The following is an essay written by me about Globalisation which has been extracted from my book - The Universe - A Personal View ( page 233 to 236 )
Link to my book :- https://docs.google.com/viewer?a=v&pid=sites&srcid=ZGVmYXVsdGRvbWFpbnxqa2hjbGlmZXN0eWxlfGd4OjM5NmM2NTViMjAzY2M5MTk
Globalisation
This is one of those grand terminologies that can spell disaster for the weaker party taking part in the game. The World Bank defines globalization as “ the freedom and ability of individuals to initiate voluntary economic transactions with residents of other countries. “ This term has been popular since the 1980s and is used in connection with the increased economic activities between all countries in the world especially the opening up of Third World economies to the developed nations such as the USA and the European Union. It is similar to the free trade concept between two partner nations only that it is universally applicable to all countries in the world through the establishment of international organizations such as the World Trade Organization ( WTO ) and its predecessor, the General Agreement on Tariffs and Trade ( GATT ). It is, in fact, the modern term for internationalization that had been in progress since the industrial revolution in the western countries that was gathering pace during the 1850s. With the dramatic increase in productive capacities brought about by the industrial revolution and mass production methods introduced by industrialists such as Henry Ford in the motor car industry in USA in the early 1900s, the need to open up international markets became a pressing issue. The technologically more advanced and better developed nations were making excessive profits out of the economically and industrially less developed countries including resource rich ones like China. Thus, industrialization and imperialism went hand in hand during the century up to the 1950s. Cutting a long and painful story for the human race short, the profit making motive ( or simply greed ) of the classical capitalistic countries such as England, USA and other European powers had led the industrialized countries to dominate the world stage for over a century since the industrial revolution at the tragic expense of the less industrialized nations until the enlightened version of capitalism developed after the First World War. Internationalization continued in the formation of global or nearly global organizations such as the League of Nations after the First World War and subsequently the United Nations ( established by the San Francisco Conference of 1945 ) after the Second World War. The more important global financial institutions are the World Bank ( as mentioned in connection with the definition of globalization ), the International Monetary Fund and the G-8 Summit involving the eight most economically developed countries ( USA, Canada, UK, Japan, Germany, France, Italy and Russia ).
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There were also lesser regional trade and political organizations that were also part of this
gradual globalization process. These included the OPEC of the oil production countries
formed during the global oil crisis in the 1970s, EFTA, the predecessor of the EU, NAFA of
North American countries for free trade, NATO ( North Alantic Treaty Organization ) for the
defence of Western Europe and USA, the Warsaw Pact countries under the former Sovet
Union for the defence of Eastern Europe, SEATO ( South East Asian Treaty Organization )
for the defence of the pro-western countries of South East Asia, including Australia, New
Zealand, Pakistan, Philippines, Thailand, France, UK and USA ( the last three countries
were involved because of their colonies and protectorates in South East Asia ). The main
purpose for SEATO's establishment back in 1954 was to oppose any further Communist
expansion in the area. Anyway, globalization has been a slowly creeping international
phenomenon since the industrial revolution of the mid nineteenth century.
The basic problem with globalization is that it is a strong man's game and money calls the shots as it was the case with classical capitalism. The golbalization process is getting more and more like a resurrection of the old form of inhumane capitalism. Despite the World Bank's definition of globalization being “ the freedom and ability of INDIVIDUALS to initiate voluntary economic transactions with RESIDENTS of other countries “, the indisputable fact remains that the major players are all international MEGA CORPORATIONS. So, the reader will appreciate the tremendous difference between the high ideal of free trade and the harsh reality of globalization which is based upon the very concept of free trade. These legal entities as I have pointed out earlier are by and large controlled by the corporate custodians such as CEO, CFO and other members on the board of directors all of whom are sworn to and bound by the corporation's memorandum and articles of association ( or simply the corporation's legal charter ) to make the maximum return on the shareholders' investments ( or is this really the case ? - please refer to chapter (x) – What I Believe – Of Money and Men to refresh your memory ). In short, they are all motivated by the heartless and impersonal vice of greed. They in their turn and by virtue of the vastly superior financial resources at their disposal ( that do not legally belong to them but to their absentee shareholders instead ) are able to exert tremendous pressure on their respective governments through lobbying consultants ( who are usually former politicians and who themselves receive huge amounts of fees from mega corporations ) and even media organizations owned by them to enact legislations and to follow trade and foreign policies in their favour. All in all, it is a matter of a small number of a privileged few holding the vast majority of conscientious and hard working modern global citizens of the world for ransom to a less than ideal economic and social and, to say the least, unfair system.
Of course, no one can argue against the economic soundness of the free trade concept. It is the abuse by a minority of black sheep that should be blamed for the undesirable reality resulting from the working of the principle of free trade. Since the time of Adam Smith in the 1770s, the concept of free trade and maximization of consumer utility have always been sacred principles of free market economics. As applied to international trade, the free trade concept runs into some human problems such as conflicts of interests between trading partner countries and different priority of economic goals of the countries in question. We must look at these problems in turn before we can appreciate the nature of the basic problem in globalisation.
Conflicts of interest inevitably arise between trading partners because of the differences in the economic backgrounds and the relative strengths and weaknesses of the countries involved in a particular international trading relationship. For example, a technology intensive economy like Japan with littte natural resources will love to export their high value added products ( in the form of technical know-how and high tech designs such as computers and highly automated robotic productive systems ) to resources rich but technically less developed economies like China because a small amount of Japan's high tech products ( such as video games and audio-video equipments ) will earn a lot of low value added natural resources which are badly needed industrial inputs to the Japanese economy. These raw materials can in turn be used by Japan to manufacture more high tech products with higher profit margins to earn more foreign exchange from other buyer countries. To facilitate greater trading volumes, unfettered and open markets would be ideal for Japan in her trade relationship with China
The basic problem with globalization is that it is a strong man's game and money calls the shots as it was the case with classical capitalism. The golbalization process is getting more and more like a resurrection of the old form of inhumane capitalism. Despite the World Bank's definition of globalization being “ the freedom and ability of INDIVIDUALS to initiate voluntary economic transactions with RESIDENTS of other countries “, the indisputable fact remains that the major players are all international MEGA CORPORATIONS. So, the reader will appreciate the tremendous difference between the high ideal of free trade and the harsh reality of globalization which is based upon the very concept of free trade. These legal entities as I have pointed out earlier are by and large controlled by the corporate custodians such as CEO, CFO and other members on the board of directors all of whom are sworn to and bound by the corporation's memorandum and articles of association ( or simply the corporation's legal charter ) to make the maximum return on the shareholders' investments ( or is this really the case ? - please refer to chapter (x) – What I Believe – Of Money and Men to refresh your memory ). In short, they are all motivated by the heartless and impersonal vice of greed. They in their turn and by virtue of the vastly superior financial resources at their disposal ( that do not legally belong to them but to their absentee shareholders instead ) are able to exert tremendous pressure on their respective governments through lobbying consultants ( who are usually former politicians and who themselves receive huge amounts of fees from mega corporations ) and even media organizations owned by them to enact legislations and to follow trade and foreign policies in their favour. All in all, it is a matter of a small number of a privileged few holding the vast majority of conscientious and hard working modern global citizens of the world for ransom to a less than ideal economic and social and, to say the least, unfair system.
Of course, no one can argue against the economic soundness of the free trade concept. It is the abuse by a minority of black sheep that should be blamed for the undesirable reality resulting from the working of the principle of free trade. Since the time of Adam Smith in the 1770s, the concept of free trade and maximization of consumer utility have always been sacred principles of free market economics. As applied to international trade, the free trade concept runs into some human problems such as conflicts of interests between trading partner countries and different priority of economic goals of the countries in question. We must look at these problems in turn before we can appreciate the nature of the basic problem in globalisation.
Conflicts of interest inevitably arise between trading partners because of the differences in the economic backgrounds and the relative strengths and weaknesses of the countries involved in a particular international trading relationship. For example, a technology intensive economy like Japan with littte natural resources will love to export their high value added products ( in the form of technical know-how and high tech designs such as computers and highly automated robotic productive systems ) to resources rich but technically less developed economies like China because a small amount of Japan's high tech products ( such as video games and audio-video equipments ) will earn a lot of low value added natural resources which are badly needed industrial inputs to the Japanese economy. These raw materials can in turn be used by Japan to manufacture more high tech products with higher profit margins to earn more foreign exchange from other buyer countries. To facilitate greater trading volumes, unfettered and open markets would be ideal for Japan in her trade relationship with China
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but is this an equally ideal situation for China ? Obviously, this question can be answered
both in the postive and the negative with some reservations from China's point of view.
Unconditional free trade without any restrictions will definitely favour Japan who can make
a higher profit margin from exports of high value added products to China while the latter
can only earn a nominal amount of profit from her export of low value added natural
resources to Japan. Furthermore, the complete opening up of a country's economy will
mean removal of all trade barriers such as protective tariffs in support of that country's
weaker trade sectors which are not as competitive as those in other countries for the same
lines of trade. Removal of protection of such sectors must result in higher unemployments
in those sectors. In political terms, unemployment contributes to instablity. It must be
avoided at all costs. There is a very popular saying or slogan among Communists Party
members in China in the past decade since the Tianmen Massacre of 4th of June, 1989
and that is “ stability above everything else “. One of the greatest issues with China with
regard to opening up its economy according to the terms of entry into the WTO is the
abolition of all subsidies to the peasants in producing agricultural products because such a
move will inevitably lead to mass unemployment which is already quite serious in her
agricultural sector. There are millions upon millions of peasants in China and mass
unemployment in the agricultural sector will spell political disaster and possible social and
political unrest. The same problem with abolition of agricultural subsidies also arises in
Korea and even France where massive and sometimes even violent demonstrations are
held by farmers during WTO conferences. Demolishing all trade barriers in the world will
undoubtedly lead to the phasing out of all economically inefficient productive units and
thereby achieving higher efficiency in the utilization of the world's economic resources in
the long run. But the short-term problem of structural unemployment and the possible
political instability must also be addressed. There is also the question of humanitarian
considerations for the workers of the inefficient sector. As the famous saying by the great
economist Lord John Mayard Keynes ( whose innovative ideas in fiscal spendings based
on the paradox of thrift saved USA from the great economic depression of the 1930s )
goes :- “ In the long run, we are all dead ! “ Therefore, short-term problems must also be
properly taken care of.
Economic efficiency must be put in its proper perspective of human values. Effficiency is not everything there is to consider. As human beings, there are other non-materialistic considerations such as justice, fairness and compassion which all flow directly from the Natural Law, the supreme and ultimate authority. Any human policy inconsistent with the laws of nature should be reformulated because no noble end can justify the ignoble means. As can be expected, the culprit in the pitfalls of globalization is none other than the cardinal evil of greed. The same vice that has given rise to other urgent world problems such as environmental desecration. Incidentally, the same agents guilty of abusing globalization are the identical ones responsible for our environmental disaster – just a handful of black sheep who should go back to the basic educational training on elementary human ethics and, in particular, the futility of endless personal wealth building. It is about time that these crooks be exposed for the harms they have done to the whole human race and our beautiful Big Blue Marble and that they be held accountable for their heinous crimes committed against humanity. Without the preparation of successfully re-educating these misguided and corrupt corporate custodians and dirty politicians, the blind push towards globalization will simply bring about more injustice and suffering upon all the honest and hard working global citizens for the benefits of just a handful of black sheep. A healthy and equitable international legal system for effective control and a satisfactory moral code accepted and practised by everyone are pre- conditions for successful globalization. Law and education must lead the way.
The second basic problem of globalzation springs from the different priorities each nation places on their own economic goals. As the objective of launching economic policies is to achieve the various economic goals of full employment, growth, price stability and fair income ( and wealth ) distribution, there must be some order of importance to be put on each objective for the simple reason that these objectives sometimes conflicts with one another. For example, full employment generally leads to better spending power by consumers and will give rise to inflation. If government increases interest rates to control inflation, such a move will dampen the incentive on the part of
Economic efficiency must be put in its proper perspective of human values. Effficiency is not everything there is to consider. As human beings, there are other non-materialistic considerations such as justice, fairness and compassion which all flow directly from the Natural Law, the supreme and ultimate authority. Any human policy inconsistent with the laws of nature should be reformulated because no noble end can justify the ignoble means. As can be expected, the culprit in the pitfalls of globalization is none other than the cardinal evil of greed. The same vice that has given rise to other urgent world problems such as environmental desecration. Incidentally, the same agents guilty of abusing globalization are the identical ones responsible for our environmental disaster – just a handful of black sheep who should go back to the basic educational training on elementary human ethics and, in particular, the futility of endless personal wealth building. It is about time that these crooks be exposed for the harms they have done to the whole human race and our beautiful Big Blue Marble and that they be held accountable for their heinous crimes committed against humanity. Without the preparation of successfully re-educating these misguided and corrupt corporate custodians and dirty politicians, the blind push towards globalization will simply bring about more injustice and suffering upon all the honest and hard working global citizens for the benefits of just a handful of black sheep. A healthy and equitable international legal system for effective control and a satisfactory moral code accepted and practised by everyone are pre- conditions for successful globalization. Law and education must lead the way.
The second basic problem of globalzation springs from the different priorities each nation places on their own economic goals. As the objective of launching economic policies is to achieve the various economic goals of full employment, growth, price stability and fair income ( and wealth ) distribution, there must be some order of importance to be put on each objective for the simple reason that these objectives sometimes conflicts with one another. For example, full employment generally leads to better spending power by consumers and will give rise to inflation. If government increases interest rates to control inflation, such a move will dampen the incentive on the part of
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investors to make investments in housing and other business ventures that will cause
employment to fall with the related political repercussion on the ruling regime. On the other
hand, a low interest rate will favour long-term economic growth but has an adverse effect
on inflation. Then, a fair distribution of income will entail redistribution of income through a
progressive taxation system which is a disincentive for more personal efforts. A less hard
working labour force will result in a slower rate of economic growth. So, it is all a matter of
value judgment for the independent nations and their citizens to set their own priorities in
their economic goals. This being the case, it is not difficult to see that the ultimate aim of
globalization which is to maximize the utility of available economic resources may not be a
top priorty of each and every nation of the world. For less developed ones where over-
population is the usual situation, full employment may be of top priority. In other less
populated but more resource rich countries like Australia, a more equitable income
distribution and price stability may be preferred by the majority of citizens. Such priority will
ultimately be reflected in government policies through the democratic process.Therefore, a
completely open economy without any protection for the standard of living of the workers
in various economic sectors may not be welcomed by the voters. All in all, the question of
different economic priorities of different nations poses an insurmountable barrier to
successful globalization even if the short comings of this economic phenomenon are
ignored which, in my opinion, is quite unrealistic. Notwithstanding my personal views, it
would appear that globalization is becoming a fact in our economic life that cannot be
avoided indefinitely. I have chosen it to be one of the pressing world problems because it
affects each and every global citizen and their livelihood whether they like it or not.
