Globalization, Enterprise and Governance: Twentieth Anniversary Re-release – Part V

Blogger’s Note. Reflecting upon the a recent “long read” published in the Guardian – an absorbing piece by Nikil Saval entitled “Globalisation: the rise and fall of an idea that swept the world” – I was rather jarringly reminded of something I wrote back in the nineties.  What strikes me about this vintage analysis, published in the International Journal (53:1, Winter 1997, pp 17-37), is just how little the debate has advanced over the intervening two decades. It seems that virtually nothing has been learned, and even less done in response to this longstanding critique. Why?  As a contribution to everyone’s summertime reading, I have decided to re-release the original, complete and unabridged, in five easy pieces. With apologies for the curious formatting and the length of this concluding section , I would very much welcome reader commentary.


Civil society at risk


How, then, has globalization forced authoritarian governments – in Latin America, Southeast
Asia, Taiwan, South Korea – to become more democratic? Again, we are left peeling back the
layers. Gwynne Dyer, Francis Fukuyama, and others are convinced that the triumph of
democracy over dictatorship looms as one of the major historical themes of the late 20th century.
A more searching assessment might conclude that globalization has narrowed political options in
countries with long-standing democratic traditions and complicated the transition to democracy
most everywhere else.

Indeed, the greatest impact of globalization may be the extent to which it has engendered a
palpable dissonance within and between existing forms of economic and political organization.
On the one hand, multinationals have leap-frogged ahead of any countervailing form of authority
and are accountable only to their shareholders, many of whom are other firms or large investment
funds with little or no interest in corporate responsibility. National leaders, on the other hand,
remain accountable to electorates, but their ability to control or even to shape outcomes is
diminishing rapidly. When power without accountability meets accountability without power it
seems a safe bet that the sharp distinction between commercial and political choice will translate
into volatility.

The industrial revolution provided the tools and resources to transform countries into nationstates
and then welfare states. To a greater or lesser extent, these modern political constructs
permitted the accommodation of heterogeneity by imparting a sense of common civic culture
based on shared values and interests rather than ethnic, linguistic, or religious particularity. In
developed countries, the historic compromise between capital and labour, expressed as social
democracy and seen by some as one of the greatest achievements of this century, is unravelling
under the pressure of global competition and shifting factors of production which favour
employers, investors, and others who control capital. This winnowing of the middle ground is
especially profound in the United States and Britain but is increasingly seen in Canada, the
countries of the European Union, and Japan.
To be sure, democracy is spreading, but representative structures and institutions everywhere
seem frail and dysfunctional. In many countries elections are treated as little more than quaint
rituals or light entertainment. This is disheartening in itself but also because it is just one more
symptom of the insidious erosion of choice chronicled by Noam Chomsky. The media, especially
the free press, is to the democratic process what wind is to sails. Yet one of the effects of
convergence is a shrinking number of independent media voices; one need look no further than
Canada for a convincing case in point.

The result is another paradox. Broad coverage of emancipating political change can bolster
resistance to arbitrary authority and kindle the spark of rebellion, even as the concentration of
media ownership and control limit the diversity of opinion and stifle dissent elsewhere. Shrinking
horizons, stock perspectives, and the sonorous tones of the like-minded are not conducive to the
sort of diverse and pluralistic debate in which open and democratic societies flourish.

In both public and private sectors, globalization has brought massive job cuts. In the name of
restructuring, which does not necessarily maximize efficiency or increase productivity, OECD
countries have experienced a staggering loss of salaried positions – and decent benefits packages –
to relocation, outsourcing, and contract labour. Whose interests are served by such measures?
Even George Soros has come to recognize that the rush to competitiveness, which has
rehabilitated social Darwinism and made it respectable, exacts painful social costs. Its latest
incarnation – the struggle of each against all – extols the survival of the fittest in a laissez-faire
environment marked by a chilling absence of commitment to the common good. This is a
substantial retreat from a set of more co-operative principles accepted, until recently, as the
hallmarks of contemporary civilization and advanced human development. Social justice requires
deliberate moral and political action; globalization is conducive to neither.

As the consensus breaks down and economic disparities grow, social peace will surely be tested.
Remarkably, in most places the various stresses and strains have not yet been translated into
fundamental political options. Indeed, the result has been quite the opposite. Political parties
throughout the Western world have lost most of their distinctive ideological identity to free
enterprise cheerleading. In the political mainstream in most countries, there is no longer a
discernible distinction between right and left, except, on occasion, in rhetoric.
Beyond spin control and sloganeering, politics has been reduced to an empty shell. That this
probably has more to do with the changing needs of élites than with any general shift in the
disposition of the polity is an interesting observation, but the point is that the very nature of the
political process has changed. Who benefits?

Globalization has generated enormous challenges throughout the industrialized world. At the
same time, the ability of underdeveloped countries to deal with the consequences of neoliberal
reforms – welfare reductions, programme cuts, privatization, marketization – has become more
constrained. The imposition of ’reforms’ in the context of structural adjustment, aid
conditionality, and the like has contributed to the desperate circumstances which, in combination
with population pressure and resource scarcity, give rise to feelings of intense insecurity among
those most affected. As we have seen in ex-Yugoslavia, around the edges of the Russian
Federation, in Algeria, and Egypt, and elsewhere, those on the losing end of the global
competition seek shelter or succor or meaning in political extremism, religious fundamentalism,
and virulent forms of narrow, exclusionary ethno-nationalism.

The alienated and marginalized are likely to try to construct a new identity founded on a
compelling vision of a brilliant and often utterly unattainable future or on shared, and often
dreadfully distorted, memories of an idyllic past. Intolerance and demagoguery thrive in a climate
of exclusion. It chokes popular sovereignty and precludes the development of an open and
inclusive political culture. In their absence, insecurity is inevitable, and democracy cannot take
root or grow.

Despair is the mother of fanaticism, and hopelessness often gives way to violence. In an era of
failed states the international community – often by default – is left to deal with both the causes
and the consequences through conflict resolution, peacekeeping ventures, or, with increasing
frequency, reliance upon heavy-handed security measures to protect potential targets at home.
Herein lies another irony: by embracing globalization as the only world order model, the
international community contributes to the very problems which it must then address.

Oh, Canada …

All of these observations resonate deeply in Canada, which trade, travel, and immigration figures
suggest is one of the most globalized countries. To the extent that statistics tell the tale, Canada’s
trading performance and general economic prospects have never looked better. With the notable
exception of employment, most macroeconomic indicators are pointing up. Immigration has
provided a diverse array of talent and skill which has contributed enormously to Canada’s
comparative advantage and to a real competitive edge. That puts Canadians in an excellent
position to do business anywhere and to offer other countries less experienced with globalization
the benefit of lessons learned here.

But there is more. With rapid technological change, privatization, deregulation, and policy reform
in full swing, Canada is itself undergoing a form of structural adjustment. These changes, as
elsewhere, are accompanied by a predictable litany: the condition of public finances remains
parlous, greater discipline is required to reduce debt, services must be further rationalized, taxes
must be cut. Get government off our backs … Sound familiar?

National policies, expressed through approaches to medicare, social programming, pensions, and
income support, are facing relentless cost pressure and, in some cases, sustained attack from
those favouring harmonization – usually a code for further reductions. Globalization has placed
the discussion of comparative levels of social service front and centre in the domestic debate and
made the lowest common denominator relevant. This in turn has raised questions about security
in all areas of national policy specifically exempt under existing trade agreements. The present
crisis over universality and access in health care, the outcome of which seems anything but a
foregone conclusion, looks very much like a harbinger of things to come.

According to the United Nations, Canadians enjoy the highest quality of life in the world. A
relatively small population, a rich resource base, and the historical inertia provided by relatively
high levels of public service and effective planning and regulatory mechanisms all contribute. But
broken windows and peeling paint in public schools, line-ups in hospital emergency wards, and a
thousand programme cuts suggest that Canada’s position is far from secure. Even in once
favoured places – Argentina , Burma, Sri Lanka, and elsewhere – where things have gone terribly
wrong. Evidence of Third World lifestyles in the streets and shelters and over warm air gratings in
all of Canada’s major cities suggest that we, too, are losing something worthwhile.

In Canada the dream of a politically distinct, economically coherent entity organized from east to
west has largely given way to what some see as the most potent iteration of the globalization
process – the relentless southerly pull of continentalism which continuing decentralization has
exacerbated. A weaker centre is less able to establish the sorts of conditions which give rise to
sustained prosperity. Governments are responsible for creating and maintaining the policy,
institutional, and infrastructural framework necessary for continuing economic development. The
question remains: to what extent is globalization an obstacle to obtaining for Canada a secure
place in the upper reaches of the new international division of labour? What are the prospects for
maintaining Canada’s enviable quality of life, which has, among other things, attracted capital
intense foreign investment?

It has been suggested that globalization could lead to an interpretation of Canadian social
programmes as investment subsidies, as some kind of offence against a level economic playing
field. Is this sort of issue suitable for reference to one or another dispute settlement mechanism?
As suggested earlier, reversion to trade tribunals necessarily shifts the locus of decision-making
away from parliamentarians and representative institutions. But are these technical bodies a
likely source of enlightened public policy? Is transparency at risk? Globalization raises a host of
fundamental public policy issues, too few of which are being publicly debated.

Finally, globalization will continue to figure centrally in the spectre of separation which
continues to haunt Canada. To address this most hardy perennial issue, the federal government
may have to go well beyond Plan A or Plan B to articulate a compelling vision of Canada as
something greater than the sum of its provincial parts. Any province electing to depart would
lose something more than its share of the whole, and all of us would emerge diminished.
Globalization is relevant to the unity file because it weakens states and is prejudicial towards
precisely the types of programmes and commitments required to give form and substance to the
idea of Canada. The rigours imposed by fidelity to fiscal responsibility and balanced budgets
have hobbled the capacity of the central government to act in the national interest and to
elaborate an appealing vision of the whole.

Resisting the force of globalization is difficult enough, even for the strongest. Could an
independent Quebec defend and protect its interests any better than has been possible within the
larger framework of a united Canada committed to bilingualism and multiculturalism? In the
absence of the bulwark provided by the rest of Canada, it is almost certain that Quebec would
face a cascade of new difficulties in areas with which it has had little direct experience – foreign
and trade policy and defence. Meanwhile, bereft of a francophone component, the remaining
Canadian provinces could be hard pressed to find binding commonalities amongst themselves and
could well be individually attracted to some form of affiliation with the United States.

In short, Canada as presently constructed is – at minimum – better able to absorb losses and
defend its core interests. Larger units can muster greater resources and avail themselves of certain
political economies of scale. Canada is already an extremely devolved federation; there is no
reason that Quebec’s cultural and social aspirations cannot be fulfilled within a wider synthesis
which complements the determination of the rest of the country to remain united. Fragmented, all
bets are off, and the divisive debate over territorial integrity and partition are just the thin edge of
the wedge.

There is another, more controversial dimension to the efforts of the government of Quebec to
achieve sovereign control over the province’s political affairs, geographic territory, and destiny.
This quest has been animated in large part by some members of the majority of old stock
Québécois who trace their roots back hundreds of years. Probably too much was made of the
commentary directed at newer arrivals by some representatives of the Parti Québécois leadership
around the time of the last referendum. Yet many observers, including many Québécois, have
expressed concern over the appearance near the very centre of the sovreigntist cause of a
seemingly ethnocentric, exclusionary quality.

In these and other respects the separatist project looks very much like a desperate rearguard
action intended somehow to save Quebec from the effects of globalization which has transformed
Montreal just as it has the country’s other metropolitan areas. Is such a defence possible? Is it
desirable? These are tough questions. Like most other dimensions of this complex process,
globalization in the Canadian context cuts all ways.

Gloom, perhaps … but not unremitting

Scrolling through these images of a globalized cultural landscape, the picture seems rather desolate
but there is a glimmering of light at the end of the tunnel, and it may be something other than an9
oncoming train. At the end of the day globalization is driven less by political conspiracy than by
market consensus. Motor vehicles, walkmans, fast food, slick films, glitzy retail – multinationals
do what they can to manipulate markets and shape demand, but in large part they give people
what they want – or think they want.

I suggested at the outset that we may be caught in some kind of temporary lag which presages
passage towards a more balanced future. Indeed, there may already be some early signs of
institutional catch-up. Serious consideration has been given to a proposal by James Toben, a Yale
University economist, to tax international financial transactions, with a higher rate for short-term
speculative flows. While this is an idea whose time has not yet come, implementation could
produce revenues in the range of $100 billion a year which could be applied towards … capacity
building and debt reduction for the poorest? Hope springs eternal.

There have, in any case, been more concrete developments. Labour and environmental sub-agreements,
however imperfect, were retrofitted into the North American Free Trade Agreement,
are front and centre in discussions within the WTO, and, along with human rights, are finding
their way into the APEC and MAI processes. Trade unions, aboriginal confederations, human
rights organizations, and ecological advocacy groups are all working to internationalize their
operations, and in so doing provide some counterweight to the status quo. It’s a start.

At the most elemental level, if globalization is the contemporary expression of a more familiar
form of economic and political organization – empire – then it may, in the classic pattern, be
sowing the seeds of its own undoing and laying the groundwork for the next phase of world
history. Reference has been made, for example, to the crucial role information technology plays in
the globalization process. Falling prices, growing market penetration, and the impossibility of
external controls have combined to expand greatly all manner of national and international
communications. Anyone with access to a computer and modem can communicate over the
Internet with anyone with similar facilities, anywhere. Electronic publishing is the equivalent of a
vast intellectual ventilator, and the fan speed is being cranked-up daily. Although access remains extremely uneven, the computer revolution is profoundly subversive of hierarchy and control, supportive of the ethic of democracy, and conducive to the exchange of
ideas. In the classic pattern of the dialectic, similar countervailing parallels might well be adduced
for some of globalization’s other disturbing dimensions.

Is globalization cause for celebration or lament? At the end of the day the answer will be based
mainly on personal values. For some, increasing poverty and inequality and the other sorts of
changes sweeping Canada and elsewhere are unacceptable. For others, the private accumulation of
capital is the greatest good. Globalization does create wealth, but not for everyone. It fosters
dynamic efficiencies, but not everywhere. It forces new economies of production, but generates
downward pressure on wages and working conditions. It makes national economies – or, at least,
what is left of them – more internationally competitive, but it renders currencies and financial
markets chronically unstable. And its price tag carries significant implications for good
governance, democratization, development, civil society, and human security.

Globalization is an enormously complex and often vexing process which is working in ways both
subtle and obvious to change almost everything. Difficult questions remain unanswered and
important issues unresolved. For many Canadians faced with rising social costs, widening income
inequalities, and accelerating environmental degradation, the evidence is on balance rather
discouraging. But in this brave new McWorld, these are early days yet.

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