Globalization's Boosters and Critics

September 1, 1999 Topics: Economics Tags: AcademiaBusinessIslamismIslamSociology

Globalization's Boosters and Critics

Mini Teaser: Pangloss and Cassandra debate the global village.

by Author(s): Jacob Heilbrunn

Thomas Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Farrar, Straus & Giroux, 1999), 394 pp., $27.50.

John Gray, False Dawn: The Delusions of Global Capitalism (New York: New Press, 1999), 262 pp., $25.

In the early 1990s, many American politicians and economists viewed Germany and Japan as emerging superpowers that were well on their way to supplanting the United States. The chastened former Axis powers, so the thinking went, had figured out that economic, not military, power was the key to success. They were investing in their infrastructures and educating their work forces for the era of globalization, while America, by contrast, was foolishly racking up higher and higher budget deficits--partly as a consequence of military spending for its protectorates in Europe and Asia--and creating, at best, dead-end McDonald's-type jobs. In his 1992 bestseller Head to Head, MIT economist Lester Thurow captured one version of the conventional wisdom: "Future historians will record that the 21st century belonged to the House of Europe."

Seven years later, the opposite seems to be the case. In the wake of the American-led incursion into Kosovo, Europe is scrambling to create its own joint military force and has watched helplessly as the euro plummets. Matters are even worse in Asia. Japan is stuck in a recession that its own Prime Minister Keizo Obuchi has recently called a "depression", and Tokyo bureaucrats have been left fuming impotently as Treasury Secretary Lawrence Summers periodically lectures them about the virtues of the American model. Under President Clinton and Federal Reserve Chairman Alan Greenspan's direction, the United States has eliminated its chronic budget deficits, created fourteen million new jobs since 1991, and enjoyed low interest rates and low unemployment, thereby vanquishing the old bugbear of "stagflation." Prosperity has not only allowed Americans to go on an unprecedented spending binge, but probably also saved President Clinton during impeachment. Indeed, so impressive has the American resurgence been that it would be absurd to quarrel with newspaper magnate Mortimer B. Zuckerman's judgment that globalization will help ensure "a second American century."

Or would it? Doubts about the effects of globalization, whether they end up proving justified or not, have become increasingly commonplace. In the United States, first Ross Perot, then Patrick Buchanan tapped into the domestic discontent of blue-collar workers spurned by a Clinton administration focused on free trade and the middle class. Most recently, a United Nations study suggests that while globalization may benefit the United States--the annual sales of General Motors, we learn, are greater than the gross domestic products of Thailand or Norway, while Ford generates more income than Saudi Arabia--much of the world is being left behind. And so, if the debate was once about whether America was headed for the skids, it is now about whether globalization will simply trigger an anti-American backlash.

On the one side is the triumphalist camp, which includes everyone from the Clinton administration to Zuckerman to Sebastian Mallaby in the pages of The National Interest. The triumphalists see the United States as poised to spread its institutions and values around the globe. On the other side are the debunkers, who view the United States as intoxicated by the idea of a new crusade on behalf of the free market and democracy. Globalization will only ride roughshod over small communities and identities, substituting an empty Western materialism for local traditions. This school includes academics such as Samuel Huntington, who has argued that "the essence of Western civilization is the Magna Carta not the Magna Mac. . . . What, indeed, does it tell the world about the West when Westerners identify their civilization with fizzy liquids, faded pants, and fatty foods?"

Thomas Friedman belongs firmly to the first of these camps. A triumphalist par excellence, Friedman has drawn on several years of columns and travel for the New York Times to produce what will probably serve as the Ur-text for globalization advocates. The heroes of his tale are not the bemedaled generals and pinstriped diplomats of yesteryear; instead, they are the new captains of industry--hedge fund managers and media moguls walking around in T-shirts and Reeboks as they tap away on laptop computers, making and breaking Third World economies.

No one will accuse Friedman of excessive subtlety. His style, you might say, favors the demotic. It is loose and garrulous and grating. In his introduction, Friedman explains that "Being the foreign affairs columnist for The New York Times is actually the best job in the world. I mean, someone has to have the best job, right? Well, I've got it. . . . I get to be a tourist with an attitude." Friedman is a talented journalist whose penetrating judgments made his previous book From Beirut to Jerusalem essential reading, but in The Lexus and the Olive Tree it is hard to escape the feeling that something has gone awry--that sloganeering has displaced analysis. Given his access to world leaders and business tycoons, and given the uncertainty besetting the world economy, Friedman could surely have made a strong case for the effects of globalization--but this is not it.

Friedman's argument that the era of globalization represents a fundamental break with power politics is not new, but it is put forward with evangelical zeal. He does not argue; he instructs. Thus, "there's now just the Fast World--the world of the wide-open plain--and the Slow World--the world of those who either fall by the wayside or choose to live away from the plain in some artificially walled-off valley of their own, because they find the Fast World to be too fast, too scary, too homogenizing or too demanding." But, Friedman asserts, the "Slow World" can only resist progress so long before it chokes on its own backwardness. He portrays globalization as an autonomous force, one that, ultimately, cannot be resisted or contained by any nation. Indeed, in Friedman's hands, globalization becomes a kind of surrogate Marxism, a deterministic force that reshapes humanity and nations (which is why Marx and Engels both admired capitalism for its ability to uproot what they saw as the traditional ignorance of Africa and Asia, and anticipated with approval a capitalist-induced "interdependence" of nations in the Communist Manifesto).

But is globalization really an autonomous force? Or is it a homegrown American product? In his most persuasive chapter entitled "Revolution Is U.S.", Friedman comes close to accepting that it is the latter. Globalization, he concedes, has an American face: "It wears Mickey Mouse ears, it eats Big Macs, it drinks Coke or Pepsi and it does its computing on an IBM or Apple laptop, using Windows 98, with an Intel Pentium II processor and a network link from Cisco Systems." But if you believe, as Irving Kristol has maintained in these pages, that a government should elevate its citizenry, then the spread of the worst aspects of American culture raises serious questions. It may be that the export of the products of mass American consumer culture has negligible effects on high culture, the province of an elite, but Friedman never really addresses the global effects of American culture, and, in the end, he rather airily dismisses the potential for anti-Americanism: "O.K., O.K., so the rest of the world thinks we're obnoxious bullies and is envious of us. So what?" Countries may envy the United States, says Friedman, but basically they view us the way other players and teams viewed basketball star Michael Jordan: "none of the other teams really wanted to see Michael Jordan injured or retire, because anytime he came into town every seat was sold. He was the straw that stirred the drink for them all."

Nor does Friedman adequately confront the social upheaval created by globalization. He calls himself an "Integrationist Social-Safety-Netter." But apart from endorsing a grab-bag of government social welfare programs, it is left unclear exactly what this fancy label means. If, as Friedman maintains, the nation-state is withering away, then who is to provide the safety net? The nation-state, after all, has historically been the guarantor of a modicum of physical and material safety. A better discussion of this question is to be found in Ethan B. Kapstein's splendid new book, Sharing the Wealth. As Kapstein observes, the reason the rest of the world is resisting liberal democratic capitalism is not mysterious: "the United States has adopted a position toward labor that is fundamentally at odds with the historical experience of other societies." Thus, Germany, France and other countries on the European continent have resisted cutting social benefits and downsizing their work forces precisely because they fear domestic instability. They may calculate that a lower standard of living with tariff barriers is preferable to domestic turmoil. The impediments that the German Chancellor Gerhard Schröder faces in attempting to emulate Clinton and Tony Blair are an object lesson in how tenaciously many societies adhere to the older model of the welfare state.

Something similar may be taking place in Asia. Friedman makes much of Malaysia's supposed inability to withstand international economic pressures, but so far, Prime Minister Mohamad Mahatir's decision to impose capital controls to stop the flow of assets out of the country has not resulted in catastrophic financial losses. And then there is Japan, a country that has vigorously resisted adopting a free-market economy in favor of shielding its population from the vicissitudes of unemployment. Even if it is suffering economic difficulties, the surprising thing is not that Japan has taken longer than expected to pull out of recession, but how well it has coped. There are few, if any, visible signs of economic suffering in any part of Japan. It may well be that many countries calculate that the cost of potential social upheaval accompanying globalization exceeds the purported economic benefits.

If Friedman passes lightly over the question of culture, he completely evades that of the role of power politics. When he does mention security issues, it is simply to wave them away as harmless revenants of an earlier age. He was quickly embarrassed for doing so. In his "Golden Arches Theory of Conflict Prevention", Friedman notoriously maintained that "no two countries that both had McDonald's had fought a war against each other since each got its McDonald's." The war with Serbia that coincided with the publication of his book instantly put paid to that theory. To be fair, Friedman's theory was based on the old political science model, first formulated by Seymour Martin Lipset in the early 1960s, which holds that an emerging middle class--characterized in Friedman's view by a McDonald's--will push for democracy. Democracies, in turn, or so the political scientists tell us, are less prone to fight wars, and certain not to fight one another. Friedman might have explored these theories, but, in his concern to boost globalization and pour scorn on what he sees as its benighted opponents, he caricatured them.

If Friedman is the high priest of the free market, John Gray is its main apostate. Gray--late of Oxford, now at the London School of Economics--made his name as a conservative political thinker whose writings influenced Margaret Thatcher and company. Now, in his brilliant polemic False Dawn, he has reversed field. The Anglo-American model of capitalism, he says, has spun out of control. Just as Friedman praises the market for any economic and technological advances, so Gray seeks to pin all social and economic ills on it. But how much more persuasive is Gray's view of events than Friedman's?
Certainly, Gray writes with verve and panache, and his book makes for absorbing reading. It covers everything from the rise of industry in the Victorian age to the Mexican economy to the current ructions in Russia. Unlike Friedman, Gray points squarely to the French Enlightenment assumptions behind globalization, which were picked up and developed by British radicals in the nineteenth century. He might have noted that it was Cobden and Bright who equated free trade with peace. Cobden called for "as little intercourse as possible between Governments, as much connection as possible between the nations of the world." And it was Jeremy Bentham who envisaged the ideal society as being run along the lines of an efficient prison system. Today, the idea of a universal civilization is espoused pre-eminently by the free-trading United States--a country with one of the highest incarceration rates and one in which, as Gray would have it, a good chunk of its ostensibly free population cowers behind high walls and electronic security devices.

Gray's view of America could scarcely be bleaker. Corporate executives are free to award themselves munificent bonuses in return for downsizing much of their work force. While the upper class profits from a soaring stock market, pushed, in part, to new heights by corporate layoffs, the middle class is being conditioned by a rapacious elite to accept its new state of immiseration as the inevitable by-product of necessary economic risk. So great is wealth inequality in the United States that it resembles the Philippines or Brazil more than it does other major economies. Gray even indicts America's low unemployment figures as deceptive: locking up prisoners, after all, artificially suppresses unemployment rates.

Yet oddly enough, American optimism remains undented. If the Enlightenment faith in the perfectibility of man and society became subsumed in anti-communism during the Cold War, it now animates the American projects of a universal free market. Accordingly, Gray's targets are what he views as the ideologues of the free market in England and, above all, the United States. In his view, "The elegant apologies for imperfection in Santayana and Lippmann, Mencken and Voegelin are scarcely historical memories at a time when conservatives have become ranting evangelists for global capitalism. Today, American conservatism is a crankish and sectarian species of Enlightenment ideology--nineteenth century libertarianism." Indeed, conservative doctrine amounts to nothing more than "a ranting eulogy of technology, a demonization of government and a militant assertion that all social evils are problems soluble by market forces."

Strong words. No doubt there are some conservatives who would fit this description, but not all conservatives are free-marketeers, and not all free-marketeers are conservatives. It is Patrick Buchanan and a number of congressional Republicans who oppose free trade. It is Bill Clinton who has relentlessly attempted to expand free trade and who signed, in August 1996, the Welfare Reform Act. For all of Gray's huffing and puffing about the evils of the market, it seems hard to dispute Clinton's success. As the United States heads into the next century, the old discussion of how to lower budget deficits has been replaced by one about how to spend a trillion-dollar surplus. The problem that conservatives face is in coming to terms with their successful transformation of American society, one that has created an unprecedentedly affluent middle class largely indifferent to social strictures. For Gray, however, the United States is not even an economic success story, but a winner-take-all society in which racial tensions are rising. But Gray's dyspeptic, one-dimensional portrait of a United States divided along class lines completely overlooks the dynamic effect that the creation of wealth has had: even the New York Times noted in a front-page story a few months ago that the notoriously tenacious black youth unemployment is sinking as teenagers are able to procure jobs leading to stable careers.

Similarly, Gray's complaints about the free market in Britain miss the mark. Tony Blair has proved even more fiscally conservative than his predecessor John Major; one of his first actions was to hand over authority for setting interest rates to the Bank of England. Is it an accident that England alone among the European countries enjoys a booming economy, while Germany and France sputter along, saddled with high unemployment, low labor mobility and a sinking euro? Surely not. A stronger argument that Gray might have made against globalization is that the widespread perception on the Continent that only the European Union can inject the iron of fiscal control into anemic economies is mistaken. The plight of the euro suggests that national control ensures greater efficiency and productivity than a corrupt bureaucracy in Brussels could ever hope to achieve.

Indeed, the fitful performance of the European Union, coupled with the Asian economic crash, ought to prompt doubts about whether the nation-state really is headed for obsolescence. Even more telling has been the steady uptick in violent conflicts, from Africa to Europe. With this upsurge in ethnic violence and the renewed jockeying of the major powers--India's explosion of nuclear weapons, China's noisy assertion of its claims to Taiwan, and North Korea's launching of the Taepodong missile--it seems ludicrous to maintain that, in the post-Cold War era, power politics has suddenly and mercifully been annulled by economic advances. The truth is that the assertion of national pride, a quest for status and recognition and self-determination, far from disappearing, all appear to be making something of a comeback in the post-Cold War era. And so the notion that something called globalization is taking, or has already taken, place is more than a little facile and obtuse. If America is to retain supremacy in the twenty-first century, it will not be as much a product of economic as of military strength and purpose. Endless debates about globalization may turn out to be a mere sideshow.

No doubt economic activity has taken on new forms with the emergence of multinational companies and the internet. To evidence this as the dawning of a new age is, however, another matter. Former Prime Minister Harold Wilson was already complaining about the manipulation of sterling by the "gnomes of Zurich" in the 1960s and Chris Patten, in his recent memoirs of his years as governor of Hong Kong, notes that the Asian collapse is not really all that unprecedented, that corrupt bankers and speculators have always been with us. As far as the road to prosperity is concerned, the economic lessons of the past two decades are clear, and both Bill Clinton and Tony Blair have understood them. But even trillion-dollar surpluses cannot cure all of society's ills, let alone bring about the parliament of man. Market booms and crashes will come and go, but the nation-state is here to stay.

Jacob Heilbrunn is the senior editor of The New Republic.

Essay Types: Book Review