> [I keep arguing that protectionism isn't a popular political stance,
> but I have a hard time getting anyone to acknowledge this. More
> evidence...]
===================
JFC can we get beyond such sophomoric binaries and vocabularies already?
:->
West's free-market agenda is unlikely to compensate losers
Jonathan Michie Monday November 24, 2003 The Guardian
We live in a globalised world. A global war on terror against an international axis of evil. Call centres for Britain's train timetables relocated to India.
The abandonment of national currencies in favour of the euro. Wars brought to your living room by CNN.
The argument that we have to accept the strict limits globalisation places on national government policy is one that was made by Tony Blair even before he was elected.
Strange, then, that when George Bush and Tony Blair met last week the discussions were not just about extending an ever more globalised economy. Instead, they discussed whether British citizens should be held without trial by the US government and why the latter had imposed tariffs against steel imports. So are we living in a global village or is it just that the rich countries are becoming more forceful in their demands that the rest of the world's economies should be opened up to western corporations?
In a book published today (The Handbook of Globalisation, editor Jonathan Michie; Edward Elgar), Cambridge economist Ha-Joon Chang argues that, while developing countries are told they must follow free-market prescriptions, today's rich countries grew rich behind protective barriers and domestic intervention. Those that gain a competitive advantage through such policies are the first to demand free trade.
The leading economies, which have manoeuvred themselves into a position of being able to do well in straight commercial competition with the less developed ones, are now demanding precisely that.
The poorer countries, whose industries and firms cannot survive such competition, will be left with no alternative but to import goods from the advanced economies - or else invite multinational corporations into their countries to produce domestically.
It is wrong to consider globalisation as representing some natural or technical development which can be judged as welcome or otherwise and reformed accordingly. The fact that international capital markets have been given free rein to move into unregulated speculation, that the international institutions have been imposing prowestern policies on the rest of the world, and that multinational corporations have been given ever more leeway, has been the result of policies pursued by western governments and corporations.
There are alternatives. History has not come to an end; it is still being made. The question is, in whose interests? Over the past 25 years or so, policy has been driven by the interests of the international financial system and transnational corporations.
This has at times been recognised by those responsible, with talk of balancing imbalances through the introduction of the social chapter to the European Union's Maastricht treaty on monetary union, and environmental and labour standards clauses in the North America Free Trade Agreement. But the main drive has remained a freemarket one, despite the inequalities and instabilities this generates. Why has policy taken such a turn?
Partly, the answer is that there have been powerful interests which benefited and in the struggle between economic interests these have gained the upper hand. It may also be owing to the inability of mainstream economics to even recognise the above factors, let alone analyse them and propose alternative policies.
In the world of textbook neoclassical economics, the freemarket outcome will maximise economic welfare. There will be losers as well as winners when markets are deregulated but, the theory goes, the winners could compensate the losers, so all would be better off. In theory, perhaps they could.
The textbook model may provide a useful analytical tool, but it does not describe reality. And the attempts to change reality to fit the model are destructive of the sort of social, political and economic institutions which historically have actually created economic growth and social progress.
The problems witnessed in today's global economy are not just technical, economic ones. They are also political, and this means that, to be successful, any alternative needs not only to spell out appropriate policy, it also must win sufficient political support to force through the necessary change.
It is thus necessary to expose the complacent orthodoxy in mainstream economics and challenge the fatalistic belief that the new globalised economy rules out any change of course. The fact that the economy is becoming increasingly internationalised does not dictate the form that this process takes. The free-market, laissez-faire agenda is one being pursued by those who benefit from such a deregulated, winner-take-all environment. It is not the only choice. And, for the majority of the world's population, it is an inappropriate one.
· Jonathan Michie is Sainsbury professor of management at Birkbeck College