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.