Thor May
Adelaide, 2016

 

 

 

Preface: This is a discussion paper, not a researched academic document. The reading list at the end is mostly a collection of contemporary links from the Internet and pretty accidental, not edited for quality. Where a topic is of broad general interest comes up with friends, I have adopted the practice of posting discussion starters like the present one on Academia.edu in the hope that others might also find them worth thinking about.  

 

 

 

 

 

1. Introduction

 

The first try at homo erectus globalization came out of Africa a couple of million years ago, and we’ve been at it ever since. People have travelled, ideas and artefacts have diffused across cultural boundaries, languages have conquered or borrowed, and trading networks have proliferated, often over great distances. The tide has ebbed and flowed, but it has never ceased. So what has changed in the 21^st Century? Quite a lot.

Scale and speed have changed. Science and technology have changed. Self-knowledge amongst individuals and groups has changed. Policemen and surgeons worldwide wear the same uniforms, teenagers worldwide wear the same reversed baseball caps, all taught by TV. Mechanics worldwide fix the same car engines and refrigerators. Tourists worldwide go to the same tourist spots and pose for the same selfies. Slowly, worldwide, whole populations are becoming aware of a pressing need to preserve planet earth itself as a habitable environment, a challenge none of our existing self-absorbed cultures seem capable of managing in the global interest. Nation states have emerged from city states, claimed hegemony, and been challenged in turn by private trans-national cartels. Systematic amoral management by the agents of large conglomerates has become dominant, distorting the aim and reach of other forms of globalization. The promissory notes which are money have morphed away from any physical guarantee of value and become momentary inventions of merchant bankers from London to Shanghai to Chicago, enriching the few and stripping the lifetime savings of millions.

 

2. What is globalization?

 

The preceding section suggested a very wide interpretation of what globalization might mean. On the other hand, if we look at the use of the word in newspaper articles and political discussions, the concept in play for these sources is much narrower. Later this article will argue that such a constriction of the term is misleading, but let us consider for a moment the narrower perspective. As it is currently used in the media, globalization generally means the trans-national movement of industries of all kinds (manufacturing, services etc), the international dissemination of intellectual property, the free movement of capital, the harmonization of legal codes across jurisdictions, the free movement of labour, the unrestricted competitive use by the owners of capital of different national labour forces, and the establishment of trans-national political free trade blocks to make all of the preceding possible.

In earlier eras, something like free trade blocks were defined and defended by force of arms. Empires throughout history have more or less prospered by this design. Nation states themselves are essentially free trade areas which may or may not cohere by other criteria also, such as the ethnicity of a country’s population. Globalization in this context is really a process which challenges the existing perimeters of smaller trading areas, namely countries. As with any disturbance of the status quo, there are winners and losers, as well as many others who see such processes as irrelevant to their own lives (though they may be wrong about that).

 

3. Boundary rules and who bends them

 

In the last three centuries a legal concept of strong fixed national boundaries has gradually emerged. Competitive colonialism, then de-colonialization, had a good deal to do with this. For the most part these boundaries hardly troubled ordinary people who were sure of their local identity and role. Even within the European Community, a union specifically designed to encourage the free movement of labour, only a tiny percentage of whole populations have actually sought domicile in unfamiliar jurisdictions.

In many countries, individuals with the means who did wish to travel and work elsewhere for experience had a fair degree of actual freedom to do so. The Qing emperor forbade Chinese to engage in trade or emigration, but was simply ignored. Arab dhows plied the world’s oceans. Young European men (especially) sought adventure and profit in every corner of the world. In Australia (my home domicile) we did not even have or need Australian passports until 1948.

However, since World War II, borders have become more and more restrictive for individuals, partly because this has also become a period of mass emigration. A tangle of administrative rules, enforced with the aid now of electronic tracking, capture each individual within a national boundary and determine the exact conditions under which he or she can escape to another environment.

Historically, trade across jurisdictions has tended to be of greater interest to elites than the occasional movement of individuals. For example, until 70 years ago much of Europe was continually engulfed in warfare for a thousand years. Individual armies were often staffed with mercenaries from a dozen so-called countries (really fiefdoms for this mafia chieftain or that). However, trade and piracy was critical to the treasuries of these countries/fiefdoms and therefore subject to regulation in the name of national loyalty, merchant-government collusion, monopoly agreement, constraint from shifting political treaties, and so on.

 

4. Protectionism Versus Free Trade

 

The emergence of national governments representing more than a king, together with a hardening of national borders and the rise of industry, led to a perception among many that national interests would be best served by restricting much trade in order to favour local manufacture and services. In democratic states one of the main divides between competing political parties since the 19^th Century has been between those who wish to protect local industry and those interests with an investment in free international trade.

Modern economies are largely constructed from circulating money between consumers, industries and government services. Beginning from the 19^th Century, it was slowly realized (after struggle) that industrial production required labour, so it was in the interests of the owners of capital to encourage a class of people who could be consumers/customers by virtue of earning wages for their labour in the production process. Such a system seemed more stable if the workers/consumers were protected within national boundaries from external competition by a system of tariffs and import bans.

Australia, for example, operated as an economy behind such tariff walls for much of the 20^th Century. The first federal government was run by the Protectionist Party in 1901,  and protectionism remained a strong principle of Australian government until the early 1980s. Tariff protection was never absolute, since Australia exported mainly primary agricultural products and also imported a fair range of consumer items. The protection enabled trade unions and the Federal Arbitration Commission (nowadays the Fair Work Commission) to force a level of incomes which spread a middle class standard of living across most of the population. Employer bodies never ceased to complain bitterly about this, but the broad prosperity actually established their customer base.

Partly as a result of changing international fashions in governance (economic theories, notions of enhanced productivity, neo-liberalism etc), and partly because of changing terms of trade, from the early 1980s Australia has progressively become one of the world’s more “open” economies. That is, it has abolished most restrictions on the transnational movement of capital, entered into a series of bilateral and multinational trade agreements, and more recently allowed up to 7% of the labour force (including 20% of 20 to 24 year olds) to be comprised of temporary immigrant workers. That is, recent Australian governments have been enthusiastic proponents of “globalization”. Over three decades, the outcomes of globalization for the Australian economy have been generally beneficial in spite of some downsides. Historical trading conditions, such as the industrialization of less developed economies like China’s, have had a great deal to do with the success of the Australian experiment. There are signs that this dream run is coming to an end. The real issue now is not whether globalization is “finished” (globalization is never finished), but what has changed to make the current paradigm unstable.

 

5. What happens when the 3^rd World is no longer 3^rd World?

 

There is a story that one of Australia’s conservative prime ministers from the 1990s, John Howard, visited Shanghai, looked out of his hotel window in Pudong and observing the skyscrapers remarked, “Oh, what happened here?”. What he meant was that his preconceptions of a more backward China had received a kick in the teeth. As it happens, it takes more than a few skyscrapers to make an advanced economy, and many parts of the Chinese jigsaw have a fair way to go on that score. Nevertheless, there is the seed of an important idea there.

The leaders of any country, no less than its citizens, are apt to form attitudes with a static idea of other societies. Rarely do they pause to wonder where the minds and energies of those other societies will be directed within a further generation or less. In the case of Howard and those around them, they adapted seamlessly to new business opportunities, which is the normal political thing to do, but his successors have found it a bit hard to imagine a China (for example) which actually might no longer need Australia’s fast fading edge in education, or agricultural technology, or whatever.

It is not only China. In unlikely places around the world now, there are literally thousands of cities where those skyscrapers are appearing, where new attitudes and new knowledge are taking root (often against great local resistance) and where rapid change will inevitably render large segments of those societies more or less equivalent to 1^st World states. 1^st World states, like any 3^rd World state, have after all their own urban peasantries, long outrun by whirlwinds of social and technical change. To use a Chinese example of transforming realities again,

“For the first time in China’s history a huge middle class now sits between the ruling elite and the masses. McKinsey, a consultancy, estimates its size at around 225m households, compared with just 5m in 2000, using an annual income of 75,000-280,000 yuan ($11,500-43,000) as a yardstick. It predicts that between now and 2020 another 50m households will join its ranks. They are spread across the country, but are highly concentrated in urban areas (see map); around 80% of them own property”.  [Blau 2016: The Economist’s Economic Intelligence Unit,UK]

We are apt to think about “globalization” only as it affects us, lazily embedded in a country like Australia, but the most profound effects are and continue to be in supposedly underdeveloped countries. As they transform, new challenges, opportunities and threats will arrive on our doorstep from peoples who now see themselves as our peers or better.

These newly articulate and empowered populations are unlikely to allow us the luxury of shutting them out for long with nationalist, isolationist policies. The challenges can be substantial. For example, globalized tourism and educational services have major importance and growing potential for a country like Australia (Yeates, July 11 2016), but with such interdependence can come threats to sovereignty. There is the case of Australia’s now substantial Chinese immigrant population which naturally turns to Chinese language media in Australia for guidance and information, yet these media have mostly become coercively controlled by the propaganda arm of the Chinese Communist Party in Beijing (Munro & Wen, July 10 2016). International students on our campuses are known to be heavily monitored and sometimes intimidated by home governments, notably again, China (Garnaut 2014, Behrens 2014). We will have to be nimble and inventive about protecting all segments of our own population, while finding beneficial ways to engage with a much more complicated world. It is far from obvious that present political leaderships have either the insight or the will to meet these demands.

 

6. Industry, local and global: how are the players motivated?

 

There are all kinds of animals in the human zoo. None of them are going away, regardless of borders, laws or ideologies. However you build their cages, they will adapt according to their natures. The type of individuals who operate within transnational corporations to maximize profits, indifferent to the effect on local institutions and populations, are really rather similar personalities to the so-called developers who infiltrate, say, a local government area, and manipulate local planning rules for private profit regardless of community interests. Among them are opportunists, adventurers, and entrepreneurs. In every tribe, empire, theocracy and industry these types have always existed, promoting a kind of amoral dynamic for expansion.

However just as guns empower cowards to pose as heroes, the suits of armour provided by mountains of corporate law and trade agreements empower  an “elite” class of management clones, company cockroaches, to splatter their corporations worldwide, supposedly for profit (even if the profit winds up in offshore trust accounts), or more often than not because that is what their peers are doing. Wider social benefit is rarely part of the core equation. They are untroubled if the tax base of the communities they prey upon evaporates. 

Also within the human zoo are whole herds of people, the majority, who will make use of whatever environment they find themselves in fairly passively, following some learned routine for sustenance, and breeding a family. It may be impossible to motivate them much beyond this. When cultures enter into a vortex of change, as they have for several generations now, these larger numbers of passive players will move this way or that within currents of prevailing belief, but will not initiate change personally.

7. Australian adaptation to globalized markets

 

So how, specifically, have Australian companies adapted to the changes enabling a globalized outlook since the 1980s? There are 800,000 companies of various kinds in Australia, and the inclinations of their owners naturally cover a wide gamut. The top 2,000 companies, those earning over $100 million per year, pay two thirds of company taxes (ABC Fact File, 2015) which in turn contribute about 20% of government income.

In 2014-15, 51,221 Australian companies were involved in export, an increase of 9% over the previous year (Australian Bureau of Statistics 2016). There appear to be no easily accessible statistics on the number of importers into Australia, no general licence is required, and no government department is tasked with specifically managing the process. Apart from companies per se, it is clear that vast numbers of individuals and small businesses are importing niche items to resell on sites like eBay. In other words, in Australia now there is a business culture of international trading spreading from very large corporations down to a myriad of individuals operating out of their bedrooms, thanks the internet. If a process of “de-globalization” is underway, they haven’t heard about it. Technologies, laws and word-of-mouth knowledge have opened up a space for trading, and all of these people have flooded in to fill it. This is a dynamic face of markets at work.

Another face of markets at work is the regulation required to keep them stable, and the taxation required to keep the communities within which they operate viable. Any examination of the effectiveness of company regulation and taxation in Australia is deeply disturbing. Although politics is built around a constant (fake) narrative of “paying off deficits”, in fact the economic literacy of the electorate on fiscal matters is very low, and their actual knowledge of corporate malfeasance almost non-existent.

There is a growing inchoate feeling that things are not quite right as occasional headlines about vast companies like Google and Apple paying derisory amounts of tax hit home. The reading list at the end of this paper contains a small selection (from a large database) of references to endemic company tax avoidance, (e.g. Heath, January 20 & April 27 2016) and outright law breaking (Hutchens 2 May 2016). It turns out that the federal government lacks the political will to pursue such tax avoidance, and has in fact decimated the number of federal public servants specialized in doing the job. This leads to a credible suspicion that the politicians have been bought in one way or another (in a different age it would have been called treason).

The loss of Australian manufacturing industries was the headline political news of the 1980s and 1990s, mitigated by a mining boom. More recent unease has been generated by the abuse of laws (e.g. 457 visas) to permit the employment of foreigners under strict conditions where local labour is not available. The conditions as applied are not only not strict, they have been widely extended to unskilled workers like Woolworths shopping trolley contractors and takeaway food shop staff, subjecting them to corrupted working conditions and illegal wages (Ferguson March 25 2016, Ferguson & Dankert June 4 2016). This seems to put Australia on track to join that shameful cline which extends to 36 million people living in modern slavery worldwide (Nguyen 2014). As with general company malfeasance, the abuse of immigrant working conditions in Australia is only partly and anecdotally understood by the general public, but has fed a politically potent undercurrent of anti-immigration sentiment which ranges from genuine economic concern to the latent xenophobia found in every community.

 

8. The Road Ahead

 

Australia has been called a lucky country. Certainly the problems with the transnational movement of capital and labour just outlined in the Australian context are greatly magnified in other jurisdictions. The United States is violently demonstrating that it is the disunited States, the United Kingdom is threatening to split asunder, and had just voted to exit the European Union, which itself is struggling to contain under one roof a dozen economies with widely divergent needs. Above all, working class people (first of all), but more and more also aspiring middle classes, are feeling that the deck is stacked against them and that predatory elites care nothing for their welfare. This is hardly new in history. It has played out again and again, both nationally  and internationally, often expressed through warfare and revolution. The expression of this fury at the moment is to question the whole enterprise of “globalization”. Globalization, as with all terms which become slogans in mass political movements, transforms into the stuff of ideology and division, losing most of the wider meaning which has been covered in this essay. Where we go from here will partly depend upon how local players decode and exploit the issues, and partly upon conditions imposed by powerful external forces.

 

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Reading List

 

Professional bio: Thor May has a core professional interest in cognitive linguistics, at which he has rarely succeeded in making a living. He has also, perhaps fatally in a career sense, cultivated an interest in how things work – people, brains, systems, countries, machines, whatever… In the world of daily employment he has mostly taught English as a foreign language, a stimulating activity though rarely regarded as a profession by the world at large. His PhD dissertation, Language Tangle, dealt with language teaching productivity. Thor has been teaching English to non-native speakers, training teachers and lecturing linguistics, since 1976. This work has taken him to seven countries in Oceania and East Asia, mostly with tertiary students, but with a couple of detours to teach secondary students and young children. He has trained teachers in Australia, Fiji and South Korea. In an earlier life, prior to becoming a teacher, he had a decade of finding his way out of working class origins, through unskilled jobs in Australia, New Zealand and finally England (after backpacking across Asia to England in 1972).

Globalization ©Thor May July 2016