GLOBALISATION: ENGINE OF A NEW WORLD ORDER

By Roberto Savio and - - Reprint | | Print |

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ROME, Dec 21 2010 (IPS) - Citizens around the world have been hit with a flood of startling news recently: the Wikileaks revelations about how US officials see the world and how speculative financial capital takes advantage of the weakness of states, now also in Italy and, it seems, on the verge of moving into Germany. Meanwhile national budgets are being slashed in all the industrialised countries and waves of layoffs imposed.

In light of these developments, we should reflect on certain themes that are absent from the everyday news and should guide our understanding of events: a reversal of globalisation, the social deficit versus the fiscal deficit, and the fallout from post-US unilateralism. Let’s start with the last, which is the easiest.

It is clearer and clearer each day that the United States is a country in decline, even for US elites. Until now the majority of US citizens have been able to avoid this reality, inventing popular movements like the Tea Party, made up of whites who on the one hand want to reduce the role of the state so that citizens can “take control of their lives”, and on the other want their country to resume its role as world leader.

As Roger Cohen wrote in the New York Times, Obama will pay a heavy price for his role as communicator to his country of the need to adapt to the new reality. His attempts to open a new dialogue with Russia and China have stirred up fierce resistance. In the next two years the Republican Party will try to block the Obama administration whatever the cost. The message is very clear: Obama must lose the 2012 election.

Meanwhile, for specialists the Wikileaks revelations contain nothing new, but they demonstrate two things: that the US remains convinced it should rule the world even though George W. Bush has left office, and that those who are speaking with US diplomats simply tell them what they want to hear.

Like it or not, for the most part the US is stuck in the hangover from the unilateral world in which it has lived since the Second World War. The world in growing more multilateral by the day, not only in terms of China and India, as countries that were previously considered part of the Third World, from Brazil to Indonesia, are beginning to make themselves heard in global governance.

It is clear that when China emerges as the leading industrialised country in about 2025, the United States will have to have concluded its adaptation to reality. How this will happen is largely impossible to predict. At present, the country is reaching for unrealistic leadership figures, like Sarah Palin, who polls show has grown increasingly popular, outstripping Obama.

The second point is more complex. The primary concern of the US is what to do about speculative capital, against which the government lacks adequate means of defense. It is widely assumed that speculative capital will go after countries with structural weaknesses in their financial systems.

For this reason, fiscal deficits must be cut, along with the state budget, whatever the cost. In this light, massive layoffs are the proof of political wisdom, as are cuts in social services from education to health care, increasing the retirement age, and using pension funds to save financial institutions. According to recent figures, more than 12 trillion dollars to save the financial system. As a part of the rescue plan, the US Federal Reserve alone has distributed more than 9 trillion dollars in short-term bonds -equal to more than half of the country’s GDP.

The Federal Reserve, which is printing 600 billion dollars to defend its economic manoeuvre, has stated that this will create almost 700,000 jobs. If one job costs one million dollars, what financial institution is going to provide the funds to eliminate unemployment?

In the logic of capitalism, eliminating the risks of the law of the market is a major error. This has always been the argument against the economic logic of the left. But these days it is not the left that is following this logic but the entire political establishment. The fiscal deficit is now a far higher priority than the social deficit, which should normally be the primary concern of politics.

We now come to the third observation, the reversal of globalisation. It is no secret that economic globalisation was set in motion by the North so it could continue to grow rich off of finance and trade.

Henry Kissinger called globalisation the new phase of US supremacy. Washington worked to restrict the activities of the United Nations to development assistance, humanitarian aid, and technical and social assistance in areas like health, education, and other areas that do not generate profits. The World Trade Organisation (WTO) assumed control over trade, while finance -the other motor of globalisation- simply lacks any governing body.

The globalisation of transportation has made it possible for the South to access the markets for the first time. A telephone, television, or car, for example, is always assembled of parts made around the world, with non-local technological and commercial licences. The EU discovered this when they wanted to block Chinese imports and discovered that the majority of goods were in reality products of European firms that relocated to China.

There is more and more talk -and not casual- about the “emerging markets” that entered the G20 and whose weight is felt in international processes. It is not a matter of only China, India, or Brazil, but also Indonesia and South Africa.

In the 16th century the countries of the North represented 20 percent of the Gross World Product (GWP) as opposed to 80 percent for those that would later be called developing countries, with China accounting for half of that. With colonialism, the North’s percentage rose to 30 percent of GWP -by 1913- and double that with imperialism. From 1950 on, the countries of the South accounted only for 40 percent as the North accounted to 60 percent of GWP.

The question, then, is this: without access to cheap raw materials and trade privileges favouring it in dealings with the South, home to 5 billion people, can the North maintain its way of life and privileged use of the planet?

Might we be entering into a period of globalisation in reverse, which will rescind the privileges of the North? The time has come to ask this question (END/COPYRIGHT IPS)

(*) Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency.