More on alter-globalization

In an earlier post, I reported some of my quick reactions to Robin Broad's and John Cavanagh's new book Development Redefined: How the Market Met its Match.  Robin and John thought I had caricatured their argument and sent in some comments.  I am happy to reproduce them here, with their permission:

First of all, terminology. As we explain (and as Robin wrote in her previous book, Global Backlash: Citizen Initiatives for a Just World Economy), the term “anti-globalization” is a faulty one. Anyone who observes and analyzes these movements on-the-ground across the globe will discover this. So we, like many others, opt for the more accurate “alter-globalization movement” (taken from the French). This term purposely is meant to convey the reality that such movements combine “alternatives” to economic globalization (for instance, against the globalization of local water resources in Canada and Bolivia) and “alternative ways to globalize economically (for instance, “fair trade” initiatives, corporate codes of conduct, social clauses, etc.)  As the latter suggests, this is not merely a “self sufficiency” model (as your review suggests) – although it is absolutely true that in certain countries such as Thailand, there is a growing movement (that includes the Thai king) to turn from reliance on the global market to increased local production.

This relates also to your caricature of what we’re pushing for as being “romantic” or even worse. As our book stresses, the key thing is not our views (or your views) but the alter-globalization initiatives happening across the globe at local, national, regional, and global levels. The proof is in the pudding.

We do want you and readers of your blog to understand that we (and those involved with these alternatives) are not romancing the past or rural life. But the current food crisis certainly supports the alter-globalization’s focus on increased food sovereignty. “Modernization” of agriculture in the southern Philippines, for instance, has been to the benefit of agribusiness corporations, seed/fertilizer/pesticide companies but not to the average farmer.

We also hope you will let your readers know that our book is not simply an economic critique of the neoliberal development model. Rather, our focus is economic, social and environmental.  We also do not ignore statistics on poverty, inequality, etc. One of our chapters disaggregates what’s happened to inequality within and among countries. In another chapter, our critique builds on fine work by UNDP disputing some of the calculations of extreme poverty rates. New “revised” poverty figures support us. 

We can’t help but add that the current moment in history seems to underscore our main points: market fundamentalism was faulty economically, socially and environmentally. (And, indeed, although our book is more political economy than straight economics – good careful economic analysis would have included those social and environmental costs initially to reveal the bankruptcy of that development model.)  And the post-World-War-II public institutions built to manage the global economy are currently in deep crises – financial crises as well as crises of legitimacy.

Time and time again, over the last 2-3 decades, the mainstream development establishment (by the way, we don’t include you in this category) has ignored and ostracized critics (both academic critics and on-the-ground critics). But, time and time again, the critics have been right. Witness the food crisis, the climate change crisis, the financial crisis, as well, of course, as the development crisis.

Comments

[Marco Antonio Moreno]

The market fundamentalism is flawed, and also Friedman's monetary theory. But it has dominated economic policy in recent decades. Please read

http://www.elblogsalmon.com/2008/10/22-fundamentalismo-y-realismo-en-economia
and
http://www.elblogsalmon.com/2008/10/24-la-caida-de-un-avion-en-llamas
thanks

[Richard H. Serlin]

"But, time and time again, the critics have been right. Witness the food crisis, the climate change crisis, the financial crisis, as well, of course, as the development crisis."

"the food crisis" is nothing compared to the hunger before globalization. Compare hunger in China today to hunger in China before the recent era of globalization.

"the climate change crisis" -- this is essentially due to reasons other than globalization, and certainly is possible to combat without getting rid of globalization. It's like saying that modern technology is the cause of globalization, so everyone should go back to living like cavemen. It would solve global warming, but it would cause mass starvation, and for the tiny percentage of the world that survived, it would make life harsh, miserable, and short, about 30 years.

Also, because of the efficiencies of globalization, science and technology advance substantially faster, speeding up solutions from safe nuclear, to solar, to exotic heat deflection and carbon eating.

"the financial crisis" -- again, not really due to globalization, and it's certainly possible to solve this and prevent future incidents without decreasing globalization. Transparency laws, good regulation, and smart central bank strategy would do it.

"the development crisis" has been tremendously decreased by globalization -- India and China are such large and amazing examples it's hard to believe you could think this.

In general, free trade is extremely good for poorer countries, but it's very true that it depends greatly on the accompanying programs, laws, and governance, for example to make sure that the benefits are widespread. And, of course, a lot of the non-free trade things added to free trade agreements are bad, like increased enforcement of drug patents for very poor countries, but the free trade part itself has been a crucial factor in lifting hundreds of billions out of the most extreme poverty. We just need to improve the side agreements and make these agreements freer in the things that can really help the poor, like in dropping first world agriculture tariffs and subsidies.

[Richard H. Serlin]

Ok, my comment late night the other night had some mechanical errors. Here's a new version with fixes, other improvements, and additions, which I've also posted on my blog:

"the food crisis" is nothing compared to the hunger before globalization. Compare hunger in China today to hunger in China before the era of globalization.

"the climate change crisis" – This is essentially due to reasons other than globalization, and certainly is possible to combat without getting rid of globalization. It's like saying that modern technology is the cause of climate change, so everyone should go back to living like cavemen. It would solve global warming, but it would cause mass starvation, and for the tiny percentage of the world that survived, it would make life harsh, miserable, and short, with an average lifespan of about 30 years. Economists would call discarding all technology a "next best solution" to the problem of global warming. It would solve global warming, but there are other ways to solve this problem at less cost, in this case at immensely less cost.

Global warming can easily be combatted effectively without getting rid of globalization, and in fact, because of the efficiencies and wealth creation of globalization, science and technology advance substantially faster, speeding up solutions, from safe nuclear, to solar, to exotic heat deflection and genetically engineered carbon eating algae. These solutions are also made cheaper by globalization, and therefore more widely adopted. The costs of solar, wind, and nuclear power, for example, are highly dependent on scale, and a global scale is far bigger than any local scale.

"the financial crisis" – again, not really due to globalization, and it's certainly possible to solve this and prevent future incidents without decreasing globalization. Transparency laws, good regulation, and smart central bank strategy would do it, and they're a far better solution than getting rid of, decreasing, or not increasing globalization. Diminishing globalization is again a next best solution.

"the development crisis" – My first thought when hearing this was that Broad's and Cavanagh meant the crisis from lack of development. My thoughts run this way because I care a lot more about people than rocks, trees, and butterfly eggs. I'm funny that way. The lack of development crisis has been tremendously decreased by globalization -- India and China are such large and amazing examples it would be hard to believe they could think otherwise. If, however, they meant environmental issues by "the development crisis", stopping globalization might help the environment – maybe – in the short run, but it's been overwhelmingly shown that the wealthier a country gets, after the point of basic industrialization, the cleaner it gets.

Environmental cleanliness is a luxury good. The wealthier people get, the more they're willing to spend on it, and globalization has been shown over the long run to be by far more effective than anything else in making poor countries wealthier – China, India, South Korea, Taiwan, etc., etc.

In general, free trade is extremely good for poorer countries over the long run, but it's very true that it depends greatly on the accompanying programs, laws, and governance, for example to make sure that the benefits are widespread and any negative effects are minimized. Nonetheless, as Nobel Prize winning economist Paul Krugman, a staunch liberal, wrote of Globalization in a 1997 Slate article (http://www.slate.com/id/1918):

These improvements have not taken place because well-meaning people in the West have done anything to help--foreign aid, never large, has lately shrunk to virtually nothing. Nor is it the result of the benign policies of national governments, which are as callous and corrupt as ever. It is the indirect and unintended result of the actions of soulless multinationals and rapacious local entrepreneurs, whose only concern was to take advantage of the profit opportunities offered by cheap labor. It is not an edifying spectacle; but no matter how base the motives of those involved, the result has been to move hundreds of millions of people from abject poverty...

End quote

It should also be noted that a lot of the non-free trade things added to free trade agreements are bad, like increased enforcement of drug patents for very poor countries, but the free trade part itself has been a crucial factor in lifting hundreds of millions out of the most extreme poverty. We just need to improve the side agreements, and make these agreements freer in the things that can really help the poor, like by dropping first world agriculture tariffs and subsidies.

[Sandro Perricelli]

"These countries are the casualty of financial excesses that are not the result of their own doing. So we emphasize that access to the SLF will be available to all developing countries that are adversely affected by the financial turbulence emanating from the subprime fallout."

This has to be a joke.

Any international financial architecture where more than 1 cent is out at risk to rescue the finances of the current regimes of Venezuela or Argentina is an international financial architecture that reflects a world that does not deserve positive economic growth.

[Sandro Perricelli]

"These countries are the casualty of financial excesses that are not the result of their own doing. So we emphasize that access to the SLF will be available to all developing countries that are adversely affected by the financial turbulence emanating from the subprime fallout."

This has to be a joke.

Any international financial architecture where more than 1 cent is out at risk to rescue the finances of the current regimes of Venezuela or Argentina is an international financial architecture that reflects a world that does not deserve positive economic growth.