Keywords: Globalisation & Trade;
The economics student struggling though the mind-numbing theory of international trade will eventually hit upon learned papers by Columbia University economist Jagdish Bhagwati, whose contributions make him a candidate for an economics prize in honour of Alfred Nobel. They will soon learn that beyond his painstaking rigour he has a total commitment to free trade. So there was much glee among anti-globalisers when he rejected some aspects of globalisation. There may be less as a result of his latest book In Defence of Globalization.
Bhagwati’s popular fame follows his rejection of the case for unfettered short term capital flows. But he favours increasing economic integration based on free trade and movements of labour, capital and technology, albeit with numerous caveats. His support comes in part out of his trade theory, although there is little reference to it in the text. Rather he argues, with numerous illustrations, that the best chance that the developing world has for raising its material standard of living is an open economy. This is a book about North-South relations, so he does not quite engage with those anti-globalisers in developed countries, who are preoccupied with the impact of globalisation on them, although they often use the impact on developing economies to buttress their argument.
Bhagwati divides the anti-globalisers into two camps. One is the ‘hard core’ who have a deep-seated antipathy to globalisation. The implacably hostile get a short treatment. In a few pages he damns their trilogy of discontents ‘anti-capitalist, anti-globalisation (he means anti-imperialist), and anti-corporatist (against big business), adding an attack on the right, on communitarians, and on anti-Americans. It’s good knock-about stuff – he has a crack at post-modernism on the way too – but the purpose is to dismiss them in order to engage with the second group.
They are those within the mainstream discourse, who argue that economic globalisation is the cause of several social ills of today, such as poverty and environmental deterioration. Bhagwati says they invite a reasoned engagement. So chapter on chapter addresses their concerns: the impact of globalisation on poverty, child labour, women, democracy, culture, labour standards, the environment. One chapter provides a powerful critique against unrestricted financial flows, (but not foreign direct investment), a second defends corporations, another on migration ends with his recommendation of a World Migration Organisation. Each chapter is rich in practical examples.
Engagement is not ideological rhetoric. One has to listen to one’s audience, and deal with its understandings and perceptions. In doing that one may change one’s own mind, or a at least recognise that there are deficiencies in the current system and suggest improvements, as does Bhagwati in his last four chapters. One is entitled ‘coping with downsides’ so he admits they exist. That’s engagement.
But he does not budge from his belief that open trading strategies are good for developing countries. Given that there is no post-war example of an economy which has successfully developed as a closed economy (the oil producers aside), he is on strong grounds. When a country is steaming along at an annual 10 percent GDP growth, a lot of good things are happening. Sometimes not everyone benefits – hence the peasants’ revolt in the ‘Shining India’ election – but with luck and care there are few people actually worse off. However when the economy reaches rich OECD status, and growth slows down to 3 percent, trade makes some people worse off. That gives an opposition to globalisation which Bhagwati hardly addresses..
Like most economists, Bhagwati is so comfortable with the way the market operates he does not recognise the widespread discomfort of non-economists (which is not the same as antagonism to capitalism). It is touched upon, when he impatiently asks whether the alternative in a particular case would be better. Perhaps, too, he should have found more space to disentangle people’s concerns with social change which they attribute to globalisation but would happen anyway. The book also needs a chapter on international institutions such as the IMF and WTO, because anti-globalisers – of both types – worry about them. (There is an excellent glossary of acronyms.)
Ultimately Bhagwati wants globalisation, because he believes in the economic integration and the trade and specialisation which comes from an open economy, and which he believes will benefit those in poor countries. But he wants a more humane version than we have today. And he wants NGOs to support the evolution of globalisation, rather than resisting it.
This is an engaging book. But for the price, I would recommend that groups buy a set and talk through chapter by chapter, taking up the implicit challenge on every page, pondering whether Bhagwati has got it right – have they got it right? Those of us who have struggled through international trade theory will be surprised to find a charming cultivated man widely read in Eastern and Western literature, one who cannot resist an opinion on matters of moment, and even of total irrelevance. How on earth do sexual revelations at the OJ Simpson trial relate to globalisation? But it contributes to a lively text which will engage the open-minded.
Brian Easton wrote this in Washington while on a Fulbright New Zealand grant.