Take a close look

In its crudest form, globalisation skepticism amounts to the claim of trade liberalisation exposing the whole world to exploitation by corporate giants from the rich nations. The consequence, we are told, will be ruthless competition, resulting in low and falling wages as well as total disregard for the environment. Government action, it is said, will only be geared to the interests of capital.

The world is more complicated than that, however. The global economy is full of surprises. That companies from emerging markets manage to rise to the top league of international business time and again is comparatively old hat. Examples from the 1990s include Mexican cement manufacturer Cemex, Taiwanese computer-maker Acer and the South Korean conglomerate Samsung. Today, the familiarity of names like Tata and Lenovo underlines the fact that companies from India and China have also become global players. And the mobile-phone company Celtel – owned by the Zain Group in Kuwait now – demonstrated for years that an African high-tech company can compete in many countries of its home continent with rivals from the industrialised world.

Meanwhile, once dominant players like Ford and General Motors are struggling. They are suffering from inadequate US policymaking in the fields of environment and health care. Not only have the Detroit car-makers failed to develop energy-saving models but – due to the lack of governmental welfare schemes – they have to shoulder the entire cost of insuring employees’ health themselves. That burden is a severe handicap in international competition.

Another surprise is that certain actors have become active – or stepped up their activity – in cross-border investments. High export surpluses and foreign-exchange reserves have enabled some governments to invest capital abroad through state-controlled funds. Such investments may be driven by purely commercial motives, but they also may aim for more political power. The financial world is currently abuzz with talk of what sovereign wealth funds might be up to – and whether it is necessary to shield listed companies in industrialised countries from such investors, who might want to buy shares or perhaps even take over entire corporations.

There has also been a big change in the volatile world of portfolio investments. The recent US mortgage and property crisis has unleashed a credit squeeze that puts intense pressure on the financial sector of the rich world. Emerging markets, which figured prominently in the financial crises of the 1990s, are suddenly regarded as comparatively safe havens.

All this does not, of course, substantiate the naive claim of the free trade ideologues that liberalisation automatically creates wealth for all. Far from it. A lot of what goes on in the global economy is brutal and ruthless. Free enterprise, by definition, is geared to profit. In other words, it is driven by self-interest. However, it is also a fallacy to believe that profit derives solely from mass impoverishment. Affluent societies are certainly in the interest of capital. Where purchasing power is zero, demand is flat. The best sales opportunities are found in prospering markets.

What the surprising trends of recent years show is the need to keep an empirical eye on assumptions. On that basis, it certainly makes sense to criticise negative developments in globalisation.