Global Policy Forum

Mayhem in May

The Economist Global Agenda
May 1, 2001

After recent mass demonstrations in Quebec, anti-globalisation protestors were out in force again for May Day. The movement may be incoherent, and often clownish, but it is increasingly influential. And globalisation's best critics, if not the demonstrators, are raising important issues

The first of May is one of the highlights of the increasingly demanding social calendar of anti-globalisation activists. Nowadays large numbers of protesters also show up at meetings of the IMF and World Bank, the annual gathering of the World Economic Forum's in Davos, Switzerland, and any talks on trade liberalisation such as this month's Summit of the Americas in Quebec. Plenty of anti-globalists were again out in force on city streets throughout the world this week for May 1st, the traditional day of solidarity for labour movements. Berlin, Sydney and Melbourne saw violent confrontations with the police. In London this year's theme was Monopoly, the capitalist board game. Scheduled events include a mass bike ride, a pigeon feed on Trafalgar Square and the building of the world's largest cardboard hotel in Mayfair.

For all their entertainment value, and despite the stupid violence which mars some of them, the anti-globalists' demonstrations cannot be dismissed as a recurring juvenile joke. How to reduce poverty in the third world—and whether globalisation is a help or a hindrance—is one of the most pressing moral, political and economic issues of our times. Undeniably, anti-globalism demonstrations have moved these questions higher up the public agenda. Whether they are pushing governments towards more enlightened answers is quite another matter.

A key thing about the anti-globalisation movement is its lack of homogeneity and hierarchy. Environmentalists, Marxists, feminists, anarchists, human-rights campaigners and left-wing economists have little in common except for a loathing of how the world economy is developing, and a sometimes fierce sense of injustice and grievance. The movement does not have a single leader, and it is intellectually incoherent. In fact, many of the groups which can be included under the broad umbrella of anti-globalisation, or which have participated in demonstrations, are campaigning for conflicting goals, even if they do not seem to realise it.


For example, trade unionists in rich countries which support the movement want to maintain trade barriers to protect jobs in the first world. Many of those most concerned about third world poverty, on the other hand, want poorer countries to have more opportunity to export goods, among other things. Those most concerned with the environment would often put protecting forests and controlling pollution ahead of the economic growth which poverty advocates would, or at least should, favour. What seems to unite all these groups is a set of broad assumptions: that economic inequality is unjust, that globalisation is mostly destructive and that free trade is not fair trade, because it mostly benefits multinationals and the wealthiest people in the developed world.

There is far more to the movement than the people who turn up for the fun of battling with police, or peacefully donning outrageous costumes and caps sporting slogans such as "capitalism sux". Many in the movement are embarrassed by such antics. Naomi Klein, the author of "No Logo", one of the best-known books critical of globalisation and corporate power, has described the demonstrators as "meeting stalkers, following the trade bureaucrats as if they were the Grateful Dead". Ms Klein believes that globalisation hits the poor the most if not managed properly. Her main target is the marketing methods of multinationals, and specifically global brands, which she claims manipulate first-world consumers and attempt to disguise a multitude of unethical practices in the third world and the exploitation of poor workers.

The demonstrators may get most of the media attention, but perhaps more important in the longer term is the small army of non-governmental organisations (NGOs) dedicated to questioning the benefits of globalisation which also now turns up for most international meetings. These groups bombard journalists and delegates with position papers, arguments and spokespeople to get their message across. Many international meetings now make provisions for NGOs to participate, at least informally. NGO advocates were as busy within the barricades at Quebec, for example, as the demonstrators were outside. Both delegates and journalists attending this week's interim meeting of the IMF and World Bank have been bombarded with information and lobbied by various NGOs.

The key question

Does any of this improve the prospects of the world's poor? Reducing poverty, as opposed to inequality, has been the primary concern of multilateral institutions such as the IMF and World Bank. Would switching the emphasis to inequality actually help the poor?

An argument for focusing on inequality, and for questioning the merits of globalisation, is advanced by Robert Wade, an economist at the London School of Economics, in the current issue of The Economist. He argues that global inequality is increasing faster than hitherto suspected and that governments should respond. The main driver of the trend to increasing inequality, he argues, is "technological change and financial liberalisation that result in a disproportionately fast increase in the number of households at the extreme rich end without shrinking the distribution at the poor end."

For that, the main causes are faster economic growth in rich countries than in poor countries, stagnation in Africa and the rural parts of China and India. Even within China and India a growing income gap between rural and urban areas is boosting global inequality. This, in turn, says Mr Wade, is bound to create political instability, both within countries and between them.

Most advocates of free trade, including The Economist, have taken a different view, arguing that growth reduces poverty and that inequality as such is a secondary concern. If poverty has increased in geographically and economically isolated regions such as rural China or India, as Mr Wade says, might this not be due to too little globalisation, rather than too much? The causes of these regions' isolation are what need to be addressed. Growth remains the best, indeed the only, hope for the world's poorest. If the anti-globalists create obstacles to freer trade, according to this view, the damage to everyone would be huge. Poor countries would be hit especially hard.

Hernando de Soto, an economist from Peru, has added an interesting twist to the debate about global inequality, claiming that it is the lack of strong property rights, and the legal structures needed to make them enforceable, which is one of the leading obstacles of underdevelopment in many poor countries, rather than exploitation by the first world. Because the poor often live on land or in houses where ownership is disputed, they cannot borrow against what they "own'', or even sell it with much confidence. This has locked up a tremendous amount of capital, even in poor countries.

Mr de Soto estimates that the value of property held but not legally owned by poor people in developing and former-communist countries is almost $10 trillion—more than 20 times the foreign direct investment in these countries since the fall of the Berlin wall. This is an intriguing point. But few if any anti-globalists are demonstrating for stronger property rights in the third world.

The anti-globalisation movement is unlikely to fade quickly. The demonstrators are not just enjoying themselves, they are also succeeeding better than might have been expected in the court of public opinion, and governments are unsure how to deal with them. Concern about poverty and inequality is likely to grow. The very globalisation which the anti-globalisation movement opposes is making the plight of the world's poorest countries increasingly difficult for rich countries to ignore. That is a good thing, as far as it goes. The challenge is to translate growing concern about poverty into policies that reduce it, rather than entrench it. And that is a challenge which governments, so far, are failing to meet.

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