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Globalization: Benefits and Backlash: Notes for Florence

English Pages, 11. 9. 2001

I don´t want to pretend that I know exactly what the term globalization really means, but we can probably agree that we have been – especially in the last years or decades – witnessing an increasing internationalization of many kinds of human activities. On one hand, it has been, caused by technological developments, on the other it was made possible by world-wide liberalization and deregulation, by the increasing acceptance of the idea of open society, by the more favourable atmosphere, prevailing after the end of the Cold War. These developments are usually called globalization, which has become a highly fashionable but poorly defined term. Its loose and fuzzy definition makes it possible to use it easily and in many, rather contradictory and not very productive and illuminating ways.

The term is used in a positive way by those who consider themselves progressive, forward-looking and flexible. The term is used in a negative sense by those who are afraid of new things, who don’t like changes, who prefer their old, undemanding, sheltered and relatively comfortable positions.  Globalization is opposite to that. It means opening up, integration of individual countries into the world society and economy, increased competition, more freedom, very intensive and visibly growing exchange of ideas, of people, of money, of goods and services all over the globe. As someone from a former communist country, I can appreciate it because we did not have a chance enjoy it in the past. Its benefits are undisputable.

It is not true, however, that globalization is exclusively a recent phenomena and that it has been driven primarily by international institutions and by rich and developed countries. Globalization is an evolutionary process, it is not a policy and, therefore, it can´t be anybody’s policy. Its main elements – free trade and opening up of societies – have not been imposed from the top down. They have arisen spontaneously and were motivated more by private interest than by public concern.

As usual, there is not only one side of the coin, there are not only benefits. Globalization brings severe questions and doubts and forces us to speak about costs, about direct and indirect by-products and about inevitable trade-offs. Let’s mention some of them.

1) The process of globalization has not been and will not be smooth and one-directional. The history of human civilization is an unending succession of integration (or univerzalization) and of disintegration (or atomization) tendencies. The current movement in one-direction is not unknown or without precedents. It looks bigger and unusual only with our incapability to put it into the right perspective. Famous Austrian philosopher Ludwig Wittgenstein said in 1936 that “Überhaupt hat der Fortschritt das an sich, daß er viel größer ausschaut, als er wirklich ist” (“Typical for progress is that it looks much bigger than it really is”). This remark is true for globalization as for anything else.

2) Globalization is in its impact not neutral. It has its winners and loosers. The world of today is more globalized (I would prefer to say integrated) but not more homogeneous than before. What it means? Is the current process of opening up, of liberalization and deregulation, accompanied by imposition of  social, environmental, labor, health, safety etc. standards a suitable vehicle for more homogeneity or is it a method how to protect existing differencies, privileges and huge gaps in income and wealth? I am convinced that the imposition of now-fashionable “standards” of rich and developed countries upon developing countries is a way how to keep them in poverty and how to eliminate their comparative advantages. (We – as an applicant country – see it very clearly in the current European unification process.)

3) Globalization (and the undisputable increase in migration) undermines the traditional nation-state. This is visible especially at the European continent. Is it a blessing or not? As someone who was in the communist era oppressed both as an individual and as part of a nation, I do not see it as a blessing and I cannot share the contemporary multicultural ideology which suggests that it is not important to be a nation, an entity with common history and destiny, because it is sufficient to be merely “a collection of peoples”. The prevailing fashion emphasizes (if not adores) differences but we need more than that. We need a shared sense of what the problems are. I do not believe it can be achieved without a nation-state.

4) The globalization itself will not bring universal harmony and will not result in the end of history or in the end of ideology. The conflict of visions will stay with us. The question is different. Will globalization bring more freedom or less freedom? The standard answer is a positive one but I do not share it fully. Globalization also means the enlargement of territory for which decisions are to be made. It will bring about, as we see in Europe, the retreat of classical parlamentarism in favor of new mechanisms of life in society and with all my sensitivity inherited from the communist era I cannot see it as a positive thing. I am afraid that globalization will not be connected with the victory of capitalism, of parliamentary democracy and of free markets. It will be connected with the increasing role of other “isms”. I see advocation of civil society (or of communitarism), not of parliamentary democracy, advocation of various third ways, not of free markets, advocation of corporativism, not of capitalism, advocation of environmentalism and humanrightism and NGO´ism, not of human freedom. This will become a great problem of our times.

5) I would like to mention one – for us very sensitive – aspect of globalization. There have been many debates about the impact of large and unconstrained capital movements in a highly deregulated but nonhomogenous world. My country was a victim of a speculation-driven currency crisis in May 1997 which – supplemented by an ill-conceived monetary policy, recommended by the IMF – brought about two or three years of economic recession, which weakened the economy and left us a fragile (and deeply impaired) banking sector.

We probably made a mistake by prematurely opening the capital account of the balance of payments (which is, of course, already an irreversible step) in the crucial moment of transition with all existing vulnerabilities and fragilities of the country – especially in the banking sector. An important lesson, confirmed by many countries, is that financial liberalization is risky. It has a positive effect in the long term, but brings instability in the short and medium term. Liberalized and deregulated emerging – which means weak and shallow – markets seem to be prove to crisis.

6) What should we do with globalization? There is, of course, no way to stop it and no reason to do it. Our task is to stop misusing the growing interdependencies, linkages, externalities and spillovers to the one-sided justification for policies, practices and methods used by the stronger, more active, more developed, more prepared.

We should defend the concept of free trade against alternative concepts (like fair trade) because we can not make trade more fair by making it less free. And we should never assume that politicians and bureaucrats are fairer than markets.

We should oppose protectionism in all its modern, sophisticated, therefore, not transparent and not explicit variants used in developed countries, which protect those countries more efficiently than the old, simple and visible methods protect the emerging and transition markets.

We should not forget (or underestimate) that successful economic development in any country must have an important domestic participation which means that the domestic economic agents must get their chance.

To raise such points does not suggest that there can be economic prosperity without human freedom, that authoritarian rulers should be allowed to keep their societies closed, that there is an alternative to free markets.

If there is one message I would like to leave here, I would put it in the following way: opening up yes, imposing exogenous standards no.

Václav Klaus, Top-to-Top Conference, Florence, Italy, 8.9.2001

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