What Is Globalisation And Is It Good?
By Michael Bond
refers to a variety of events that are rapidly changing the world.
The machine that powers globalisation, however, is the global economy. At the heart of the global economy are
the twin policies of
privatisation and deregulation, which national
governments have adopted worldwide since the 1980ís. Terms like
free market economy, level playing field, monetarism, market
economy, and neo-liberalism embrace processes such as privatisation and
is about putting governments out of business. The economic theory
behind privatisation is that, Business knows best. In
this age of globalisation, our governments cheerfully tell us that
they are too incompetent to manage our economy, so as a service to
the public they will instead
let the free market run it. Then our governments sell off publicly
owned businesses and assets, which usually end up controlled by
multinationals and financed by public shareholders. Competition within the
marketplace rather than government management, we are told, will
allegedly produce lower prices and better services for consumers.
This is called a better standard of living, which implies
that the public are better off for having a privatised economy so
they should be happy about it.
The strange part
is that governments streamline their businesses, making them
efficient and profitable, before they offer them for sale. If
governments can do that before they privatise, why were they not
doing it all along? Also, if governments are competent to get
their businesses profitable and efficient, why not keep running them
that way in the future rather than sell them? If governments
genuinely are that incompetent, how can the public trust their
competence to manage anything?
Why also do
governments sell businesses that were always running profitably and
were never losing money? All these actions contradict the stated
reason why privatisation is allegedly necessary. They also imply a
lazy, if not negligent attitude from government towards citizens,
whose assets they are selling off, often at undervalued prices.
takes several forms. Within a country, the lifting of trade
restrictions and easing of government regulation in business is meant to
allow business to run more efficiently. The best businesses will
survive the competition to give consumers a better standard of
living, that is, more material goods for lower prices.
applies to national currencies. Currency is no longer pegged at a
certain value by government decree or gold reserves, but its value is
floated in the
global market place, where it will find its own natural level in the
ocean of other global currencies.
not just apply within a country though. Deregulation also involves
opening a country up to foreign competition. Foreign businesses
can operate in our country, on the basis that our countryís
businesses can trade in other foreign countries.
What is the benefit from
all this? A better standard of living through a wider range
of cheap goods is what globalisation is all about. This is what the
media, politicians and multinationals keep telling the public.
Why are democratic
governments now putting themselves out of business by selling their
companies and assets, and giving control of national infrastructures
and economies over to multinationals? The present phase of the process began in the
After World War II
most countries were in an economic mess. Governments were the only
entities large enough to get economies repaired and moving again.
The governments took control of the commanding heights of their
economies. Government directed economies were based upon the idea that
Government knows best .
For three decades
after WW2 the government led economies worked reasonably well.
However, the US monetary system had a problem left over from a
1930's quick fix, and
this problem began to catch up by the 1970ís.
In 1971 the US economy was technically as good as bankrupt. President Nixon took
an easy way out by severing the link between
the US dollar and gold. This allowed the US to have adequate money
supply, where previously gold had stifled it. While this fixed the short-term problem
for the US, it created several long-term problems globally.
Now US dollars had
become freed from the restraint of a gold standard and the US banks
could create as much money as they chose to, virtually without
effective regulation. The ensuing
flood of money aggravated economic malfunctions within many other
countries that were still on the US dollar standard. As nations
floundered economically, they contaminated other
trading partner economies. Stagflation, stagnant economies
with rampant inflation, became like an epidemic
sweeping around the world.
Let us look at how inflation works. When money is in
short supply (credit squeeze, recession), interest rates go down to stimulate
more lending, which puts more money into circulation. However, when there is an
over supply of money (inflation) interest rates go up to curb
lending, which removes money from circulation.
currencies lost the regulation of gold, the raising of interest
rates no longer curbed borrowing like it did under the gold standard.
During the earlier 1980's so much money continued pouring into
circulation that many people could afford the higher interest rates and
they kept on borrowing, which took inflation even higher.
The global banking
fraternity could have regulated the inflation chaos that
occurred after the US severed its link to gold, but they did not.
All the banks had to do was cut back on the number of loans they
granted, but instead banks kept on lending to the unwary world. Why?
Because the banks knew that the day of reckoning would come, when
the interest burden of the loans inevitably caught up with and
stalled the free flow of money. It is similar to a pyramid sale
scheme, but instead of the patsies ending up with a garage full of
soap, they end up with a life or business full of debt.
Why did the banks encourage an
economic situation that they knew would stall itself? Because the
banks knew that when it stalled, they would be in a position to take
control of vast amounts of property and businesses, when the people
that built them inevitably defaulted their loans. It was good
nations became debt burdened,
privatisation and deregulation did effectively deliver public
property and businesses into multinational control to pay off
The 1980ís and
1990ís were the decades of crippling inflation and stagnant
economies. In Africa and South America the 1980ís are referred to as
the lost decade. Great Britain was brought to its knees, and the
Mexico currency crisis nearly destroyed the global economy. The
1990ís were when Japan, SE Asia and the USSR crashed economically.
The real cause of the economic instability was the willingness of
the global banking fraternity to oversupply a faulty money system.
This was quietly ignored. The blame for the world's economic woes
was instead cast upon
government interference and ineptitude in economics.
The global crashes
of the 1980ís and 1990ís were caused by deregulation of the global
financial system and business decisions made by banks, not
government ineptitude. No government could have survived what the
banks were doing (and continue to do). Banks reaped an economic harvest across the
Earth while the cause of the problem was deflected in the direction of
national government incompetence. The governments had run up huge debts,
therefore they must be inept at running business. Its logical.
privatisation and deregulation, banks and other multinationals could
now begin to purchase and control infrastructures and businesses that had previously
been run by national governments for reasons of national security. Much of the essential business of
running countries was now being put on the market for sale through
privatisation. The banks and their multinational affiliates began to
purchase the infrastructures of countries, while governments signed
away national rights of control through international laws in the
World Trade Organization (WTO).
In the early
1980ís, England under Thatcher was the first country to embrace the
principles of privatisation and deregulation, which the Chicago
School of US economists
had been promoting since the 70's.  The
USA under Ronald Reagan quickly joined in. As other countries around
the world fell into economic chaos, the US economists were close at
hand to sell them the benefits of government privatisation and
deregulation. The magic fix of the market led deregulated economy
seemed to work in the failing economies, and the economies began to
stabilize. But as countries bit the bullet through loss of national
assets and jobs, all that really happened was that their economies
were being painfully reset to an even ledger again after
selling the farm to pay off crippling debts. New debt would continue
to accumulate as it had before. Getting out of debt
made governments look impressive to voters and gave the voters false
hope that perhaps now the economy might be fixed.
The illusion was
globalisation mantra of Business knows bestí was an axiom of
economic reality, a fundamental truth. This was because government
privatisation and deregulation seemed to stabilise economies.
However, the quick fix of privatisation and deregulation was not a
long-term solution for the global economy because the debt fault
still remained. This
meant that nations would eventually fall victim to uncontrollable,
escalating debt again.
WHO IS RUNNING
lending by banks in the 1980ís had been the bait, and their catch
was the gains they made through bankruptcies and sales of national
assets. As these profitable bankruptcies cleared away the immediate
economic chaos, the banks resumed more moderate policies of lending.
had no choice but to float their currencies, doing so was just a
short-term fix rather than a long-term solution. In the new economy
if countries did not join in and deregulate their currencies (and
economies) they became sitting ducks for global money speculators,
foremost among which are multinational banks. The floating of
national currencies was an inevitable result of the US severance
from regulated currency. It was an offer to weaker economies that
could not be refused - either join the club of globalised currency or be
clubbed by globalised currency. The
floating of currencies partly addressed the threat from global money
speculators, but it did not fix the fault in the global monetary
system, which continues to hamstring national economies through
Foreign debt is
largely a misnomer. The debt is foreign in the sense that it is
not owed within the same country and its economy. The word foreign implies that the debt
is owed to another country. These days that is not entirely the case either,
because most countries on Earth have excessive foreign debts. Foreign debt
is mostly owed to multinational banks, which have no loyalties to
any nations and are in the business of
deregulation also ignore the fact that debt growth outpaces
economic growth in the post-1970's global money system. Just as private debts had
bankrupted citizens and companies through the 1980ís and
1990ís, debts are now preparing to bankrupt whole countries
in one go.
Australia has about the same growth averages as the entire global
economy. Both have economic growth of about 4% and debt growth of
about 10%. At that rate, by about 2030
growth in debt will be larger than Australiaís annual gross income. Australia will be in economic ruins
well before 2030.
Yet Australia is
classed as one of the best performing economies in the developed
new global economy, all the banks need to do is keep running steady
as she goes, and within a few years they will theoretically be able to foreclose
upon entire nations. Society is induced into thinking that the global economy
is resilient enough, and is the best alternative
deregulated national economies have allowed multinationals to take
the business, infrastructures and economies that run countries and
shape their futures. In reality, the world is really run by an
oligarchy of global corporations. After deregulation, national
governments just take care of lesser, more trivial tasks that still
need doing, like building roads and taxing the nation. A country's
economic destiny is dictated to it and life for everyday citizens
falls into line accordingly. Meanwhile,
nobody is meant to notice
that their nation is steadily marching towards a precipice
WHAT IS GOOD ABOUT
wide-screen TV's. We have cheap Chinese goods. The
greatest benefit from globalisation is that it gives some countries
a greater range of cheap overseas goods to buy. The cheaper prices
are not a lasting result of globalisation though, but rather a
reflection of the non-level playing field that currently exists within the global
Government subsidies, import tariffs and lower paid workforces are
what make the playing field of the global economy non-level. If the
global economy ever reaches its proclaimed goal of a level playing
field, then the cheap goods will become more expensive again. There
would not be cheap labour or protective subsidies anymore. Cheap
foreign goods are bait to encourage citizens to accept and assist
the process of globalisation.
As wealthier nations buy
those foreign goods they raise the wages of foreign workers and
reduce the wages of workers in our own countries by ultimately
putting them out of work. Prolonged high unemployment eventually leads to
reduction in real wages.
So in effect, cheaper goods, which are an evident benefit
from globalisation, are precisely what globalisation is aiming to
remove through its level playing field policy. Achieving a
level playing field is a
stated goal of the WTO.
WHAT IS BAD ABOUT
The bad aspects of globalisation involve human wellbeing, the
environment and economic realities.
Human Wellbeing and Quality of Life
Quality of life is at risk from globalisation in a number of
THE END OF DEMOCRACY AND NATIONAL CONTROL
While democratic-styled governments are being installed
around the world in the name of freedom, the essential structure of democracy
itself is being undermined by globalisation.
Many fundamental areas
of society that were traditionally administered by democratically
elected governments are now becoming administered by unelected
and unapproachable multinational boards.
Where governments were open to public scrutiny, corporations operate
in secrecy within their boardrooms in faraway countries.
* Where governments could be voted
out if society disapproved, corporations are not subject to
* Where governments made decisions in the interest of the
nation, corporations now make decisions in the interest of
* Where governments were the highest authority
in a land, now international laws overrule national laws that
conflict with them. Even in matters like environmental care and
public health, international law protects multinational profits over
Globalisation has create new kinds of stress into everyday life. Even
proponents of globalisation admit this, on the basis that "markets
Corporations rationalise jobs whenever possible. This can be
done by laying off workers or importing cheap workers from other
countries. Job insecurity and the escalating workloads of existing
jobs are eroding quality of life.
At any time fuel prices or interest rates may rise so much it hurts.
What if there's a recession? What if the stock market crashes? What
the real estate market spikes up high - or down low? A new culture of
"fear of the future" is entering
society, caused by multiple long-term insecurities stemming from the new
How big must the global economy grow in order to be big
enough? How much is enough? Globalisationís answer is that there can
never be any such thing as big enough. In 100 years when, at current growth
rates the global economy would have grown 50 times it present size,
it would still not be large enough. Continual growth is necessary
for this present economy to survive because of the way it is
designed. The growth rate is deceptive. 4% annual growth does not sound like much but the global economy grows
exponentially, not mathematically.
Mathematical Growth 1 + 1 + 1 + 1 + 1 +
1 + 1 = 7
Exponential Growth 1 + 2 + 4 + 8 + 16
+ 32 + 64 = 127
The destruction of natural resources like clean
water, forests, arable land, ocean fish stocks, coral reefs and so on are already
causing extreme concern even in the traditionally conservative ranks
of society. The current rate of extinctions from the planet is
comparable to the rate of the extinction event that destroyed countless millions of
species along with the dinosaurs from Earth 65 million years ago.
Earth is clearly
not coping with the demand for resources in the present sized global
economy. At present rates of growth in 30 years the global economy
would be about 4 times larger than today, and in 60 years it would
be 10 to 20 times larger than today.
The global economy,
which must grow exponentially in order to survive, does not
recognize the realities of the natural world. The logic
behind the present global money supply system is like
sustaining your life by eating your own body from the feet up. The
global economy is presently on a course to destroy itself through
the planetís lack of ability to sustain it. Like a cancerous growth,
the global economy is growing so vast that it
will soon kill it host.
remains a fundamental flaw built into the post-1970's global monetary system, and
economic trouble is arising from it again. The flaw in global
money supply ensures that debt will always grow at a much
faster rate than economies.
View the mathematics yourself in the article
Why Economic Growth Is Unsustainable
On its present course, unless there are fundamental changes made
quickly to the global money supply system, the global economy has no option but to
collapse well before 2030.
It will be curious to see which inevitable reality the global economy
succumbs to over the next two decades, crippling debt or
nature's inability to cope.
IS GLOBALISATION GOOD?
It would be possible to have a different kind of global economy that works in the real world
to sustainably serve humanity. The pain and destruction caused by
the global economy are not inevitable, but simply the result of the
particular global economy is designed.
Is there not more to life than cheap consumer goods? Environmental
degradation, social breakdown and high personal stress levels do not
factor into mathematical profit margins.
The people of a nation care about the well being of their
environment and society. Multinational corporations have no such
national sentiments. They would give the world for a dominant market
share, and presently they appear to be doing just that.
A copy of this document is available from
Michael Bond is a promoter of social and environmental reform.
His book Eve of the Apocalypse sheds light on
the present global situation and its affect on individual people.