Two versions of globalization go to opposing ends

Two versions of globalization go to opposing ends

B Herry-Priyono, Researcher, Jakarta

Ocean apart, two narratives of globalization are being enacted
this month -- on Jan. 23 and on Jan. 28. One is the World
Economic Forum (WEF) in Davos, Switzerland, and the other the
World Social Forum (WSF) in Porto Alegre, Brazil. They may give
us the impression that the world is being earnestly engaged in
the great battle between good and evil. Cheap journalism would
portray the first as "globophiles", whereas the second are
"globophobes".

As always, things are more complicated than the act of naming.

Not so long ago, there was only the first forum, and only
recently has the second been conceived and born. With the two
fora now coexisting to shape tomorrow's world, we do not have a
pro and contra globalization, but two versions of globalization.

The first version, the Davos version, is constructed around
the power of the purse. It is also through the lenses of purse
and wealth that the world is seen. The rest is a form of ceteris
paribus, that is the non-wealth and non-purse issues exist but
are considered as suspended variables.

It is the version of those whose main concern is the working
of the present form of globalized economy. Financiers, financial
pundits, economic ministers, bankers and some other invited
parties will argue over the way tomorrow's globalization should
be directed.

The second one, the Porto Alegre version, was born out of
movements like the ones in Seattle and Genoa, to which the
growing protests, criticisms and outrages toward the present form
of globalization have converged. It is the version of those whose
concern is the nonworking of the present form of globalization.
Human rights activists, farmers, environmentalists, concerned
academics and intellectuals, and a variety of people's movements
will take part.

No doubt there is a great deal of overlap between the two and
variations within each, but it is increasingly clear that they
represent two models of globalization. In many respects, the
Porto Alegre version would not have come into being without the
history of overindulgence of the Davos version of globalization.

Where does the overindulgence lie? As a version constructed
around the power of the purse, the Davos version is a model of
globalization predicated upon the completely free movement of
capital. What is meant by capital is not just any form of capital
but above all financial capital.

At face value, what seems to be advanced here is the
philosophical value of freedom that no one will disagree to.
Going beyond the rhetoric, however, the real issue is in fact not
freedom. Freedom is valued only because of what it is that
freedom does; so the importance of the freedom of capital
movement is for the Davos version of globalization derived
entirely from the importance of capital movement.

No one disagrees with the virtue of free capital movement. The
problem is that it does not exist in a vacuum. It operates within
the principle of the sanctity of private property which is, as we
all know too well, increasingly losing its social mission.

In short, it is a form of globalization founded upon the
sundering of financial capital from the survival process of the
majority of nonowners.

As the American economist, Paul Davidson, rightly points out,
financial markets are now more liquid, but that is not the same
as being more effective. Long before that, John Maynard Keynes
warned that capital markets were there to provide investment for
entrepreneurs, not gambling chips.

The problem is very serious "when enterprise becomes the
bubble in a whirlpool of speculation; when the capital
development of a country becomes a byproduct of the activities of
a casino, the job is likely to be ill done".

What was forewarned by Keynes and Davidson is by no means
unfounded. In 1971, 90 percent of the global financial
transactions were still related to the real economy -- trade or
long-term investment -- and only 10 percent were speculative. By
1990 the percentages had reversed.

By 1995 about 95 percent of the vastly greater sums were
speculative, with daily flows regularly exceeding the combined
foreign exchange reserves of the seven biggest industrial powers;
i.e., over US$1 trillion a day, and very short-term -- about 80
percent with round trips of a week or less.

Hence, the present predicament: The owners of financial
capital grab the biggest yields of globalization, the nonowners
go to the wall. The future of the world is becoming more and more
an unintended consequence of financial oligarchs.

It is against this backdrop that the WSF came into being. It
seems grossly mistaken to call the WSF an antiglobalization
force. It seems more to be a tapestry of movements to make
globalization work not only for financial oligarchs but for
global welfare.

In 1944, the great Hungarian economic thinker, Karl Polanyi,
called this a "double movement". In today's parlance, this means
the project to dis-embed the working of financial capital will
sooner or later encounter movements to re-embed it into the
survival process of the majority of the world's population.

The WEF and WSF are two movements of globalization. It may not
be too inapposite to say that the first is a neoliberal version
of globalization, whereas the second is a social-democratic one.

Neoliberalism's loudest message is that there is no
alternative to the present form of globalization, and that
humanity has reached the Fukuyamaniac "End of History". Its
missionaries usually demand the critics to present an
alternative, without their realizing that what is taking place
now is also less of their genius than their game of sheer power.

True that it remains a quest as to how to set up a social-
democratic globalization, and the very notion has a utopian air
about it. But every advance in history, from ending slavery to
ending formal colonialism has had to conquer the notion at some
point that it was impossible to do because it had never been done
before.

Humans change the world by acting on it.