Lo: No Go
Why anti-globalisers choose the wrong targets.
Enron, which viewed energy as the new world currency and tried to be its banker, has bitten the coaldust. Gone too are LonRho, whose colonial mining empire did not long survive its anachronistic founder, and Union Carbide, after proving no more able than its hundreds of Indian victims to recover from the explosion in Bhopal.
Monsanto and Celera Genomics must fight for financial life after failing to find any genes for profitability, while numerous telecoms giants are mortally mortgaged on broadband and wireless investments which may take until the ‘third generation’ to pay back the debts. Although it will survive, Starbucks is turning into a sandwich chain – and courting decaffeinated consciences with fair-trade coffee – to slake the thirst of rack-renting city centre landlords; while McDonald’s sees profits plunge and franchisees jump format as cosmopolitan palates tire of mechanically recovered meat.
This should be a triumphal time for the many ‘anti-globalisation campaigners’ who, inspired by such multinational-bashing media stars as Naomi Klein (No Logo), George Monbiot (Captive State) and Noreena Hertz (The Silent Takeover), blame big business for subverting democracy and perpetuating poverty.
Globalisation would be good, these globetrotting gurus insist, if it brought people together on equal terms, scrapping trade barriers that restrict the flows of goods from poor countries to rich, and of capital from rich to poor. It is only corporate-driven globalisation, they argue, that makes the world’s working people compete for concentrated capital’s benefit, forces nation states to fight to cut the taxes on that capital, and stretches the scope for social and environmental dumping. Banish the baleful ‘brand barons’, and one world – built on the solidarity of Seattle’s rioters rather than the liberal economy of its World Trade Organization delegates – will become a worthwhile project once again.
So why aren’t the logo bashers celebrating the welter of profit warnings from America Inc and Europe Plc? It’s not because ‘9-11’, and the spectre of an even more oppressive globalisation built on less commercial culture, has forced people to see a brighter glow to the global logo. Or because multinationals have closed their sweatshops and acknowledged ‘corporate social responsibility’ to a significant degree.
Instead, Seattle’s victory has proved hollow because those who equate anti-capitalism with anti-corporatism confuse the disease with its most visible symptoms – and so overlook possible ways these could translate into an antidote.
Few businesses ever want to go abroad. Commercial capital, even in its most abstract and dematerialised forms (such as in the financial and service sector), depends for its returns on a complex support act of state-provided infrastructures, human skills and demand management, and socially generated pro-business attitudes, which have proved very hard to replicate outside small urban hubs within already wealthy nations. Kings of the executive jungle require creature comforts that are even harder to find beyond their affluent stamping-ground, as soaring expatriate salaries attest.
Most companies that grow large within their domestic markets look first to the quiet life of monopoly profits, and then to diversification across sectors on home soil, before considering the much riskier move across borders. Until very recently, the only truly global companies were mineral extractors who had to go abroad for the richest deposits, or banks who could afford to do so because theirs was the form of capital least sensitive to local social context. (Although their frequent overstretch on seamless mid-East goldmines or destinationless South American rail lines suggests a dependence on ‘social capitals’ of knowledge and trust that often again evaporate at the border).
The past two decades have seen businesses globalising mostly under duress. Pressure came first from organised labour, whose wage-bargaining success increased the profit gain from low-cost relocation; then from governments changing the rules to level the domestic paying-field.
Multinationals’ home countries exerted a push by clamping down on domestic monopoly, principally by removing trade barriers. This gave formerly shielded ‘national champions’ foreign counterparts to contend with, and allowed them to transplant production abroad without compromising their domestic market access. Multinationals’ new host countries contributed a pull, by removing capital controls and tax or expropriation threats to inward investment, while wherever possible retaining trade protections so firms had to produce where they wanted to sell.
Protestors’ charge, that corporations have forced the state to scrap its border controls, privatise its assets and cut its investment-income taxes, reverses the reality of recent events. In fact, globalisation is a device adopted by governments to re-assert their power over big business.
The globalisation genie may have backfired against its public paymasters – forcing them into a tax-cutting, wage-controlling battle to attract and retain footloose capital – but their fingerprints are clearly on the bottle. By dismantling border barriers, states hoped to discipline their home-fattened industries, by exposing them to wider global forces.
Some anti-capitalist protestors concede that globalisation is a political initiative, aimed at big business to put limits on its profit rather than driven by big business to take them off. But they go on to confuse the two sides – viewing multinational corporations as the standard-bearers of a ruthless market economy, and so being forced to side with governments (however dictatorial and corrupt) as a necessary check to all-embracing commercialism.
In practice, markets have no bigger enemy than big business. Even when their home-market presence stopped short of monopoly (or the near-equivalent oligopoly), large firms have long been the deal-resistant shield for internal planning systems, and the hub of networks whose ‘relational’ transaction is far removed from anonymous market trade. Now, stripped of these domestic protections, big business has sought to raise its subversion of the market to regional and eventually global level. Governments in the Age of Gates are left to intervene to restore an adequately competitive supply side at the global level, just as governments in the Age of Keynes intervened to restore an adequately absorptive demand side at the national level.
With old underconsumption tendencies and financial instabilities now spread across previously insulated economies, that old Keynesian spender-of-last resort function has not gone away. The irony is that protestors now condemn the overpowering of government by business, just as the power balance starts tipping the other way. When, as at present, the world economy turns down under weight of overaccumulated capital (including missiles) and undersold goods, it is the historic mission of pro-capitalist governments to patch up the corporate armies’ self-inflicted wounds.
Along the way, they may well have to bail out the multilateral lending agencies, protestors’ other mis-chosen target, now counting the cost of promoting ‘export-oriented strategies’ in a world awash with exports too few can afford.
We may soon look back on Enron’s Skilling and Marconi’s Simpson the way the French revolutionaries looked back on Louis XIV – as a reminder of better times, when wealth was still enough to be worth redistributing; and as fatal distractions for a protest which ended up struggling to recreate the very source of global order it had sought to overthrow.
Alan Shipman is a freelance economist. He is the author of The Globalisation Myth, Icon Books, 2002 (buy this book from Amazon UK or Amazon (USA)); Transcending Transaction: The Search for Self-Generating Markets, Routledge, 2001 (buy this book from Amazon (UK) or Amazon (USA)); and The Market Revolution and its Limits: A Price for Everything, Routledge, 1999 (buy this book from Amazon UK or Amazon (USA)).
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