q Globalization

“Globalization 3.0”
Martin Walker

Walker made a name for himself as Manchester Guardian reporter assigned to Moscow, USSR [EG], then assigned to Washington DC. He has written much about Russia, USA and the Cold War. At the time of the article here summarized, he was a senior scholar at the Wilson Center in WDC.

SAC editor has summarized the Walker article here for use in our course. He has introduced boldface and hypertext links to SAC and other explanatory websites.

Walker argues that "globalization" is not new, and that it can be broken into three phases =

Globalization 1.0 = up to WW1 and WW2,
(England at head)

Walker presumes that "globalization 1.0" arose in the 19th century, but it is clearly a far more venerable world trend [GO SAC TXT on "imperialism"]

Globalization 2.0 = WW2 up to 2000,

*--Two men are largely responsible for planning the post-WW2 economy =
John Maynard Keynes [LOOP from his earlier experiences at the Versailles Peace conferences] and
Harry Dexter White [W#1 | W#2 | W#3]
*--One international conference and two organizations initially put these plans into operation =
Bretton Woods conference [W#1 | W#2 | W#3 | W#4]
World Bank and IMF (International Monetary Fund) [SAC]

International Organization for Standardization [W#1 | W#2] & Organization for Economic Cooperation and Development [W#1 | W#2]
*--Then GATT (General Agreement on Tariffs and Trade) [W#1 | W#2]
*--Then WTO (World Trade Organization) [151 members, each with one vote] [W#1 | W#2]

Marshall Plan for Europe [ID]
USA War Department (Pentagon) Special Procurements budget [PSP] for Japan. PSP funded roads, ports, railroads, shipbuilding yards, and other industrial enterprises, EG=Toyota automobile assembly lines [Walker:18]. Here is a paragraph from a public record website [W] on "Special Procurements" in Japan at the time of the Korean War =

The US material requirements were organized through a Special Procurements system, which allowed for local purchasing without the [regular oversight of the] complex Pentagon procurement system. Over $3.5 billion was spent with Japanese companies, peaking at $809 million in 1953, and still significant [two years after the war] in 1955. Other foreign non-military investment was less than 5% of this. US Aid Counterpart Funds gave Japan, by 1956, the most modern shipyards in the world and a 26% share in launched tonnage. Left-wing organizations were closed down, and the zaibatsu [ID] went from being distrusted to being encouraged -- Mitsui [ID],Mitsubishi [ID] and Sumitomo were amongst the zaibatsu that thrived, not only on orders from the military but through American industrial experts, including W. Edwards Deming [ID]. Japanese manufacturing grew by 50% between March 1950 and 1951. By 1952, pre-war standards of living were regained and output was twice the level of 1949. The 1951 peace treaty returned Japanese sovereignty (excluding Okinawa [ID] and the Ryukyu islands) and the non-belligerency clause in the constitution was being considered a "mistake" by 1953.

Now back to Walker's article =

Post-war economic recovery might have been more far-reaching if USSR had ratified IMF’s Articles of Agreement and accepted aid from the Marshall Plan [ID]. USSR feared this new version of USA “open door” [ID]. Soviet Foreign Minister Viacheslav Molotov expressed views on this matter that were echoed for years to come by other critics of globalization (touching even on the standard initial global aversion to influential US pop-arts [LOOP]) =

We would probably live to see the day when in your own country, on switching on the radio, you would be hearing not so much your own language as one American gramophone record after another.... On going to the cinema, you would be seeing American films sold for foreign consumption.... Is it not clear that such unrestricted applications of the principles of “equal opportunity” would in practice mean the veritable economic enslavement of the small states and their subjugation to the rule and arbitrary will of strong and enriched foreign firms, banks and industrial corporations? Was this what we fought for when we battled the fascist invaders? [Walker:19]

*1989:WDC Peterson Institute for International Economics member John Williamson coined phrase “Washington Consensus” to characterize dominant orthodoxy of “Globalization 2.0” [Walker:22] =

(1) fiscal discipline
(2) cut deficit spending
(3) tax reform
(4) market-determined interest rates
(5) competitive exchange rates
(6) privatization of state-owned enterprises
(7) deregulation
(8) secure property rights
(9) redirection of public spending toward education, health, and infrastructure

Soon Washington Consensus on economic development absorbed a vague political pretense which allowed market economics to be conflated with democracy. West-European style marketization became the central meaning of "democracy" in the vocabulary of the Washington Consensus.  Substituting the economic procedures of open market for the political structures of democracy, even while retaining the expression "democracy", elevated trans-national corporations and global financial institutions over those political units traditionally called "sovereign nation-states". Sovereign nation-states and their mercantilist militaries dominated international relations and development during "Globalization 1.0". Now, during "Globalization 2.0", market forces and fiscal power with world-wide reach took over the self-proclaimed progressive role of earlier expansive, revolutionary west-European nation-states, leaving these states with main military responsibility to enforce the consensus and guiding nation-state decision-making through lobbying and economic incentive. (Even then, regional military organizations, like UNO and especially NATO, augmented and to a degree shifted a measure of military responsibility and regulation away from nation-states.) Walker does not express it this sharply. Here’s what he did write = 

By the time the USA invaded Iraq [ID], the Washington Consensus had become notorious as a way for Western multinationals [transnational corporations] to buy and bully their way into poor countries, to impose Western rules and values, and to conduct a form of soft imperialism, disguised as the distilled and disinterested wisdom of the West. [Walker:22]

Globalization 3.0 = 21st Century,
China-centric & India-centric

*2001de11:China acceded to membership in WTO. For Walker, this marked the beginning of a third phase of globalization, characterized by what Walker calls “tectonic shifts” in global economic power. China and India were, at the time of the writing of Walker's article, showing signs of displacing the USA-dominated "Globalization 2.0".

“The West can no longer set the rules for world trade" [Walker:19]

India, with its combination of economic progress and democracy, is more promising than China, says Walker. But how decisive is "democracy" in the new world recipe for development?

Now we have the Beijing Model as substitute for "Washington Consensus". The Import-Export Bank of China [W] has become a major source of investment capital in Africa. The Chinese model of statist capitalism appeals to many leaders around the world who want prosperity, especially statist or neo-mercantilist prosperity without the pressure or even the pretense of going through or sustaining the first and second phases of the European revolution (as described here in SAC).  In other words, economic "Globalization 3.0" harmonizes very well with what SAC describes as the third phase of the European revolution, an enduring political/institutional legacy of the 20th century.

"Globalization 3.0" is visible everywhere, not just in the "developing world". Consider the opening paragraph and a half of this review [TXT] of Charles Tilly's thought-provoking Coercion, Capital and European States.

Here is how Walker summarizes this point = “countries can prosper and grow without any bothersome [22/23] democratic baggage such as free press or free elections, and it includes breathtaking levels of corruption and a docile judicial system”.

Here are some examples of recently arising, vigorous, global economic and fiscal enterprises not under “Western” domination and showing a variation on the European model of "free market" corporate influence on nation-state foreign policy, namely direct state involvement, management and even ownership, in whole or in part =

(1) Mercosur (South America) [W#1 | W#2]
(2) ASEAN (Association of South East Asian Nations) [W#1 | W#2 | W#3]. "ASEAN+3" now includes China, Japan & South Korea
(3) SCO (Shanghai Cooperation Organization) [W#1 | W#2 | W#3] is made up of China, Russia and several Central Asian states (that area that the CIA has popularized far too narrowly as "Eurasia" or (in a tone of arch belittlement) "the Stans"). Iran, India and Pakistan have “observer” status in SCO. SCO emphasizes cooperative and coordinated construction of roads and other means of transport, including an "interstate-style" north-south highway, petroleum pipelines, energy grid linking Russia w/SE Asia via Iran. SCO is pushing now to have USA military bases removed from those areas where they were placed during the USA-led war in Iraq and Afghanistan

And now a fourth since Walker wrote his piece = BRICS [ID]

*2007my:Some foreign exchange reserves reported by Hedge Fund Research =
  China             $1,300,000,000
  Saudi Arabia    4,100,000,000

Here are some examples of transnational corporations of the new era of "globalization 3.0" that might have (or need) eye-opening Wikipedia entries =

China National Petroleum Corporation [W#1 | W#2] (partially state-owned)
China Petroleum and Chemical Corporation (Sinopec) [W#1] (partially state-owned)
China National Offshore Oil Company [W#1 with ocean sounds | W#2]] (70% state-owned) tried to purchase Unocal

USA Congress forced Dubai Ports World (aka "DP World") [W#1 | W#2 | W#3] to relinquish ownership over six US ports it obtained when it bought the following English company =
P&O (Peninsular and Oriental Steam Navigation Co.) [W#1 | W#2]