The Polarised Debate on Globalisation

Elliott Lecture: Globalisation: Curse or Boon? St Antony’s College, Oxford

Foreign contact of course was not invented with globalisation. Britain has a long history of providing home to successive waves of immigrants. London was first established as the capital of England by Romans from Italy. They were displaced by Saxons and Angles from Germany who were in turn invaded by Danes from Scandinavia. The great cathedrals of this land were built mostly by Norman bishops, but the religion now practised in them was settled by a Dutch prince. It is not purity that has given Britain its strength and its character but the sheer diversity of the many foreign influences which have contributed to its development.
Today globalisation challenges all nations with exposure to foreign contact and competition to an extent that not even Britain has previously encountered. Trade between nations has increased at more than double the rate of output. Even the youngest lecturer at this college has witnessed the overall volume of trade increase by more than it did from the Industrial Revolution to the Second World War. The growth in mobility has been even more exponential. It took two centuries of migration by sea to develop Australia. In modern times the equivalent of the entire population of Australia is in the air or moving through an airport at any one moment.
But most striking of all has been the revolution in communications technology which can hurl data and design across continents in seconds. Location has become irrelevant to the production process. For a century after the Industrial Revolution managers lived within walking distance of the mill. Today they are more likely to transmit their instructions by fibre-optic cable or satellite to numerically controlled machines in factories in China or Brazil.
The debate about the globalisation of economic activity has become dramatically polarised. Globalisation has become a hologram in which the picture is dependent on the perspective from which you view it. To some globalisation expresses the conditions for a welcome growth in trade and investment, and enriching contact between foreign cultures. To others it is shorthand for deepening global inequality, a threat to local cultures and worldwide homogeneity of the same consumer brands and products. Neither of these views is wholly without evidence to support it. Both of them capture different elements of the same complex reality.
As the Government made clear in last year’s Globalisation White Paper, the world is now more interdependent and interconnected than ever before. This process is irreversible. Globalisation brings with it great opportunities but also real risks. Managed wisely, the new wealth being created by globalisation creates the opportunity to lift millions of the world’s poorest people out of their poverty. But managed badly it could lead to their further marginalisation and impoverishment. Neither outcome is predetermined; it depends on the policy choices adopted by governments, international institutions, the private sector and civil society.
Globalisation has provided the conditions for the largest financial flows in history from the industrialised world to the developing world. Foreign Direct Investment has increased six fold in a generation and is now three times greater than official development aid. With investment has come technology transfer which is the main driver of industrial competition. Within my lifetime some countries of Asia have as a result moved from a standard of living broadly comparable to Africa to a standard of living broadly comparable to Europe. Within the next generation the majority of the ten countries with the highest GDP will border the Pacific not the Atlantic.
But the economic gains have not been evenly spread either within countries or between countries. Across Africa per capita income is lower than a generation ago. It is not just the irony, but the tragedy of globalisation that the poorest continent has got poorer during the era of globalisation. The communications revolution has bypassed a whole continent. Sub-Saharan Africa has fewer phones than Manhattan and the majority of its residents have never made or received a phone-call in their life.
The polarity of views on globalisation reflects the diversity of the phenomenon of globalisation. How do we set about constructing a common response to such a diverse phenomenon?
Nostalgia for a pre-global era does not offer a rational response. The problem with nostalgia is not only that it provides no guide to the future, but that it often is dishonest about the past. There are telling criticisms of the effects of globalisation which need to be addressed, but they should not be based on the myth of a past in which third world villages lived in a rural idyll and workers of the industrialised world sang the hours away at the assembly line. The traditional way of life in some of the native cultures now being changed under global pressures often embraced poverty, disease and ignorance. Work on the traditional assembly lines and garment production is now disappearing from the developed world was often repetitive, unhealthy and exploitative. The task is not to resist change but to ensure that change produces progress.
The one common ground between both advocates and critics of globalisation is that it does bring monumental change. In terms of economic change it even surpasses the experience of the post-war decades, from the Marshall Plan to the Seventies oil shock – what the French call ‘les trente glorieuses’. During that period, the British economy doubled in size, the US economy tripled. Germany and Japan both grew ten-fold.
However, the striking contrast between these two phases of economic growth is the difference in public reaction. The period of post-war growth was overwhelmingly popular and was not in itself a matter of political controversy. By contrast, the term globalisation has entered the language as an unloved, menacing word – as unattractive as it is polysyllabic.
Why this contrast in popular reaction to two periods of economic change?
The post-war consensus was built not just around economic growth. It reflected a much wider social compact which was broadly common across Western Europe. Business was guaranteed a stable environment for sustainable growth. But the wider consensus was based on an implicit social contract with the people. Their consent was based on other features of the post-war consensus. A universal standard of welfare. Equal opportunity of education and in employment regardless of birth. An open society and democratic government. These were the broad planks on which popular support was built for the prolonged post-war period dynamism of business in the Atlantic area.
A Global Social Contract
Globalisation will not enjoy a similar consensus until it offers a similar social compact.
Globalisation must be more than just a global economy. If we are to accept that a global economy requires rules on trade and investment that are common to all, then we must also accept that it requires social solidarity on the same global scale. Those nations who benefit from increased exports, reduced consumer prices and the new range of exotic fruits in their supermarkets, should be expected to put back some of that increased wealth into the provision of basic education, clean water, and primary healthcare in those communities who have none.
Yet the harshest paradox of globalisation is that while the global economy has been integrating, development aid from the rich to the poor countries within that global economy has been declining. Moreover, the global distribution of official aid sometimes appears to enhance rather than to diminish injustice. If we were to allocate aid on an index of poverty it would be unlikely to produce the current spread of development assistance, which allocates to the whole of sub-Saharan Africa only one-twentieth of the help per head available to the Middle East and North Africa.
Britain is unusual among donor countries in that we are increasing our aid budget, up by 45% in real terms in the six years from 1997. However, in most donor countries the world wide trend to lower public spending has fallen disproportionately on the aid budget with results that are the very antithesis of globalisation. For instance it is not a rational order of priorities that Europe and North America together should spend more on subsidising their domestic agriculture than on promoting development of the entire Third World.
Nor can we pretend that the benefits of global trade are available to all states when some states see their income from their current exports swallowed in part or in whole by interest on historic debt. Bad debts are not the sole creation of the borrower. They are also the result of bad lending by the creditor.
Britain has unilaterally renounced the debts to us of the forty-one most Heavily Indebted Poorest Countries. However, in some cases, most usually in cases where the government is engaged in conflict, often with its own citizens, we have not felt it right to let the government rather than its people pocket the benefit from debt relief. In those cases the interest payments are now being held in trust until such time as we can be confident they will be applied to the reduction of poverty rather than the prosecution of conflict. If the International Monetary Fund could agree on the same approach from all its members, it would secure a real reduction in the debt burden and a real increase in pressure to end conflict.
No programme for social justice within the global economy would be complete unless the demand for free trade from the industrialised world was matched by fair trade from the developing world. The World Trade Organisation meets this weekend in Qatar. If it could secure the halving of tariffs on trade from the developing world it would have delivered them a financial gain three times larger than global development aid. Nor would it be only the residents of the developing world who would benefit. Ultimately higher tariffs on trade translate into higher prices to the consumer. European consumers are currently paying in the shops three times the price for sugar on the world market.
The obstacle to the WTO achieving such a dramatic breakthrough is not anti-globalisation protestors, but old-fashioned protectionists. It is an irony for globalisation that those who preach free trade to the developing world are often disappointingly slow to practice the same policy on their own imports.
There is one useful reform that could provide a corrective to the effects of protectionism. The WTO should accept as one of its objectives achieving the agreed International Development Targets, such as the reduction by half by the year 2015 of those living below the poverty line. Endorsing these targets would be a powerful signal of the WTO’s commitment to poverty reduction, and would in itself be an acknowledgement that trade is a means to an en, not an end in itself.
An explicit social contract based on the three planks of development aid, debt reduction and fair trade would go a long way to creating a consensus for, not against, globalisation. It would mirror the post-war settlement which created the conditions for political stability as well as economic prosperity. It would answer many of the questions raised by the critics of globalisation in domestic debate.

A Global Politics
Such a social contract would not answer the thorny political questions about the new relationships between states in the modern global era.
With the social dimension to globalisation at least we know what the answers ought to be. The problem is in getting them implemented. With the political dimension we simply do not yet know what are the answers. The politics of globalisation is lagging far behind the economics of globalisation.
Globalisation will require a profound rethinking of our political structures. Political thought and concepts of political legitimacy move at a pace in which change is measured in generations. It is proving hard for that leisurely process of political change to adjust to the acceleration of technological innovation and the resultant rapid economic and social change.
For centuries the state has been the primary unit of political identity and the principal context in which political differences were resolved. Most of the population of most states, and most of their politicians, still retain a mindset that reflects the perception of politics as a domestic matter. It is hard for that mindset to come to terms with a globalised environment in which more and more issues, from economic prosperity to security against organised crime, that were once central to domestic politics, can now be satisfactorily resolved only between states rather than within states.
September 11th should have put a full-stop to unilateralism as a viable basis for foreign policy. We are all interdependent now. The future conduct of international relations requires not the narrow calculation of individual national interest, but the securing of common interests through coalition building, international partnership and the construction of global architecture. It is an era in which diplomacy will become more and more multilateral rather than bilateral. An era in which the skilful application of foreign policy is not measured by the stubborn assertion of individual interest but by success in putting together international strategies on global threats such as climate change, terrorism or the drugs trade. It will mean that national leaders must meet more often, not less often. The true cause of protests by those who want an ordered system of global relations with fair rules is when national leaders fail to meet rather than when they do.
As a multicultural society the United Kingdom has a distinct advantage in this new multilateral era. London is a hub of the new globalised era. Tonight no less than three hundred separate languages will be talked over the table as the residents of our capital city sit down to their evening meal. Such ethnic diversity is an inevitable consequence of globalisation and the population movements that accompany it. Those states that will best retain their cohesion through this century will be those that draw on the new diversity as a source of strength in their economy and richness in their culture. Those states who will have the greatest problems in coming to terms with globalisation will be those who try to resist foreign influences and to preserve an ethnic or religious mono-culture.
Some writers have argued that globalisation means the end of the state. The more we adjust to the new political context of globalisation the more that view appears wrong. On the contrary the more our employment, our environment and our security depend on agreements with other members of the global community, the more we need an effective national government that can broker common strategies with other states.
But politicians raised on the concept of an independent state must now come to terms with a world in which all states are inter-dependent. Even the strongest state cannot now stand alone.
A generation ago it was fashionable to talk about world government and to envisage the UN emerging as a super-national system of government. We are witnessing the emergency of a system of global governance, but not one which is a kind of replica of a national government on stilts. What we are witnessing is the mushrooming of international agreements, treaties and conventions, requiring individual states to regulate their conduct in the global interest. Each of them are separate though often complementary. Each of them have a shifting kaleidoscope of states who are parties to the agreement. The common feature to all of them is that the primary political unit of which agreement is built is the old-fashioned concept of the state.
Paradoxically globalisation has provided not less room for initiative by governments, but has provided the need for even more activism by governments in order to mediate the terms of engagement of their nation with the rest of the global community. It is not the state that is withering away in the age of globalisation but the importance of the borders which were once essential to the definition of a state. Globalised production, the worldwide web, acid rain, the drugs trade or massive daily financial transactions, for better or for worse, are rendering the borders between states increasingly less significant.
In Europe we have learnt a lesson that would have appeared a paradox to the Edwardians. We have discovered that by removing borders as a barriers between us we have gained more security, not less, than when we maintained them as armed frontiers against each other. Who in either France or Germany would now imagine that it was rational to go to war over which side Alsace-Lorraine stood on the border between them?
This has not lessened the importance of the state but it has changed its role. Government today can deliver on its domestic agenda only if it is successful in delivering on the international dimension to domestic issues.
The environment is a good example of both triumph and tragedy in international negotiations. The most dramatic demonstration of the inter-connected character of the modern globe is that even our weather can be changed by economic activities in the southern hemisphere of the globe. There has been agreement on a diversity of environmental measures from the Convention on International Trade in Endangered Species to the regulation of transfer of nuclear technology. The Montreal Protocol on the Ozone layer has made real progress in inhibiting use of the flouro-carbon products that deplete the ozone layer. The environment has been the scene of some success for multilateral diplomacy.
It has also been the scene of its most abject failure. On a long term view the biggest challenge facing humanity is how we halt the impact of our own activities on the climate of our planet. That impact has been greater in the past five decades than in the previous five millennia. Nothing will do more to destroy species and diminish food production than the steady over-heating of the globe. But we have yet to reach agreement on the Kyoto Protocol. A measure so modest that it will not halt global warming but it will merely slow down the rate at which matters get worse.
Europe can take pride in its commitment to the Kyoto principles and no country is volunteering a bigger cut in its greenhouse gases than Britain. But the present stalemate does not reflect with credit on the world’s efforts to construct a web of agreements that reflect our growing inter-dependency. Every nation will suffer if climate change continues unchallenged. No nation should regard its signature on the Kyoto Protocol as a favour to others. We are all in this together. We need a global coalition against climate change as urgently as we need a global coalition against terrorism.
Yet too often the common interest of all nations gets sabotaged by the old-fashioned pursuit of national interest by individual nations. This is counter-productive in the globalised era when the common interest is in the national interest, especially on climate change. The problem is that our deep seated identity with our nation often blinds us to the greater gain of compromise to get agreement with many nations.
The challenge is to establish popular consent to respect for international obligations. Democracy works best when it is built on a common identity. It requires the defeated minority to accept the legitimacy of the verdict. That is only possible where both minority and majority share a wider solidarity through their common membership of the same nation. Democracy without that consent to a common identity becomes an empty form.
This is the single most acute political dilemma from the increased need for global agreement. A supra-national democracy would lack legitimacy. An inter-governmental polity will only work if the national electorates understand the need for agreement and reward leaders who prove adept at securing agreement, rather than leaders who pose as national heroes for refusing to compromise.
We see this dilemma here at home in the British ambivalence to the European Union. Britain has little prospect of coming to terms with the globalised world if it cannot make a success of its relations with its immediate neighbours. Yet the Official Opposition in Parliament have made No Surrender on the British Veto their rallying cry. In truth British interests have been more often a victim of other countries vetoes. Where we have given our considered agreement to majority voting we have often been able to further British interests precisely because no other individual member can block progress.
Conclusion
The real question today is not whether globalisation is good or bad. It has both those characteristics in abundance. Globalisation is a reality. It is not going to go away through a process of collective wish fulfilment in which we will ourselves back to a previous more insular era with more fixed certainties and fewer disruptive changes.
The real questions are how do we make globalisation work for the greater good? How do we increase its potential for growth in the developing world and minimise its potential for exploitation? How we do combine globalistion with global social justice? How do we develop a new political culture which recognises the compelling need for inter-governmental co-operation that matches the global reach of the new economic and environmental forces?
These questions will have a powerful impact on domestic as well as international politics.
In the 21st century the old dividing lines between left and right will be less and less useful as a political definition. A more relevant guide to the division between the forces of progress and forces of reaction will be how they respond to the new global reality of interdependence.
The reactionary forces will be those who are isolationist and insular: who feel more comfortable clinging to the comfort blanket of a false past of their nation state. They will offer solutions that are based on a retreat to narrow nationalism and will oppose the obligations of international partnership. They are more likely to favour detaining foreigners than welcoming them.
The progressive forces will be those who are cosmopolitan and outward looking: who are comfortable building international partnerships and looking to the future. They will recognise national security requires international alliances, and that domestic prosperity requires foreign co-operation. They will be people who like foreign contact as enriching not threatening.
Placing the anti-globalisation political movement on this new political calculus is perplexing. The individuals within it are demonstrably cosmopolitan. They are masters of the new technologies of international communication such as internet, email and mobile phone. Their campaign transcends national identities and expresses solidarity with peoples of other continents. Yet a demand to stop globalisation puts them in uncomfortable proximity to reactionary forces who view with distaste much of the international contact that is forced on them by globalisation.
Many of the anti-globalisation campaigners deserve credit for having identified and highlighted the downsides of globalisation. But the solution lies not in the hopeless undertaking of halting globalisation, but channelling its colossal energy for change in a direction that leaves the world a better place.