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Pre-Departure Reading, Pt. 1: What is Globalization? (25 days)

July 8, 2010

One thing I forgot to mention in the introduction is that I’ll be using this little exercise in narcissism (or blog, as I believe the young people call it these days) to post analyses of the things I’m learning, which at this point are all coming from our pre-departure reading packet. If you’re more interested in seeing hott pix of rainforests and mountains than sharing in the bounty of my educational experience, then, um, just skip over the ones tagged “Adventures in Education!” maybe?

First thing about the packet: it’s kinda big.

Taking pictures at work. Nbd.

I’m really bad at estimating quantities of things, so I’ll spare you my attempts to give you the number of pages (said pages aren’t numbered), but we were informed that the readings should take about 30 hours to complete. That has proved to be a challenge during the summer, when all I want to do when I get home from work is sit on the couch reading Dinosaur Comics. On the other hand, it’s stuff that I’m really interested in, and even though I’ve barely finished the first section of three readings, I’ve already learned a ton. Obviously I won’t regurgitate the entire thing here, just the stuff that I think is interesting.

Today we’re learning about what the term “globalization” actually means. The first reading is a short chapter from the book Why Globalization Works by Martin Wolf*, who provides a working definition of globalization in terms of economics. Most of it strikes me as fairly straightforward, at least, it fits my intuitive understanding of economic globalization.

Wolf starts out by providing economist David Henderson’s definition of globalization as the

free movement of goods, services, labour, and capital… and full national treatment for foreign investors (and nationals working abroad) so that economically speaking, there are no foreigners.

In Wolf’s own words:

what we are talking about is movement in the direction of greater integration, as both natural and manmade barriers to international economic exchange continue to fall. A necessary consequence of such a process of integration is the increased impact of economic changes in one part of the world on what happens in the others.

So it looks like globalization is defined by two major changes. First, the fall of the “natural” barrier of the geography that separates countries, driven by technological advances that greatly decrease transportation and communications costs. Second, the fall of the “manmade” policy barriers to trade imposed by governments. Wolf points out that while we are indeed seeing technology hacking away at natural trade barriers, transportation costs will remain significant factors for pretty much everything except pure information. This makes sense: you can’t get a pizza delivered through the internet. And to even have internet, you need a computer, which has to be manufactured somewhere and shipped to wherever you happen to be. Also, while he maintains that the fall of these “natural” barriers does tend to stimulate governments to lower their policy barriers to trade, he claims that government influence  on trade isn’t going to disappear anytime soon, either.

He briefly notes that this is “the kind of globalization – let us call it ‘liberal globalization’ – the protesters condemn.” In my opinion, it seems apparent just from his definition alone that these protests are not completely misguided: the diminishing power of “Third World” governments to protect their citizens from economic policies and corporations promoted by the powerful nations (who may or may not have their best interests in mind) seems to create potential for exploitation. Similarly, while it seems clear that, in general, opening up avenues for trade tend to lead to economic growth all around, I have not yet seen convincing proof that “total economic integration” is truly best for everyone involved. However, the extent of my formal economics education is AP MacroEcon in high school, so I certainly don’t feel qualified to say. In any case, a debate is raging on this issue, and the next couple of readings will present some of the criticisms of and support for globalization of this kind.

Towards the end, Wolf mentions cultural globalization, which he sees as a “[consequence] or [concomitant]” of economic globalization. He cites sociologist Peter Berger’s argument that:

there are four facets of cultural globalization: business values – or the impact of ‘Davos man,’ named after the location of the annual meeting of the World Economic Forum; intellectual values – or the influence of the ‘faculty club’; popular commercial culture and the spread of religious movements – particularly evangelical Protestantism, now thought to embrace some 250 million people world-wide. (emphasis mine)

He doesn’t elaborate, though it’s not too hard to imagine what these cultural impacts might look like (except for “intellectual values,” what does that mean, exactly?). I think that in order to assess whether globalization is “good” or “bad,” there are important questions to be asked about its cultural effects that can’t be addressed in terms of economics alone. Wolf recognizes this, as he closes the chapter by saying that, while they are not the focus of his book, “The economic globalization discussed here has cultural, social, and political consequences (and preconditions).” Since the non-economic effects of globalization do seem to be tightly linked to its economic factors, this kind of definition is a necessary starting point for discussion of the merits of globalization as a whole.

What are your thoughts on economic globalization? Is the free market the only practical solution to economic hardship, or is it the scourge of the Western capitalistic oppressors? Would you define globalization differently?

*Linking to the book’s Amazon page totally counts as sufficient citation, right?

4 Comments leave one →
  1. Travis permalink
    July 8, 2010 6:10 PM

    I think a free market isn’t just a practical solution its an ideal solution. It allows for the individual to achieve incredible things. But those who use it have to have a set of moral values that cause them to think about their transactions in the market and if those transactions are impeding on other peoples free use of the market.

    Globilization seems inevitable to me as long as growth is occuring. I’m ready for Solarsystemication.

  2. July 12, 2010 5:15 PM

    Fascinating, David. Thank you.

    In my incomplete understanding of globalization, I would deem globalization good for several reasons.

    Globalization encourages a more uniform world culture, which I believe to be desirable – fewer disagreements &rarr fewer wars. Perhaps, this is too naive, but I’d like to think this to be true.
    Globalization increases world-wide aggregate supply and demand, which theoretically results in higher production, and a net increase in standard of living.
    Globalization encourages competition, which distributes wealth more evenly between countries.

    Pure, Market-driven globalization, however, does not always result in good – moral – effects; rather, globalization seems to often result in exploitation. Examples from history include slavery and land appropriation, and examples from today are sweat shops – in many forms. These atrocities are/were driven by self-interest of the powerful. In the United States, the bloodiest war we have fought was Market vs. values – the Civil War. Because of this, I do not trust people to put their values above their self interest, because “All men are liars,” (Holy Bible, Psalm 116:11), and “The love of money is the root of all kinds of evil.” (Holy Bible, 1 Timothy 6:10)

    What then is the solution to integrating values in globalization? War? Sometimes. Not always.

    I note that these values do not necessarily need to come from a forceful balance of power by war or government intervention. The balance of power can come by the Market itself. Consider present-day China and India. Many people (not all) that once worked in very poor conditions have now, because of the countries’ capitalistic economies, begun to realize a higher standard of living as they powerfully compete in world markets. Indian programmers and customer service providers and Chinese engineers compete with the same workers in other countries, effectively balancing the standard of living for those fields.

    Thus, the Market is not a perfect solution, but can any other human force regulate the Market as justly and effectively as the Market itself?

    I don’t think so.

  3. July 12, 2010 9:27 PM

    Well said, Travis, thanks. Couple of questions for you, if you’d like to elaborate:
    1. How would you define “achievement” as you used it above?
    2. Do you think market forces alone will be enough to keep overproduction/consumption from destroying the planet?
    3. Do you think it’s feasible to factor morality into our purchasing decisions? Are there any changes to our current system that might better allow for this?

  4. July 13, 2010 8:14 PM

    Thanks, David. Here’s that response I promised. Can’t think of too much to ask/point out. I’m glad to see you pointing out the capability of the market to violate human rights. However, do you think that positive moral choices can influence the market, as Travis suggested? What is our responsibility as consumers as far as making sure that we are not feeding a system built on exploitation?

    Another point, which was briefly touched on at the beginning of my other post: competition is not always a good thing for developing countries, especially if they are competing to supply the cheapest labor, or the easiest access to their natural resources. I’ve learned that Ecuador, for example, has had difficulty protecting their extremely rich environment while still being a competitive supplier of their #1 export, petroleum. While I think your point was probably that competition among individual economic agents across borders is positive, the reality is that competition does take place at the higher levels as well, and there doesn’t seem to be much that individual citizens can do about it.

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