May
08

Capitalism in the Age of Globalization

Samir Amin (1931-2018) spent his life research, writing and acting against capitalism, in particular highlighting how exploitative is it for the peripheries of the system. On this, Unequal Development (1976), is one of the earlier important works. In its place, he advocated for a socialist system. In the 1970s he introduced the term "eurocentrism", a critique that has influenced all of the social sciences (he wrote a book by that title, published in 1988, which I will aim to cover in a later post). Born in Egypt, he spent much of his life in West Africa, largely writing in French (which he was educated in). This post covers "Capitalism in the Age of Globalization: The Management of Contemporary Society" (1997).

I have the 2014 re-print, which is useful because Amin includes a Preface that he wrote in 2013. In several regards, Amin foresaw many of the challenges that would emerge in the decades that followed the publication of this book, which he reflects on in saying: "So far as I was concerned, the new system was nothing other than the latest stage in moves to world domination by the centres of historical imperialism (USA, Western Europe, Japan), which they sought to impose through exclusive access to the planet's natural resources, a monopoly over modern technology, control of the globalized financial market, and sole deployment of weapons of mass destruction. I maintained that the nations of the South, being victims of this system, would not willingly bow to its demands, and that the North-South conflict was therefore destined to grow in scope and importance" (p. xv)

"Generalized, globalized and financialized monopoly capitalism now has nothing to offer the world, other than the sad prospect of humanity's self destruction, and further deployment of capital accumulation is inexorably heading in this direction. Capitalism has outlived its usefulness, producing conditions that suggest a necessary transition towards a higher stage of civilization. The implosion of the system, caused by the ongoing loss of control over its internal contradictions, signals 'the Autumn of Capitalism'." (p. xxix)

"During the Uruguay Round (which ended in December 1993) Western powers pursued common objectives, while attempting at the same time to reconcile some of their differences. It is important to say it clearly: the common denominator for all the Western powers, throughout this affair, has been a marked hostility toward the Third World. The true objective of the Uruguay Round is to block the competitiveness of the industrialized Third World, even at the expense of the holy principles of liberalism, and thus to reinforce the "five monopolies" of the dominant centers. In this area, as in every other area and at every other time, the double standard prevails." (p. 28-29)

"With Trade Rights in Intellectual Property (TRIP), an offensive has been launched not to reinforce competition, but on the contrary, to strengthen the power of technological monopolies - at the expense, of course, of developing countries for whom the possibility of acquiring the technology they need in order to progress becomes even more uncertain. Will the 'trade secrets' that GATT-WTO wants to include under this category bring us back to the mercantilist monopoly practices of 300 years ago? Even the language used to discuss the topic is not neutral. We no longer speak of knowledge as the common property of humanity, but rather of 'piracy' when someone tries to acquire it! This policy sometimes verges on the obscene: GATT-WTO, for instance, wants to forbid Third World manufacture of inexpensive pharmaceutical products, which are of vital importance, in order to protect massive profits of monopolies in this sector." (p. 29)

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Oct
30

Can Trade Promote Development?

Joseph Stiglitz and Andrew Charlton wade through the debates and evidence in "Fair Trade for All: How Trade Can Promote Development" (2005). The book aims to "describe how trade policies can be designed in the future with a view to helping the developing countries" including that "liberalization needs to be managed carefully - the task is much more complex than the simple prescriptions of the Washington Consensus which blithely exhorts developing countries to liberalize their markets rapidly and indiscriminately" (p. 2). It has been over a decade since the book was published, and as a result some of the details have changed, but the general arguments are important ones. The book is easy to read for non-economists and is highly recommended. 

The book begins: "The rules which govern world trade affect the livelihoods of the whole planet, and influence the economic development of all nations... You might hope that the world's trading system went some way to redressing the global inequalities which slice our world into the rich, the poor, and the very poor. Yet the opposite is true. The world trading system has protected the interests of the rich countries, at the expense of the poor, and entrenched inequalities" (p. v). 

The authors provide plenty of examples to back up the strongly worded statement given at the outset. One example: "Farmers are subsidized and protected by the governments of the rich countries, where less than two percent of the workforce is employed in agriculture. This protection shuts out goods produced by farmers of developing countries, where agriculture supports the livelihoods of most of the world's poor people. Intellectual property rules protect the rights holders in the rich countries, but do little to transfer technology to the underdeveloped industries in the poor countries. We are in the bizarre position of giving the developing world some $100 billion in aid every year, but costing them three times as much in protectionist policies." (p. v; see also p. 7). 

Despite what might be assumed (based on the positionality of the authors), the authors do not advocate for free trade, in all places at all times. In fact, they argue against this. "To date, not one successful developing country have pursued a purely free market approach to development. In this context it is inappropriate for the world trading system to be implementing rules which circumscribe the ability of developing countries to use both trade and industry policies to promote industrialization" (p. 17). And, not just trade - liberalization will affect inequality, and thus other services are required (like safety nets) to ensure the redistribution of wealth do not simply re-create new forms of poverty.

One point I found interesting was a commentary on the idea of 'comparative advantage', and the limits (or limiting role it can play). "For example, the theory of comparative advantage told South Korea, as it emerged from the Korean War, that it should specialize in rice. But Korea believed that even if it were successful in increasing the productivity of its rice farmers, it would never become a middle- or high-income country if it followed that course. It had to change its comparative advantage, by acquiring technology and skills. It had to focus not on its comparative advantage today, but on its long run, its dynamic comparative advantage. And government intervention was required if it was to change its comparative advantage." (p. 30). Often the 'comparative advantage' discourse is deterministic, stories such this present comparative advantage not as a reflection of present resources and opportunities but also of a vision for different opportunities and creating pathways for that. 

The focus of the second half of the book is what fair trade could actually look like - in agriculture, intellectual property, labor mobility, non-tariff barriers, and a number of other areas. Interested readers should pick this book up.

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