Eight Myths of Economic Globalization

Advocates of economic globalization try to describe it as an inevitable process, the logical outgrowth of economic and technological forces that evolved over centuries to their present form, nearly as if they were forces of nature, like gravity. But while global trade activity and concepts of free trade have existed since the distant past, they do not nearly begin to resemble the volume, speed, form or impact of today's activities, nor were they as deliberately plotted and structured.

Economic globalization in the modern era is not some kind of accident of evolution; it directly emerges from a set of institutions and rules created on purpose by human beings for a specific goal: to give primacy to certain economic processes and values, and place them above all others.

In fact, modern day globalization had a birth date and a birthplace: Bretton Woods, New Hampshire, July 1944. That's when the world's leading economists, bankers, corporate heads, and heads of western governments tried to create a new economic system, following the devastation of World War II. They decided on a globally centralized system with global corporations as the engines of economic growth.

New institutions were created with new rules and powers to help grease the pathways for the corporations. Out of the Bretton Woods meeting grew instruments that later became the World Bank, the International Monetary Fund (IMF), the General Agreement on Tariffs and Trade (GATT), the North American Free Trade Agreement (NAFTA), and now the World Trade Organization (WTO).

The primary function of these bodies is to place economic values above all others, and to establish rules that suppress the ability of nation-states to sustain laws that protect nature, workers, consumers and even national sovereignty and democracy if they can be construed as slowing down free trade. The net result is the greatest transfer of economic and political power from nation-states to corporations ever in history.

But none of it is inevitable. All of it can be reversed once citizen movements and their governments realize the full consequences. To call what is essentially a collection of rules—very consequential rules—"inevitable," is really designed to make everyone feel there is nothing to be done about it, thus promoting passivity.

Myth 2:
We Need Globalization To Feed the Hungry

The globalization of corporate industrial-style agriculture has failed to address the world's hunger crisis; in fact, it makes it worse. During the past two decades, the total amount of food in the world has increased, but hunger rates have also increased, far faster even than population growth.

The main problem is that globalization of food production is actually pushing small, self-reliant farmers—who now account for 40 percent of global food production—off their lands and replacing them with large chemical and machine intensive corporate farms. Evicted, landless farmers find themselves without jobs or money to buy food.

A 1993 study reported alarming percentages of rural families who now have insufficient land to support themselves or their communities. In Peru, the number of landless or land-poor was 75 percent, in Ecuador 75 percent, 66 percent in Columbia, 32 percent in Kenya, and 95 percent in Egypt, among many others. Even in the U.S., we are losing a record number of family farms every year.

The globalized industrial agricultural model does not emphasize food for hungry local communities. Instead, it encourages export economies resulting in monocultures—a single crop grown over thousands of acres. These crops are usually luxury high profit items such as flowers, beef, shrimp, cotton, coffee, and soybeans cultivated for export to well-fed countries. In addition, monocultures are notoriously vulnerable to insect blights and bad weather, and greatly contribute to soil infertility.

The big new trade institutions and agreements like the WTO and NAFTA—as well as the World Bank and the IMF—all strongly favor the transition of agriculture from small-scale, locally oriented diverse agriculture to large scale monocultural production, using heavy chemical and machine inputs, directed toward export markets.

WTO policies of restricting direct payments to farmers yet encouraging subsidies for corporate export-oriented agribusiness brought global corporations into local communities, making survival difficult for small scale farmers in every country of the world. Once driven from their lands, it is a short route to urban hunger lines. Meanwhile, traditional livelihoods and communities disappear.

Industrial agriculture advocates also suggest that global biotechnology companies have the answer to world hunger. But biotech production is also a monoculture that does nothing to solve local hunger problems. It too produces luxury crops for export. Does anyone believe that the invention of biotech plants whose seeds are sterile—and therefore force farmers to buy new seeds every year—has something to do with stopping hunger? The biotech industry's goal is not to feed the hungry, only to feed itself.

A recent United Nations study confirms that the world already has enough food to feed the global population. The problem is one of distribution. Global trade rules put food production and distribution in the hands of agribusiness giants, supplanting the traditional system of local production for local consumption. As a result, the world is producing the wrong kind of food for export to the already well-fed, by a process that leaves millions of people landless, homeless, cashless, and unable to feed themselves as they traditionally had.

Myth 3:
Globalization Will Alleviate Poverty

This has been the theme strongly trumpeted since Bretton Woods; free trade and globalization will "lift all boats," and end poverty. But in the half century since this big push began, the world has more poor and more hungry than ever before, and the situation is getting steadily worse as we approach the millennium.

According to a recently published (September, 1999) UN report, global economic inequality has increased dramatically as a direct result of economic globalization and current rules of trade.

"When the market goes too far in dominating social and political outcomes, the opportunities and rewards of economic globalization spread unequally and inequitably, concentrating power and wealth in a select group of people, nations, and corporations, marginalizing the others."

Economic globalization creates wealth, but only for the few elite who can sit at the hub of the process, able to benefit from the surge of consolidations, mergers, global scale technology and financial activity. Recent figures confirm how it all works.

Benefits are so concentrated that the number of billionaires in the world has increased by 25 percent in only the last two years; collectively these 475 individuals are worth more than the combined incomes of the bottom 50 percent. Three of these billionaires are now worth more than the combined GNP of all the UN-designated "least developed countries" and their 600 million people.

Of the 100 largest economies in the world, 52 are now corporations. Mitsubishi is the twenty-second largest economy in the world; General Motors is twenty-sixth; Ford is thirty-first. All are larger than the national economies of Denmark, Thailand, Turkey, South Africa, Saudi Arabia, Norway, Finland, Chile, etc., to name only a few. If anyone thinks larger corporations means more jobs, an Institute for Policy Studies (IPS) report shows that the largest 200 corporations now control 28 percent of global economic activity, but employ less than one-half of one percent of the global workforce. This is because they enjoy tremendous efficiencies of scale, and new technology.

Here in the U.S., the story is much the same. Though the U.S. is reaping the greatest benefits of globalization of any other country, the benefits are not being shared. According to the Institute for Policy Studies, American CEOs now earn 417 times the wages of factory workers they employ. Between 1990 and 1998, CEO salaries increased by 481 percent, reports IPS and United for a Fair Economy. And the U.S. Federal Reserve now reports that the top 20 percent of the U.S. population owns 84.6 percent of all the wealth in the country.

Some people point to the booming stock market and record low unemployment as evidence that economic globalization is working. But while the stock market has boomed, it actually does not reflect the reality of life for most people. Almost 90 percent of the value of all stocks and mutual funds owned by households is owned by the richest 10 percent.

Even in wealthy countries like the U.S., median wages have fallen steadily as the economy has become globalized. From 1983 to 1998, the Standard and Poors 500 Index grew a cumulative 1,336 percent. Although unemployment is low, the average worker is now earning ten percent less, adjusting for inflation, than he or she did in the early 1970s. Many need to hold two jobs to survive. Globalization exacerbates this trend by setting workers against each other all over the world to keep wages low. England actually now advertises that its wage levels are the lowest in Europe.

So much for the rising tide that lifts all boats. Actually, it lifts only yachts.

Myth 4:
Economic Globalization Increases Choice

The ultimate expression of choice is diversity, and economic globalization destroys both cultural and biological diversity. Globalization is homogenizing values and behaviors, producing a new global "monoculture," just as it creates monocultures in agriculture. While economic globalization may increase consumer choices in some cases, it drastically diminishes our choices in almost every sphere of life. Also, domination of major industries by a handful of multinational corporations makes it next to impossible for small, local producers to compete. When brands like Coca-Cola and Levi's proliferate around the globe they put local operators out of business, which limits consumer choice.

While Indian villagers may now have access to CNN and Baywatch, the dissemination of western popular culture by global media companies is destroying diverse local cultural and artistic traditions. Some would argue that the western cultural cloning now underway is the direct result of deliberate corporate intrusion into other nations. Corporate advertising portrays not-so-subtle images that glorify western taste, dress, food and lifestyle as being a sign of progress, while non-western traditional values and cultures are viewed as backward and out of date.

Myth 5:
Economic Globalization Increases Environmental Standards in Developing Countries by Making Countries Wealthier

First of all, economic globalization does not produce wealth, save for a small percentage of people (see above). The wealth that is produced is rarely spent on environmental programs. Multilateral lending agencies set up to further the agenda of economic globalization, such as the International Monetary Fund and the World Bank, practically ensure environmental destruction. The conditions attached to loans from the IMF and World Bank require that governments open up their natural resources to corporate exploitation and cut spending for environmental programs. In any case, some kinds of environmental destruction cannot be reversed through increased expenditures. No amount of money can bring back species pushed to extinction.

Globalization is inherently destructive to the natural world because it requires that products travel thousands of miles around the planet, resulting in staggering environmental costs such as unprecedented levels of ocean and air pollution from transport, increased energy consumption and use of fossil fuels (furthering climate change), and increased use of packaging materials. It also requires devastating new infrastructure developments: new roads, ports, airports, pipelines, power grids—often constructed in formerly pristine places.

WTO agreements have already rolled back years of hard-won environmental gains made through national legislation and multilateral environmental agreements (MEAs), including measures agreed upon at the 1992 Rio Summit. To date, in every dispute case challenging a domestic environmental regulation, the WTO has ruled against the environment. Its very first ruling, in fact, seriously weakened a part of the U.S. Clean Air Act. In 1997, the U.S. Environmental Protection Agency changed some of its clean air rules to allow dirtier gasoline as a result of this ruling. In addition, the WTO has ruled against provisions of the U.S. Endangered Species Act and the U.S. has changed its regulations to comply with the WTO.

In the interests of advancing trade liberalization, commercial interests advising governments say trade rules must be consistent from country to country. However, instead of setting minimum standards for environmental protection, WTO agreements and dispute rulings effectively place a ceiling on environmental standards. This ensures that environmental regulations sink to the lowest common denominator, resulting in a downward harmonization of global standards.

Proponents of globalization point to the rising number of MEAs as evidence that environmental concerns are being addressed. However, most MEAs are largely voluntary and do not have effective enforcement mechanisms.

Myth 6:
Opposition to Economic Globalization Is Protectionist

Advocates of economic globalization have succeeded in making the term "protectionism" a dirty word. They use it to offhandedly dismiss everyone from environmentalists to consumers to small businesspeople to organized labor. Peasant farmers are lampooned as protectionists for resisting trade liberalization and for trying to preserve a so-called "inefficient" way of life that has served them and their communities well for centuries.

If protectionism refers to protecting local jobs, public health, cultural diversity, and natural resources, then protectionism is a good thing. The structure of economic globalization is itself corporate protectionism, because it is set up to protect corporations from the regulations of democratic societies.

Myth 7: 
Developing Countries Are Depending on Economic Globalization To Achieve First World Standard of Living

Developing countries are, in fact, becoming poorer, not richer. They are already paying the highest price for globalization. This is because the rules of the global bureaucracies invariably favor Northern corporate interests.

While it is widely accepted that the biosphere is incapable of sustaining six billion people at the consumption levels of the North, one cannot argue that poor countries should stay poor while rich countries continue to consume more than their share.

The over consumption of the north has been fueled by centuries of exploitation of the South's natural resources. So we must give a much higher priority to cutting Northern over consumption, sharing resources and wealth and recognizing the South's legitimate need for sustainable development.

 

Myth 8:
There Is No Realistic Alternative to Economic Globalization

There are many alternatives. But for the reasons outlined above, our current course is the one that is not realistic. By punishing countries and communities that fail to follow its rules, economic globalization actually precludes the development of other alternatives and growth models.

The expansion of the global economy inevitably marginalizes and renders obsolete the livelihoods of a large segment of the world's population. At the same time, it devastates the natural world, homogenizes cultures, and destroys communities.

The better path is to do exactly the opposite of what economic globalization advocates suggest. The more they say to remove restrictions on currency flows, the clearer it is there should be strict restrictions on currency. The more they say free trade, the more we must fight for the powers of local communities and regions to act in the interests of their own resources, people and land.

We should move away from economic globalization—and toward a revitalization of local political and economic control, self-reliance and ecological preservation.