Questions the American left's take on globalization
Amsden, Alice
THE PERFECT battle can't be picked. However flawed politically, the confrontation inspired by the World Trade Organization (WTO) in Seattle this past December had enough going for it to be...
...Instead of pumping out exports, emerging economies are supposed to adopt labor practices that raise domestic wages and hence, domestic demand, which can then substitute for exporting...
...Because of American protectionism and fast growth in emerging economies, trade and foreign investment have tended to explode among "The Rest," creating a decentralization of global economic power...
...Second, the EU position is that linking trade and labor is not a matter of sanctions [the way it is for the United States].* The Left Positions The American left's position has been identical to that of the Democratic Party on labor standards and has been staunchly anti-global in general—for better or worse...
...Some of the tendencies represented in Seattle were progressive while others were patently reactionary...
...Race to the Bottom...
...Seattle wasn't the perfect battle because issues were not drawn neatly along class lines...
...I think (American labor leaders) have 14 • DISSENT / Spring 2000 their own case in mind, you know, and they want to protect their own thing, and they will go to any lengths, using the labor questions, to create a protectionist setup if necessary...
...and Korea, Thailand, and Taiwan, have experienced an industrial revolution since the 1950s based on protectionism, government interventions disciplined by performance standards, and exporting...
...steel industry fold, given that the "adult" protection it has received for decades has proved insufficient to enable it to compete...
...Dissent, Fall 1999) that the number of people living on less than a dollar a day increased by two hundred million in the 1990s...
...In the future, however, things could get better from a progressive point of view...
...In fact, whether an emerging economy is "outward" or "inward" oriented, or unionized or non-unionized, doesn't seem to matter much for its treatment from American progressives...
...For better, the left has been a consistent opponent of free financial markets, championing capital controls and constraints on Wall Street's power and the IMF's emergency measures when capital markets quake...
...The middle-income countries, ranging from Argentina, Brazil, and Mexico...
...The vast majority of developing countries have extremely small domestic markets because they are poor...
...The Indian textile industry is probably more unionized than the American textile industry, with costs only a fraction of those of U.S...
...The "dollarization" of Ecuador is underway...
...This reasoning is logical but wholly unrealistic...
...The share of imports in U.S...
...Our fear is that because our workmen have lower salaries, they will be eventually punished for that, because they become a danger to the jobs of richer workers...
...But he fails to mention that because capitalist development is uneven, the living standards of workers in some countries have steadily risen—especially in those emerging economies that eschewed free market policies and developed their own modern industries and global firms...
...They prefer the transparent procedures of the WTO to the arbitrary practices of the U.S...
...The growing hegemony of business, the rising power of Wall Street, and the disregard for democratic decision making by international bodies like the WTO, all made Seattle fair ground for a fight...
...Financial instability is inherent in capitalism, but financial deregulation in the past decades has made matters worse...
...This process of decentralization should be strongly supported...
...The WTO prohibits voluntary export restraints, but governments can still intervene to protect their infant industries, their embattled sectors, and their bruised balance of payments, as both the United States and the emerging economies have abundantly shown...
...The terms demanded for integration can be self-serving and wildly unrealistic (as were demands designed to stop NAFTA, such as the same American and Mexican minimum wage...
...Turkey, India, and China...
...Given the right's political ascendance, the real minimum wage (in constant 1996 dollars) has fallen steadily over time from a high of $7.21 in 1968 to a low of $4.24 in 1989 (up to a mere $4.75 in 1996...
...These more sophisticated products are made in the world's newest, most efficient factories, many of them owned by nationals of emerging economies...
...Mark Levinson notes ("Who's in Charge Here...
...Like low-income countries, middle-income countries were generally disappointed by Seattle because they regard the WTO as the lesser of two evils...
...But such a proposal represents a healthy antidote to the Washington IMF, and won't go away...
...Chile has already proposed a free trade agreement with the United States...
...BRAVE NEW GLOBE workers or obstruct the "forces of production" from further development...
...There are grounds for fighting aggressively for due compensation for redundant steel workers, but there are no grounds inherent in any socialist principles to justify the exclusion of foreign steel from the United States, or agricultural products from Japan, or coal from Belgium...
...This is what we're talking about...
...As the world economy has become more integrated, regional trade has become stronger, leading to three economic blocs: north- and southeast Asia, the EU, and the Americas...
...This position can only be applauded...
...In 1990, for example, Korea had a population of roughly forty million people but a gross national product that was smaller than that of the Netherlands...
...If insufficient, a threatened industry could always weep in Washington until "anti-dumping" duties were introduced...
...If steel can be produced more cheaply in India than in the United States, why shouldn't the U.S...
...Regional currency systems to sustain regional trade flows, such as the Euro, Europe's new currency, are likely to reduce global financial instability...
...economy, and scale economies force financial service providers to internationalize...
...The American government's knee-jerk response to "The Rise of the Rest" was to force open their markets and buttress trade barriers at home...
...Congress passed an aggressive Super 301 Omnibus Trade Act that gave the United States power to accuse, try, convict, and punish foreign countries whose major crime was being more efficient than American manufacturers...
...Who wants to have prison work...
...The rise of new centers of economic power may be expected to reduce the economic hegemony and hence arbitrary power of any single country...
...With the exception of Mexico, which trades almost exclusively with the United States, local Latin American trade has also soared, as has intraEuropean trade, including trade with Turkey...
...Argentina has tied its economy tightly to that of the United States by forming a currency board, in which the U.S...
...The low-income countries were possibly the most disappointed by the failure of the WTO to advance the cause of free trade...
...Here's what Luis Felipe Lampreia, a representative of Brazil's social democratic government had to say on the subject of labor rights, a position echoed by governments ranging from democratic India to authoritarian China: Nobody's for child labor...
...The kneejerk reaction of Washington to decentralization has thus far been negative—to wit, Japan's proposal for an Asian International Monetary Fund 16 • DISSENT / Spring 2000 (IMF) was squelched...
...Although the WTO prohibits export subsidies (at Washington's insistence), it condones state subsidies to both research and development (the U.S...
...This was in spite of democratization and worldrecord wage increases for over two prior decades, as noted above...
...The guiding principle—in practice—has to become the promotion of economic growth and social welfare within and beyond American borders...
...The left has played an important role, academically and otherwise, in exposing the dangers of global financial liberalization...
...They can stick their heads in the sand and continue to oppose them, or they can use integration to create new, more socially and economically progressive political entities...
...The United States accounts for barely one-quarter of their total exports, and the same pattern applies in Malaysia, Indonesia, and Thailand...
...The justification for such policies has been rhetorical, that the interests of American and foreign workers coincide, as in the case of labor standards, and that international competition creates a "race to the bottom...
...We're not talking about other labor standards [as the United States is doing...
...government imposed "voluntary" export restraints on trading partners...
...Pseudo-protectionist policies have been justified by American socialists on the grounds that globalism entails a "race to the bottom...
...The effect of NAFTA on U.S...
...All Rights Reserved...
...We're addressing the five core conventions which the International [Labor] Organization has put forward, and which have been ratified, and which have to do with child labor, with forced labor, and with the possibility of people to (form) unions...
...The Lesser Evil...
...The share of union members among American wage and salary workers was 20.1 percent in 1983 (36.7 percent in the public sector and 16.5 percent in the private sector...
...Foreign trade, therefore, can't be used as an excuse for retrograde isolationism If progressives in the United States are not to go down in history as die-hard nationalists, they have to abandon their rearguard actions to stem the tide of global capitalist development in defense of their own labor elite...
...In the long run, socialists will merely manage their way to political obscurity if they champion proDISSENT / Spring 2000 n 15 BRAVE NEW GLOBE tectionist policies toward old industries, however disguised as labor standards...
...North American progressives have complained that the United States has become the "importer of last resort," but the truth is just the opposite...
...But our fear is not that...
...The Democratic Party's total political capitulation to financial interests, however, has been disgraceful...
...jobs has been nil, possibly because the American business cycle has been highly expansionary...
...Every cluster has its major economic powers: Japan (vying with China) in Asia, Germany in Europe, and the United States in the Americas...
...The emerging economies' worst nightmare, which left all developing countries sleepless in Seattle, was the protectionism posed by lofty and largely self-serving American demands for universal labor standards—demands that lie at the heart of the American left's approach to globalism...
...But a crisis in unionization and a domestic "race to the bottom" clearly preceded the "Rise of the Rest...
...Closer political, economic, and intellectual integration may be conducive to more fundamental restructuring in the long run...
...dollar and Argentine peso are exchanged freely at a fixed price...
...Nationally owned firms have staged the first serious competitive challenge to entrenched multinational companies...
...There will be more NAFTAs (North American Free Trade Agreement...
...Globalism may have become monolithic, but the interests of the same class tended to differ depending on the country—low income, high income, and middle income ("emerging economies...
...GDP rose from around 5 percent in 1980 to a little more than 10 percent in 2000...
...suppliers...
...Yet one does not feel a great groundswell of support in the United States to "Buy Indian," just as one does not feel a great ground-swell of support in India to "Adopt American labor standards," which, apart from wages, may be inferior to those in Indian mills...
...Irony of Globalism As socialists re-examine their political agenda, critique of capitalism, and socialist ideals in the wake of the abortive socialist experiment, their global policies have to change...
...The left's lobbying for labor standards has been packaged as part of its fight against emerging economies' "export-led" growth...
...Smaller countries favor the formation of an Asian IMF and Asian currency system and will pressure Japan and China to reach an accord...
...Come on, who is for slave labor...
...Ironically, the laws of the WTO are barely more market-oriented than those of GATT (General Agreement on Tariffs and Trade), the WTO's predecessor that emerged from Keynesian postwar institution-building and won the support of American and European social democrats...
...While real manufacturing earnings in some countries have stagnated (between 1969 and 1990 they fell by -0.1 percent in Argentina and -0.8 percent in Mexico), in other countries wages have soared at annual rates unprecedented in world history: for example, 5.1 percent in Indonesia, 5.6 percent in Brazil, 7.8 percent in Korea and 8.5 percent in Taiwan...
...American wages failed to rise since the mid-1970s in tandem with a growing labor supply, slow productivity growth, and a sharp decline in unionization...
...courts and Congress...
...The EU had a more internationalist position than the United States in Seattle, as stated by Pascal Lamy, the EU's representative to the WTO, so the labor standards issue fizzled: The difference [between the EU and U.S...
...Whatever new Mexican employment is being generated has tended to be associated with NAFTA, but the number of new jobs has not been spectacular...
...It is hotly debated whether foreign trade has dampened domestic wages...
...position] is the number of standards...
...There is abundant need for social change in both North and South America...
...The "race to the bottom" has largely played itself out within the United States, where until very recently wages have stagnated...
...Five years after the conclusion of NAFTA, neither the American nor Mexican economy has exhibited much change...
...By 1998, unionization had fallen to only 13.9 percent (37.5 percent in the public sector and 9.5 percent in the private sector...
...national innovation system would collapse without help from the Department of Defense and National Institute of Health) and to regional development (otherwise, Europe's poor regions would balk and American subsidization of business at the state level would crumble...
...The emerging economies now produce not only a large share of the world's labor-intensive manufactures, such as textiles (36 percent) and shoes (44 percent), but also a large and rapidly growing share of its more technologically advanced and capital-intensive products, such as semiconductors (market share depends on the type of chip) and steel (around 30 percent...
...Threatened with real foreign competition in textiles, steel, automobiles, machine tools, and semiconductors, the U.S...
...The often conflicting interests of American and foreign workers have to be acknowledged...
...Far worse, the American left has been an arch opponent of any policies that compromise the position of American workers, whether or not these policies are at the expense of foreign *Copyright © 1999 MacNeil-Lehrer Productions...
...Financial services are a growing segment of the U.S...
...For all DISSENT / Spring 2000 13 BRAVE NEW GLOBE the opprobrium heaped on the WTO, moreover, it is hardly a free trade paragon (if it were, few countries except maybe Hong Kong would have joined...
...The Latin American economies have some of the most unequal income distributions in the world, just as income distribution in the United States tends to be unequal compared with that of Europe's social democracies...
...Now, however, socialists have to refine the terms on which they oppose and support globalism...
...Toward this end, a curious irony of globalism needs to be explored...
...In 1970, Korea and Taiwan exported almost half their manufactures to the United States, but now about half their exports go to other Asian countries...
...Or they can be structured to create the basis for future political democratization and economic growth (as in Turkey's admission into the European Union...
...Without a manufacturing sector to fear foreign competition, these countries have everything to gain from open markets for their agricultural exports, which continue to meet protectionist barriers in the advanced countries, whether Japan, the European Union (EU) or the United States...
...However flawed politically, the confrontation inspired by the World Trade Organization (WTO) in Seattle this past December had enough going for it to be worthy of progressives' support...
...The gross domestic product of the Netherlands was three times larger than that of Indonesia, although the population and land mass of the Netherlands were a mere fraction of those of its former colony...
...ALICE AMSDEN is a professor of political economy at the Massachusetts Institute of Technology...
...By the 1990s, middle-income countries feared free access to their markets by foreign investors, not foreign exporters, but in 1998 the big push by the United States for scot-free foreign investment was blocked by the EU...
...How should American progressives respond to such proposals...
...I mean, nobody can condone that or accept that...
Vol. 47 • April 2000 • No. 2
