It is by Immanuel Wallerstein.
Comment No. 30, Dec. 15, 1999
"Seattle, or the Limits of the Globalization Drive"
The decade of the 1990's has seen one long political drive to remove interstate barriers to the free flow of commodities and capital. This has been preached as the inevitable coming of globalization. The chief preachers have been the U.S. government, many of the largest transnational corporations, and a few interstate organizations. If preaching is to be effective, it must be translated into structural requirements which prevented the various states from succumbing to internal political pressures to protect their own enterprises or residents from the negative effects of such free flows.
Initially, the main instrument of pressure on states was the International Monetary Fund (IMF) which made its own financial assistance to governments conditional on their acceptance of such free flows (as well as on curbing various internal welfare state provisions). This instrument was at first effective, but the so-called Asian financial crisis brought the IMF itself under political pressure. What happened was that IMF requirements for aid during this crisis worsened the situation in a number of states and this had immediate political consequences, most spectacularly in Indonesia where the hitherto invincible Suharto regime was forced to abdicate. This led various conservative Western forces (the World Bank, Jeffrey Sachs. Henry Kissinger, George Schultz) to question the political wisdom of the IMF's policies. As a result, the IMF withdrew into the background.
The locus of pressure shifted to the World Trade Organization (WTO). The U.S. government and the transnationals sought to get the WTO to draw up treaties that would make it impossible for signatory states to be protectionist. First, there was an attempt to adopt a Multilateral Accord on Investments (MAI), which would have tied the hands of the states in curbing the role of foreign investment in their states. Its adoption was quietly proceeding when a combination of uproar by social movements, opposition from some European governments (particularly France), and some governments of the South stopped the juggernaut.
It was to overcome this double defeat that President Clinton hoped to overcome by getting the WTO to initiate at Seattle a new "Millennial Round" of negotiations on free flows. Seattle was chosen as a site because of the strong backing of multilaterals under the leadership of Bill Gates and because of the symbolic importance of the computer software industry. Seattle was to mark for Clinton a great achievement, a culmination of a series of free flows initiatives - most notably, the North American Free Trade Association (NAFTA) and the repeal of the Glass-Steagal Act. The latter was an internal U.S. constraint on the ability of banks to corner all financial activities, a constraint that had been enacted in 1932 because of the Depression.
Clinton and the U.S. government tried their hardest. And after a week at Seattle, they had to admit total defeat, at least for the moment. No doubt, they may try again. But it was no small defeat. And it places in question the persistent arguments of all those, on the left and well as the right, who sing the tune of the overwhelming power of the U.S. government at the current time. Quite the opposite. Seattle showed that, even when the U.S. government throws all it has into a major international economic struggle, it runs into obstacles so great that it has to retreat.
What were these obstacles? They were three. Let us start with the most important obstacle, and the one least mentioned in media analyses of the event. The U.S. position was strongly opposed by the European Union (EU) powers (including not least Great Britain) and Japan. Why was this? The answer is so simple that one is amazed that everyone is not talking about it. The economic interests of the United States are in direct opposition to those of both the EU and Japan. They have been in direct opposition for thirty years now and they will be even more in opposition during the next thirty.
During the last thirty years, a period of global economic stagnation - and therefore of global high unemployment and primacy of financial speculation as a mode on ensuring profits - the Triad powers have been in a struggle to export unemployment to each other and to be the primary locus of speculative accumulation. Western Europe did best in the 1970's, Japan in the 1980's, and the United States in the 1990's. But the game goes on. And if the world-economy comes out of this stagnation into another productive expansion, the Triad will be in a competitive struggle to be the locus of the monopolies that will be the major beneficiaries of the expansion.
Why have the media not noticed this? The media have concentrated on geopolitics to the detriment of observing the economic struggles. They have noticed that the EU and Japan have constantly given in to U.S. political pressure on questions such as the Gulf War, NATO expansion, and Kosovo. But they haven't noticed that, over the past thirty years, the EU and Japan have not given in on a single major economic issue (such as the Russian oil pipeline to western Europe, or the innumerable ways in which Japan limits access of U.S. corporations and banks to Japanese internal markets). And they weren't about to give in at Seattle about government subsidies to European farmers. The U.S. ran into a stone wall.
If this wasn't bad enough, there were the street demonstrations which did indeed get much media coverage (often not all that accurate). It was not surprising that there were popular demonstrations. After all, free flows have been resulting in an ever greater economic polarization of real incomes throughout the world, including in the wealthy countries. What was surprising was the depth and breadth of the protests. This time, in addition to the usual groups of left-wing activists, there were two mainstream groups: the U.S. trade unions, and the middle class environmentalist movements.
The trade unionists had a simple demand: an accord on minimal labor conditions worldwide as the price of free flows. And the environmentalists asked for an accord on minimal environmental protections enacted worldwide as the price of free flows. President Clinton could not afford to ignore such protesters, since labor and the environmentalists provide two of the indispensable pillars of a Democratic victory in the elections of 2000. So Clinton decided to swim with the tide, at least ostensibly, and he called upon the WTO to include provisions of the type the U.S. trade unions and environmentalist groups had demanded. And this Clinton demand ensured the firm revolt of the delegations of the South at Seattle.
After all, in the present hyperpolarized world-economy, the one weapon the states of the South have in the fierce world market competition is that they can produce some items more cheaply than the countries of the North. And this is because their laborers are more poorly paid and because they spend less on environmental protection. If one removes these advantages, then what hope do they have for even keeping their heads above water? They know full well that there is not going to be some sort of worldwide economic redistribution, and they know that, at the moment, they are too weak to install serious protectionist barriers.
So there it was. Clinton and the U.S. ran into a triple fierce opposition - from the other wealthy states (EU and Japan), from key supporters at home (trade unions and environmentalist groups), and from the governments of the South. Against two of these opponents, the U.S. might conceivably have prevailed. But all three together were too much. Will this lineup change significantly in the coming decade? This is doubtful.
Immanuel Wallerstein
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