The world ain’t what it used to be. Globalisation arguably started as long ago as Macedonian Alexander the Great’s military expansion towards the East, followed by the Roman Empire’s far-flung hold on the ancient world (and if one really wanted to push the argument, you could claim that it commenced almost 150 000 years ago when the first members of Homo and Gyna sapiens began to spread out across the globe from where they originated in Africa).
Conventional wisdom has it, though, that it is a phenomenon of recent origin, and some scholars (such as Steger) insist on distinguishing between “globality” (the condition of global interconnectedness at various levels) and “globalization” (the process of developing or driving such interconnectedness and interaction). One thing is certain, though, if one starts examining this field of study, namely, that it is a very complex thing indeed.
For one thing, the political vocabulary of the nation state, as it was forged in the crucible of modern thought since the Peace of Westphalia in the 17th century — which put an end to the religious wars of the Reformation — is no longer adequate to articulate the many and varied strands of political and economic power which sometimes cohere with the vaunted “sovereign” power of the nation state, and sometimes transcends, or undermines, this power.
For another, if people believed, naively, at one time, that a definite distinction and separation between economic affairs and political affairs could be effected, it has become apparent that in the condition of globality no such separation can be done, even if the distinction remains valid. And not only are the political and the economic inseparably intertwined; throw in the cultural (including the religious) and the social too, and, of course, the ecological. Ever since the dawn of complexity theory (the popular paradigm of which is the so-called “butterfly effect”) the realisation has grown that everything in this world is somehow interconnected.
The pollution in China now can be seen to have an effect on the kinds of sunsets that people observe halfway around the globe from China, for example, and the mutual cultural influences between and among different countries may be detected in the appearance of interesting new cuisine as well as dress fashions far from the countries where they originated. Chinese food in South Africa, to mention but one example, is not the same as Chinese food in mainland China — it has adapted itself to local conditions and tastes, and vice versa, as I discovered to my horror when I ordered a Western dish in a Chinese restaurant.
But to return to the realm of the political and economic: this is arguably where the destiny of the earth and its inhabitants will be decided, albeit with the constant influence of the cultural and social diversity in the world. As several thinkers have noted (among them philosopher Johann Rossouw), there was a time when the religious sphere of society dominated the economic and the political (pre-modernity); this was followed by the dominance of the political sphere over the economic and the religious (the modern era of the nation state); and more recently, from about the 1950s, the economic sphere has been in the ascendant (postmodernity). And importantly, the dominant social sphere is the one, at any given time, that receives priority in the making of far-reaching decisions.
Although postmodernity is characterised by the dominant status of the economic sphere in relation to other societal spheres, however — didn’t Fredric Jameson describe the postmodern as the “cultural logic of late capitalism”? — this does not negate the intertwinement of all of these domains today. The political and the economic, particularly, are related in a seemingly paradoxical way, because one could easily argue for the priority of either: economic relations and developments require political decisions, but the latter are always made in the context of economic conditions that influence the political decisions and events. “Political economy”, indeed.
As far as globality and its further unfolding, globalisation, in the political and economic domains are concerned, a few things must be kept in mind. The first is, again, that in both domains, things have become bewilderingly complex. When the international Bretton Woods conference of the mid-1940s, crafted by economist JM Keynes, set out to bring order to the world’s economy in the aftermath of the 2nd World War by creating institutions such as the World Bank, GATT (later to become the World Trade Organisation) and the IMF, together with the linking of countries’ currencies to a gold-standard pegged to the US dollar, little could they foresee that this era of “controlled capitalism” would wither before the economic chaos of the 1970s.
The sudden rise in the oil-price, together with the political convulsions across the world, eroded the industrial competitiveness of the US to the point where Nixon abandoned the gold standard and ushered in the era of free-floating exchange rates, which, together with the increasing liberalisation and internationalisation of finance and trade, has contributed to the sensitivity of interacting global markets and economies to events in every country across the globe (an economic “butterfly effect”) — recall the worldwide effects of the financial crisis triggered in the US by irresponsible, irrational financial transactions in 2008.
Satellite, internet-based and fibre-optic technology has further accelerated this process of economic liberalisation and internationalisation — one can literally, since the 1990s, conduct “business@the speed of thought”, as Bill Gates phrased it. The net result of all the accompanying high-risk financial competition is more complexity, high volatility and chronic insecurity of global currency markets. Given the intertwinement of the social, political and economic domains, this means that the insecurity of the global financial sector impacts on societies worldwide, so that an emerging market-country or -region could just as easily be the scene of colossal profits on the part of global speculators, as one of declining social welfare because of the globalisation of financial transactions. A telling example is the notorious South-east Asia Crisis of the late 1990s, where a drastic economic turnabout was triggered by just such events in international finance.
The bewildering thing about the economic domain today, is that there seems to be some kind of “disconnect” between the world of “real” economic production and the abstract sphere of global finance, where astronomical amounts are involved in transactions concerning events that have not even happened yet (“futures”, etc). And yet, what happens in this abstract domain of virtual capital, has very real effects in the social world.
Add to this the tremendous economic power of globally transnational corporations — in 2003, 51 of the largest economies in the world were corporations; only 49 were countries — and my earlier reference to the dominance of the economic sphere over other societal spheres is put into better perspective. The global reach of TNCs’ power is captured in Ulrich Beck’s ironic remark, that the only thing worse than being colonised by the corporations, is not being colonised by them. Here’s the rub — the financial clout of these economic giants explains their ability to by-pass national labour laws by “colonising” investment-hungry developing countries for purposes of transnational production at rock-bottom labour-costs (the notorious Nike sweatshops in Eastern countries being the prime example). Given their global strategies of profit-generation, transnational corporations directly influence the economies, the politics and the social welfare of countries worldwide — for example, the power that Nokia of Finland has over politicians, potentially, to lower corporate taxes and in the process affect the financial basis of the collectively beneficial egalitarian social welfare dispensation.
The final consideration regarding the economic aspect of globalisation bears on the asymmetry of power between the “developed” North and the “developing” South. The three international financial institutions, the IMF, the World bank and the WTO, all located in the North, determine the conditions under which developing countries can borrow money, usually predicated on the latter’s willingness to embark on “structural adjustment programmes” (today framed in terms of the neoliberal economics rules of the so-called “Washington consensus”, including deregulation and privatisation). This is supposed to uplift these countries economically to the point where they are sufficiently productive to obviate further financial dependence, but in practice it seldom works out accordingly.
One glance at the extent of debt repayments by developing (mainly African) countries, as opposed to loan investments by the WB and the IMF, destroys the illusion that it is the former that benefit in the process — in 1997 debt repayments totalled $292-billion, while new loans came to $269-billion, which makes the wealthy North the recipient of $23-billion in profit. And as the example of Argentina – once the blue-eyed boy of the IMF and the WB as far as model development behaviour goes — shows, the kind of austerity measures demanded by these institutions when the going gets tough, sometimes provoke citizens’ reactions (like mass strikes), which can paralyse a country’s economy — in Argentina’s case leading to its defaulting on its colossal debt of over $140-billion in 2002, and eventually causing the value of its currency to drop to levels that entailed the impoverishment of its citizens. These are some of the consequences of this new form of (economic) colonisation.
What about the political dimension of globality and globalisation? Suffice it to say (because this post is getting too long for most readers’ attention-span) that the power and sovereignty (in practice, if not formally) of nation states have decreased, but not totally disappeared, as some scholars tend to argue. It has been weakened by increasing political and economic (including technological) interdependence among states (for combatting international terrorism, or for the consolidation of global communications networks, for example), on the one hand, and by the growth in political power of smaller political and economic entities such as regions, provinces and even cities (which have in many cases entered into political and economic agreements that by-pass the governments of the countries concerned), as well as by the growth of supranational institutions such as the United Nations, on the other.
At the same time, though, the nation state has reasserted its political power through immigration control and the tightening of security measures post-9/11, despite the concomitant increase in cooperation with other countries. And governments also regularly implement legal measures to attract foreign investment.
Given the hegemonic status of economic decisions and processes, however, it should surprise no one that the major representative institutions of the economic sphere, today, wield an enormous amount of power — so much so that some have argued that political institutions have all but relinquished their power to these economic entities (corporations, as well as the three major international financial institutions). If this were true, in practice it would mean that nation states would not be able to resist the advances of corporations and their ilk, and would be helpless when it comes to the encroachment of the latter on the terrain of a nation’s interests — for example, when a corporation indicates its desire to invest in a country’s economy, with major advantages to itself, but less so for the country in question.
But is this necessarily the case? Of course not. While it is difficult, if not impossible, for any government to resist or ignore the reigning economic paradigm at any given time — at present neoliberal capitalist economics, but slowly changing — it is still possible for a state to negotiate an agreement with potential foreign investors that would benefit it as much, if not more than, the investor in the long run.
This depends on more than one factor, of course, such as the corruptibility of a government’s or local company’s representatives who negotiate with the would-be investors, as well as the extent to which the investing company wishes to do business with the country concerned. If it is a trade agreement that involves import or (usually) export of manufactured goods, the benefits may be equal to both parties, with no serious consequences, or alternatively, entail labour exploitation on the part of the corporation (like Nike, setting up subsidiary manufacturing plants in a foreign country, for example).
But if the investment has the form of extracting minerals of some kind from the soil of the foreign country, the matter would be more fraught with possible loss for the latter. In cases such as these the nation state can and should assert its power by negotiating an agreement which ensures that more wealth is generated for the country than for the corporation concerned. I have read many an article and report indicating the disadvantageous position of (the people of) Nigeria, for instance, vis-á-vis the economic power of the Dutch oil company, Shell, which gets much more out of exploiting Nigerian oil reserves than the country’s people do (although I suspect, judging by these reports, that a small Nigerian elite benefits hugely in financial terms).
How can such exploitation be avoided in the context of globality and globalisation, then? Barring the advent of corruption, which always robs the people of a country of wealth or resources, in which they should share, by channeling wealth into the pockets of a few corrupt individuals, governments ought to be the guardians of a country’s natural and other economic resources, even if it requires legislation to limit a corporation’s access to its wealth. I am not talking of nationalisation here — no company would participate in wealth-generation if it does not get something out of it, but neither should foreign companies siphon off all the potential wealth from another country, whether it is oil, gold, diamonds, iron, copper, or whatever. In short, a mechanism must be found to ensure that developing countries not be defrauded by so-called “foreign investors”. The very concept should raise one’s suspicion and alertness; after all, an “investor” wishes to “invest” with a view to profiting from it. Ergo, limit their profits without begrudging them these altogether. The economic interdependence between countries and other economic entities, today, together with the intertwinement of the political and the economic spheres in the condition of globality and globalisation, allows for such win/win situations.
Bert, the best books I have read on globalization, are Negri and Hardt’s “Empire”, “Multitude”, and “Commonwealth” – books that have been influential in raising hopes for social justice via the activities of the alternative globalization movement. I believe that they are fundamentally in agreement with your analysis of globality and globalization. Do you share what seems to me to be their optimism regarding the future as far as egalitarianism goes?
Too bad Marxism is bastardised by self serving communists
‘At least I’m not a Marxist” K Marx
Limit profits made by foreign investors? Why, then what will happen is that the foreign investors will simply choose to invest in a country where their profits are NOT capped.
This is the real win/win. (The only losers are those countries daft enough to think they can get away with capping an investor’s profit and still getting his investment capital. The King Canutes of the global investment world.)
Ironic that this rambling journey on which you have taken us should raise the issue of Argentina’s recent debt default… as though it were somehow the fault of the lender rather than the borrower.
Argentina is a serial reneger [sic] having defaulted on its debts for the first time back in 1891. Curiously at this time it was, per capita, the world’s wealthiest country outstripping that of the USA. It even managed to remain pretty wealthy right through the absolute folly of the Peronist years. However today after a century plus of following the kinds of restrictive economic policies regarding investor’s rights that you have promoted in this blog, they have degenerated to a middle income country, which has now resorted to stealing the pensions of private sector citizens in order to stave off further bankruptcy. [Not that they are alone in this ... back in the early 90's SA's govt paid teacher's increased pay demands by stealing the money from our pensions fund].
Should the inherent economic folly, represented by what seems to be your rather convoluted presentation, become the option of choice for South Africa then we too will continue along the path of low destiny that has been trod before by such places as Argentina.
4 comments to make:
1) Bretton Woods Institutions are NOT the devil. They have become the lender of last resort, by & large to borrowers to whom no one else will lend. Initially they loaned $ to countries with the same values as they shared, who repaid their loans. But not now, so what about ‘saving’ til you can construct?
2) The ‘old saw’ about Shell milking Nigeria. We should add up the billions in taxes etc. that Shell has ‘left’ in Nigeria, and try to find the thread of where they went. You’re correct, into the pockets of the few; but that is hardly Shell’s fault. Just as in Zimbabwe, where the mining companies not only pay their taxes, they build roads, housing, clinics & schools in the areas where they mine…just as the Evil White Farmers did.
3) The UN is not an international player along the lines of TNCs. It is a ragtag band of every country in the world voting along each’s perceived best interest.
4) The Province of Ontario in Canada is about to create a Export-Free Zone, yep, just like in Asia; and a diamond mine in Northern Ontario uses Vietnamese diamond polishers til ‘the locals’ can be trained.
So, no one is exempt in the race to the bottom.
Excellent Blog though. I will print it and think upon it. Thank you.
Unfortunately this post just degenerates into the usual Marxist narrative were everything is the fault of the evil corporations and the cabal of IFI’s that control the world. True to form the solution being suggested is more state intervention and more control to politicians…
(1) First, things really started going wrong with the honorable Mr Keynes and his solutions…Unfortunately you also fall for the popular “it it all the banks fault” propaganda regarding the financial crisis.
(2) Where do you think Finland gets its taxes from to fund the welfare state? To propose that Nokia somehow has something to do with Finland cutting back on the welfare program is just ludicrous. These programs are being cut across Europe because they are simply unsustainable and amounts to condemning your kids to slavery to pay of your retirement and social welfare perks. Politicians are finally realising they cannot just print/borrow more money and past the costs on indefinitely.
(3) I would like to see you propose the terms of your loan agreement with a bank. I also suggest you look at figures comparing the foreign accounts of African leaders with they debts of their countries.
(4) Blogroid already addressed Argentina.
(5) Are you seriously suggesting states have become less powerful? They are enabling most of what you describe through granting monopolies, favours and encouraging crony capitalism (corporatism). States have become bigger and more invasive than ever before…
There is entertwinement between politics and economy. Human nature is is such that man has to produce in order to live, and what he cannot produce, his ability to communicate enables him to barter with those who can.
Whatever problem man cannot resolve alone, he joins hands with those equally-affected, using the same ability to communicate, to achieve or overcome.
Originally, politics (polis) was a means by which citizens assembled and administered the government in person. Citizens constituted both state and society, with no bureacracies, magistrates or professional armies.
The distinction between the state and economy begins with the modern republic. And understanding the reasons or causes thereof, we may understand better the irrelevance of the nation-state in a global world, which is characterised by the “flattening of space and time”.
The concept of the nation-state, with its traditionsl role as a power repository, and distributor of wealth, is the accident of space and time constrants, which, simultaneously, compelled concentration of industry and manufacture in the Industrial Age.
It is the time and space constraints that enabled the development of the nation-state, which gradually stripped man of the faculties of cooperative action, which only he, different from other animals, possessed. His deference to modern politics has cost him the most basic necessities of life, rendering him servile and subhuman,through laws and regulations, to the nation-state.
Incidentally, these laws enabled monopoly, as individual enterpreneurs could not afford to render “services” to citizens, for the nation-state.
HD – you evidently don’t read much – if anything – on globalization! Much of what I have written here you will find in the literature on the phenomenon. And besides, I don’t take accusations of being a marxist as insults, rather as compliments – it is a reputable critical theoretical position. Moreover, you are the uncritical ones – you and the likes of blogroid, because you swallow everything supporting the economic status quo. There is plenty of evidence that the investment banks – like Goldman Sachs – caused the financial crisis – they are no more than criminals, as several people have pointed out. This is not propaganda, it is conformed even by mainstream magazines like TIME. And SOMEONE has to expose neoliberal capitalism for what it is – an exploitative, corrupting system. Read Hardt and Negri, read Naomi Klein, read Joel Kovel and Joel Bakan, read David Harvey, read Jared Diamond’s ‘Collapse’ – and many more critical studies on capitalism. Philosophers are – if they are really philosophers – always suspicious of the status quo, because invariably it is the reigning ideology of the time. It is, in the Dutch philosopher, Kwant’s words, the ‘gods of the city’, and like Socrates before me and other philosophers, it is our duty to expose these gods as false.
Digressing a bit from the topic, I believe that the strength of communism lies in the fact that it has never been, and therefore was never tested.
Capitalism has short-comings, and all if not most of them are well-known from practice. But most of its critique is about how it creates poverty. I think it is a wrong test of the capitalism to measure it according to what it was never designed to do.
Humans are competitive by nature. History is replete with domination of man by man, be it in religion, politics, economy, feudalism, kingdom, etc,. All these form of socialisation reflect one person (man, to be exact) above the others. Equality matters only to the dominated, and thereafter they strive to dominate everyone.
Capitalism is one form of domination of man by man for his benefit. Politics has the effect that it legitimises human domination. Left to itself, it achieves the same excesses.
@Bert
My critique is that you only regurgitate the Marxist stuff. It is, therefore, neither critical nor unique. It is the stuff that Negri, Klein, Kovel etc. churn out it thousands of best selling copies that wishy washy lefties eat up as gospel.
It is also ironic that you use the main stream press (and it doesn’t get more status quo PC mainstream than Time Magazine) to support your argument – when your last post warned exactly against doing this…
Goldman Sachs played a role but to blame the whole crisis on greedy investment bankers is factual wrong and ideologically convenient.
Maybe you should consider expanding your library. I used to love Klein, Negri etc until I discovered how much they generalise, sensationalise and just plain get the facts wrong – they are the Michael Moore’s of print.
@ Prof Bert
I think your point about philosophers pointing out that “the gods are false” needs to be extended to all the gods (since *all* the gods necessarily make up the status quo). ‘Marxism’ / ‘the left’ is as much a god as ‘Capitalism’. Reducing the evils of the world to ‘Capitalism’, at least, confuses rather than clarifies since many economic systems that dont qualify as ‘Capitalist’ are a lot worse. And many claiming to be better (Marxist) were even worse than them.
I would love for you to give a summary of the corrupting influence of ‘Capitalism’ since that implies some knowledge of uncorrupted human nature to compare it to. I would to know what that is.
Bert, what i would like to see from you is a non intellectual article on the possible social/political systems, giving pros and cons plus choosing your preferred one, for S. Africa. While taking into account our history, very mixed population and social groupings plus our unbreakable links to the whole world
I work in the chemical/chemical engineering world and when we come with a proposal we are asked to “show us a working model of your technology’. Something i wish all Marxists would be required to do, show us a happy working model of their political ideals – not the words just the deeds.
Brent
@ Mallencolly: If I may interfere, I should point out that you have not read Bert correctly. The expression, “gods of the city” – referring to the Socrates episode in the history of philosophy – denotes something very specific, namely the gods adhered to by a particular “city” or group, or society. Therefore Marxism cannot count among the current gods of the city; it belongs to a different city, not lionized today. The gods of today’s city equal capitalism.
@ HD and Brent: I don’t think Bert expects you as champions of capitalism to agree with him, but at the same time he is doing a good job raising people’s awareness that it is not the only economic system open to humanity. In effect, Bert is doing what he has always said he aims for, namely to introduce a different discourse. This is in line with Adorno’s insight, that once a discourse has become total(-ized), no alternative appears on the horizon. Only while what exists at a specific historical moment, is seen as not all that could exist, is change for the better possible. And why do you keep harping on the supposed discredited status of some of Bert’s favourite writers? Hardt and Negri, for example, is a pair that is more than reputable – I’d like you to equal their ability to draw the connections between the social, the economic, the juridical and the cultural! Their trilogy is a magnificent synthesis of thought dispersed across a wide spectrum.
@ Prof Bert
Please can you ask whoever is responsible for the upkeep of the comments section to fix up whatever is causing us (me?) to be able to see (and obviously use) other peoples names and email addresses. It is bad enough having to make sure that yuou arent commenting as someone that used your computer to post something without having to worry about posting as complete strangers.
Ive emailed thoughtleader@mg.co.za but no-one seems to have payed any attention.
The comment from “Lindiwe” above is from me. Unfortunately her comments have been runied for me because I now know precisely who she is.
@ Maria
I believe I used the word “extend” ie include the other gods.
The “groups” today are not neatly seperated (unlike Athens and the other Greek cities). You cannot seperate the other influences from ‘Capitalism’ and must include the other ‘gods’. As an example, one of the reasons for Capitlism’s dominance is the failure of supposedly Marxist/communist states(nevermind the number of people killed by the states or through the policies of the states) and thus the perceived failure of the Marxist gods.
As for your response to Brent and HD, I do not think that Prof Bert is really succeeding in “introducing a different discourse”. If a person believes that s/he owns, and therefore has the right to sell, her/his own labour and no-one can tell her/him otherwise, would easily dismiss Prof Bert’s articles. Actually, its the comment’s afterwards when Prof Bert starts using words like “explotitative and corrupting”. Inevitably, this will get responses from those that feel that obligation to a group is “exploitative and corrupting”. Im fairly certain that this is not what Prof Bert has in mind. Prof Bert’s use of the word capitalism confuses rather than clarifies. It limits the discussion through what may not be an approriate generalisation (and the inevitable responses to that generalisation) .