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Globalization Today March 23, 2002
By Jeremy Brecher and Tim Costello

Since the beginning of the new millenium, the process of global economic integration we call globalization from above has sped from crisis to calamity. That has intensified both the need for and the strength of the convergence of social movements we call globalization from below.

End of the Global Gilded Age

The corporations, governments, and elites that promoted globalization from above promised that it would bring prosperity, democracy, and peace. But globalization has in fact entered a new, more destructive phase marked by recession, repression, and militarization. From an era of undemocratic and exploitative rulemaking we have entered an era of piracy and plunder.

By 2002, the United States, Europe, Latin America, and most of Asia had entered the first worldwide recession since the 1970s.1 According to Joseph Stiglitz, former chief economist at the World Bank,

"Already we see inklings of the downward spiral that was part of the Great Depression of 1929.... Every week brings new records.... [including] the largest increase in unemployment and decline in manufacturing in two decades ... [and] the slowest growth in nominal GDP in any two consecutive years since the 1930s."

Global linkage of this downward spiral is as much an aspect of globalization as the global currency market or the WTO. European economies, for example, were widely expected to be little affected by the US downturn, because North America is not a major market for them--but they are being severely hurt by the decline in Latin American and Asian markets that are in turn being hurt by the US bust. Globalization, supposedly the solution to the worldwide recession of the 1970s, has instead become central to the problem.

The collapse of Argentina shows how the promises of globalization from above have been realized. Described by the Financial Times as the "IMF’s star pupil," Argentina has suffered four years of recession and seen wages slashed, while unemployment rose to 20 percent and underemployment to 15 percent.

In a country with some of the world’s richest natural resources, one-third of Argentines are living in poverty. As one IMF-sponsored austerity plan followed another, the people of Argentina finally went into the streets to demand a halt. The result was the fall of four presidents in quick succession and the largest default of sovereign debt in history.

The collapse of Enron shows that the so-called new global economy was largely a fraud, with soaring paper profits based not on real economic activity but on speculative fiction. It reveals the true meaning of privatization, deregulation, neoliberalism, and globalization.

Lord Wakeham, who oversaw the privatization of British electricity in the 1980s under Margaret Thatcher, turns out to have been a member of Enron’s audit committee. Rodolfo Terragno, Argentina’s former minister of public works, said he was pressured to let Enron build a pipeline in Argentina and pay just 15 percent of the international market price for gas.

When George Bush was vice president of the United States, Terragno received a mysterious call from Washington. "Mr. Minister, I’m the son of the vice president," he recalls the person saying. "I’m calling you because I know you have a proposal from Enron sitting on your desk. I want to tell you that in my opinion this would be a good thing for your country."

According to Human Rights Watch, "Enron was complicit in human rights abuse in India." Local groups opposed a huge Enron project in Dabhol over concerns about "corruption and the hasty negotiations over the terms of Enron’s investment."

Farmers complained that "the power plant had unfairly acquired their land and had diverted scarce water for its needs." Local activists raised concerns over environmental damage.

Human Rights Watch documented how "police raided a fishing village where many residents opposed the power plant. They arbitrarily beat and arrested dozens of villagers, including Sadhana Bhalekar, the wife of a well-known protester against the plant. They broke down the door and window of Bhalekar’s bathroom and dragged her naked out into the street, beating her with batons.... Bhalekar was three months pregnant at the time."

Nonetheless the US government lobbied India aggressively for the plans and provided Enron nearly $300 million in loan guarantees. (Shortly after coming into office, Vice President Dick Cheney lobbied for the project with Sonia Gandhi, leader of India’s main opposition party.)

Meanwhile, the promise that a global economy would "lift all boats" has only been fulfilled by a still more devastating race to the bottom. Take, for example, that paragon of export-oriented economic development, the Mexican maquiladora zone.

In 2001, nearly 100 maquiladoras shut down and 200,000 maquila workers lost their jobs. The reason is not only the recession in the United States, but international competition to lower the price of labor. The average take-home pay for entry-level maquiladora workers is $4 to $5 per day; with payments for transportation, meals, and government fees, a worker costs a company $2 to $3 per hour.

But according to the New York Times, "The problem is that those figures are far higher than average wages for low-skilled factory workers in El Salvador, where the owners pay an average of $1.59 an hour; the Dominican Republic, where it is about $1.53; Indonesia, about $1.19; and China, about 43 cents."

In many countries, the international race to the bottom promotes an internal race to the bottom. Mexican President Vicente Fox bragged, "In southern Mexico, we are establishing the same conditions as Guatemala or China. Maquiladoras do not have to leave Mexico. We can offer them the same level of competitiveness."

But even in the desperately poor Mexican South wages aren’t low enough to attract the maquiladoras abandoning northern Mexico. According to Rolando Gonzales, president of the Maquila Industry Export trade association, "Instead of going south, they are going to China." So are jobs from Taiwan, South Korea, Singapore, Thailand, Central and South America, and Japan.

In 2001, Taiwan had the steepest drop in GDP in the half century since records first were kept as "tumbling electronics exports slashed companies’ profits and accelerated their flight to China, where costs are lower."

The race to the bottom is forcing nations to trade away their entire systems of worker protection and job security. Even in the rich countries of Europe and North America, workers’ economic security has been eroded. Economic insecurity is the face of globalization in daily life.

>From Globalization to Unilateralism

The movement for globalization from below arose in the context of elite efforts to create new global rules and to impose common global corporate interests through institutions such as the WTO, the IMF, and the World Bank. Opponents argued that these rules favored the strong against the weak and the rich against they poor. They fought against such rules and for ones that would lead to greater economic and social justice.

The United States was a leader in the rulemaking, and the rules generally incorporated special benefits to the US government and US-based corporations. However, the Bush administration has initiated a policy that has been dubbed "unilateralism" in contrast to the rulemaking that characterized the previous era of globalization.

In the past, as a German official put it in the New York Times, Washington determined its national interest in shaping international rules, behavior, and institutions. "Now Washington seems to want to pursue its national interest in a more narrowly defined way, doing what it wants and forcing others to adapt."1

>From its inauguration in January 2001, the Bush administration undermined one effort after another to address world problems on an international basis. It skipped out on the Kyoto Protocol on global warming, scuttled efforts to control biological weapons, refused to support an international war crimes tribunal, withdrew from efforts to limit nuclear proliferation, and renounced the Anti-Ballistic Missile Treaty.

After the September 11, 2001, attacks on the United States, the Bush administration called for a coalition against terrorism, but in fact pursued a still more unilateralist policy. This was embodied in Bush’s January 2002 proclamation that the United States confronted an "axis of evil."

As Secretary of State Colin Powell explained, "We can’t have our national interest constrained by the views of the coalition [that supported the US war in Afghanistan]."

But US unilateralism is also evident in its global economic policy. In the IMF, for example, it has subordinated even neoliberal principle to short-term national policy, dictating the abandonment of Argentina, while demanding massive loans to Turkey as an ally in the "war against terrorism."

While the United States gives lip service to free trade, the Bush administration in fact has moved far toward unilateral protectionism, for example in its protection of the US steel industry and the protectionist commitments it made to win passage for so-called fast track trade authority.

>From Globalization to Globalized Repression

The advocates of globalization from above once projected a benign future in which free trade and economic cooperation would bring peace and stability. Instead we are seeing an escalation of war, preparation for war, and political repression.

US unilateralism is rapidly setting the tone for a global war of all against all. Its justification for its attack on Afghanistan as "harboring terrorists" was repeated almost word for word by India, Israel, Russia, and China as they announced their own attacks on political enemies at home and abroad.

The use of the "right of self-defense" as a justification for a unilateral decision to attack any country one accuses of harboring terrorists provides a pretext that all national leaders can now use to make war against anyone they choose in complete disregard of international law. Many will echo the Italian officials who recently proclaimed that "like George W. Bush they have the right to put their national interests first."

The Bush administration’s 2002 arms budget will be larger than the arms budgets of the next 19 countries put together. Its escalating rhetoric, from the "war against terrorism" to the "axis of evil," has provided a model for belligerence and potentially for nuclear conflict from India and Pakistan to Israel and Palestine.

This militarization of conflict has been justified by the terrorist attacks against the United States, but, as a New York Times editorial points out, "Bush is using the anti-terrorism campaign to disguise an ideological agenda that has nothing to do with domestic defense or battling terrorism abroad."

Another popular claim of globalization from above was that it was bringing democracy and human rights to the world.

But according to a global survey by Human Rights Watch, "The anti-terror campaign led by the United States is inspiring opportunistic attacks on civil liberties around the world.... Some countries, such as Russia, Uzbekistan, and Egypt, are using the war on terror to justify abusive military campaigns or crackdowns on domestic political opponents. In the United States and Western Europe, measures designed to combat terrorism are threatening long-held human rights principles."

In place of global democratization, we are seeing globalized repression, including racist profiling, wiretapping, and military tribunals.

Meanwhile, global capitalism has replaced democracy with kleptocracy. The Enron scandal has shown that crony capitalism dominates the politics of the United States. The collapse of Argentina has led its population to conclude that virtually every political force and institution, from the supreme court to the political parties, are irredeemably corrupt. Citizens are reaching similar conclusions all over the world.

As globalization from above has become less and less defensible, its proponents have turned in desperation to smearing their critics. US Trade Representative Robert Zoellick, for example, has linked opposition to US trade policy to the terrorist attacks on the United States.

"On September 11, America, its open society, and its ideas came under attack by a malevolence that craves our panic, retreat, and abdication of global leadership.... This president and this administration will fight for open markets and free trade. We will not be intimidated by those who have taken to the streets to blame trade--and America--for the world’s ills."

(Before going to work for the government, Zoellick received $50,000 in advisory fees from Enron and had stock holdings between $15,000 and $50,000.)

Globalization from above has failed--and will continue to fail--to provide what people need and want: safety, well-being, and a secure long-term future. Militarism, war, and repression will not save globalization from above from itself. They will only further demonstrate its failure.

* Based on material from the forthcoming Second Edition of Jeremy Brecher, Tim Costello, and Brendan Smith, GLOBALIZATION FROM BELOW: THE POWER OF SOLIDARITY (South End Press, 2002).

Visit the authors’ web site at www.villageorpillage.org. Our next ZNet column will address the current state of globalization from below.