Is Globalisation a Stabilising Force in the International System?

free tradeBy Ian Howarth

Globalisation can be defined in many ways, Martin Albrow (1990) defines it as follows; ‘Globalisation refers to all those processes by which the peoples of the world are incorporated into a single world society, global society.’ (Bayliss & Smith, 2001 p15) or alternatively Martin Khor (1995) states that, ‘Globalisation is what we in the Third World have for several centuries called colonization.’ (Bayliss & Smith, 2001 p15)  Within these two disparate views of Globalisation can be found the tensions in perspective which depend upon from where in the international system you are viewing the effects and outcomes of Globalisation. The western capitalist perspective sees Globalisation as a positive development that has opened up new markets and brought the world together.  Robert Cox argues that Globalisation has made ‘the world… [Into]… a global shopping mall in which ideas and products are available everywhere at the same time’ (Bayliss & Smith, p15).  However, for a vast majority of people in the Third World globalisation is seen as a new form of western economic imperialism. The great example of this is where underdeveloped agricultural economies or sectors are opened up to exploitation by western multi-nationals, as can be seen in the collapse in Mexican agricultural production following its admittance into the North America Free Trade Area (NAFTA).  If attempting a more neutral view of Globalisation we can probably at best say that it is an attempt at a single world economy. A global economic system where business is assured that its investments are protected by an international framework of treaties and regulations. It ties the economies of many nations together forming a dependent network e.g. the European Union (EU) or the NAFTA.

The EU and NAFTA are zones of economic dependence where conflict and trade barriers have been removed.  In doing this it has allowed for the unrestricted expansion of business and trade and led to greater economic growth.  This has had massive benefits for the peoples of the respective nations within these trade zones, raising employment and increasing individual wealth.  In creating this complicated network of economic dependence between nations it has created a more stable international political environment.  The ties that bind the nations of the European Union together run so deep and are so complex that it is inconceivable that a general war could ever break out again between any of the members of this zone.

Within the EU and NAFTA economics have become central driving forces within the respective nation’s foreign policies. It is this force that can help to explain the moves particularly within the European Union in creating a single market and a single currency.  In short the economic devastation the last war caused was so great that even the victors were left in ruins. It was bad for business and so the victors led primarily by the USA drew up an international system of finance and investment at the Bretton Woods Conference that created a dependent world economy.

The removal of trade barriers and in Europe even border crossings has created vast multi-nationals that employ thousands and span continents.  The nation state has seeded economic control within their territorial boundaries partly by choice and partly by consequence of choice to the ups and downs of global economic forces.  This has created an international economic system where borders are an irrelevance which in part can explain the loss of control over stock markets, and the value of a nation’s currency.  Even the world largest economy the USA cannot control the destiny of its own economy, due to the fact that US economic growth depends just as much on domestic sales and confidence as it does on European or Asian economic growth and confidence. The multi-national giants of the United State like Boeings, Microsoft and Google gain the majority of their profits from their international not domestic markets.

It is possible to argue that Globalisation has brought about stability/unity within the international system if you only focus on the industrialised nations. These are nations that following 1945 largely shared a common ideology and started with roughly the same kind of technological and industrial base.  However, in the developing world massive problems have arisen out of the push for wider and deeper globalisation of the world economy. The process of colonization right up to the middle of the last century led to the establishment of many national economies based on the sale of a small range of products largely agricultural e.g. Jamaica Bananas and Tobacco.  These cash crop economic systems represent the backbone of many developing nation’s economies.  They are the main source of employment and investment.

The effect of decolonisation and subsequently globalisation has brought to bear on these small and poor nations international competition which has driven down prices and demand.  Nations such as those in the Caribbean have been forced by large supermarkets and demand within developed economies to lower prices or global food retail giants like Wal-Mart of Tesco’s will go and find someone else to buy from.  The devastating effects of these forces on small and poor countries dependent on the incomes raised by these crops have not been unifying.  It is arguable that in these parts of the global economy the primary effect of globalisation has been to entrench inequality and poverty.  Corporations with larger balance sheets than the nations they operate in use this substantial power to prevent wage inflation and unionisation.  This maintains the supply of cheap labour which allows for low prices for consumers in developed economies.

The unequal balance in world trade is clear 1.2 billion people live on less than a dollar a day, and the gap per capita incomes between the richest and poorest countries has gone from 30:1 in 1960 to 74:1in 2000 (www.unctad.org 2001).  The effect of the stringent demands of the World Trade Organisation (WTO) on countries to conform to economic models designed for developed economies has led to unemployment, poverty and instability.  This is further exasperated by the unfair practices of the EU and NAFTA within the one sector where the economies of the developing world could compete, agriculture.  The EU’s Common Agricultural Policy (CAP) prevents cheap imports of agricultural goods, while at the same time subsidising agriculture in the EU to the tune of billions of dollars a year.  These policy positions can in part be attributed to the ground swell of opposition to globalisation which was seen during the Seattle WTO conference in 1999 and in Nice in 2001. Instead of addressing some of these inequalities the response of government leaders was to move their meetings out of town and away from the people.

The collapse of the financial system revealed the extent and complexity of the connections between geographically distant economies.  The freeze in world finance and the need to massive taxpayer funded state interventions to stabilise the system revealed a new kind of potential for instability that had grown up with the spread of globalisation.  The selling of cheap home loans to people with poor credit ratings in the United States led through a complicated web of global financial transactions to the collapse of the Royal Bank of Scotland.  This has of course brought massive instabilities within many nations.  Political and civic unrest in Spain, Portugal and Greece which could lead to all kinds of unwelcomed political outcomes for the international system

Globalisation can bring unity to the international system.  In the developed world it has been a successful policy and contributed to an unprecedented period of peace and prosperity. The financial crash and crisis since 2008 is not in itself evidence of a failure in globalisation, but in the managing and regulation of financial systems.  In the developing world globalisation has been a far less successful policy approach with the results promised to the wider societies of these nations failing to materialise.  It is too often the case in developing economies that tiny wealthy global elites reap the rewards while the mass of the people upon which this wealth is generated receive none of the benefits.  In the developed world increased profits and economic growth led to higher living standards and development.  In the developing world the development and higher living standards enjoyed in the developed world are not being delivered, and this is a cause of tension and potential instability.

Bibliography:

Bayliss, John. Smith, Steven. (2001) ‘The Globalisation of World Politics’ 2nd Edition, Oxford University Press, Oxford. p15, 16,17

White, Brian. Little, Richard. Smith, Michael. Editors (2001) ‘Issues in World Politics’ 2nd Edition, Palgrave, Basingstoke, Chap. 3, p36-40

http://www.unctad.org or alternatively access http://www.un.org & then click on economic and social development.

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