In Defense of Globalization

Around the time when the Iron Curtain came down and the USSR, and even China, opened up and adopted the capitalist model in some way or other, the historian Francis Fukuyama famously wrote his book The End of History. What he meant was that the entire world had finally succumbed to liberal democracy, and therefore, to the blessings of its triumphant economic model, neoliberalism: free markets, privatisation, free trade and unfettered economic globalisation. How quickly history overtook Fukuyama. We now have the 'war on terrorism', perhaps a 'clash of civilizations', and major international civil protests against the dominance of the neoliberal ideas and their effects. Witness the urban battlefields accompanying the World Trade Organization meetings in Seattle, Geneva, and, most recently, Cancun in 2003. Recurrent contestation also surrounds meetings of the IMF, World Bank and World Economic Forum. There is a growing resistance among developing countries against one-size-fits-all policies being imposed on them. At stake are opposing views on where the global economy should be going, and in particular, which measures best help the poor countries to develop themselves. These two books address the ideas behind these debates, but from different angles. Bhagwati is a leading defender of free trade, Indian born and Indian/US educated, a respected advisor to the Indian government and professor of Economics at Columbia University. He argues that globalisation doesn't need a 'human face' – for him, it already has a human face. He starts with a list of often-heard objections to globalisation, such as that in developing countries it increases child labour and the gap between rich and poor; it is bad for democracy, women, culture and the environment; and corporations are predatory rather than beneficial. Bhagwati has no truck with this criticism. They are often issues that NGOs campaign about, but he chastises them for not looking at the facts, and for straying off the course of their good works, meddling with issues that they do not sufficiently understand. Oxfam, he feels, is one example, when they published the report on fair trade, Rigged Rules and Double Standards. He does agree, however, with the criticism of unrestricted capital flows, which were a major factor in causing the East Asian financial crisis of 1997/8. The IMF has indeed listened and has changed its policies in this regard. The last section of the book looks at 'appropriate governance': how globalisation can be made to work better. This is rather unfocused and disappointing. Bhagwati's stance is that we need more rather than less globalization, and more free trade rather than less; after all 'globalisation already has a human face'. Bhagwati enjoys sharp debate and is witty, though a bit pedantic, when he is on the attack. The sections proposing measures to remove the sharp edges off globalization are curiously less inspired. The book peters out and is very thin on proposals for institutional and policy improvements. In the section on the WTO he completely ignores the well-documented fact that too often during the negotiations the developing countries are bullied or manipulated into accepting disadvantageous policies. Cambridge development economist Ha-Joon Chang and Ilene Grabel (University of Denver) also look at globalisation and development, but they arrive at different conclusions and have a more focused and organized approach. They present a succinct and highly readable analysis of the neoliberal theories and policies of development, how they can be refuted and what the alternative policies are. The book opens with six chapters on 'Development Myths – Explored and Rejected'. For example: 'Today's wealthy countries achieved success through a steadfast commitment to the free market'. This is refuted by the historical record that, for example, Britain and the USA became dominant economies through extensive state interventions in industry and trade. It was trade protectionism that helped the infant British textile industry to develop. Once strong enough, it imposed devastating free trade on weaker trading partners, such as India. In the second and largest part of the book, the authors discuss seven policy proposals on issues such as trade and industry, privatisation, international capital flows. In each case they present both the best neoliberal defence and its refutation, and offer a discussion of alternatives as well. Reclaiming Development is excellent because it clarifies the background ideas to any discussion on economic globalisation. They point to theoretical inconsistencies and weaknesses, and lack of empirical evidence for the pervasive ideology that 'there is no alternative' to globalisation, Washington (and Brussels) style. They do not fall into the trap of advocating only one alternative, but suggest a range of alternatives for 'more rapid, equitable, sustainable and stable development'. One of those rare books that takes a stance while being able to take all sides of the argument seriously. Taken together, both books are an indispensable read if you care about the future of the developing world.