by Guy Arnold
There is no easy overall definition of globalization. The concept emerged in the 1990s following the collapse of the USSR since this removed all constraints from the activities of transnational corporations (TNCs). The USSR had acted as a defence shield for the formerly colonized zones of Eastern Europe and to a lesser extent around the globe and had made possible the rise of the non-aligned movement. ‘To most of the world, globalization did not mean the equality of conditions of exchange. But it meant the entry of G-7 goods and finance into their zones just as a few of their compatriots could take their own goods to a limited part of the G-7 markets.’8 Privatization is the leading policy weapon of globalization and by the end of the century water and power had become crucial items on its list: control of these fundamental resources had to be opened up to corporate ownership. All the instruments governing international trade and economic relations that in any case have long been controlled by the major developed nations, have been advancing policies leading to globalization. For example, ‘The overall framework of GATT was to “liberalize” the traffic in goods, to open markets to TNCs and to cutback on the right of states to levy tariffs as a means to manage economic development and equity. It appears that these can be violated by the US, when it suits it, as made clear by its 2002 tariff on imported steel.’9 Increasingly, global firms ‘write’ the rules of international economic behaviour and when, for example, a scandal such as that concerning Enron takes place, the West does not rewrite the rules controlling the behaviour of such companies (which it certainly would do if such a company was a Third World one) but rather treats such excesses as a one-off lapse, leaving in place the structure that allowed the scandal to take place.
One view of US wars on drugs and terrorism is that they are designed less to fight these threats than to give it control of strategic areas and resources. What appears unanswerable is the way in which the major economic powers, led by the United States and the EU, have, since the end of the Cold War worked to open all trade and all investment opportunities to penetration by their companies and corporations, regardless, or in spite of, the wishes of smaller countries who need some forms of protection in order to retain any control over their development. ‘Market forces’ has become one of the catch phrases of the present age but in reality the pattern of a country’s trade is intimately linked to its economic and military strength and hence to its international power and influence. The powerful tell the weak to open their markets,10 yet if the US and the EU really believed in market forces they would end their subsidies to agriculture and allow weak economies to benefit from the one major area in which they have an advantage. The WTO in principle discourages economic integration between nation states in that it theoretically requires that members practice non-discrimination in trade: that is, they accord equal treatment to all other countries which are parties to the agreement.11 In fact, the WTO, like the other international financial institutions, is dominated by the US and the EU who ignore rules when it suits them to do so while insisting that the majority of weaker members adhere to them at all times. Occasionally they are defeated. In 1998 they attempted to force through the Multilateral Agreement on Investment (MAI) but were overruled as the result of a campaign led by NGOs. Had MAI been agreed it would have given a huge increase in powers to TNCs over elected governments by expanding their investment rights worldwide and empowering companies to sue governments, for example if their profits were diminished as a consequence of national laws. Then there came the scandal of the WTO’s General Agreement on Trade in Services (GATS): this particular form of global liberalization aimed to require all countries to allow foreign business equal access to all domestic markets for services, including health and education, as well as tourism and financial services. The EU Commission has described GATS as ‘first and foremost, an instrument for the benefit of business’. But, as a leaked DTI memo of 2001 made clear, the case for GATS was ‘vulnerable’ when campaigners asked for ‘proof of where the economic benefits lay for developing countries’.12 The more globalization is examined the harder it is to argue that it works equitably let alone to the benefit of the world’s small economies.
Aid has always been an instrument of policy and increased emphasis upon channelling aid through the private sector is a warning signal that donors are prepared to use aid to boost private business in recipient countries. ‘Where a Southern state depends on external aid rather than the national economy for its existence, it effectively becomes a local government in the global political order. Sovereignty is meaningless in a situation where primary government functions – security, economic management, the selection and implementation of public policies – cannot be minimally guaranteed or undertaken unless externally negotiated and financed.13 Deliberate channelling of aid through NGOs is a way of both bypassing and downgrading the recipient government. Moreover, since NGO funding comes in part from governments they have lost the ability or desire to either criticize donor policies or work on a truly radical basis – as some did to begin with.14 During the 1990s the World Bank responded to mounting criticisms of the way it worked by a new initiative to promote ‘participation’ of civil society in formulating government policies in developing countries. It required governments to consult with civil society groups to draw up a national development strategy that would then receive World Bank funding. No real consultations along these lines took place; rather, civil society groups were asked to ratify decisions or policies made by elites. Except in revolutionary situations this is normal, something the World Bank knew only too well. Its proposals were no more than a gesture to appease critics while its basic modus operandi would not change.
The genesis of globalization can be found in immediate post-World War II attitudes of Britain and the United States. Clement Attlee, the Prime Minister, Ernest Bevin, Foreign Secretary, and Sir Stafford Cripps, Chancellor of the Exchequer, saw the development of ‘our’ African resources as of prime importance and a major consideration in planning Britain’s economic activities while Field Marshal Montgomery claimed that British living standards could be maintained by Africa’s minerals, raw materials, land and cheap coal. The only problem, Montgomery added, was that the African was ‘a complete savage’ incapable of developing these resources himself. At that time Colonial Office planners were aware that they were grossly exploiting the colonies: ‘the Colonial territories are helping so much on balance of payments’ as one 1951 file records. Bevin, who in his other role as a leading trade unionist knew all about exploitation, believed that the possibility of presenting British policy as exploitation was ‘almost endless’ and suggested that ‘care and preparation’ would be needed to present British policies as promoting development.15 Little had changed by the end of the century. The basic aim of US foreign policy at the end of World War II was to create an ‘open door’ in trade and investment where US companies were to be able to secure access to other countries’ markets. Both the United States and Britain, still pursuing similar policies, had become ardent advocates of globalization at the end of the century.
In a devastating critique of New Labour’s policies towards Africa, Mark Curtis16 examines the British approach to post-apartheid South Africa which Britain had spent years shielding from the wrath of anti-apartheid activists. ‘Following apartheid, the advocates of global liberalization – inside and outside the country – have created a South African economy geared to offering a generally favourable climate for investment by business. At the same time, the threat of radical change that might have principally benefited the majority of the population living in poverty has been staved off.’ In other words, South Africa’s white business elite that Britain went to such lengths to defend has won after all. Peter Hain, a radical turned poacher, said as minister in the Foreign Office ‘where South Africa was once the reactionary pariah of Africa, now it is the radical and progressive model’.17 Another Labour Minister, Trade Secretary Patricia Hewitt, said, ‘We have no doubt about South Africa’s attractiveness as a business partner
for UK companies.’ She has also said, ‘We want to open up protected markets in developing countries.’ Penetration of its economy had indeed gone deep and by the end of the century British investment in South Africa stood at £11 billion. The British aid department, DFID, has become the strongest advocate of globalization among development organizations and all the donors appear to have adopted a similar line over globalization. Developing countries, on the other hand, need import protection, domestic subsidies and significant regulation of foreign companies. ‘Under New Labour Britain is helping to organize the global economy to benefit a transnational business elite while pursuing policies that are often deepening poverty and inequality. New Labour has, in fact, a very grandiose project, not – as it claims – simply to manage globalization, but actively to push an extreme form of economic “liberalization” globally.’ So much for the new partnership that Tony Blair says he wants with Africa. Speaking in Cape Town on 8 January 1999, Blair said, ‘Real development can only come through partnership. Not the rich dictating to the poor. Not the poor demanding from the rich. But matching rights and responsibilities.’ True partnership, it should be stressed, can only be achieved between equals. One last quote from Curtis is in reality a commentary upon the difference between the promise of New Labour and the reality. ‘Instead of promoting a one-size-fits-all straitjacket of global economic “liberalization”, Britain should champion diverse economic policies suited to local situations.’18
The internationalization of economies and finance, and the expansion of technologies, especially communications and information, have been the most obvious aspects of globalization during the period from 1990 onwards. The chief problem posed by this rapid expansion has been a commensurate reduction of democratic decision-making: governments have less control over social and welfare policies as the power of the nation state over economic decisions is downgraded. The evidence is increasing that where government policies concerning welfare come into conflict with the power and practices of TNCs, the latter win the argument. Thus, at the 1998 World Economic Forum at Davos, business leaders expressed dismay at ‘excessive government regulation’ such as rules covering the workplace and the environment. At the 1999 Davos Forum, on 5 July, UN Secretary-General Kofi Annan, falling into line with business pressures, launched the United Nations-International Chamber of Commerce (UN-ICC) Global Compact. This relies upon the ability and will (in other words it is voluntary) of transnational corporations to comply with proposed standards concerning human rights, labour conditions and environmental practices. The transnationals are to regulate themselves and there are no monitoring or enforcing mechanisms. In return for this compact the United Nations would support free trade. This shameful surrender was the antithesis of any UN role as the guardian of the weak. At almost the same time as this Davos agreement was reached, on 12 July the annual UNDP Human Development Report was published. It detailed how profit-driven economic globalization resulted in the neglect of human rights and social justice for the majority of the world’s people. It stated, among other things: ‘Multinational corporations are already a dominant part of the global economy – yet many of their actions go unrecorded and unaccounted… They need to be brought within a frame of global governance, not just a patchwork of national laws, rules and regulations.’ The UNDP wanted globalization with a human face and in a sense conceded defeat as it all but admitted that the process of globalization was already beyond control. Like the United Nations at Davos, pleas for globalization with a human face are no substitute for controls over governments and corporations that are determined to push the process above everything else. As the UNDP report continued: ‘Today, they are held to codes of conduct only for what national legislation requires on the social and environmental impact of their operations. True, they have in recent years taken up voluntary codes of ethical conduct, but multinationals are too important for their conduct to be left to voluntary and self-generated standards.’ The UNDP argues that human rights are the key source of ethical principles and, unlike the UN-ICC, stresses the need to strengthen current international human rights regimes and says that not only governments but also that TNCs and the WTO should be held accountable to those affected by their actions.19 The Secretary-General of the International Chamber of Commerce, Maria Cattaui, responded to the Human Development Report in an open letter to the Financial Times in which she said the report was ‘on the wrong track in calling for a mandatory code of conduct for multinationals’ since binding rules ‘would put the clock back to a bygone era’. She was of course correct and the last thing the ICC wants is the kind of controls that existed in the past. As transnationals have become bigger and more influential, they have ignored codes of conduct or claimed to be self-regulating. Now, more than ever, codes of conduct are needed just as they are being abandoned. Corporate engineering is not new but it should be understood that corporations are only interested in doing more and better business. This can most easily be achieved with a minimum of restraints. The great argument now and in the coming years is how much restraint can be applied to them on behalf of the people and to what extent they will work to evade such restraints with the connivance of laissez-faire governments.20
‘Privatization is the act of cannibalism made possible by the forces of globalization.’21 This description may appear dramatic but becomes less so when a poor country such as Mozambique sees its major state assets being bought up by outsiders. The Western push for privatization really means globalization by another name: structural adjustment programmes in Africa that include privatization force small economies to open up their controlled assets to foreign takeovers which are a form of asset stripping. Market fundamentalism was meant to rescue economies from the dead hand of the state and put them in the safe hands of bankers, technocrats and the thrusting new class of entrepreneurs. But as countries such as Ghana, Mozambique and Uganda have found, ‘the enrichment of foreign asset-strippers and domestic political cronies disguised as entrepreneurs has been a main outcome of privatization’.22 In South Africa privatization became a bone of contention between the ANC and COSATU: the main beneficiaries of privatization were the new black business elité.
Globalization has produced some of the fiercest political arguments in many years: broadly, its advocates are the rich, developed West and its opponents the representatives of the South or developing nations and that division at once defines what the argument is about. As one opponent of the process puts it: ‘There are essentially three “classes” or “actors” in the world political economy: the advocates and beneficiaries of globalization; the adversaries and exploited classes and states; and those who experience both exploitation and benefits and waver in their response.’23 Almost all Africa falls into the second category though mining or commodity export enclaves that clearly enrich local classes may favour the process. Adversaries of globalization make up in numbers what they lack in financial power and that goes to the root of the problem. South Africa, with its long-standing links with British and American business, is an interesting borderline case. Arguments about globalization invoke the shades of Fukuyama and the ‘end of history’ for supporters of globalization argue that it is the last stage in history in which all countries and economies will be linked together in a single market. At the turn of the century three African countries – Algeria, Nigeria and South Africa – were on the margin and liable to be enmeshed in the globalization process but most of the rest had such small economies that, with luck, they were not worth bothering about and so might just have a chance to organize themselves before they lose all control of their economies. The weakening of the nation state is a necessary corollary of the extension of globalization. ‘Globalization, defined here simply as the intensification of economic, political, social and cultural relations across borders, has gradually eroded and weakened the integrity of the nation-state as an autonomous, independent actor.’24 The adjustment policies imposed on African economies by the World Bank and IMF have opened their economies to tr
ansnational actors on the one hand while debt has been used as a lever to direct domestic production away from industry and towards primary products for export on the other. ‘Moreover, the required privatization of public industries has frequently led to take-overs by foreign companies and multinationals, as sufficient national capital has rarely been available.’25 Weak states with large resources are a natural target for the globalizers.
THE IMPACT OF GLOBALIZATION UPON AFRICA
The process of globalization faces Africa with huge challenges that, by and large, it is ill-equipped to meet. Countries that are deeply dependent upon aid and desperate to attract investment have little bargaining power and since both aid and investment are largely dependent upon the ‘seal of approval’ of the international financial institutions and since, in turn, these are controlled by the major laissez-faire Western states that are pushing globalization, Africa will find it extremely difficult not to be ‘globalized’. One of its main hopes is support from the United Nations. ‘The UN approach in economic and social issues is different from that of the WTO and Bretton Woods institutions. The latter promote the empowerment of the market, a minimal role for the state and rapid liberalization. Most UN agencies, on the other hand, operate under the belief that public intervention (internationally and nationally) is necessary to enable basic needs and human rights to be fulfilled and that the market alone cannot do the job and in many cases in fact hinders the job being done.’26 The same writer adds: ‘The North has leverage in the Bretton Woods institutions and the WTO to shape the content of globalization to serve their needs and to formulate policies which the developing countries have to take on.’ It is not true that trade liberalization is to the benefit of all; nor has this ever been the case. While some countries gain substantially from liberalization most of the poorest countries have not gained at all and some have lost. The proposal of MAI (considered above) was clearly designed to assist foreign investors to expand their activities and protect them from almost any kind of interference by states that would impose conditions on their operations. Very clearly, as the new century began, most developing countries faced a dilemma: open up to globalization in the hope of obtaining some benefits; or continue by various means to protect fragile economies and risk being bypassed in the global free-for-all. At the top of any agenda for developing countries ought to be the question of greater rights of participation in the decision-making processes of the World Bank, IMF and WTO, though how this is to be achieved is unclear. Despite current claims on behalf of an all-powerful market, the idea that the market knows best and that state intervention in development and industrialization is always counterproductive is not borne out by past history.