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Theses on Globalization

Elmar Altvater, professor of political economy at the Free University of Berlin, outlined the character and consequences of globalization in a series of theses translated from the German on the WWW.
Theses on Globalization

By Elmar Altvater

[These theses on the character and causes of globalization presented to the Enquete commission "Globalization of the World Economy - Challenges and Answers" of the German Bundestag April 3, 2000 are translated from the German on the World Wide Web.]

1. A short definition of globalization was offered in the "Boston Globe", February 1, 2000 in a report on the World Forum of Davos: "Globalization is the West over the rest." The whole world is included unequally in the globalization process regarding income, access to global communication media, work, financial assets and cultural possibilities. "Globalization" is a transformation process seizing the whole globe and nearly all aspects of social life (economy, politics, culture etc.).

2. Four positions can be distinguished in the debate on globalization. (1) Free trade globalization is enthusiastically welcomed by some because of expected increased prosperity (so-called "enthusiasts"). Globalization is a chance or even a "stroke of luck" (A. Minc). Troublesome encrustations will be cracked open. (2) "Skeptics" oppose this position and emphasize the potential dangers of globalization: growing inequality, marginalization of half continents, social exclusion tendencies, crisis proclivity and simultaneous loss of political control. (3) Some regard globalization as a myth although they have lost influence in the last years since their exaggeration is not justified by the actual development. (4) Some insist that nothing new has occurred since economic interconnection was as intense before the First World War as 100 years later. The important question is raised: Is a relapse in nation-state and aggressive screening conceivable as during the first half of the 20th century?

3. Globalization was applied in the second half of the 20th century with the "deregulation" of the economy and the opening of national markets vis-a-vis the world market. This was a consequence of the "regime" of the IMF and Gatt and an answer to its crisis tendencies of the 60s and 70s (collapse of the Bretton Woods system). The relation of the state and the market, politics and the economy now changes in a global dimension: from the keynesian intervention state in the "West", from the development or planned state in the "South" and from the planned socialist system in the "East" toward a "deregulation" of economic forces from society and politics. After 1989, all the world is now following the model of the market economy. The changed condition of the economy and politics has its theoretical expression in the supremacy (and sometimes assumed lack of alternatives) of "neoliberalism" in relation to socioeconomic paradigms.

4. Globalization can now be interpreted as a process of the formation of global standards: "single price", "like products", benchmarking, global rating, shareholder value, linqua franca, Pensen unique, political models of good governance etc. These tendencies were accelerated (not caused) by modern transportation- and communication technologies. The condensation of space and time can be described as a characteristic of globalization. Distances become insignificant and positional competition is globalized while conditions of competitiveness are mostly of a local nature. The coined word "glocalization" is occasionally used to describe the contradictoriness of this tendency.

5. Globalization is expressed most extremely in the uncoupling of monetary from real accumulation. This uncoupling appears in massively increased monetary aggregates (sales on currency markets, stock prices, capitalization, derivative trade etc). The most important qualitative expression is the inversion or reversal of the relation of real interests and real economic growth rates. Since the beginning of the 80s, the real interests have been above the real economic growth rates.

6. This constellation is mainly responsible for debt crises (in the 80s) and financial crises (of the 90s). Indebted countries seldom manage to be free of their debts. In this situation, all governments, corporations and private persons seek to join the side of owners of financial assets. When profits of investment projects must be very high and projects must be focused on the short-term, so-called "myopia" (short-sightedness) of corporate conduct is supported. At the same time, the consciousness and conduct of citizens change with the increasing significance of the monetary sphere. The danger of a global speculative mania arises with consequences described in Charles P. Kindleberger's classical study on speculation.

7. Despite globalization standards and the genesis of an anglophonic "globalization discourse", there are regional peculiarities that can be shown in the globalization discussion in Latin America. In the course of the debt crisis of the 80s, the political concepts of import substitution, state-planned development projects and screening toward the world market had to be abandoned. Opening, deregulation, privatization and de-bureaucratization were the slogans of the new "neoliberal" (political) concept. Its success was not convincing but was criticized very broadly and vehemently in the Latin American public. This concept was modified (by CEPAL) to benefit a political model promoting "systemic competitiveness" (mobilization of the productive potentials of the market, society and the state). As a result, the so-called "informal sector" grows in the course of opening to the world market. Cardoso regards this sector as a social buffer of globalization.

8. A strong stable currency in the global currency competition is also part of competitiveness. Latin American countries cannot guarantee the stability of currencies out of their own strength. Therefore a series of currencies in the 90s were closely bound in the course of fighting inflation. In the meantime, Ecuador (and possibly Argentina) like Panama are planning to replace its own currency with the dollar ("dollarization"). The tendency of "triadization" of hegemonial currencies appears here: the dollar in Latin America, the Euro in the European-African area and possibly the Yen in parts of Asia.

9. Informalization- and exclusion processes have an undesirable consequence in Latin America: genesis of an "illicit economy", especially in drug production, trade and therefore money laundering. Thus globalization has a dark side that should not be ignored or disregarded.

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