Globalisation - Skepticism

Skepticism

There are plenty of people who doubt that we live in a globalised society. There are 9 main points to their arguments. This post will outline each of the points in turn.

Globalisation isn't a new thing

The most famous text to give this argument is 'Globalization in Question' by Hirst and Thompson. One of their main points is that international trade has been around in history for a while and isn't new. You might they say have a point. Spices and fabrics and things of that nature have been shipped all over the world for centuries. The banana was first brought to Britain in the 1800s.

They even go on to say that in history, lots of countries actually relied on trade more than they do now, so you could actually argue that globalisation has decreased. Another one of their points is how immigration has slowed compared to earlier times.

Marxist theories are used to back up their points. It is said that:

Marxist and Leninist theories of imperialism assumed that the quest for ever-expanding markets would in time compel nation-based capi- talist economies to push against national boundaries in search of an international economic imperium.

(from Jihad vs McWorld, see Blackboard)

There are many places isolated from globalisation

The book 'Globalization: A Very Short Introduction' has some interesting figures to contrast more economically developed countries with poorer nations:

• The sum of the debt owed by the 47 poorest nations in the world is equal to the military spending of the world's richest nations: $422 BILLION.


• The total raised by 1985's 'Live Aid' concerts is equal to just one week of the interest payable by the foreign debt incurred by African nations: $200 million.

These figures indicate the staggering economical deficit between the rich and poor nations.

This was briefly mentioned in my previous post, but the world economy is pretty much dominated by the world's richest countries, The US, Germany and Japan in particular. Kenichi Ohmae coined the term 'the triad' to refer to the economic powerhouses of Japan, the US and Western Europe. The less developed nations (Eastern Europe, most of Asia, South America and Africa) are known as 'the periphery'.

Looking at a map of the Fortune Global 500 (a list of the top 500 companies in the world, ordered by revenue)...

...you can see that the majority of the pins are in the US, Western Europe and East Asia (with some outliers, Australia, South America and India for example). You can clearly see that not a single company is African.

140 of the companies from the Fortune Global 500 are headquartered in the US. (Full list below)

Lots of multinational companies (MNCs) aren't really global

The argument here is that a MNC is never actually global, because it's just a domestic firm that's got a presence and other units abroad. This is backed up by pointing out that most the board of directors for most MNCs is dominated by people from it's headquartered country, and that all the 'big decisions' are made at headquarters. Also in a lot of cases, the parts that are abroad are the low value things like production.

Let's look at a couple of big companies from the Fortune 500 to see if this is true.

Volkswagen

We should expect the majority of the board to by German nationals, and looking at their official website 6 of the 8 board members are German (the remaining 2 members are Spanish and Austrian)

Toyota

Every single one of the board members appears to be a Japanese national (according to the official website)

Therefore this argument does appear to carry some weight.

Customer tastes

Some products are quite varied depending on the region they're sold in, which can harm their reputation as 'global' products.

When McDonalds began to operate in the UK, they had to change their method for cooking fries. In America the fries were cooked using beef tallow, a kind of fat. The large Hindu population in the UK meant that they were forced to change their cooking method to a more vegetarian method.

Cars are another great example of how consumer taste changes internationally. Many cars are changed to suit the nation they are sold in. In Australia Vauxhall is known as 'Opel'.

The weightless economy myth

A lot of globalisation is based on the so called 'new economy', where the economy moves from being based on industry towards services, like I.T. However, while the economy has certainly evolved in recent years to rely more on services, most of the world's wealth is still based on more traditional commodities, such as oil and gas, and the ports. 7 of the top 10 companies in the Fortune 500 are energy companies.

States are still powerful

Part of globalisation theory is based on the assumption that domestic governments are losing power. After all, how can a government that exists only inside it's own borders compete with a powerful company with a presence in dozens of countries?

This assumption hasn't yet come to fruition however. Governments are still elected exclusively by domestic citizens of that nation, and there still aren't any real governments that transcend borders (this includes organisations such as the UN, which can be subverted if needs be as with the invasion of Iraq). Also, most military power is still executed by states.

Another thing to consider is that specific regions still hold a lot of financial importance, such as Wall Street in New York, where much of the Western economy is based.

Regulations are still important

Neoliberalism is the concept of giving companies freedom to act as they wish without regulation. This is an important concept for globalisation as it allows for things like more free trade. (There are many disadvantages associated with it too however).

While in theory this does sound like a good thing, in practice this isn't always true. Financial regulations are often put in place to encourage good business practices and to prevent unsustainable growth.

With such a complex global economy, more regulations are often needed to keep it functional. It is near impossible to have a totally deregulated economy.

What global culture?

This is something that was also mentioned in the previous post, and will be addressed further in a future post.

While it is certainly true that some aspects of culture are homogenised (how many of the last 5 films you watched came from Hollywood?), there are also some things that may never be influenced by a global culture.

You can't even say that the UK is homogenised, let alone the entire world! Try and get gravy in a chip shop in the south. They will honestly look at you like you're insane. What I'm trying to get at is that some cultural eccentricities will probably always be around.

The 'varieties of capitalism'

The argument here is that, while globalisation theorists would say that capitalism is global, there are in fact many different types of capitalism employed in different regions. A good example is how powerful trade unions are in Germany, whilst in the US they are a lot weaker. Other examples are the focus on lifetime employment in Japan, compared to the short term nature of many US jobs.

The web (no not the WWW)

In global finance there is a small 'web' of individuals who appear to hold a disproportionate amount of control over the world economy. This web includes:

• The head of the US Federal Reserve


• Chairpersons of the NYSE and the Chicago Board of Trade


• Heads of the major banks


• Rich venture capitalists

To conclude...

While a lot of the arguments put forward here are compelling (and some less so), remember that they are just arguments. Neither one of them is completely right, or wrong.

Personally I do wholeheartedly agree with some of the points, while I think some of the others aren't so credible. The most important thing to do is to just read up on as many of the points as possible and be able to talk about the pros and cons of them.