decided in the offices of the WTO in Geneva. The same organization, the WTO, also protects the patents multinationals place on locally developed seed species - for which local farmers have to pay a fee to use. The billions of agricultural subsidies in the US, the EU and other OECD countries are the most shameful sign of this basically unjust and unfair world trading system. Of course, these subsidized agricultural products, such as cotton, are exported to the South, putting farmers out of work and driving them to the slums in major urban areas.

  This world economic order, as it is called by the rich countries, is the greatest of all perils which, then, leads to the perils of an increasing gap between rich and poor both in high income and low income countries - to hunger and starvation, ill health, poor housing and inadequate education.

What are the promises made by the dominant actors of the world economic order, i.e. the large multinationals?

They believe in the trickle down theory that benefits all – a rising tide that lifts all boats. It is assumed that a stronger economic growth is good for all. As a matter of fact, the world economic pie is getting bigger, but for the majority of nations and particularly the poor in those nations, the slices of that pie are ever smaller. Without social and ecological justice even larger economic pies become more detrimental to more people and to greater parts of the planet.

What are the prospects for improving the structure and process of globalization?

In his 2006 book, Making Globalization Work, Joseph Stiglitz, economics professor at Columbia University, former chief economist at the World Bank, and chair of the Council of Economic Advisors during the Clinton Administration, offers constructive advice and proposes radical changes for countering the perils of globalization in trade, the  IMF, WTO, patents, and debt. It is a veritable guide offering pathways for reaping the social and ecological benefits of an interdependent world.

  While Stiglitz considers globalization in global terms, EPE and many other organizations, particularly the International Forum on Globalization at , emphasize the need for empowerment on the national, regional, and particularly the local level, where people live and work. It is in their local communities that persons and organizations can counter the perils of globalization by becoming socially and economically stronger while placing ecosystem well-being or ecological integrity as their first concern. The next issue of Transitions will present an overview of what constitutes sustainable communities, what distinguishes them from the smart growth and new urbanism movements, and of pathways to creating them.