It’s easy to blame “globalisation” for a host of ills. The term itself is ambiguous, except insofar as it implies some party remote from our shores. Steel mills in China, bankers in Switzerland, multinational firms without fixed abode.
As such, the term can provide useful cover for unpopular policies that are entirely homegrown.
The term generally refers to economic openness — to trade, investment, immigration and ideas. It’s meaningless therefore to refer to globalisation as if it is a single property, but there have been times when prevailing norms of international behaviour could be described as more or less open.
[Essential: voters turn on globalisation and trade]
We could go back to histories of the merchants of the Hanseatic League, or even further to aboriginal people trading in grinding stones and pituri, but a starting point for current consideration is 1944, when representatives of the soon-to-be victorious allied powers came together in Bretton Woods, New Hampshire, to hammer out a postwar economic order.
The background to the conference was the failed peace of 1918, and the isolationism and protectionism that had seen countries, each trying to pursue their self-interest, driving one another into a worsening depression and contributing to the horrors of another war. As the American political scientist Joseph Nye describes it:
“With their countries drawn into the conflagration despite their efforts to avoid it, Western officials spent the first half of the 1940s trying to defeat the Axis powers while working to construct a different and better world for afterward. Rather than continue to see economic and security issues as solely national concerns, they now sought to cooperate with one another, devising a rules-based system that in theory would allow like-minded nations to enjoy peace and prosperity in common.” — “Will the liberal order survive”, Foreign Affairs, January/February 2017
Australia was fully engaged in Bretton Woods. Our delegation included some of our most influential postwar economists: Leslie Melville, Arthur Tange and Frederick Wheeler.
From the Bretton Woods Conference emerged a number of co-operative institutions: the IMF, the General Agreement on Tariffs and Trade (later to become the WTO), and the World Bank. The spirit of such co-operation was also behind the Marshall Plan for the reconstruction of Europe, and the European Coal and Steel Community, later to morph into the European Common Market and eventually into the European Union.
The important point is that the post-1945 economic order, that brought such leaps in prosperity in all “developed” countries including Australia, didn’t just happen; it rested on a spirit of international co-operation supported by rules by which countries were expected to abide, and on domestic policies designed to ensure what we would now call “inclusive growth”.
Notably, in order to avoid countries engaging in the mutual destruction of competitive devaluations, an outcome of Bretton Woods was a de facto regime of fixed exchange rates. Fixed exchange rates work only so long as countries pursue the same pace of economic development, and that system started to fall apart in 1971, but the general co-operative arrangements remained intact, and the general path continued to be towards global economic openness.
Also by the 1970s, “developing” countries were taking advantage of a liberalised trading environment to become involved in export-oriented manufacturing, initially in labour-intensive industries, most notably clothing and simple metal fabrication. These industries were to be the first step in lifting many countries out of poverty. The “elephant curve” was starting to take shape.
Although Australia was comparatively slow to reduce tariffs, we were on a path of trade liberalisation, with imports putting competitive pressure on our manufacturers from the early 1970s onwards.
[Trump: it wasn’t the economy, stupid — it was racism]
From 1970 to the end of the century, effective rates of tariff assistance to manufacturing fell from about 35% to close to zero; manufacturing’s share of employment fell from around 25% to 15% (it’s now around 8%); and imports in relation to GDP rose from 12% to 21%. From 1972, for the first time in postwar history, the unemployment rate rose to above 2%, never to fall to such low levels again.
The easy inference is that globalisation was to blame for the destruction of our manufacturing base, and if only we could reverse it we would restore those industries.
Such reasoning, of course, is subject to the post hoc fallacy, and it overlooks the impact of technological change — including the humble technology of the shipping container — and of automation.
*Read the rest at John Menadue’s blog, Pearls and Irritations. This is part of an eight-part series on Trump, Brexit and the Lucky Country.
It is easy to quote figures and make statements that would appear on the surface to be self-evident. Whether its globilsation, technological change ( remember the humble shipping container has a large impact on the pollution of our oceans) or automation, people are still losing their jobs – where does a middle aged male or female that has worked in manufacturing most of their lives go to? We are allowing economics ( an imprecise social science) and vested interests to dictate the future of our faithful workers and our young people. It is time that our paralysed conservative governments opened the debate and started planning for our future – making policy decisions that are for the benefit of our Australian people.
I put the problem down to managerialism – you are a manager so you don’t need to understand the business.
Managerialist CEOs seem to have no idea of a social contract – and one of the results is globalism: off-shored labour and profits.
This edited version is a bit misleading. You need to go to John Menadue’s blog to read the article in full to appreciate that it is actually arguing that it is neoliberalism giving globalisation a bad name. There the author says –
“Therefore it’s reasonable to ask the broad question, ‘are people really rejecting globalization or are they rejecting its extension into domestic policies that favour corporations over people, that hand the community’s assets over to private companies, that unnecessarily subject people to insecurity, and that widen income and wealth inequality?’ In other words, the excesses of neoliberalism.”
The problem with this argument is glaringly obvious. If you give globalised capital free access to your economy, how long before its influence overwhelms your political system? Who else do neoliberal policymakers primarily speak for if not globalised capital, after all? Hence, neoliberal policies don’t “unnecessarily subject people to insecurity”: they do so because it is necessary consequence of a globalised labour market. Similarly, it’s not neoliberal policies that “favour corporations over people”, it’s the immense power and influence that global corporations have over governments.
The author’s argument rests on a host of distinctions between the economic and the political, the domestic and the international, and the acceptable and the excessive, that – typically for liberal thought – collapse upon the slightest confrontation with reality. Neoliberalism isn’t globalisation’s aberrant misapplication, it is its logical historical product, because wealth begets power, greater power begets greater wealth, and so on. No wishy-washy liberal hopey-changey defence of globalisation – which attempts to measure the benefits of free trade in economic terms alone – can get around this. The political consequences broadly speaking (those damned ‘externalities’ again!) – growing inequality, insecurity, environmental damage, public disaffection, etc – can’t be willed away.
A lot if not most of our retired manufacturing industries had old machinery and equipment, the companies having not invested in upgrading/replacing their technologies and infrastructure. Had they done so, maybe quite a few may not have gone , offshore or otherwise. There is also this imperative to pay shareholders rather than investing in company interests, be it infrastructure/technology, labour or the way the business is run.
So what is to blame for the thieving scum who are multinational companies?