James Petras and Henry Veltmeyer Globalization unmasked: Imperialism in the 21st Century  (Zed Books, 2001)  $19.95

“Globalisation” is a term used with increasing frequency in the popular media, by activists in a range of organisations, and by politicians, yet discussion of its precise meaning has tended to be confined to academic circles, to economists and students of international relations.  As John Kay said in the Financial Times recently (14/11/01) globalisation can sometimes mean anything and everything “that people hostile to the modern economy don’t like”. Though Kay writes from a measured but essentially conservative perspective, he has a point. Petras and Veltmeyer’s lively polemic, which seeks to show that globalisation is nothing but imperialism in a new dress, is therefore welcome, performing as it does the difficult task of answering complex (and, indeed, often deliberately obscure) “pro-globalisation” arguments in a way which takes the dispute out of the halls of academe and within the reach of anyone able to think critically. In so doing, the authors have provided activists with an essential tool.

Petras and Veltmeyer’s argument is that  “…the existing world economic order is in the process of being renovated so as to create optimal conditions for the free play of greed, class interest and profit-making.” They take issue with the presentation of globalisation as an inevitable process, “the only road available.”  Globalisation involves a “widening and deepening of the international flows of trade, capital, technology and information within a single integrated market”, and each of these processes, as well as the precise form they take in the spreading of capitalist market relations and the culture which has grown from them to every corner of the world, are contingent upon decisions taken by human beings. Other decisions could have been taken and could yet be. Globalisation is politics in the service of a particular vision of economics, the result of a “consciously pursued strategy”. It demands “the liberalization of national and global markets” and without this liberalisation the growth of world trade would take on an entirely different pattern. This is an important distinction, because if globalisation is inevitable all we can do is try to adapt to it. If not, we can resist.

If globalisation depends on human decisions, then which particular humans are taking these decisions and in whose interests? The authors are clear on this point: transnational corporations (TNCs) are the motor and the beneficiaries. What is being created is a new international division of labour, new institutions to bypass democratic and other defensive forces, new means of exploiting opportunities provided by new technologies capable of reducing the costs of transport and communication to the point where Adam Smith’s famous “marginal advantage” gives way to a more absolute measure: put simply, cheap labour and repressive regimes have always provided suitable growing conditions for capitalist industry, but their advantages were traditionally offset by the huge costs involved in moving goods around the world, as well as the uncertainties of doing business at a distance which made rapid communications impossible. The telegraph and steam engine began to change those things. Email and jet aeroplanes, cheap fuel and advances in sea traffic of commodities have further “shrunk the world”.

At the same time, other technological applications, coupled with the rise of the Reagan-Thatcher Axis and a newly aggressive approach from the core of capital, by raising labour productivity, in turn, of course, reduced the need for labour. The result was not, needless to say, the leisure society which the Reader’s Digest had promised us and slow-witted sociologists had fretted over in the 1960s, but mass unemployment. 

The globalisers would tell us that this shedding of jobs was the inevitable result of opening up to competition from low wage countries. In response, western workers must accept lower rates of pay, deteriorating conditions and, above all, reduced job security. The only form of economic growth now available is that which derives from international trade and the movement of capital.  This self-serving argument, as with all of globalisation’s fundamental tenets, rests on some dubious assumptions and no sound evidence whatsoever. In fact, in both the developed and developing world, the bulk of industrial output continues to serve domestic markets. Real trade remains local, regional, and only exceptionally global. Even TNCs make most of their profits domestically, though the extent of this predominance is lessening.

As significant as the technological developments which made “globalisation” possible were political changes. The disappearance of the Soviet Union and Yugoslavia removed economic alternatives to capitalism from much of the globe, while a complex of social developments provided the opportunity to weaken the labour movement. Working class parties, including arguably the most important, in Britain and Germany, were taken over by technocrats. Capitalism, even in the view of many on the left, became the only game in town. 

Globalisation is a term which conjures up a world of mutual, and mutually beneficial, dependence, conforming to the vision of Adam Smith, who wished every country to be in a position where it could concentrate on what it was good at, trading with other nations to acquire those things which it found difficult or impossible to trade for itself.  Smith would hardly have recognised any fulfilment of this benign vision in modern trade patterns, nor indeed would he have approved the essentially mercantilist imperialism of the TNCs and those politicians and institutions which serve their interests. What stops globalisation from being a Smithian project is quite simply that, whilst economic activity taken as a whole may be more internationalised than in the past, profits do not remain in the countries in which they are made, but flow north and west, a direction ensured by the continuing imbalance of power which underlies international relations and undermines any possibility of the sort of peacefully trading world which Smith believed could be built.  Under these circumstances the new global division of labour represents not a liberation of the Third World from the limitations of primary production but, on the contrary, a predictable development of the rich countries exploitation of the poor. As Petras and Veltmeyer put it, “…globalization has deepened and extended the international division of labour. Cars…are made of parts from factories in distant nation-states. Information collection, processing and analysis are outsourced to workers in different regions…But this is a continuation of the past international division of labour…between mining and agricultural workers in the Third World and manufacturing and service workers in the imperial countries. What has changed is the inclusion of manufacturing activities in the former Third World.” In other words, all that has really changed is what the master requires of his slave.

If globalisation were more than this then we would expect to see a diversification of centres of wealth. Yet, as the authors show, US-based TNCs continue to strengthen their grip on global economic activity, with 70% of top firms based in the United States. Third World countries account for only 26 of the top 500, and increasingly the vital infrastructure of poorer nations is furnished by US corporations.  Dependence on foreign finance makes poorer countries peculiarly vulnerable to the vagaries of a world economy run as if it were a giant casino, as we have seen very recently in Argentina and earlier in Ecuador, Mexico, and numerous far eastern nations.

The globalisers’ arguments are often based on an admission that not all is rosy in the garden, that the process has losers as well as winners. This, however, tends to be explained away by short term difficulties and by claiming that, overall, the world is far better off. This utilitarian optimism is difficult to sustain. United Nations figures show that since 1980 the gap between richest and poorest has grown hugely: the richest fifth of the world’s population is now 17 times as wealthy as the poorest fifth. In 1980, the comparable multiple, scandalous enough, was 11.  Of course, overall wealth has increased greatly in those two decades, but in sub-Saharan Africa and numerous individual countries elsewhere, real per capita incomes have fallen too.

As well as demonstrably false claims that globalisation is delivering the goods of poverty alleviation, supporters argue that it is leading to a spread of democracy. At first sight, this may seem more plausible, as the last two decades have seen a move away from openly dictatorial regimes and direct military rule towards civilian governments operating within a formal liberal democratic framework. “Good governance”, which is assumed to involve such an institutional and constitutional set-up, has even been made a condition of loans and aid from international financial institutions and rich nations.  At the same time, however, not only has the West proved too ready to accept paper guarantees of ‘democracy’ as if they were the real thing, but the economic processes of globalisation, presided over by unaccountable international institutions, have seriously undermined the capacity of individual nation states to take their own decisions. This has the most damaging effects on the poorest countries, but the undermining of democracy is not confined to the Third World: NAFTA has locked Canadian citizens into a macro-economic framework which they can do little to change, whilst the introduction of a single currency under Maastricht Treaty rules has all-but eliminated parliamentary influence on core economic decision-making, even preventing elected governments from attempting to persuade the European Central Bank to change interest rates or any other aspect of its policies.  Backing this up, TNCs routinely threaten to disinvest  if governments don’t dance to their tune. When labour is withdrawn in pursuit of policy changes not directly linked to the immediate workplace, workers are accused of “holding the country to ransom.” When capital threatens the precise equivalent, governments are enjoined to be realistic and accept the inevitable.

This is not to side with those who argue, without, in general, feeling the slightest need to produce any evidence to back their assertions, that the nation state is now enfeebled, forced always to be at the beck and call of TNCs whose budgets may exceed those of medium-sized countries. On the contrary, as Petras and Veltmeyer argue, “never has the nation-state played a more decisive role…in shaping economic exchanges and investment at the local, national and international levels. It is impossible to conceive of the expansion and deepening involvement of multinational banks and corporations without the prior political, military and economic intervention of the nation-state.” The authors cite “…the vital political role of the imperial nation-states, particularly the US, in fuelling an arms race and subsidizing cultural and religious propaganda. The most elementary and important trade agreements…were formulated, codified and implemented by nation-states…The major policies stimulating vast tax windfalls, massive subsidies and lower domestic labour costs have all been formulated by the nation-state.”  What has happened is that traditional sources of opposition have evolved from social democracy towards the gruesome “centre-left”, a non-movement which “has almost uniformly assimilated the globalist ideology…”

This book is recommended unreservedly for students of the subject and, above all, for activists seeking to equip themselves with arguments capable of blowing over the globalisers’ house of cards.

The reviewer, Steve McGiffen, is editor of Spectre and an environmental advisor to the European Parliament’s United Left Group. He recently published The European Union: A Critical Guide (Pluto Press, 2001) and is currently working on a brief book on globalisation for UK publisher Pocket Essentials.