Globalisation: The Debate
Scaling the Economic Heights
[Reprinted from Land & Liberty, Summer
Journalists from two of Europe's leading newspapers clashed in a
debate over a subject billed as being on the theme of globalisation at
the London School of Economics on May 7. They were revisiting the
theme of free trade or protectionism, and whichever way you looked at
it the conclusion was one of despair.
For the London based Financial Times, Martin Wolf, Associate
Editor put the case in favour of removing all trade barriers, but he
concluded with this admission: "All economic processes without
exception have led at some point to some people doing worse than
Perhaps; but need it be so? The FT journalists had no credible
solution other than to lament the absence of adequate social policies
and to blame macro-economic failures on poor monetary policy.
Mr. Wolf satirized the protectionist case with a quote from the
French philosopher Frederic Bastiat, whose celebrated attack on the
sun for providing light and heat and thereby destroying the job of
candlestick makers was worth repeating. Even so, the FT team was
unimaginative in that it failed to address the seep-seated social and
environmental problems that follow from new extensions of freedom in
the market economy.
Nor was the paradox in this fact adequately addressed by the team
from the Paris based Le Monde dipiomatique. Its journalists,
two of whom double up as professors in universities agonised over the
social disruption associated with "unbridled competition",
but they could offer no solutions other than those which had been
discredited in the past 20 years. They advocated state regulation to
restrict the flow of capital. They did emphasise the need to take
account of environmental and human noneconomic values, but they failed
to offer a model which achieved this while retaining the benefits of
According to Bernard Cassen, Director General of Le Monde
diplomatique, "The market economy must be strictly
disciplined and regulated to serve the whole of mankind, not corporate
greed". The journalists from Le Monde diplomatique were
long on emotive phrases such as "sustainable forms of
co-operative systems" but short on specific proposals on how to
structure the deregulated private market so that it could also serve
the interest of every citizen on earth.
There was a sad irony to their catalogue of criticisms. They were
correct to note that, as currently constituted, resources are not
efficiently allocated. But this has nothing to do with the global
scale. It is the kind of criticism that applies at the local level as
well, and the explanation ought to have been at the forefront in the
presentation by the journalists from Le Monde diplomatique. It
was the French Physiocrats who originally defined the optimum
conditions for liberating the economy within a social system that
protected the welfare of everyone. This was achieved by treating the
flow of income to land and natural resources as public revenue. The
correctness of this theory continues to be affirmed to this day.
Globalisation misleads. It is a process, not a place. And in any
event, the economic process has now gone beyond the global sphere to
embrace the economic opportunities offered by outer space.
Broadcasting corporations such as those owned by Ted Turner and Rupert
Murdoch are deriving rental income from their orbiting satellites.
But the new phase of trade which has been made possible by the
microchip merely continues with age-old economic laws which can be
summarised as follows. As more people are brought into the trading
relationship, the returns to wages and their capital investments are
equalised across the board (or round the globe), with the increased
gains in productivity showing up as an increase in the rental income
of land and natural resources.
If this rent were reserved for the social sector we would have an
economic development which, contrary to the observation by Mr. Wolf,
would lead to everyone's benefit. No-one would be "doing worse
than others", because everyone would be receiving what he or she
earned; and no-one would be receiving unearned income. But to achieve
this win-win outcome we need to socialise the public value and
re-privatise (meaning: untax) the earned income.
This produces the level playing field which the FT would undoubtedly
applaud if only it knew how to construct such an arrangement to the
satisfaction of entrepreneurs and employees. It would produce the
liberal market economy free of the horrors that were catalogued by the
journalists from Le Monde dipiomatique.
According to Peter Martin, the FT's International Edition Editor, the
global market was "the summit of human endeavour". Alas, the
victims of the global process which the FT currently commends would
not agree. There are still mountains to climb of an intellectual and
moral kind before we achieve the pinnacle in human endeavour of which
we are capable.