Another tottering utopia
THE COLLAPSE OF GLOBALISM and the Reinvention of the World
by John Ralston Saul
Penguin Australia / Viking
Hardback RRP: $32.95
Of the dozens of books on globalism, this is one of the more important for three reasons.
First, it puts together a mass of evidence to support the claim that application of globalist economic concepts has been declining since about 1995, although this is never admitted by the globalists at the political, bureaucratic or academic levels.
Second, it examines the success of several nations – China, Malaysia, India, Brazil and New Zealand – which have rejected parts of the globalist economic agenda.
Third, it provides encouragement to researchers and government policy-makers to recognise that globalist economics does not have the answers to many of our problems, and for this reason is a declining force in the world.
John Ralston Saul says “the central perception of globalization is that civilization should be seen through economics, and economics alone … everything is looked at under an economic prism”. Other perspectives are supposed to be ignored and rejected.
To the globalist mind, everything is expressed through “the market” and this provides government policy-makers with all of the information they need to consider.
This is the economic ideology that has dominated Australia for over 20 years. It is variously referred to as neo-liberal economics, economic rationalism, economic fundamentalism, free market economics or simply “economic reform”.
Government actions that flow from it are very familiar:
- Deregulation and privatisation.
- Removal of industry protection.
- No industry policy whatsoever (“leave it all to the market”).
- Labor market reform (i.e., winding back wages and conditions).
- Smaller government (“contracting out” public services).
- No government borrowing for infrastructure.
- Negotiate free trade agreements (FTAs).
- Business principles to dominate in running universities, TAFE, health care systems, etc.
Arguably, no country has adopted this ideology to the degree that Australia and New Zealand have (although New Zealand has now changed course).
Saul examines globalism’s impact across the world. There are some surprises here, even for those who already have reservations about globalism. Here is a sample of his findings:
Some nations have already thumbed their noses at globalism. In 1998, during the Asian financial crisis, Malaysia made its currency unconvertible to other currencies and pegged it low enough to favour exports. It raised tariffs to protect some industries and blocked the export of foreign capital. The country was “written off as a basket case and Mahathir as mentally unstable”.
However, investment grew, exports strengthened and foreign reserves improved. The Malaysian economy has done well to the astonishment of the international financial community, especially the International Monetary Fund. Mahathir has had the last laugh, being received as a hero at the 2003 Davos Conference, which until then had been totally dominated by globalists.
Saul claims that the economic successes of China and India are not achievements of globalism. He says that, during the 1997 Asian meltdown, both countries prospered with the aid of “capital controls and other limitations on movements and investments”. Their modernisation has “not followed the economic principles of globalization”. Importantly, whatever they have done, has been done in “the context of nation-state interests”.
The following statement of Indian Prime Minister Singh illustrates that India is definitely not following a globalist agenda:
“Economic growth is not an end in itself. It is a way to create employment, to banish poverty, hunger and homelessness, to improve the lives of most of our people. The direction is equality and social justice.”
Actually, the party in power, prior to Singh becoming Prime Minister, was defeated at the polls in 2004; the cause of defeat being, according to Saul, an attempt “to embrace much of the globalist economic ideology”.
“The growing success of India and China,” Saul asserts, “makes nonsense of large swathes of globalist received wisdom.”
Saul says that virtually none of the globalists’ promises have been fulfilled, promises such as:
- The power of the nation state will wane, to be replaced by that of global markets.
- In the future, economics, not politics or arms, will determine the course of human events.
- Once freed from regulation, markets will quickly establish natural international balances, impervious to the old boom-and-bust cycles.
- The growth in international trade, as a result of lowering barriers, will unleash an economic-social tide that will raise all ships, i.e., all economies will prosper.
- This prosperity will turn dictatorships into democracies.
- The very size of the new markets will require ever larger corporations whose sheer size will raise them above any risk of bankruptcy. This will be a source of international stability.
- Transnational corporations will provide a new kind of international leadership, free of local political prejudices.
- As nation states remove industry protection, new industries will spring up to absorb any displaced workers.
Saul says that the only promise that the globalists have delivered on is that of a massive increase in international trade. He adds, however, that a big percentage of the “trade” is actually movement of goods within transnational corporations.
Once the many failures of globalism documented in this 310-page study are reflected upon, the irresistible conclusion is that globalist ideology is intellectually bankrupt.
Failed to materialise
Its promised outcomes have failed to materialise. Its basic assumption – that if everything is viewed through an “economic prism” and left to “unfettered markets”, then disappearing nation states will arrive at “a life of prosperity and general happiness” – has been revealed to be a romantic utopian dream.
One may well ask, how is it possible that apparently intelligent people have taken us down this path?
Malaysia, China, India, Brazil and New Zealand (the latter since 1999) have pursued a different course.
Not so, however, Australia; the ideology still has us mesmerised. Hopefully, however, our infrastructure mess, our shrunken manufacturing sector and the lack of secure, full-time jobs for our people, will shake us from the grip of economic doctrines that have already created financial and social havoc in parts of the country.
Of course, not all of Saul’s themes and conclusions should be blindly accepted. Indeed, views to the contrary – including those penned by free-market fundamentalists – should be also be given a fair hearing.
Nevertheless, The Collapse of Globalism is essential reading, not just for those interested in economic issues, but for all who are concerned about Australia’s future.