It is a commonplace of left and right that global markets are rendering national economies ungovernable. Unconstrained markets are said to increase wealth while polarising its distribution and destroying political authority. But how global has the market become? Paul Hirst examines the evidence for globalisation and finds that the theory does not always match realityby Paul Hirst / February 20, 1996 / Leave a comment
The belief that national economies and cultures are dissolving before the great flows of trade, finance and information, leaving in their wake an increasingly homogenised, global market society, has become part of the common sense of educated people. It is now widely believed that nations, companies and individuals no longer have any choice but to adapt to intensifying global competitive pressures. All that states can do, if they are not to disadvantage their citizens, is to help make their territory attractive to internationally mobile capital.
For the past decade, belief in globalisation has been spreading among academics, media commentators and politicians of left and right. Many of them welcome it. In his influential book The Borderless World, the management guru Kenichi Ohmae argues that globalisation means that at last markets can develop on a scale which allows them to escape from the inefficient grasp of governments. Unconstrained global markets for capital and goods allows companies to allocate resources to maximise benefits for consumers. Others, less convinced of the inherent wisdom of the market (such as most of the moderate left) nevertheless feel powerless before the logic of globalism. At best, they argue, public policy can promote national competitiveness by investing in training and in the public infrastructure that business requires. This is the view of Robert Reich, the US Secretary of Labour, in The Work of Nations. The left has become convinced that its tax, welfare and public spending options have virtually disappeared. In last year’s Mais lecture, Tony Blair said that global markets now placed “strict limits” on Labour’s tax policies.
Whether or not it correctly describes the reality of the international economy, the influence of the theory of globalisation means that it may become a self-fulfilling prophecy. Policy makers, especially in the US and the UK, appear to be in the grip of a pathology of over-diminished expectations about what governments can do. In the past few months the intellectual fashion in the UK has, however, begun to shift. A more sceptical counter-argument to the globalisers, to which this essay is a contribution, is gaining some ground. But before reviewing the evidence for globalisation, I shall spell out the social and political issues at stake. For if globalisation really is occurring, then we face a very bleak future indeed.
A truly global economy will render obsolete the expectations developed in the advanced world during the long boom…