Globalization: Is There Anything to Fear?

Abstract

Globalization in its many different forms is the last grand narrative of the 20th century. It evokes a universal vision of frictionless adjustment, endlessly innovative corporations, infinite progress and unlimited abundance for all through the power of the world market. What is particular about the latest tidal wave 'where all are interrelated through the global market' is that it is not a popular force capable of mobilizing millions in the way working class internationalism once did. Nor is it a foregone conclusion that the global economy will come undone and crash. By Contrast, what is clear is that financial deregulation has gotten out of hand. Despite the triumphant nature of markets in Anglo-Saxon economies that have irreversibly altered the fundaments of economic and social policy management in many jurisdictions, there are still strong grounds for claiming that the world price system does not automatically build a level playing field across nations as its rhetoric claims. So far, the price mechanism has not produced the expected convergence between social market, laissez-faire, developing economics and Asia-Pacific. Governments ought to be highly vigilant in times of speculative booms, quick fixes that turn bad and too much easy money flowing across borders. Significantly, they have misunderstood the importance of the regulatory need to organize the market. The collapse of the miracle economies (once touted to last for decades)--Mexico in the early 80s and more recently the Asian Tigers along with the former Eastern Bloc countries--underlines the fragility of the existing order. What the paper demonstrates is that divergence at all levels is increasingly becoming more important as a feature of globalization despite the powerful authority of elite international institutions to move the global agenda towards the market end of the spectrum. The bottom line is that stability at any cost is simply the wrong target. The paper argues the political market for social protection--jobs and a higher standard of living--promises to be a more potent force than the most arduous tenants imposed by the dynamics of a laissez-faire globally-directed free trade regime. The question is, can governments and policy experts learn to think in a reasoned and critical way about the limits of global free trade? Or, will they continue to fear what they do not understand, engage in unnecessary risk-taking and be unable to react strategically to such complex changes in the international economy?

JEL Classification: O40