The Social, Ecological, Cultural and Political Costs of Economic Globalization
In November of this year, leading activists, economists, researchers and philosophers from 19 countries around the world gathered in New York City to respond to the threats that economic globalization is posing to the environment, communities, human rights, equity and democracy. They presented a teach-in to over 1,000 citizens from around the country who are concerned that the globalization process is being driven by and for corporate interests without guidance or control of the people whose lives are directly affected by these changes in the global power structure.
Speakers at this event included Ralph Nader of Public Citizen, Vandana Shiva and Martin Khor of the Third World Network, David Korten of the People-Centered Development Forum and author of When Corporations Rule the World, Jeremy Rifkin of the Foundation on Economic Trends, and many other progressive thinkers and writers. David Korten’s address at the opening plenary session encapsulates the essence of the event and is printed here in its entirety.
The Failed Paradigms of Globalization: Address by David Korten
World Bank economist John Page told a meeting of Middle Eastern officials that the global economy is like the bullet train from Osaka to Tokyo. If you miss it, its gone and there is no way to catch up. He urged them to get on board quickly by restructuring their economies.
Harvard Business School professor Rosabeth Kanter, in her book World Class, tells us that the future belongs to those who are willing to give up their loyalties to community and nation to seek personal financial success in the global economy. She warns that those who remain loyal to people and places will be left behind.
Business Week tells us that East Asia—where the number of non-Japanese multimillionaires is expected to double from 400,000 in 1993 to 800,000 in 1996—is the leading example of what a global free market economy has made possible. “There are new markets for everything from Mercedes Benz cars to Motorola mobile phones to Fidelity mutual funds…To find the nearest precedent, you need to rewind U.S. history 100 years to the days before strong unions, securities watchdogs and antitrust laws.” Scant mention is made of the fact that free market economies have also left 675 million Asians living in absolute deprivation.
We have organized this teach-in because we strongly believe there is something fundamentally wrong with an economic model that calls on us to give up all loyalty to place and community—says we must give free reign to securities fraud and corporate monopolies and deny workers the right to organize—and tells us to run faster and faster after a train we have no chance of catching-so that a few hundred thousand people can become multi-millionaires by destroying nature and depriving others of a decent means of livelihood.
Millions of people around the world are no longer buying this monumental fraud against humanity—and their numbers are growing. We are here to celebrate their awakening—our awakening—from the myths and illusions of an industrial era that is now in its death throes.
These myths have become so embedded in Western industrial culture that most of us grew up accepting them as self-evident truths.
The myth that growth in GNP is a valid measure of human well-being and progress.
The myth that free unregulated markets efficiently allocate a society’s resources.
The myth that growth in trade benefits ordinary people.
The myth that economic globalization is inevitable.
The myth that global corporations are benevolent institutions that if freed from governmental interference will provide a clean environment for all and good jobs for the poor.
The myth that inflows of foreign money are a path to local prosperity.
Take the growth myth. To begin with our measures of growth are deeply flawed in that they are purely measures of activity in the monetized economy.
If I were to divorce my dearly beloved wife of 33 years it would be good for the national economy. It would generate lawyers fees and I would have to buy and outfit an extra house.
If a young parent stays home to care for his or her own child, it contributes nothing to the economy. If that same parent hires a baby sitter so he or she can take a job caring for other people’s children that counts as an economic contribution.
The growth myth has another serious flaw. Since 1950, the world’s economic output has increased 5 to 7 times. That growth has already increased the human burden on the planet’s regenerative systems—its soils, air, water, fisheries, and forestry systems-beyond what the planet can sustain. Continuing to press for economic growth beyond the planet’s limits does two things. It accelerates the rate of breakdown of the earth’s regenerative systems—as we see so dramatically demonstrated in the case of many ocean fisheries—and it intensifies the competition between rich and poor for the resource base that remains.
The disparities in this competition have become truly obscene. There are now 358 billionaires in the world. We could easily seat them all in a corner of this grand church. They have a combined worth of $760 billion—equal to the total assets of the world’s poorest 2.5 billion people—almost half the world’s population. And the proponents of globalization tell us they simply want to create a level competitive playing field.
In case after case we find that development projects—many funded with loans from the World Bank and other multilateral development banks—are displacing the poor so that the lands and waters on which they depend for their livelihoods can be converted to uses that generate higher economic returns-meaning converted to use by people who can pay more than those who are displaced. What growth in GNP really measures is the rate at which the economically powerful are expropriating the resources of the economically weak in order to convert them into the garbage of the rich.
Take the myth of free unregulated markets. It is almost inherent in the nature of markets that their efficient function depends on the presence of a strong government to set a framework of rules for their operation. We know that free markets create monopolies, which government must break up to maintain the conditions of competition on which market function depends.
We also know that markets only allocate efficiently when prices reflect the full and true costs of production. Yet in the absence of governmental regulation, market incentives persistently push firms to cut corners on safety, pay workers less than a living wage, and dump untreated toxic discharges into a convenient river.
Take the example of the Benguet Mining Company in the Philippines documented by Robin Broad and John Cavanagh in their book Plundering Paradise. In the quest for gold, Benguet Mining cut deep gashes into the mountains, stripped away trees and top soil, and dumped enormous piles of rock into local rivers. With their soils and water sources depleted, the indigenous people in the area can no longer grow rice and bananas and have to go to the other side of the mountain for drinking water and to bathe. The cyanide used by the Benguet corporation to separate the gold from the rock poisons the local streams, kills cattle that drink from the streams, and reduces rice yields of people in the lowlands who use the water for irrigation. When the tailings and cyanide empty into the oceans they kill the coral reefs and destroy the fishing on which thousands of coastal people depend.
The company reaps handsome profits. The local people bear the costs. Economists applaud the company’s contribution to the national output and export earnings. And the winners in the global economy are able to buy their gold trinkets at a more attractive price.
The one thing at which free, unregulated markets are truly efficient is in transferring wealth from the many to the few.
Take the myth of free trade. Many so called trade agreements, such as NAFTA and GATT, are not really trade agreements at all. They are economic integration agreements intended to guarantee the rights of global corporations to move both goods and investments where ever they wish-free from public interference and accountability. GATT is best described as a bill of rights for global corporations.
Take the myth that economic globalization is inevitable. Many of the people who claim globalization is a consequence of inevitable historical forces are on the payrolls of the global corporations that have invested millions of dollars in advancing the globalization policy agenda. Economic globalization is inevitable only so long as we allow the world’s largest corporations to buy our politicians and write our laws.
Take the myth that corporations are benevolent institutions. The corporation is an institutional invention specifically and intentionally created to concentrate control over economic resources while shielding those who hold the resulting power from liability for the consequences of its use. The more national economies become integrated into a seamless global economy, the further corporate power extends beyond the reach of any state and the less accountable it becomes to any human interest or institution other than a global financial system that is now best described as a gigantic legal gambling casino.
Take the myth that foreign investment creates local prosperity. Foreign investment is attracted by perceived opportunities to turn a quick profit-not to benefit some needy local community. Though they do have real world consequences, most of what we call “international capital flows” are little more than movements of electronic money from one computer to another in a high-stakes poker game.
From 1990 through 1994 Mexico became touted as an international economic miracle by attracting $70 billion in foreign money with high interest bonds ad a super heated stock market. As little as 10 percent of this foreign money went into real investment. Most of it financed consumer imports and debt service payments or ended up in the private foreign bank accounts of wealthy Mexicans—including the accounts of the 24 Mexican billionaires the inflows helped create. The bubble burst in December of 1994 and the hot money flowed out even faster than it flowed in. Mexico’s stock market and the value of the peso plummeted. Mexican austerity measures and a sharp drop in U.S. exports to Mexico resulted in massive job losses on both sides of the border. Most foreign investment seeks to extract local wealth—not create it.
Economic globalization expands the opportunities for corporations to go about their business of concentrating wealth-and from the corporate perspective, it has been a brilliant success. The Fortune 500 corporations shed 4.4 million jobs between 1980 and 1993—while increasing their sales by 1.4 times. Their assets by 2.3 times. And average CEO compensation by 6.1 times. The average CEO of a large corporation now receives a compensation package of more than $3.5 million. These same corporations now employ only 1/20th of 1 percent of the world’s population, but they control 25 percent of the world’s economic output and 70 percent of world trade.
And the consolidation continues. The value of corporate mergers and acquisitions world-wide completed in 1995 is expected to exceed the total for any previous year by 25 percent. Our development models—and their underlying myths-are the artifacts of the ideas, values, and institutions of the industrial era. Modern corporations have been the cornerstone of that era, concentrating massive economic resources in a small number of centrally controlled institutions. They brought the full power of capital intensive technologies to bear in exploiting the world’s natural and human resources so that a small minority of the world’s people could consume far more than their rightful share of the world’s real wealth. Now-as we push the exploitation of the earth’s social and environmental systems beyond their limits of tolerance, we face the reality that the industrial era is exhausting itself—because it is exhausting the human and natural resource base on which our very lives depend. We must hasten its passage, while assisting in the birth of a new civilization based on life affirming—rather than money affirming—values.
Countless citizen initiatives all over the world are creating the building blocks of the new civilization. Powerful formative ideas are emerging from these efforts, for example, the idea that economies should be local—rooting power in the people and communities who realize their well-being depends on the health and vitality of their local ecosystem. It is our consciousness-our ways of thinking and our sense of membership in a larger community—that should be global. Perhaps the most important discovery of all is that life is about living-not consuming. A life of material sufficiency can be filled with social, cultural, intellectual, and spiritual abundance that place no burden on the planet.
It is time to assume responsibility for creating a new human future of just and sustainable societies freed from the myth that greed, competition, and mindless consumption are paths to individual and collective fulfillment. We are here to embrace that responsibility and to build citizen agendas for change.
The International Forum on Globalization is planning a series of teach-ins through 1996 to “bring systemic analyses of economic globalization to a wider audience, thereby increasing debate and discussion, as well as enthusiasm for change toward re-empowering local economies and communities…” Memberships to IFG are $15.00. Audio tapes and transcripts of November’s teach-in are available. Please contact:
International Forum on Globalization
P.O. Box 12218,
San Francisco, CA