¥þ ²y ¤Æ ºÊ ¹î

What is 'globalisation'?

Gerard Greenfield and Tim Levens

'globalisation’ is a word which has come into common use in recent years. Government policy-makers, political party leaders, businesspeople, academics, labour union leaders and the mass media all refer to the effects of globalisation and how it is changing our lives. Government policy-makers often talk about how important globalisation is, and although they tell us that globalisation is 'good’ for us, they also say that many of the problems we face today are because of globalisation, not government policies. So what is 'globalisation'?

Let us start with a common definition of 'globalisation.’ Many people see globalisation as the rapid increase in international trade and investment in the last 20 years which is breaking down national borders and creating a single global economy, or what some people call a 'global village.’ Although they have different views on whether this is good or bad, most people see globalisation as a 'process’ or even as a 'natural’ process.

Based on this view we can see four useful points about what 'globalisation’ could mean:

The process of 'change’ involves international trade and investment. So clearly the role of business corporations and their overseas activities is a key part of this change.
Based on this international trade and investment, national economies are tied together in a global economy.
Changes in this global economy are much faster now.
The 'change’ that globalisation describes has taken place in the last 20 years.

But here are three very important problems with this definition of 'globalisation’:

If we see globalisation as a 'process’ of increasing international trade and investment, then it is important to realise that this is not new. The growth of modern international trade and investment began 500 years ago as part of European imperialist expansion. So the new changes we are trying to understand are not just about international trade and investment, because this has been going on for 500 hundred years. The process of 'change’ involves much more than this.
It is not true that national borders are disappearing. We live in an economic system that is international or 'global', but national borders are still as strong as they always were. It has become easier for corporations to move their investments from one country to another, but in most cases this involves the active support of national governments. Governments sign international agreements and make deals to allow business to move around easily. But it is not as easy for ordinary people to move around. National borders are still very strong, so ordinary people still need visas, passports and face tight immigration controls. They cannot move easily from one country to another like rich people and corporations. So the 'global village’ looks more like a village of the rich and powerful. In fact, it is not like a village at all, it is more like a heavily fortified 'global castle town’ (garrison town) where a handful of powerful and wealthy people are served by the majority.
Globalisation is not a 'natural’ process of change because all trade and investment activity is determined by the deliberate decisions of corporations and governments. These decisions are made by corporations and governments as part of their conscious strategy to promote their own, usually convergent, interests. To do so, both governments and corporations exercise a lot of power to make the changes which are taking place in the global economy. The most important type of power in the global economy is the power of corporations, and the interest of corporations is profit. This is also not new! And it is certainly not natural!

But the question remains: If this has been going on for 500 years, then how has the last 20 years been different? Or to put the question differently: Why do we only see 'globalisation’ occurring in the last 20 years?

In answer to this, there are three points to consider:

Advances in technology in the last 20 years, especially computer technology, have meant that communication, information and transportation have become much faster and have reached more countries around the world. This new technology has been used by corporations to increase their overseas business activity and - of course - to increase their profits. That is why some people have defined globalisation as capitalism in the age of electronics.” But of course, it is much more than this.
In the last 50 years the size of overseas investment by corporations in Europe, North America and East Asia has increased much more than before. In particular, this involved overseas expansion by British, French, German, US, Canadian and Japanese corporations. These corporations became more powerful and played a greater role in the international economy, while their products came to dominate consumer markets around the world. These big corporations came to known as 'multinational corporations’ (MNCs) or 'transnational corporations’ (TNCs) and have increased in power and size over the last 20 years. The rising importance of TNCs and their increased power is an important feature of globalisation that will be discussed in the next issue of the Bulletin.
Although increased overseas investment is an important 'global’ 'change', we must recognise the fact that most of this overseas investment was invested in nearby countries and not all over the world. US corporations invested in Latin America, Japanese corporations invested in Southeast Asia, and British, French and German corporations invested within Europe. So changes in overseas investment patterns show that there has been a regionalisation’ rather than a globalisation of investments.
Twenty years ago, in the mid-1970s, business corporations in the developed countries faced a serious energy/oil crisis which threatened their profits. Of course, they were still making profits, but they were worried they could no longer keep increasing their profits. To overcome this crisis they did three things: (1) they increased investment in countries where labour was cheaper and where workers were more repressed, (2) they created new kinds of business activity to make larger profits, (3) they got governments to break down barriers that were preventing them from increasing their profits.

As we have already mentioned, the rapid increase in overseas investment over the past 20 years was marked by the rise in the power of TNCs and their increased presence in our daily lives. The exploitation of cheap labour overseas was a key strategy for producing their products cheaply so that they could dominate consumer markets around the world, while still making huge profits. In this way we can see that many big corporations in Europe, the US and Japan, when faced with a profit crisis in the mid-1970s, turned into TNCs.

For other capitalists, new profit-making activities included putting more money into financial investments and less money in industrial investment. The obvious reason is that it meant bigger profits in a shorter period of time and no need to worry about the rising cost of oil, steel, etc. But another reason is that capitalists could escape the pressure of the demands of organised workers. This financial investment is called 'finance capital’ does not produce anything of use and basically involves moving money around the world quickly, speculating on such things as currency exchange rates, land prices, and interest rates. Rather than building or making things, finance capital makes profit out of buying and selling - including buying and selling money - and making big profits in very short periods of time. This is a bit like gambling, and that is why some people call it casino capitalism. Clearly, new computer technology played an important role in allowing this new kind of activity.

More important, though, was the removal of 'barriers’ that corporations claimed were preventing them from making bigger profits. These barriers included international trade barriers like tariffs, taxes on imports and import controls.

But corporations also wanted governments to remove 'social’ barriers, including labour unions, labour laws protecting workers’ rights, job and income protection, public services provided by governments, social welfare and social safety nets. In fact, these 'barriers’ were not barriers at all, but were forms of 'protection’ for the rights and livelihood of working people that working people had gained after long years of struggle. It was their collective social right to have this protection. However, corporations and the governments supporting them claimed that this protection was limiting the ability of corporations to make profit and so it was necessary to have a 'free market’ in which there was no protection for working people and less government spending. Of course, there is nothing 'free’ about the market. What it really means is more freedom for corporations to make profit.

Of course, there were other so-called 'barriers’ which corporations wanted to break down. This included government protection of the environment and protection of public health. Again, this protection was fought for by working people over many years of organised struggle. But corporations wanted to remove this protection to allow them unlimited ways of making profit - and that meant turning all our natural environment into 'things’ which corporations could buy, sell, and destroy for profit.

So breaking down 'social barriers’ to corporate profit to overcome the crisis of the mid-1970s, began more than 20 years of breaking down working people's collective social rights. This meant cuts to workers’ wages and living standards, the loss of social protection for working people, cuts in government spending, privatisation of public services and utilities, and cheaper, unprotected labour for corporations to exploit.

This process of breaking down social barriers included breaking down those barriers in other countries where corporations - especially TNCs - wanted to make profit. In countries where working people had already succeeded winning protection of their collective social rights, governments were encouraged or forced to destroy this protection. In countries where working people did not yet have this protection, the 'free market’ was forced on them too and their governments refused to recognise their rights. This often involved violent repression of workers’ movements and social movements by governments.

Two of the first government leaders to launch this attack on 'social’ barriers in the interests of corporate profit, were the British Prime Minister, Margaret Thatcher and the US President, Ronald Reagan. That is why this 'free market’ ideology is sometimes called Thatcherism” or Reaganism. This attack on working people was carried out in the UK and the US, as well as overseas. Now nearly all government leaders around the world have adopted the 'free market’ ideology and are destroying the livelihood of working people and the environment we live in the interest of corporate profit.

As such, we can see that the world-wide changes which we call globalisation are part of a political solution to the profit crisis faced by big corporations 20 years ago. By imposing the same 'solution’ of the 'free market’ on working people in all countries around the world, big corporations and the governments have created these changes on a global scale.

Based on this we can define globalisation as follows: Globalisation is a strategy of political elites and corporations to overcome the profit crisis faced by big corporations in the mid-1970s, and this strategy involves an ideology of the 'free market’ which attacks the rights and livelihood of working people around the world and subordinates everything to corporate profit.

By understanding globalisation in this way, we are faced with an important conclusion: If globalisation is not a natural process and if it is a deliberate political strategy used by governments and corporations against the interests, rights and livelihood of working people, then clearly we can and should create a different strategy. Globalisation is not a thing, it is not something that fell from the sky. It was created and is being forced on us. If that is the case, then we must un-make it, and create for ourselves a set of 'changes’ that advance of interests, our rights and our well-being.