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MSc. ENVIRONMENTAL AND DEVELOPMENT EDUCATION:
MSc in Environment & Development Education
UNIT 4 and 6 : Note on Globalisation
1.- Globalisation¼ ¼ _ Historical origins¼ .
" As a concept, "Globalisation" is somewhat reminiscent of the concept of "Time"¼ before the advent of modern physics¼ .in as much as¼ to paraphrase St. Agustin¼ ¼ Everyone know what time is¼ ¼ as long as they are not invited to "explain it¼ .."
Indeed, Globalisation has come to mean different things to different people¼ .. for our purposes here¼ Globalisation represents a constellation of macro-economic reforms which are a concrete reflection of the evolution of post-war capitalism. The macro-economic management adopted at the national and international levels has played a central role in the emergence of a new global economic order.
Taken in toto – the reforms "regulate" the process of capitalist accumulation globally. This however is not a "free" market: on the contrary it is supported by a neoliberal discourse: expressed through "SAPs" sponsored by the B-Ws institutions.
This constitutes a new and Highly Interventionist Framework in the affiars of "independent" nation-states.
The origins of what is generally identified as "Globalisation" can be traced back to the demise of the post WW-II agreement on the global economy; institutionalised under the Bretton-Woods agreement of 1944.
a.- Global economic crisis in the 1920s and 30s - leading to the WW2
post-WW2 attempt at voiding the calamities of unfettered free-market operation; particularly unregulated speculative capital flows.
It is often argued that the B-Ws agreement advocated a liberal international economic order in both trade and finance¼ In fact it adopted a decidedly opposite stance: i.e. a non-liberal stance with respect to the financial arena¼ .strongly endorsing the use of capital controls; as witnessed by the US treasury Secretary, Henry Morgenthau ‘s statement to the conference re: the goal of the agreement:¼ .to¼
"¼ ..drive the usurious money lenders from the temple of international finance."
Or according to the chief British negotiator,. J. M. Keynes¼ .
"Not merely as a feature of the transition but as a permanent arrangement, the plan accords every member government the explicit right to control all capital movements. What used to be heresy is now endorsed as orthodoxy."
Basic priorities underpinning/informing the Bretton-Woods Agreement¼ .1945-1970 (early 1970s.)
In short: on the international sphere, this involved introducing capital controls to prevent international capital controls to prevent international financial movements to disrupt the policy autonomy of the new welfare state.
In defending their Bretton-Woods proposals, Keynes and White ( the chief US negotiator) both outlined four central reasons why a liberal financial order was incompatible with the new welfare state.
a.- capital controls were needed to protect the new macroeconomic mechanisms developed in the 1930s that were speculative and a cause of disequilibrium in the system.
As Keynes put it: "In my view, the whole management of the domestic economy depends upon being free to have the appropriate rate of interest without reference to the rates prevailing elsewhere in the world. Capital control is a corollary to this.
b.- as welfare expenditures grew, governments could no longer afford to allow their corporations and citizens to move funds abroad to evade taxes.
c.- it was clear that the domestic financial regulatory structures built in many countries during the 1930s and 1940s to facilitate industrial and macroeconomic planning would be eroded if domestic savers and borrowers had access to financial markets abroad.
Finally, and most broadly, the welfare state had to be protected from "flights of hot money" induced by "political reasons" or a desire to "influence legislation."'
In Keynes's words:"Surely in the post-war years there is hardly a country in which we ought not to expect keen political discussions affecting the position of the wealthier classes and the treatment of private property. If so, then will continually be a number of people constantly taking fright because they think the degree of leftism in one country looks for the time being likely to be greater than some- where else."
Abandonment of B-W consensus¼ increasingly after early 1970s; the advent of "MONETARISM"
in short: the progressive deregulation of national economies: the removal of all barriers to the unfettered operation of the "market place" on a global level.
Rationale: reaffirmation of Classical/Neo-classical economic theory: Laissez faire-ism against Keynesianism.
Impact of oil price increases of 1973 and 1978/79: the origins of the 1980s Debt crisis.
World Debt crisis: Macro-Economic Reforms:
Post-1980 macro economic reforms are a reflection of the attempt to reorganise the global flows of capital/finances.
In short; from the historical viewpoint, the emergence of globalisation can be attributed to at least 5 main developments:
The first was the restoration of market confidence in the safety of international financial transactions in the late 1950s, a confidence that had been shaken by the crises of the early 1930s and the economic and political upheavals of the following years.
The second was the rapid expansion in market demand for international financial services that accompanied the growth of trade and multinational corporate activity in the1960s.
The third was the depositing of enormous surplus funds in international banking markets by opec states after the 1973 oil price increase.
The fourth was the move to floating exchange rates in the 1970s, which encouraged market actors to diversify their assets internationally in the new volatile currency markets.
Fifth, the unravelling of conservative, inward-looking financial cartels across the advanced industrial world in the 1970s and 1980s pushed financial
F. Nemani/March 1999