From Wall Street to Silicon Valley, most businesspeople assume that globalization, driven by economic efficiency and technology, is as inevitable as the traffic lights changing in Palo Alto — protests in Seattle, London, and Washington, D.C. notwithstanding.
In fact, the backlash against globalization is real and growing. Those who dismiss it show a woeful grasp of three things: human nature, history, and even globalization itself.
Globalization is not a fact, but a process — rather like waves washing onto a beach. Deregulation, technology, and capital markets are the winds driving these waves, and they have left behind an economy that is much less integrated than most people think. There is always an undertow: The same winds that whip up a global television channel like CNN also blow in ever-increasing local programming.
The next misunderstanding is of human nature — and how strongly people's actions are based on self-interest. In his Theory of Moral Sentiments, Adam Smith compares the pain you would feel if you lost your little finger to the distress you would feel over the news that "the great empire of China, with all its myriads of inhabitants," had been swallowed up by an earthquake. You would be hugely shocked, he says, but you would not offer up your finger for them. Personal interests take precedence. That is why Bill Clinton, an avowed supporter of globalization, backed the unions during the WTO tumult in Seattle — to help Al Gore's political chances at home.
History reinforces this. Economic efficiency and technology have often been trumped by local political prejudice. A century ago the world was, by many measures, much more global than today. Capital and people moved around the world with ease, propelled by forces far more radically globalizing in their time than the Internet is today — the telephone, electricity, and motorized transport. Businesspeople at that time, particularly in the Anglo-Saxon world, presumed that the world would get only more integrated. A Great Depression and two world wars showed how wrong they were.
That does not mean another depression or war is destined to stop the winds of globalization. The bigger threat is of regional trade blocs becoming trade fortresses, temporary capital controls becoming permanent, and people demanding cultural protection against McWorld.
If globalization does not find a political defense to match its economic efficiency, if it does not base its appeal on liberty and diversity rather than the dry language of IMF reports, then protesters' jibes that "IMF/World Bank start shakin', today's pigs are tomorrow's bacon" will be less of a laughing matter.
John Micklethwait, [email protected]
John Micklethwait works for The Economist and is coauthor, with Adrian Wooldridge, of A Future Perfect: The Challenge and Hidden Promise of Globalization (Crown Business, 2000), www.afutureperfect.com.
Adrian Wooldridge, [email protected]
Adrian Wooldridge works for The Economist and is coauthor, with John Micklethwait, of A Future Perfect: The Challenge and Hidden Promise of Globalization (Crown Business, 2000), www.afutureperfect.com.