Globalization as an Enemy of the Common Good

Keywords:  globalization, national economy, United Nations, Bretton Woods Institutions, subsidiarity, decentralization, communities of communities, structural adjustment. 

Globalization does not serve the common good.  That is because it is driven by economic actors.  It is the nature of such actors, according to standard economic theory, to act “rationally,” and that means, in their understanding, to seek their own good. 

1. The Economic Theory that Supports Globalization

In economic theory, the tension between the good of individuals and the common good is supposed to be overcome by the way the market functions.  Exchanges in the market are inherently voluntarily, and people do not engage in them without expectation of benefit.  Hence, in normal market activity exchanges benefit both participants.  The purchaser of a pair of shoes wants the shoes more than the money he or she exchanges for them.  The cobbler, on the other hand, wants the money more than the shoes. 

Competition in the market to sell the shoes leads to greater efficiency in their production.  As the market ceases to be limited to a village and grows in size to national scale, this competition and improvement in efficiency are multiplied.  Instead of individual cobblers spending many hours to produce the shoes, factories can produce hundreds of pairs with the same amount of labor.  These shoes can be sold for a lower price, so that the purchaser does not have to give so much of his or her time to earning them.  Competition among factories leads to the substitution of machines more and more for human labor.  The productivity of labor continues to grow.

I will not develop the theory further.  It is correct as far as it goes.  The free market, together with the industrial production to which it can lead, increases the amount of goods and services available and decreases the amount of time people must spend to earn the money required to buy them.  By this measure, one that roughly corresponds with per capita Gross Domestic Product, the market, when left to itself, leads to overall improvements.

However, this is not a measure of the common good.  Many do not share in the increased consumption, and even those who do share are likely to pay a high price in other respects.  Many people lose their accustomed means of livelihood.  Far fewer are self employed, so that dependence on others increases.  Job security declines as unemployment increases.  For many the personally satisfying work of the artisan is replaced by the drudgery of the assembly line.

Competition replaces cooperation.  The rich can compete more successfully in the market than can the poor.  Hence the rich get richer.  Whether the poor get poorer is debated, but that the spread of income increases is quite clear.  The market increases the concentration of ownership and income as well as the dependence of the many on the few. 

Most important for the discussion of the common good, the quality of human relations, central to community and hence to the common good, deteriorates.  This is not noticed when one views matters in standard economic terms, since human relations other than market transactions and contracts are not part of the economist’s view of the world.  But they are the stuff of human happiness.  Happiness studies, on the other hand, show that there is no connection between absolute income levels and happiness, although relative standing in a community does contribute to happiness.  Since the common good cannot be separated from the felt well being of the people, the increase in per capita consumption, won at the expense of greater gaps in income, greater dependence of the many on the few, and the replacement of satisfying work with boring routine is not by itself a contribution to the common good.

2. Distortions of Globalizing Practice by Corporate Interests

These limitations characterize globalization its best.  It has brought about large increases in consumption in many countries, but the quality of community has deteriorated.  But the actual process of globalization that has characterized the world since 1980 must be criticized more severely. 

Under the banner of a global market, powerful corporations have dominated national governments and the Bretton Woods Institutions.  These have established rules of trade that do not at all represent the justice of the ideal free market.  Economic globalization has followed the lines of neo-colonialism rather than worked for a genuinely level playing field.

These distortions and injustices are often egregious and very important.  The increasing recognition of their role has finally put large obstacles in the way of efforts to extend this kind of globalization still further.  In 2003, the failures of the World Trade Organization meeting at Cancun and of the Free Trade Area of the Americas meeting in Miami were impressive indications that the “developing” nations are not willing to make still more concessions when the developed ones refuse to do likewise.  I rejoice in this.  Elections in several Latin American countries, especially in Bolivia, have confirmed that the tide has turned against economic domination by the United States and its corporations.

3. Successful Development and Globalization

However, this is not my main interest in this paper.  My concern is that so many leaders of those countries that have suffered most from globalization seem to suppose that if it were carried through fairly, truly according to the teaching of economists, it would serve the common good.  My argument is that it would not.  The evils of globalization do not follow only from its distortions by the great powers that serve the interests of their corporations.  Some of the evils follow from any systematic application of the economic theory that supports a global market.  The victims of globalization should oppose globalization as such, not simply try to purify it of its current distortions.

Against the view I am putting forward, many people point to the fact that a good number of industrialized countries in Europe and in East Asia have achieved quite attractive and desirable societies.  The gap between rich and poor is not so great, and even the relatively poor in some societies have their economic needs met and enjoy considerable economic security.  New forms of community have arisen to replace the ones that were lost at earlier stages of economic development. That industrially undeveloped countries wish to become more like these successes is certainly understandable.

I am not denying the excellence of what some nations have achieved on the basis of advanced industrialization.  Nor am I questioning that the free market has contributed to this industrialization.  But there are two problems with celebrating these successes as products of economic globalization. 

4. Problem One: Global Limits

The first problem is that the level of per capita consumption in these countries is not possible for all the inhabitants of the world.  Present levels of global economic activity are probably not sustainable.  We are already heading for catastrophes.  For billions more people to aim at emulating these societies can only speed and worsen the catastrophe.  We will all suffer acutely from these efforts.

For this reason, the need is to find ways of meeting the economic needs and reasonable desires of all people at a less consumptive level.  Since we know that much of the consumption by middle class people, and certainly by the rich, contributes nothing to the happiness of the consumers, this is not an empty goal.  But the dominant economic theory works against this kind of goal.  The dominant theory assumes that there is no positive or acceptable alternative to the aim at overall economic growth.  It assumes that the needs of the poor can be met only where others have great wealth. 

There is urgent need for economic theories and development models that show that basic needs can be met and healthy community life supported with far less use of natural resources and sinks.  Some technological developments are promising.  But there seems to be virtually no fresh reflection among mainstream economists.  They still push for the adoption of policies geared to increasing overall production and hence speeding the exhaustion of resources and sinks. 

There is some promise of help from “ecological economics.”  Some ecological economists are simply applying old theories to new problems.  But some are rethinking assumptions.  Thus far this rethinking is given no place in leading academic circles.  However, those who are really concerned for the common good should look to these rare economists as their authorities, not to those who are generally considered the experts.                                                    

5. Problem Two: Successful Nations Rejected Global Economy Policies

The second problem with supporting a global market as a means of achieving the desired goals is that none of the successful nations attained their present positive condition by following the patterns of economic globalization.  Instead, in all cases, their governments played a large role in developing their national economies.

To put matters in a different way, the market as such does not work for the common good.  It can and will contribute to the common good only if the people of a community, normally a nation, act through their government for the common good.  If they do that wisely, then the increased quantities of goods and services available because of market activity can contribute to the common good.

I am contrasting national economies with the global economy.  A national economy is one that is shaped by the policies of a national government and developed for the sake of the nation’s well being.  This is hardly a radical idea.  Prior to 1980 this was the dominant pattern throughout the world.

The government in charge of a national economy may give a great deal of freedom to the internal market.  It may also encourage trade with other countries.  To encourage trade it may agree to reduce tariffs and other barriers to exchange.  But the government is in position to make decisions about what kinds of trade are beneficial and to restrict those that are not.  It can encourage local interests over against foreign ones, and it can prevent major parts of its economy from coming under foreign control. 

Tariffs have played a large role in enabling local industry to develop. The United States made extensive use of tariffs during its industrializing period. The resentment of the agricultural South at being forced by tariffs to buy industrial products from the American North instead of cheaper ones from England was one of the causes of the Civil War.  

All the nations of continental Europe developed their economies on this nationalist basis.  The same was true of the East Asian tigers.  It is currently true of China.  Prior to 1980 a good many other developing countries made progress along these lines.

I am not claiming that all of the governments of the developing nations used their power wisely or even tried to promote the common good.  There are too many instances of well-intended action that was faulty and even foolish. There are also many instances of generals who took power only to aggrandize themselves and their families. Nevertheless, on the whole, there was progress throughout the world during the period when development took place on the basis of national economies. 

The main means of destroying national economies was “structural adjustment,” especially in Africa and Latin America.  The goals of structural adjustment were supported and furthered by policies enacted through the World Trade Organization as well as regional agreements such as the North American Free Trade Agreement..  The justification, I am inclined to say the “excuse,” for this massive disempowerment of the governments of developing nations was that many of them were unable to deal with the heavy indebtedness that they had been unwisely, and sometimes cynically, encouraged to incur.  It was claimed that the problem of debt showed that national economies did not work well.  By subjecting themselves to the global economy, it was asserted, developing countries would prosper and be able to pay their debts.

The results in most cases, of course, were quite opposite to this prediction.  The problem of debt has grown worse. The move from national economies to a global economy has not speeded overall global growth, as it was claimed to do.  In much of Africa it has reversed the progress that was made under the aegis of national economic development.    Even where there has been some growth as economists measure it, the picture is, at best, mixed. 

Economic globalization systematically undercuts the capacity of national governments to establish policies favorable to their national economies.  The countries that have been subjected more and more fully to structural adjustment can make few decisions about their internal affairs.  Their resources are available for purchase by transnational corporations.  These decide what goods will be produced for local consumption and for export.  Often there is little increase in overall production.  Even where such increase occurs, the gains go chiefly to foreigners.

6. The Global Economy and the International Economy

The alternative to a global economy is not, of course, a national economy.  It is an international one.  Today the planet as a whole must be considered even in making decisions about local matters.  The question is whether the planet is to be organized economically as a single market or as a network of markets that trade with one another as they judge profitable.  The organization is international rather than global as long as each market is under the supervision of a separate and genuinely independent government.  In this international structure, the judgment of what is truly “profitable” will involve the well being of the whole nation and not simply of individual corporations.

It is popular today to say that, whatever the problems with globalization, it is inevitable.  We live on a shrinking planet in which interdependence continually increases.  Communications around the globe are virtually instantaneous.  Money can move anywhere at the flick of a finger.  Given our technology nothing else is possible.

This is simply not true.  It is interesting that the advocates of economic globalization rarely argue for the inevitability of world government.  Yet the justification for political unity is as great as that for economic unity.  The global market did not grow organically out of the preceding situation.  It was imposed on the world by those who benefit from it.  One can trace the many steps through which the Bretton Woods Institutions, following the leadership of the United States, enforced the aims of the great global corporations and financial institutions.  Whatever inevitability there was is the inevitability that those with power will impose their will on the weak. 

It is inevitable today that what happens in one part of the world has effects elsewhere.  That means that we must be concerned about ordering the world as a whole and not simply leaving everything to local decision.  But this in no way precludes an international ordering instead of a global one.

7. The Real Economy and the Paper Economy

It is important to distinguish not only an international economy from a global one but also the real economy from the paper one.  The real economy is the production and exchange of goods and services.  The paper economy is that of finance.  In the real economy, money is the instrument of exchange, greatly facilitating that process.  But in our world today the paper economy has more to do with the buying and selling of money than with the exchange of goods.  Financial corporations have replaced industrial ones as the dominant factors in the global economy.

This world of finance is, in many ways quite fragile.  The financial structure of a nation can collapse.  This happened in Argentina as a result of its enthusiastic adoption of globalizing policies.  Nevertheless, the Argentineans did not allow this collapse to stop the real economy from continuing.  Workers continued to operate factories, and farmers continued to produce food.  Exchange was still possible.  Despite all the hardships the people suffered, their basic needs were met. 

Globalization reduces the ability of nations to maintain real economies that can survive the collapse of paper ones.  Geographical regions are encouraged, even forced, to specialize in forms of production that have little to do with their need for goods.  They may not be able to survive the collapse of the paper economy that governs global trade.  Fortunately, the real economy of Argentina could still meet these needs for the most part without dependence on trade with other countries.  Other parts of the world would not be so fortunate.  For the sake of sustainability, nations need to break with the global economy and re-establish national ones.

8. An International Global Order

Those who insist on the necessity of globalization point out that absolute national sovereignty is unacceptable in a world that has grown as small as ours.  National behavior must be regulated in terms of global needs.  Sad to say, thus far, the global institutions have done their regulating in the interest of corporations rather than the worldwide common good.  Nevertheless, the point is correct.  The world cannot survive each nation following its own course on such issues as global warming.

But this need not mean that we want a single, all controlling global government. The minimum requirement is that we have enforceable international agreements on matters of global concern.  The United Nations is an international organization.  Unfortunately, when the United States found that it could not control the United Nations as fully as it wished, it arranged the transfer of such power as the UN had to regulate the world’s economy to the Bretton Woods Institutions.  These now function globally rather than internationally, and they exercise their powers to break down those of nation states.  Nevertheless, the United Nations has continued to develop rules for international behavior, and other nations have agreed to these even when the United States has not.  The strengthening of the United Nations would not lead to more destructive globalization but to the improvement of the international system.  Shifting economic power back to the United Nations, providing it with its own income from a Tobin tax, and establishing a permanent UN peacekeeping army would be important steps toward achieving a more just and peaceful world.

9. A Community of Communities

Although I believe that a world organized on an international basis can serve the common good much better than a globally organized one, I am not a nationalist.  I would prefer a somewhat different world order than the international one.  The organization of the planet that I believe would best serve the common good would be a community of communities of communities.  Actually there should be more levels of community than that!

Europe provides the best model.  The European Community is what I mean by a community of communities.  The national governments are still strong, but they are checked by the European one.  Decisions best made at the national level are made there, but other decisions are made at the larger level.  Further, in some of the European nations, the smaller units of which they are made up also have considerable control over local affairs.  They also constitute viable levels of community.  We can consider Bavaria as an example.  Then within Bavaria there are towns and villages in which some decisions can be made.

I have been speaking of political divisions, but to some extent these constitute economic units as well.  Economic centralization has gone farther than political centralization, and in Europe it constitutes some threat to the political order.  If the people understand this as a threat and rein it in, they can preserve a healthy pattern. 

Speaking then, in terms of abstract principles, I favor subsidiarity.  This is the principle that every decision should be made at the smallest level possible beginning with the family and going up the ladder.  In the United States, that would be from towns to counties, to states, to regions, to the national level.  No one level should be “sovereign” in the traditional sense.  Each checks the power both of the level below it and of that above.

A significant degree of political self-determination depends on a significant degree of economic autonomy.  A town in which all important economic actors represent companies headquartered elsewhere can make far fewer significant decisions than one that has its own businesses.  A state in which there is considerable locally controlled industry can exercise far more authority than one that is heavily dependent on outside capital.  The ideal is that local regions be relatively self-sufficient economically and, therefore, able to be relatively autonomous politically.

10. Regional Organization

We live at the end of the epoch of nationalism, that is, of a system of radically sovereign states.  In Europe these sovereign states allowed varying degrees of authority to their parts.  I favor increasing this decentralization.  Most impressive, after World War II, these states ceded some of their authority to the European Community.  My view is that in other regions of the world similar decentralization on the one side and regional organization of the other would be a great advance.

The goal should be to encourage such regional organization elsewhere.  Rudimentary beginnings are present.  The Organization of African Unity exists.  If the United States and the European powers decided to give it strong support it could probably develop quite rapidly.  It might develop sufficient strength to greatly reduce the tribal conflicts and warfare that have done so much to prevent the healthy development of Africa.  It might also work to give more political status to tribal groups that are more natural and viable political units than those provided by boundaries imposed by European empires.

Latin America might come to constitute a regional power analogous to the European Community.  The beginning of this could be the Organization of American States once the United States was excluded.  Alternately alliances now being formed in South America could develop into a continental organization, leaving Mexico, Central America, and the Caribbean to organize separately.  The Middle East could constitute another grouping and Southeast Asia another.  

A world organized into such regions would put an end to the imperial ambitions of the United States.  No nation could play the role of global superpower.  It would also end the economic dominance of the Bretton Woods Institutions.  Most economic issues would be decided within the several regions; either at the regional level, or at smaller ones.  The United States would be one power among others and one economy among others.  This would be far healthier for its citizens than its present role in the world.

11. International and Interregional Global Institutions

I have indicated that a greatly strengthened United Nations would represent an international organization of the world.  This would be a great improvement over the globalization to which we are now subjected.  Nevertheless, I have been suggesting that we work toward a regionally organized world instead. 

I will not attempt to specify just what these regions should be.  They should grow organically out of already existing economic and political structures. For example, resistance to the hegemony of the United States is encouraging new alliances in South America.  If these spread, there is the possibility of the emergence of a new regional order there.  Successful regional development in South America might stimulate healthy development elsewhere.

A world organized in such regions will still need global institutions, just as a world organized in nation states does.  The difference, of course, is that the global institution would be made up primarily of representatives of the regions rather than of the individual nations.  Perhaps the major global institution would have a dual structure.  If the new structure developed out of the United Nations, for example, the Assembly could continue to be made up of representatives of nations.  The current Security Council could be replaced by one made up of representatives of the regions.  Even now there is some tendency to try to have all major regions represented there.   To have regional organizations choose their representatives would not be a drastic change, but their sense of responsibility to regional bodies would be greatly heightened. The second change would be that all the regions would control permanent memberships on the Security Council and would have the same authority. Eventually veto power should be abandoned, although for some purposes far more than a simple majority might be required for action. 

A similar dual structure might operate at the regional level. The regional government would be made up primarily of representatives of the nations constituting the region.  I favor this because decisions made at this level will need to be enforced largely through the national governments.  However, a second house could be composed of representatives of the communities that make up the nations.  Indeed, this pattern could be extended further down as well.

Another possibility at least at some levels would be to have the second house elected directly by the people. The normal pattern of representative democracy could thereby play a larger role.  My lack of emphasis on this comes from my disillusionment with respect to how this works in the United States.  Here wealth controls both the ability of candidates to mount viable campaigns and the media that shape the public understanding of the election. It is my impression that in most developing countries also wealth plays an undue role in determining popular votes.  I seek an alternative.  However, these problems are better handled in other countries that continue to have direct elections of their leaders.  Diverse experiments are certainly in order. 

One of these experiments should be to accent the idea of communities of communities.  In local communities the possibility of knowing the candidates, or at least having knowledge about them that is not controlled by the media, makes the popular vote significant.  If the local community government then sends representatives to the next level of community of communities, and so forth, I believe there is a chance that wealth may play a lesser role in government than with direct representative democracy. 

12. Decentralization versus Globalization

I am pressing systematically for following the principle of subsidiarity.  Whatever can be dealt with locally, should be dealt with there.  Of course, this will be limited.  The local community can only deal with many of its problems in community with its neighbors.  It will work with them through higher level institutions to deal with those problems that can be dealt with adequately at that level.  These communities of communities will work in similar ways with other communities of communities, and this pattern will be extended to the whole earth.  In other words, decentralization will function as far as possible, with the recognition that in our world many decisions must be made at large levels, many of them regional, but also at the global level.  This is a bottom up approach, locating sovereignty with the people, and envisioning the granting of needed power from individuals and local communities to larger units.

What we mean by globalization today approaches matters in an opposite way.  It uses every possible lever of power to compel people at lower levels to surrender their  power to shape their own lives and allow their basic condition to be determined by actors they cannot influence.  Nations are pressured to accept the authority of global institutions in which they have no significant representation.  They are pushed to accept rules that remove authority from their subdivisions and from their citizens.  Although the resulting centralization of power is for the sake of the global economy, it has extensive political ramifications as well.

The process of globalization since 1980 has operated to give dominance to economic actors over political ones.  This is fundamentally unacceptable to those who seek the common good.  There is no guarantee that political governments will act for the common good, but there is a virtual guarantee that economic actors will not.  For the common good to have a chance, we must have political institutions that can make economic policies for the sake of the people rather than simply for the sake of corporations and the wealthy.

This means that if we simply accept the current globalization of the economy, we must abandon the goal of decentralization of political power.  Only a strong, centralized global government can control a strong, centralized global economy.  The danger, of course, is that instead of doing this it will be controlled by the major economic interests.  This has happened in the United States.  I am proposing decentralization in part to counter this move to plutocracy that has gone so far not only in the United States but in other countries as well and would threaten any global government.  However, it must be emphasized that the decentralization must apply to the economy as well as to political power.  Decentralized government can be no match for centralized corporations. 

Accordingly, the earlier discussion of an international economy remains central to my proposal.  Currently there can be little decentralization of the global economy except as this is demanded by national governments.  My proposal, however, is to modify the international order in two directions.  As a first step, regions may organize their economies in ways that restrict the power of the United States, the Bretton Woods Institutions, and the transnational corporations.  I hope that this can be followed by further steps toward decentralization, but the first step is of great importance, and some economic activity may need permanently to be at the regional level.

The other direction is the move toward the local.  Whereas it is usual to indicate that technological developments call for globalization, they may in fact be used quite differently.  Modern technology allows for a great deal of industrial production to take place locally.  As the cost of transportation rises, even in purely economic terms the advantage of local production for local markets increases.  It will be possible for fairly small localities to become fairly self-sufficient.  A world economy organized in this way will be far more sustainable than the globalized one.

In a decentralized economy, the domination of the real economy by the paper one will also be greatly reduced.  As the paper economy becomes ever more fragile, this reduction of its role will also be crucial to the capacity of people to survive the crises we will undoubtedly face.  The making of vast fortunes with no contribution to the real economy will be much rarer.

13. Conclusion

We have been barraged by propaganda telling us that the economic globalization to which we are now subjected is inevitable, that no other world is possible.  This is a lie, and its exposure as such is of the greatest importance for all the inhabitants of this planet.  Actually the indefinite continuation of this globalization is not even possible. The global economy will collapse.  Fortunately, another world is possible.

Modern technology and communications are as compatible with a decentralized society as with the extreme centralization that goes with globalization.  Globalization is a choice, not a necessity.  Most of those who have chosen it have done so out of false expectations.  Those who have persuaded them both of its benefits and of its inevitability benefit greatly in the short run.  They too will lose in the inevitable collapse.

The clearer we become about the other world that is possible, the more attractively we portray it, the more we stop the destructive advance of globalization, the more we actualize elements of the possible world, the more we will reduce the suffering that is the inevitable outcome of current global policies.           

About the Author

Born in Japan of Methodist missionary parents, Cobb attended the University of Chicago Divinity School after his military service in World War II.  Subsequently he taught at Emory University and the Claremont School of Theology.  Among his books are: Is It Too Late? A Theology of Ecology; The Liberation of Life (with Charles Birch); For the Common Good (with Herman Daly); Sustainability; The Earthist Challenge to Economism; and American Empire and the Commonwealth of God (with David Ray Griffin, Richard A. Falk, and Catherine Keller). He is Professor Emeritus at the Claremont School of Theology.

Professor Cobb can be reached by e-mail at cobbj@cgu.edu