Globalization is it a blessing or acceleration on the road to chaos?
Globalization is – according to a definition of the OECD – the process in which the interdependence of markets and production in various countries grows as a result of the dynamics of trade in goods and services, and movements of capital and technology. A broader definition of the World Bank includes also the need for collective action in order to deal effectively with world environmental problems. The dynamics of the globalization process in past decades have greatly intensified the impact of the driving forces behind the economic mechanism on the living conditions of people everywhere on the globe. Those believing that the neo-liberal system holds the key for an ideal economic development eagerly embraced the three myths on: unlimited needs, permanent growth and a totally free market. The urge to make money served as effective glue for holding them together.
Globalization is not in itself good or bad, all depends on how it is managed. For some countries in East Asia it has led to a substantial improvement of the living conditions for millions of people. A result that could only be achieved by adapting the rules of the game to the requirements of the country involved. For others – particularly the poor – it was an unmitigated disaster! Stiglitz, the renowned economist and Nobel laureate, did not mince his words when he wrote: “Globalization today is not working for many of the world’s poor. It is not working for much of the environment. It is not working for the stability of the global economy” He was also highly critical about the transition from communism to a market economy which: “has been so badly managed that, with the exception of China, Vietnam, and a few Eastern European countries, poverty has soared as incomes have plummeted.”
Among the negative consequences of globalization should also be mentioned the destruction of traditional cultures at great speed. The ‘consumption culture’ is spreading its own values to the remotest corners of the world. Fixation on private gain and the practice of financial calculation are rapidly replacing long cherished moral values.
Removal of barriers to free trade and closer integration of national economies can be a force for the good, it has the potential to enrich everyone in world – also the poor. But forcing a developing country to open its markets can have disastrous consequences. Not only for workers in industries not yet in a position to compete with much stronger foreign companies but also for farmers in developing countries who see their markets inundated with highly subsidized products from Europe and America.
The World Trade Organisation (WTO) – under pressure of the highly developed economies – is pushing for deregulation. The result is that even markets in the remotest corner of our planet are exposed to the full thrust of powerful economic forces. This strong drive for worldwide access to markets is an important aspect of the globalization process. Another factor is the vastly increased mobility of capital, greatly facilitated by revolutionary developments in communications- and information technology. Huge capital transfers, – decided upon in the board room of a London or New York office – can have an immediate harmful impact on the lives of numerous people located thousands of miles away. Uncontrolled financial movements of vast dimensions are now a daily phenomenon. Actual speculative capital movements stand in no relation whatsoever to normal transactions in goods or services. Premature capital market liberalization has been an important factor in the increase of global instability. All these operations constitute a permanent threat for currencies, stock exchange and above all the well-being of countless people.
International management of the globalization process
The high degree of freedom in the movement of capital, goods and services is not only creating a problem for the poor but also for the rich countries. Modern means of communications enable corporations to take advantage of the big discrepancy in wage levels between countries. Even traditional European corporations like Siemens are considering the relocation of part of their production to Eastern Europe or Asia if the labour costs in Germany cannot be brought down. The growing importance of outsourcing is another reason for concern about reduced employment opportunities for qualified workers. Corporations are in a global market under continuous pressure to reduce costs. An abundant supply of highly qualified labour in several Asian countries at a fraction of the costs in Western nations makes this possible.
There are therefore good reasons both for poor and rich countries to insist upon a careful international management of the globalization process. Advocates of total free trade tend to disregard the magnitude of numbers: while nearly 1.2 billion people are living in high income countries there are roughly 5 billion people surviving on a low subsistence level. China and India together – with more than 2.5 billion people – are both in full development. These countries are in a position to offer products at a fraction of our costs.
To think that this competition will be limited to simple products ignores the strong motivation to make progress of countries with a high intellectual potential. Total free trade not only affects millions of poor people in the world but carries also the risk of pauperisation of modern societies! Neither protectionism nor full-fledged liberalization will help us to chart the road towards a just and sustainable economic development. The challenge in coming years is therefore to find a responsible balance between the legitimate interests of the developing world and those of the modern world!
The power of multinationals
Multinationals dispose since decades over a large freedom to operate on the world market. Few governments are in position to ignore their wishes and international control is deficient. Unchecked power however creates an unhealthy situation it opens the way for an abuse of strength. As individual nations are unable to control trans-national corporations there is a real need for developing countervailing power on an international scale. To a certain extent this could be achieved by strengthening international rules and institutions. Of no less importance would be the development of a Global Ethos. Here, religions – together with non-governmental organisations – could play a constructive role. A positive development in this direction is the growing sense of public responsibility among multinationals. The popular slogan: ‘people, planet, profit‘ is indicative for this recognition of corporate responsibility. In this connection attention should be drawn to the initiative of Royal Dutch Shell to develop a code of conduct for its national managers. Mention should also be made of the activities of the Inter Action Council. But all these positive developments in the field of Business Ethics should not let us forget that many shareholders are still reluctant to accept the more responsible concept of stakeholders! The profit motive, shareholders and other ‘ultimate interests’ of the corporation remain potent factors and therefore a source of permanent tension with human rights, social and ecological considerations!
Human unity – an ecumenical vision
One of the negative aspects of globalization is the fragmentation of societies and exclusion of a growing number of members of the human family. The prevailing concept of globalization as creating one world – fostered by trans-national and worldwide structures of economy, finance and communication – stands in marked contrast to the vision of human unity as advanced by the ecumenical movement.
The former Secretary General of the World Council of Churches, Konrad Raiser, stressed in his Report to the Central Committee:
“…Globalisation is increasingly being turned into a political project. In fact, the present extent of globalisation, rather than being the sheer manifestation of historical necessity, is to a large degree the consequence of deliberate decisions on the part of governments, reflecting the neo-liberal economic theory. The goal of the globalisation of markets increasingly replaces the search for a viable order of world community. The call for the liberalisation of capital movements, for the deregulation and privatisation of social and economic systems and for the expansion of free trade is considered the only valid response to the processes of globalisation on the national and regional levels. This project has been given the status of unquestioned truth by the policies and actions of the international financial and economic institutions – the International Monetary Fund, the World Bank and the World Trade Organisation…. The dramatic and destructive effects of these policies of globalisation are before our eyes: they have led to an unprecedented concentration of power and wealth in the hands of a small minority, thus widening the gap between rich and poor both within and between countries.”
This disquieting situation demands new questions and new approaches from churches. In a publication of the WCC on the eve of its World Assembly in Harare some of these are raised:
“As the forces of globalisation put on the cloak of ‘internationalism’ and even of ‘ecumenism’, how can the church, the one body of Christ, make its understanding of universality heard? How can the ecumenical movement manifest in social and political terms the unity given in Christ and the sovereignty of God over all human powers? How is the moral voice of the church to be used in the face of such widespread economic, cultural and political immorality?”