Category: Book Report 10th May 2019
The author of the book, Jagdish Bhagwati, is an American economist of Indian origin, a professor at the Columbia University, a recognized authority in the field of an international division of labor and world trade, and a consistent supporter of free trade. His work is dedicated to the problems and contradictions of the biggest phenomenon of the XXI century – globalization, analyzed by him in a wide and public manner. The author seeks to give an argumentative, reasonable and unbiased reply to criticism of globalization expressed by anti-globalization movement (the intellectual and political movement that has spread in the West). The book shows from the science-grounded perspective that globalization is an objective and, for the most part, a positive trend of the world’s development. The arguments of the anti-globalization ideologists and their organizations bear a demagogic character and are often based on a deliberate fraud and misrepresentations. The real question is not the denial or inhibition of globalization but the correct management of it that results in minimizing the negative impacts and maximizing the benefits brought by it to all countries and peoples.
In the modern world, where the voices of the so-called anti-globalists become louder, an event that could seriously affect the prospects of this intellectual, ideological, or political movement finally happened. The main factor that allowed for it is the work by Jagdish Bhagwati In Defense of Globalization. The book based on substantial arguments was the first notable attempt of the anti-globalization theory criticism.
The uniqueness of the book is also a merit of the author’s personality. Jagdish Bhagwati is one of the recognized experts on the issues of international division of labor and world trade. In his study, he concentrates on a range of problems faced by the modern globalized humanity, while at the same time showing the disadvantages of the anti-globalization ideas. The author assesses the state and the origins of the modern anti-globalization movement. In his view, anti-globalists can be divided into two groups – conscientious objectors of globalization with a deep feeling of antipathy, and those whose protests do not go beyond common objections and grievances. These two categories can be represented as two groups of shareholders. The first consists of those supporting a mass meeting playing the roles of heralds of themselves all around the earth. The second group consists of people who want to use their “share” (involvement) to participate in the ongoing processes and to influence the system from the inside. According to the author’s point of view, little can be done to initiate a dialogue between the members of the first group.
Bhagwati believes that the ideological and intellectual currents of 1960-1980-ies are the main sparks for the rise of the anti-globalization. First of all, it is the interest of many researchers of that time (a part of which he considers himself) to the experience of the Soviet Union and other socialist countries representing, as it seemed, to be an alternative to the unjust capitalist society. Despite the fact that Soviet ideology was highly praised and accepted earlier, in the modern world the perception of the Soviet alternative is a terrible mistake.
Secondly, it is the idea of “post-colonialism”, the apologists of which challenged the adequacy of the Western concepts of peripheral societies, denied the universal nature of market laws and regarded them as a threat to the cultures of those nations and people who have liberated them from colonial domination. Third, the “paradox of Hume’s concentric circles of reducing sympathy and loyalty.” With the development of television and media, the plight of the inhabitants of the world periphery, which the media often reports about without proper comment provokes a natural desire to improve their situation. At the same time, the problems of their own society play a less important role. Finally, according to Professor Bhagwati, the fourth driving force of the anti-globalization is the insistence of his supporters on demonstrational radicalism and progressiveness to “the city and the world”, while they are the main features distinguishing them from the “renegades” and “conservatives.” The author is convinced that the fair in the past hard opposition of these concepts today does not reflect the fundamental challenges of our time nowadays. Therefore, on the one hand, the modern anti-globalism is generated by the illusions of the past. On the other hand, it is promoted by the reluctance (or inability) of the movement supporters to penetrate deeply into the essence of current problems.
The modern anti-globalism is fueled by other factors as well – from the growing anti-Americanism to the aspirations of marginalized small left-wing parties, as well as proliferated non-governmental organizations for expressing themselves or just surviving. Special attention should be given to the evidence suggested by the author, confirming that the anti-globalization groups are increasingly going to outright falsification of data and misrepresentation of reality – including manipulation and fabrication of false statistics, photos, and videos. It is not surprising that the anti-globalization spirits dominate in the rich countries of the North while the majority of politicians and citizens of poor countries of the South consider globalization as a positive phenomenon.
Bhagwati compared the current anti-globalization activity with the protest antipolitics of the intellectuals such as Vaclav Havel from Czechoslovakia and George Conrad it from Hungary, who considered antipolitics to be the most effective means of democratization in communist countries. Nevertheless, with the establishment of democracy, the need for such antipolitics has disappeared because those who have been displaced outside the political process initiated it. Similarly, anti-globalists are trying to present themselves as a kind of implacable opposition, while they actually exist in any society at any period of history as a marginalized minority. As a rule, they cannot admit the fact to themselves but seek to act on behalf of the world’s poor, even without learning beforehand about people’s opinions.
Most of the book is devoted to the analysis of imprecise judgments about the globalization that occurred a long time ago, but seems to be steadily evolving even today. The paper mentions some of the problems in the light of which the imprecisions are particularly evident.
First, it is important to mention the issue of slow economic growth. After the war, many economists believed the economic growth to be a means of achieving long-term goals such as poverty reduction, building self-sufficient economy, etc. The author shows that this error was fatal for the majority of developing countries. The writer argues that the idea of balanced growth, so popular in the 50-60s of the last century, was internally flawed.
The desire to increase the rate of accumulation and limit private consumption in the period of industrialization inevitably leads to the development of the economy “for its own sake,” an example of which was the Soviet experience. The largest developing countries China and India have lost decades trying to build a planned economy and have not been able to cope with poverty, which in today’s market reforms vividly disappears. Finally, the growth that does not take into account the naturally evolving market conditions, is rather able to make the country poorer rather than enrich it. Thus, the researcher claims that the priority should be given not to the growth rate but to its harmonious nature, which allows saturate the consumer market and reduce the poverty level. Moreover, it will allow the country, developed on a similar set of rules, gradually become integrated into the world economy. It should be noted that the concept of the so-called busting growth, forwarded by the writer in the 1960s, brought him fame and positioned him as one of the main critics of the traditional economy.
The second problem depicted in the book is the problem of economic openness. It is not a secret that in the 1960-1970s there was an active debate among economists about what kind of economic growth (the import-substituting or export-oriented) was more effective and was able to meet the needs of developing countries. The modern anti-globalization stance unambiguously classifies them as supporters of import substitution. Although, the history of the last decades convincingly evidences the benefits of export-oriented economies. As a result, this path of development is preferred in the context of fighting poverty, because, if growth was extroverted and labor-intensive products, along with light industrial products, exported in bigger amounts, it would have increased the demand for labor and thus would be more helpful for the poor. Indeed, contrary to the arguments of anti-globalists, the average annual growth in the most “closed” developing economies in the past 20 years did not exceed 0.7%, while in the most “open” it reached 4.1%. The proportion of people living on less than $1 per day decreased in South-East Asia from 52 to 31%, whereas in Africa it has increased from 42 to 45%. The professor considers the outcomes of “openness” that are often referred to by anti-globalists (the dependence on foreign markets, the over-exploitation of labor, etc.) to be not more than a common prejudice.
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One more problem raised in the book is the problem of externalities. Most of the anti-globalization movement members pay attention to the fact that the unbridled market expansion facilitates barbarian use of natural resources. In their opinion, “the intensification of trade with countries possessing lower environmental standards, and the increase in the investment into their economies will lead to dangerous to the environment results and to unfair competition with developed countries that adhere to more stringent environmental conservative requirements. This is partly true, while the accelerated development of underdeveloped countries will surely lead to a higher level of pollution. Nevertheless, it was exactly what could be assumed, regardless of the degree of involvement in the global economy, the underdeveloped countries would use cheaper fuel and pay less attention to the protection of nature than the developed countries. The only way to improve the situation is a consistent increase in welfare. The book contains the results of statistical studies, showing that the peak of contamination corresponds to the average per capita income of 5-6 thousand dollars per year. Moreover, it does not depend on the extent to which a country is involved in the international division of labor. From these perspectives, Bhagwati opposes unreasonable environmental restrictions, which face vivid opposition on the behalf of the developed countries. The author considers that the reluctance of the United States to join the Kyoto Protocol is an understandable and rational choice.
Next, the writer raises the issue of cultural unification. As it is known, one of the favorite objects of anti-globalists criticism of the current situation becomes a “suppression” of national cultures’ unified standards. However, Jagdish Bhagwati rejects these accusations. On the contrary, speaking of English as a universal means of global communication, he notes that its triumph is due not only to economic globalization, but also because the English-speaking countries have been dominating the world for the past two centuries. As a result, the process of language globalization has accelerated its spread. Regarding the dominance of Hollywood products in cinemas, the author supposes that the Europeans should more actively engage in supporting their own film industry, increasing its competitiveness on a global market.
Last, but not least, it is significant to mention the problem of multinational corporations’ dominance. Bhagwati uses the most convincing arguments to debunk persistent myths about the large international companies as a source of almost all evils of the modern society. Firstly, he claims that those who assert that more than a half of the 100 largest economic entities of the world are multinational businesses mislead the public. The author jokes that comparing sales which represent the gross cost to GDP is the same as comparing oranges to apples. Second, the corporations do not gain such enormous profits through the transfer of their enterprises to developing countries, unlike is commonly believed. For example, in 1999 the percentage of income of the largest companies operating in the emerging markets did not exceed 8.3%. Third, the researcher presented numerous examples showing that the governments of the developing countries, in which they operate very often, initiate the measures for which the anti-globalists criticize multinationals.
Recognizing the urgency of the problem of global inequality and poverty in developing countries, Jagdish Bhagwati proves that not only overcoming poverty is most successfully realized in the globalized economy , but also the inequality inside the market economic system is perceived in the context of a globalized world as a lesser evil than in closed administrative economies. The author does not deny that the income of workers and labor standards in developing countries are far from the ones on the West. Nevertheless, he also pays attention to the wickedness of these countries’ authorities, which (particularly in China) have ratified more international agreements on the protection of labor, than the US, but have no intention of abiding them.
The author recommends the reader to pay attention to the fact that popular in the anti-globalization environment allegations of raw materials supplied from developing countries impairment do not find statistical evidence. Protectionist tariffs, for which the anti-globalists criticize the Western countries, appear to be in 1.3 – 4 times higher in the developing countries than in the developed ones. In most developing countries, the wages in enterprises controlled by transnational corporations are on average 1.6 – 2 times higher than those paid in similar industries belonging to national entrepreneurs.
To conclude, the book gives a contentious, valid and unprejudiced reply to criticism of globalization expressed by anti-globalists. The author admits that despite all possible disadvantages, globalization is a positive trend that is developing and perfecting the world. The problems discussed in the work prove that the arguments against globalization are mainly grounded on a biased, inaccurate or misinterpreted information, spread by the opponents. All in all, Bhagwati believes that the main question of interest does not regard the denial or prohibition of the globalization, but rather calls for its intelligent and skillful management. As a result, the negative results will be diminished and the potential advantages multiplied, all of which would benefit the developing countries.