Fwd: ZNet Commentary / Dec 1 / Herman and Du Boff / Questioning Henwood (fwd)

Christine Peterson quintanus at hotmail.com
Tue Nov 30 21:07:20 PST 1999

>Richard B. Du Boff and Edward S. Herman
>For some reason Doug Henwood feels called upon to play down globalization.
>Others on the left, some associated with MONTHLY REVIEW, have done the
>warning that any acceptance of the globalization thesis will discourage
>leftists and breed "defeatism." Henwood expresses no such fears; but his
>treatment of globalization, his stress on the benefits of trade and
>"cosmopolitanism," and his concern that globalization has been "greeted as
>an evil in itself" are based on arguments that are incomplete and
>One of Henwood's problems is an apparent unwillingness to recognize that
>globalization today is bringing about integration at the level of
>itself, through trade, investment, mergers and acquisitions, and
>intercorporate alliances, rather than integration of markets by trade
>Take Henwood's treatment of "trade penetration in general," based on
>"exports as a share of GDP." He states that by that standard Britain,
>and Mexico are no more globalized today than in 1913, although he grants
>that "exports are just one indicator." Even by that indicator, however, the
>source of his own data (Angus Maddison) shows that for the world as a whole
>the export percentage of GDP was significantly higher in 1992 (13.5%) than
>in 1913 (8.7%). A more recent study (by Michael Kitson and Jonathan Michie)
>compares average annual growth rates of world exports and world output,
>the world economy becoming more "open" when trade grew faster than output.
>By this measure, the "openness indicator" for 1913 was reached in 1968 and
>has since been left far behind.
>Henwood's constricted view of trade carries over into the service sector,
>where he notes, correctly, that most of us work in services that are
>"largely exempt from international competition." As a snapshot frozen in
>time, yes; as analysis of a process, no. Powered by new technologies, trade
>in services is actually growing more rapidly than trade in merchandise. It
>covers finance, telecommunications, transportation, and a range of business
>services and now accounts for around 30 percent of world trade, up from 17
>percent in 1980 (percentages that are understated for several reasons,
>them the less reliable statistical coverage than for merchandise trade).
>result is that larger numbers of skilled and semiskilled workers in
>high-income countries are no longer "exempt." A global "back office" data
>entry industry is developing in the Caribbean, with labor costs running 25
>to 40% those in North America and Western Europe for services requiring a
>low level of computer literacy. Higher levels of occupational skill can be
>tapped as well: for computer software programming, a $100,000 a year
>board designer in California will cost less than a third as much in India,
>and similar subcontracting is spreading to other areas, and other
>(film and television among them). Henwood needs to think more seriously
>about the direct and indirect effects of globalization on worldwide labor
>supplies, the "20-25%" econometric impact on real wages notwithstanding. As
>he himself has pointed out elsewhere, the economists' chief explanation for
>real wage stagnation at the bottom of the income scale--computer-led
>"technological upgrading of skills"--is a myth.
>Economic globalization is centered in the production process itself. Again,
>Henwood picks out a single tree in the forest--intrafirm trade in component
>parts narrowly defined--to claim that a global "assembly line" is an
>"overblown" image. True, but increasing global production and marketing
>capacities of corporate capital are not. In simple trade terms, the
>proportion of world trade in the form of intrafirm trade has grown from 20%
>in the early 1970s to somewhere between 30 to 40% in the 1990s. In U.S.
>corporations, intrafirm exports both finished and unfinished have increased
>markedly as a share of total corporate exports over the past 20 years: they
>now make up about 45% of the total. But U.S. data also indicate that the
>fastest growing trade of all is taking place among foreign-based affiliates
>of parent corporations. And all such intrafirm trade figures exclude the
>increasingly important "outsourcing contracts in China" and elsewhere.
>Across the globe multinational corporations now number around 60,000, and
>their 500,000 foreign affiliates by themselves had sales (of goods and
>services) of $11 trillion in 1998, now exceeding global exports (as they
>have ever since these data were first gathered in 1984) by $4 trillion. The
>stock of foreign direct investment, the prime mover of international
>production, is now estimated at $4.1 trillion, equivalent to 12% of world
>output compared to 9% in 1913; foreign direct investment flows have grown
>from 2% of world output in the early 1980s to 6% at present. And these
>figures do not reflect a very rapidly growing network of nonequity
>arrangements among firms, like strategic partnerships and joint technology
>and R&D ventures, which are not captured by usual measures of international
>production and serve as leading elements of market power in a number of key
>industries (telecommunications, electronics and computers, biotechnology,
>instrumentation, automobiles). While most production and distribution is
>still carried on within national boundaries, self-contained and localized
>production networks are quickly becoming less important in the operations
>and strategies of corporate capital--the Fortune 500 in the United States
>and their foreign counterparts, which are both competitors and strategic
>allies depending on situations prevailing in one industry or another.
>The steady enlargement and integration of global money and capital markets
>too, where private holdings now tower over the reserves of central banks,
>constrain national economic policies. Henwood agrees but stresses the fact
>that financial markets were also free before 1913. In that earlier era,
>however, there were no welfare states to be subverted by the mobility of
>money, so that even a return to freer markets is a matter of serious
>Henwood's treatment of the role of the state is curious. "States have been
>acting for centuries . . . in the interests of capital," he says. He's
>of course, but he uses this as a club against an argument that no serious
>student of globalization would make--that the state "is withering away
>a new regime of stateless multinational[s]." The point is that, once again,
>the state is helping to create new institutions for new modes of
>accumulation. In the late 19th century, the state helped create and refine
>the legal entity known as the corporation, and its creation of joint-stock
>companies goes even further back in time. Now, nation states are working to
>create international institutions to further the globalization process. So
>effectively is the state serving the interests of multinational capital
>it enters into international agreements like WTO and NAFTA that actually
>diminish its own abilities to serve ordinary citizens.
>Henwood then asks: "And when did internationalization become something
>feared and hated in itself?" Again he sets up a straw person. Many who
>globalization is a menace are "cosmopolitan" and don't object to trade and
>other exchanges in themselves. They hardly deny the potential benefits of
>international trade--cheaper imports, a wider range of consumer choice, new
>technologies, the spur of foreign competition. But we live in an age of
>trade shaped and dominated by multinational capital, not by small,
>competitive producers with little control over prices, costs, techniques of
>production, and market shares. Henwood admits that "export-oriented
>development has offered very little in the way of real economic and social
>development for the poor countries who've been offered no other outlet."
>Then he asks, "But does that mean trade itself is bad?" No Doug, but your
>question is bad. You just conceded that export-oriented development has
>poor countries: why don't you acknowledge that this is part of the
>globalization process? And wouldn't you agree that the unprecedented growth
>in world trade since the 1960s has been associated with steeply rising
>inequalities of income and wealth, both internationally and within nations?
>"Why," Henwood also asks, "do so many people treat globalization itself as
>the enemy rather than capitalist and imperialist expansion?" But why can't
>you see, Doug, that capitalist and imperialist expansion now takes the form
>of globalization, a form that feeds back to crush democracy at home? You
>embarrassed that Nader echoes Pat Buchanan in describing NAFTA and GATT as
>threat to U.S. sovereignty; and you say that "Washington has been abusing
>Mexican sovereignty for over a century--which is why it's a good idea to
>stop saying globalization when you mean imperialism." But you miss the
>point: globalization is a major contemporary form of imperialism, and Nader
>is right that it reduces U.S. sovereignty while beating up on Mexico as
>well, a point that he certainly would have made without any prompting from

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