Global Policy Forum

By Jerry Mander and Debi Barker

Why Globalization Needs to be Thrown Out Jerry Mander and Debi Barker are co-directors of the International Forum on Globalization. David Korten is a former economist with U.S.AID, author of When Corporations Rule the World, and an associate of the International Forum on Globalization.Blurb: This second essay, adapted from the upcoming special report of the International Forum on Globalization, explains how globalization benefits corporations to the detriment of national resources and well being of individuals. It also offers some hints as to possible alternatives.This is the second of four essays adapted from a special report done by the International Forum on Globalization. Click here for the first. The IMF, World Bank and the WTO are pursuing what some have labeled "market fundamentalism," an ideological commitment to two basic false principles:

· Economic growth and increased trade achieved through deregulation and privatization automatically increases the wealth of communities and humanity, and contributes toward a better future for all. In other words, what benefits corporations benefits all.

· Increased foreign investment in Third World countries increases productive capacities and development, adding to the well being of the poor.

Neither of these has proved true. What is true is that the system has added to the well being of the corporations that have perpetuated it.

Most measures of "economic growth" such as Gross Domestic Product (GDP) and Gross National Product (GNP) tend only to measure increases in the market value of economic production, i.e., the rate at which resources are converted to commodities, and that other paid services and activities are performed. By such standards of measurement, expansion of military hardware, prisons, wars, crime (and its prevention), as well as the clear-cutting of forests, or building of toxic dumpsites are all made to seem positive as they increase GNP and GDP. Meanwhile, unpaid household labor, or care for the sick and elderly, or self-sufficient food growing or its distribution are not deemed positive results because they don't get counted.

Such standards also contribute to the depletion of social and natural capital (nature) which, as former World Bank economist Herman Daly has suggested, is the foundation of all real wealth. In fact, export-driven globalization is the greatest single contributor to the massive ecological crises of our time. Its emphasis on exponentially increased trade and transport activity requires corresponding expansion of infrastructures -- airports, seaports, roads, rail-lines, pipelines, dams, electric grids; many of these in pristine places, often on indigenous lands. Increased transport also uses drastically increased fossil fuels adding to the problems of climate change, ozone depletion, and ocean and air pollution. And an ever expanding economy requires the depletion of the last resources on the planet; under free trade these are nearly always located in the global south. One of the greatest injustices against southern countries is that they are net resource exporters to the already rich north.

Indeed ecological degradation -- forests, rivers, biodiversity -- has the most devastating impact on the poor; and resource depletion reduces livelihoods and creates poverty. So economic growth is certainly not a measurement that benefits the poorest parts of the world. In any case, depleting nature cannot serve anyone for much longer, even the rich, who may be, as the late British financier James Goldsmith put it, "enjoying champagne on the deck of the Titanic."

Growth has little or no correlation with actual benefits to the poor. The United States itself is a prime example, as during this period of greatly expanded globalization, the disparities between wealthy and poor have never been greater, and they are steadily increasing. The experience in the United States is matched by most other countries as well. If globalization was going to help the poor, the last 20 years of very rapid globalization should have made everyone rich by now. But, as globalization accelerates, the benefits are not trickling down to the poor, but up to the wealthiest people on earth. As for increased capital flows and investment under free trade, most of these are purely speculative -- money buying currencies or other capital instruments -- and contribute nothing at all to productive capabilities in poor countries. In fact, quite the opposite result normally obtains, as foreign investment tends to diminish local resources, local ownership and the share of profits and reinvestment that stay in the country. And foreign exchange that is earned through any of this capital movement most often pays for the import of luxury consumption goods, as well as military procurement and other expenditures for the wealthy. It does not feed the hungry.

One can only conclude from this that the present system is fundamentally flawed, and cannot be corrected by reforms at the margin. It must be changed to a very different system, based on values and institutional relationships that place human beings and nature above percentage returns on investment.

Alternatives

The International Forum on Globalization (IFG) is now completing work on a new report that addresses alternatives to the present financial and trading system. It will be published within the next several months. The report includes a new set of basic values that any international system must follow. For example, it must truly give higher priority to meeting the needs of the poor rather than providing new luxuries and diversions for the rich. It must also give priority to rebuilding natural and social capital -- the real wealth of society -- over growing assets. Ownership and control must be rooted in real people and communities; this means reducing or eliminating the various forms of absentee ownership that are now promoted by globalization. It means promoting real investment and minimizing financial speculation. It also means favoring local self-reliance, wherever it is possible, over the creation of global dependence based on failed abstract theories. And it means replacing global institutions that serve the interests of a global financial elite with institutions that strengthen regional, national and local controls, and hold global financial interests and corporations accountable to democratic values and rules.

Most groups that oppose corporate globalization continue to favor some forms of international institutions that attempt to save the environment from corporate ravagings, and that benefit the world's poor. But the World Bank, the IMF, the WTO and other globalizing institutions and agreements are not the answer. New institutions with entirely different hierarchies of value may be required. These begin with democracy, equity, transparency, ecological sustainability, and subsidiarity -- favoring the interests of the regional and local. Such institutions must also be biased toward the poor, workers and human rights, and the health of the planet rather than corporate rights and profits.

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