Coping with globalization

Coping with globalization

B. Herry-Priyono, Researcher, Alumnus, London School of Economics,
Jakarta, herryprb@lse.ac.uk

When asked how sustainable development has been overshadowed
by globalization, the Coordinating Minister for the Economy,
Dorodjatun Kuntjoro-Jakti, replied: "the realities (of
globalization) will continue ... We cannot stop them."

Despite its non-inevitable character, globalization seems
unstoppable. Although the relationship between "sustainable
development" and "globalization" is far from being a zero-sum
game, the demise of the meaning of "development", let alone
"sustainable development", can be accounted for by the rise of
the present form of globalization.

If the core of development lies in the importance of people's
planning in attaining common welfare of a nation, the type of
globalization at work seems to render such planning empty. Even
from the most conservative point of view, the demise is like
changing the substance of Adam Smith's famous book, from The
Wealth of Nations (1776) to The Wealth of Individuals.

It is the replacement of "common purpose" by "private
interest" as the core principle of neo-liberal political economy
that has brought development in a state of disarray.
Privatization, deregulation and liberalization can be strategic
devices for injecting moribund state-owned enterprises with new
entrepreneurial ethos; yet they also reflect this profound shift.

Then common welfare simply becomes the unintended consequences
of individual profit-seeking pursuit rather than the target of
collective efforts called "development".

The shift is so profound that welfare is not the effect of
"development" -- but scraps from the financial masters' party
tables.

If globalization is inevitable, how should we approach the
problem? First, just "let it happen". Second, try to resist it by
cutting off our economy from the outside world. Third, introduce
some policies to maximize the gains and minimize the losses. The
last is the most attractive option, yet easier said than done.

Globalization is as ambiguous as every other phenomenon under
the sun. Only when put under some ethical criteria does
globalization become a contested issue. Its proponents argue that
the world has been better-off with globalization.

We are connected more closely. The cost of a three-minute call
between New York and London has fallen from US$300 (in 1996
dollar) in 1930 to less than 45 cent today. Indeed, the existence
of losers is not sufficient argument for resisting globalization.

The opponents claim that large numbers of the world population
have become losers (like in Indonesia, Brazil, sub-Saharan
Africa, landlocked parts of Asia such as the Ganges valley of
India and interior China). The share of wealth has also
deteriorated quickly. While in 1960 the 20 percent richest
controlled 70 percent and the 20 percent poorest controlled 2.3
percent of the world's wealth, in 1989 the first group had 82.7
percent whereas the second were left with 1.4 percent. The post-
1990 trend has been no better.

Then others would say that the problem is not globalization
itself but, that at least one-third of the world's population
(more than 2 billion people) are unaffected (untouched) by
globalization. So, the task is to touch them with the midas of
globalization. Assuming that we will ride the tiger of
globalization (third option), this seems like a Sisyphean task.

Policy recommendations to this effect have included more
investment in infrastructure, social safety net, more market
information for the poor, growth-oriented development aid, more
access for poor countries to global trade.

Yet economic globalization is largely, if not entirely, a
deregulation of business. By removing socially-oriented
regulations on the operation of business, it gives more power to
owners of financial assets. Power is largely a question of
options. By handing over more options to capital owners (like no
constraints on location of production, sources of supply,
environmental standard), globalization gives them immense power
and prerogatives.

Power in economic life means an ability to shift more and more
of the value produced by society into increasingly fewer hands.
Simply letting globalization to happen is a de facto formula for
shifting income and resources to the owners of financial assets,
that is, for increasing inequality. Through investment more and
more people may be touched by the benefits of globalization.

But, being touched is one thing, being uplifted by
globalization is quite another. It is on this torturous issue
that the future of globalization hinges.

Of course, this problem has far-reaching implications for a
democratic movement. If democracy is a movement to make the
socially consequential exercise of power accountable, the
criteria of democratic accountability should also be applied to
the exercise of power by capital owners/controllers.

The problem is, in policy-making circles, questioning the
problematic status of business power is like a subject that dares
not speak its name. But it is the key to a more humane
globalization. At a time when business is held in high esteem,
recognition of this truth may sound unpopular. But we should not
confuse popularity with validity.

The challenge is a policy package to bring companies and
financial powers under democratic accountability. This would
include competition policies to restrict the market share of any
one company, together with a "site-here-to-sell-here" policy for
manufacturing and services, domestically and regionally reducing
the power of companies' threat to relocate by making access to
markets dependent on physical presence.

If globalization is a fact of life, the question is not about
"to accept" or "to reject", but about how to make the powers
involved in the directions of globalization accountable.