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Herman Daly on globalization

Jim Manwaring

If you read nothing else on the subject of globalization, you must read these few paragraphs by Herman Daly. I think he really nails it. If you get what he is saying – and you will – you will probably blurt out with me: “Why have we gone along with this for 30 years? We must be mad.”

This is from a paper presented in Oslo, Norway in 1999. If you wish to read the whole paper, Google Herman Daly and click on “Five Recommendation for Sustainable Economic Development”. Below is his fourth recommendation on globalization:

(4). Move away from the ideology of global economic integration by free trade, free capital mobility, and export-led growth — and toward a more nationalist orientation that seeks to develop domestic production for internal markets as the first option, having recourse to international trade only when clearly much more efficient.

At the present time global interdependence is celebrated as a self-evident good. The royal road to development, peace, and harmony is thought to be the unrelenting conquest of each nation’s market by all other nations. The word “globalist” has politically correct connotations, while the word “nationalist” has come to be pejorative. This is so much the case that it is necessary to remind ourselves that the World Bank and the IMF exist to serve the interests of their members, which are nation states, national communities– not individuals, not corporations, not even NGOs.

The Bretton Woods institutions have no charter to serve the one-world without borders cosmopolitan vision of global integration –of converting many relatively independent national economies, loosely dependent on international trade, into one tightly integrated world economic network upon which everyone depends for even basic survival. If the World Bank and the IMF are no longer committed to serving the interests of their members, then whose interests are they serving?

Globalisation, considered by many to be the inevitable wave of the future, is frequently confused with internationalisation, but is in fact something totally different. The word internationalisation refers to the increasing importance of international trade, international relations, treaties, alliances etc. International, of course, means between or among nations. The basic unit remains the nation, even as relations among nations become increasingly necessary and important. Globalisation refers to global economic integration of many formerly national economies into one global economy, mainly by free trade and free capital mobility, but also by easy or uncontrolled migration. It is the effective erasure of national boundaries for economic purposes. International trade (governed by comparative advantage) becomes, with the introduction of free capital mobility, interregional trade (governed by absolute advantage). What was many becomes one. Where there had been a guarantee of gain from trade to each nation, now there is only a gain to the world as a whole, with the possibility that some nations may lose as others gain.

The very word “integration” derives from “integer”, meaning one, complete, or whole. Integration is the act of combining into one whole. Since there can be only one whole, only one unity with reference to which parts are integrated, it follows that global economic integration logically implies national economic disintegration. By disintegration I do not mean that the productive plant of each country is annihilated, but rather that its parts are torn out of their national context (dis-integrated), in order to be re-integrated into the new whole, the globalise economy. As the saying goes, to make an omelette you have to break some eggs. The disintegration of the national egg is necessary to integrate the global omelette.

The model of international community upon which the Bretton Woods institutions rests is that of a “community of communities”, an international federation of national communities co-operating to solve global problems under the principle of subsidiarity. The model is not the cosmopolitan one of direct global citizenship in a single integrated world community without intermediation by nation states. Who conferred upon these institutions the right to unilaterally change the very reason for which they were created?

To globalise the economy by erasure of national economic boundaries through free trade, free capital mobility, and free, or at least uncontrolled migration, is to wound fatally the major unit of community capable of carrying out any policies for the common good. That includes not only national policies for purely domestic ends, but also international agreements required to deal with those environmental problems that are irreducibly global (CO2, ozone depletion). International agreements presuppose the ability of national governments to carry out policies in their support. If nations have no control over their borders they are in a poor position to enforce national laws, including those necessary to secure compliance with international treaties.

Cosmopolitan globalism weakens national boundaries and the power of national and sub national communities, while strengthening the relative power of transnational corporations. Since there is no world government capable of regulating global capital in the global interest, and since the desirability and possibility of a world government are both highly doubtful, it will be necessary to make capital less global and more national. I know that is an unthinkable thought right now, but take it as a prediction — ten years from now the buzz words will be “denationalisation of capital” and the “community rooting of capital for the development of national and local economies”, “minimum residence times of foreign investments”, “Tobin taxes”, etc., not the current shibboleths of export-led growth stimulated by whatever adjustments are necessary to increase global competitiveness. “Global competitiveness” (frequently a thought-substituting slogan) often reflects not even a real increase in resource productivity, but rather a standards-lowering competition to reduce wages, externalise environmental and social costs, and export natural capital at low prices while calling it income.

Jim Manwaring is an ERA member living in NSW

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