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Economy

The Nexus between Globalization and Justice

Emanuel L. Paparella, Ph.D.

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“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…”- Opening paragraph from “A Tale of Two Cities”

In 1973, E.F. Schumacher wrote a book entitled Small Is Beautiful. The book was well reviewed and was read by many people concerned with the global ecological disaster, but perhaps it was a bit ahead of its time.

That was after all the time of agribusiness and the widely held idea that “big is always better.” That in turn was integral part of a positivist approach which believes that progress is inevitable, it is always scientific and what comes at the end and is most modern is always the best of all possible worlds.

Now we are more likely to be persuaded by those who insist, as Schumacher did, that a more localized decentralized approach to economics may be the more sensible and humane approach.

The question arises: why is that? Quite simply because economic globalization has taken center stage while global warming is often derided and ignored, more often than not by those who are supposed to be our leaders. Some say that globalization actually began with the era of Western colonialism and imperialism and it is unstoppable like the idea of progress. Closer to us, in modern times, while welcomed and seen as a panacea at its inception in the last quarter of the 20thcentury, it has by now transmuted into a great debate on whether globalization is capitalism at its most pernicious or a promising way to reduce poverty world-wide. The sad truth is that while wealth has been increased it has mostly gone to the one per cent on top of the economic pyramid while the poor and middle class have seen no economic process.

Laissez-faire liberal capitalists of various stripes and assorted entrepreneurs searching for world-wide market opportunities a la Trump naturally support globalization and argue that becoming part of the world economy is the only chance for developing countries and those living in abject poverty at grasping economic opportunities and lift themselves out of poverty. They see absolutely nothing wrong with globalization per se; at best they suggest some reforms in its methods and its side effects on regional cultures. They may pay lip service to regional cultures and even religious heritages and tradition while at the same time deriding them as retrograde but necessary superstitions to keep the people docile and exploitable (hence Marx critique of religion as the opium of the people), but essentially they have reduced human beings to mere consumers within the global market place.

As William James used to quip: do not pay attention to what people say, pay attention to what they do and you will know what they really believe in. People willing to ruin reputations and impugn the professional integrity and career of their critics for an ideology reveal with their ad hominem attacks better than with their scholarly treatises the extreme measure to which they are willing to resort to in defense of their pet unexamined ideology.

And that may indeed be the reason why, on the other hand, the protesters believe that globalization is merely an excuse for big business to run roughshod over the developing world. For them “free trade,” so called, simply enables multinationals to dominate developing markets and push out local enterprise. They call for alternative ways of reducing poverty that prioritize environmental and human rights. They argue that by reducing ancient heritages and cultures to their lowest common denominator one dissolves most conflicts and distinctions among them and trivializes them.

The protesters, who have been at it for the last twenty years or so are convinced that Global capitalization is all about getting the rich to be even richer. They cite examples such as this: ten years ago a US company director got 40 times the wages of an average blue collar worker – their wages are now over 400 times as much. Just 400 families have more than half the world’s theoretical wealth. Yet calling this insanity is sneered at. Capitalism requires expansion, there has to be year on year growth, and that’s simple math: if you must expand your economy by an average of 3% a year, in a hundred years you need to consume in a day what we currently consume in a year.

In the world of culture a dichotomy seems to exist between the world of science and that of the liberal arts and the humanities, something I have written at length in previous articles. Indeed, a novel by a great novelist such as Dostoyevsky or Joyce, or a poem by Dante or Shakespeare represents a world rooted in numerous particularities where people from different backgrounds encounter one another and are trying to connect and influence each other; a world complicated by memories and ambitions and multiple connections and displacements. It’s a world wherein its unique rounded characters refuse simplifications.

On the other hand, what Globalization with its reductionistic tendencies seems to produce is the disembowelment of the complexity of world cultures, forcing their differences into the blender of consumerism and accumulation of wealth, to then regurgitate shallow formulaic platitudes, reducing the narrative of those cultures and their heritage of millenarian religious traditions, to a singular outcome; that of universal consumerism and happiness, Disney or McDonald or soccer games style, where business need not be responsive to the people or to truly democratic institutions but to the happiness of its shareholders. This is achieved by moving factories and businesses to the cheapest labor markets and keeping pays low.

According to this severe critical view, history has taught us that globalization means only one thing: the rich get richer, the poor get poorer. Corporate globalization and financial globalization without a buttressing ethical value system which sees the unity of humanity and its nexus to the earth, inevitably becomes dominated by greed and the profit motive. The critics also point out that those societies with the highest standard of living are those which allow some degree of capitalism, but combine it with a strong sense of social justice as exemplified by their social programs designed to help the less privileged and the least fortunate. The richest country in the world may not necessarily be the country with the highest standard of living. It appears that the element of distributive justice, whether it is taken seriously or it is simply ignored and considered unimportant, makes all the difference

Obviously there are two contrasting ways of looking at Globalization and the question arises: are the two views irreconcilable or is a synthesis of sort possible? While the developing world needs help from the developed world, does such help have to come at the price of pollution and unsustainable technologies under the title globalization? Does globalization have to imply that transporting goods and foodstuffs thousands of miles using valuable fossil fuels and creating massive pollution is a good thing? It appears that Globalization as envisaged by the visionless current world leaders and economic pundits measuring wealth and ignoring justice is likely to damage the developing world more than help it.

What the developing and the developed world need are initiatives that allow countries to be self-supporting and less dependent on the vagaries of world exchange rates, transport costs and international sanctions. However those promoting world trade and entrepreneurial capitalism do not want this, they want to the developing world be dependent on to their technologies and trade tie-ins. The problem is not free trade as such, but the unfair way with which it is implemented. It is apparent to any dispassionate observer that far from upholding the principles of democracy, the exigencies of commerce has served often to thwart them. All one has to do is recall that Britain’s colonial adventures in India, China and the East Indies were perpetuated by what was felt to be an inalienable right to force nations half way across the world to trade with them on their own terms.

Some have suggest that socialism is the solution, but socialism is often seen historically tied to the ideology of communism, adhered to by China’s ruling party, and this despite the fact that it is practiced in genuinely democratic countries in Scandinavia as well as in most industrialized democratic countries of the world which have social services that can only be characterized as socialistic, including the US which has social programs such as Social Security, Welfare benefits, Unemployment benefits, Medicare, Medicaid etc.

The Chinese are out to prove that democracy is not necessary for material prosperity; it is mere frosting on the cake, never mind Marx’s injunction that power ought to always proceed from the people, that is to say, from the bottom up and not from the top down. Hence ideological cultural battles invariably and regularly ensue and as it can be expected they become not part of the solutions but part of the social problems of our global village.

In point of fact, the battle between capitalism and anti-globalization, socialism, communism and all the other -ism’s one can think of is quite pointless – none of these ideologies stand up in extremis. A harmonious balance between regulation and freedom in the markets seems to be the only way forward to benefit all with at least a minimum of egalitarianism and distributive justice while preserving and enhancing freedom and democracy.

There is one glaring example that can be brought to bear to better illustrate the unfair business practices of the developed world toward the developing one. Both Britain and the US make strenuous efforts to sell cigarettes to poor countries. They give no health warnings against smoking as they do by law in their own countries. One can easily imagine how the precarious health services of these developing countries are going to cope in 20 year time with all the smoking related diseases we in the West are imposing upon them. I suppose that at that point in time the rapacious entrepreneurs of our brave new world will get busy selling them expensive medicines manufactured and developed in the West.

The major issue with globalization seems to be that corporate chairmen have power without representation. One of them is all set to become the next US Secretary of State. If we were to think of consumerism as a new political idea, corporate chairmen are the politicians, advertisements are the party broadcasts or propaganda, and the products are the manifesto. The result as advertised is happiness, fulfillment and wealth for everyone concerned. Donald Trump has promised as much to the ignorant and gullible and many are now waiting for the check in the mail. Good luck!

This analysis points to the fact that in effect we live in a semblance of democracy but in reality we live in a deterministic universe wherein we have been reduced to consuming automatons and our personhood and our very humanity has been robbed. It is now impossible to vote a corporation out of power. There is something fundamentally wrong in this situation. Branding globalization protesters as “anarchists” playing at revolution, as the media tends to do, will not lead to any solution either. Schumacher made similar points in the above mentioned book.

In this article I have simply outlined the problematic of Globalization as presented by those on opposite sides of its analysis. Those readers who may wish to further deepen their knowledge and even attempt a solution to the conundrum would be well advised to peruse a seminal and influential article by Steven Weber, Naazneer Barma, Mathew Kroenig and Ely Ratner titled “How Globalization Went Bad” which appeared in Foreign Policy of Jan/Feb 2007.

In conclusion let me say this on the present perplexing and ambiguous age of globalization, the era of the so called interrelated “global village” with its Facebook and Twitter and the Internet: it is both the best of times and the worst of times. The outcome, I suppose, will depend on how well we can hold together in our mind those two contrasting notions and wrap them around our minds as a paradox. I sincerely doubt that logical positivists and assorted entrepreneurs will be of much help here, but I would suggest that the novels of a Dickens or a Dostoyevsky, not to speak of sages and philosophers, may provide some hints on how best to bridge the chasm.

Professor Paparella has earned a Ph.D. in Italian Humanism, with a dissertation on the philosopher of history Giambattista Vico, from Yale University. He is a scholar interested in current relevant philosophical, political and cultural issues; the author of numerous essays and books on the EU cultural identity among which A New Europe in search of its Soul, and Europa: An Idea and a Journey. Presently he teaches philosophy and humanities at Barry University, Miami, Florida. He is a prolific writer and has written hundreds of essays for both traditional academic and on-line magazines among which Metanexus and Ovi. One of his current works in progress is a book dealing with the issue of cultural identity within the phenomenon of “the neo-immigrant” exhibited by an international global economy strong on positivism and utilitarianism and weak on humanism and ideals.

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Economy

Turkey and Trump’s sanctions-based “political economy”

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By the end of last year, the Turkish economy had slipped into a technical recession, boosting in 12 months by only 2.6%, despite the fact that a year ago the government expected GDP to grow by 3.8%. The slowdown is particularly striking against the background of sustainable development over the past seven years: in 2010, the country’s GDP grew by 8.5%, in 2011 – by 11.1%, in 2012 – by 4.8%, in 2013 – by 8.5%, in 2014 – by 5.2%, in 2015 – by 6.1%, in 2016 – by 3.2% and in 2017 – by 7.4%  This trend has turned Turkey into one of the fastest developing economies, earning it 17th position worldwide in nominal GDP and 13th in the GDP value regarding purchasing power parity.

The situation changed by the middle of 2018, when relations with Washington deteriorated to the point of a trade war. The Trump administration resorted to the much-practiced method of targeting the “dissenters”: it raised drastically customs duties on steel and aluminum imported from Turkey (which, however, did not prevent the United States from becoming the second buyer of Turkish metallurgical produce by the end of the year). On August 1 the US introduced sanctions against Turkish Interior and Justice Ministers. At that time, the main stumbling block (at least on the surface of it) was Turkey’s refusal to release American priest Andrew Brunson who was detained in 2016 on charges of  espionage and links to Fethullah Gulen’s movement along with the Kurdistan Workers ’Party. For some time Donald Trump’s propaganda slogans were dominated by the maxim “to save rank-and-file pastor Brunson”.

Turkey responded by slapping import duties on American goods: cars, alcohol, tobacco, cosmetics. And, of course, it put two US ministers on its sanctions list.

But the forces were clearly far from equal. As a result, the Turkish lira collapsed. At the beginning of 2018 one dollar traded for 3.8 liras, whereas by the end of the year it sold for 5.3 liras. Moreover, at the peak of the weakening of the national currency, the dollar cost almost 7 liras. The Central Bank of Turkey was forced to raise the interest rate, even despite opposition from the country’s omnipotent president. Today, the rate has climbed up to the red level of 24%. Consequently, there has been a drop in the sales of real estate, cars, and a number of other industrial goods. Prospects for inflation have materialized too – in October, inflation hit a fifteen-year high, exceeding 25 percent.

Recep Tayyip Erdogan put the blame for the crisis on Turkey’s foreign ill-wishers. This time – with a lion’s share of truth.

In October, the court sentenced Branson to imprisonment for exactly the time he had already served. The pastor returned home, mutual sanctions were lifted, which partly calmed the markets. But only partly.

According to the Turkish Statistical Institute (TSI), the country’s GDP increased by 2.6% by the end of the year. At the same time, the service sector grew by 5.6%, agrarian – by 1.3%, industrial – by only 1.1%. Exports, compared to the previous year, increased by 7% – to 168 billion dollars (a record figure in the entire history of the Turkish Republic). Foreign trade deficit, amid a boost of imports prices,  decreased by 28.4% to $ 55 billion, while imports proper dropped by 4.6% to 223 billion dollars. Tourism revenues increased by 12.3% to 29.5 billion

At first glance, the situation is far from critical, but, according to the TSI, over the year, per capita GDP dropped from $10,597 to $ 9,632; household expenditures, although going up by 1.1% on the year, went down by 8.9% in the fourth quarter. In December unemployment rate among the able-bodied population reached 13.5% – more than 4.3 million people.

Nevertheless, Berat Albayrak, Minister of Treasury and Finance of Turkey, sounded optimistic: “The worst days for the economy are over. The government is confident that the growth of the Turkish economy in 2019 will match the forecasts laid down in the New Economic Program. ”

In general, the above-mentioned program envisages the implementation of reforms that will protect export-oriented small and medium-sized enterprises, strengthen their competitiveness, stimulate the economy to secure a high level of added value. An important part of the document is a clause that stipulates cutting government spending on expensive infrastructure projects, often designed to foster the image rather than the economy.

Specialists differ in assessing the prospects for the Turkish economy: forecasts vary from a slight increase to a further decline. In particular, according to the Frankfurter Allgemeine Zeitung, “Economists expect the cooling to continue. The OECD forecasts a further reduction in the economic growth of (Turkey-author) for 2019 to minus 1.8 percent.” So far, the trend is as follows: industrial production, for example, in January 2019 fell by 7.3% against January last year.

Among the chronic illnesses of the Turkish economy is a deficit of the balance of payments, which the government traditionally tries to compensate with foreign loans and foreign investment – these primarily provided economic growth in previous years. Now this source seems nearly exhausted as investors worldwide are growing increasingly wary of developing markets. The position of Turkey is aggravated by the uncertainty of foreign capital about the independence of the Central Bank, its concerns about the unpredictability of the country’s policy and the adequacy of its economic course (first of all, its adherence to ambitious projects with questionable economic efficiency).

Also, potential investors are deterred by the strained relations between Ankara and Washington. For many, President Trump’s recent treat to “ruin” Turkey for its policy on Syrian Kurds and his recent decision to abolish customs preferences for a number of Turkish goods came as signaling the continuation of a trade war. Significantly, these statements were made after the Turkish leadership confirmed its determination to acquire Russian air defense systems, thereby making it clear that pursued a course towards independence in strategic decision-making.

For Turkey, the United States is a fairly important trading partner, which in 2018 accounted for almost five percent of Turkish exports ($ 8.3 billion) and more than five percent of imports ($ 12.3 billion).

The recession in the Turkish economy has a certain negative impact on Russian-Turkish economic results. Last year, Turkey became Russia’s sixth largest trading partner. In particular, it accounts for a considerable share of Russian exports of metals, grain and, most importantly, energy carriers (the second, after Germany, importer of oil in the world). In February, according to Gazprom, the export of Russian gas to non-CIS countries decreased by 13% in annual terms. The company said the main reasons behind the decrease were the warm weather in Europe and the crisis in Turkey.

The Russian economy has succeeded in adapting to the extensive sanction pressure from Washington and, it looks like the Trump administration has now chosen to “attack from the flank”, targeting one of Moscow’s major foreign economic partners. It would not be a mistake to assume that the ability of the Turkish leadership to resist pressure from its “strategic ally” and NATO partner in the near future will largely determine not only economic, but also political relations between Moscow and Ankara. 

First published in our partner International Affairs

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Economy

Ambiguity in European economic leadership

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Europe’s economic situation remains uncertain! The European economic crisis and austerity policies remain in place. On the other hand, there is no sign that the EU is passing through the current situation. Two conservative /Social Democrats in Europe have not been able to effectively counteract the economic crisis over the last few years.

 This same issue has led to anger by European citizens from traditional European parties. Subsequently, the trend of European citizens to nationalist and extremist parties has increased in recent years.

The events that have taken place in France in recent months have led to disappointment with the eurozone leaders over the current deadlock.The most important point is that Macron was planned to assume the title of the Europe’s economic leader in the short term, and that was to be after succeeding in creating and sustaining economic reforms in France and the Eurozone.

 Meanwhile, European citizens expressed their satisfaction with the election of Macron as French President in 2017. They thought that the French president, while challenging austerity policies, would strengthen the components of economic growth in the European Union. Moreover, EU leaders also hoped that Macron’s success in pursuing economic reforms in France would be a solid step in pushing the entire Eurozone out of the economic crisis.

 In other words, in the midst of anti-Euro and extremist and far-right movements in Europe, Macron was the last hope of European authorities to “manage the economic crisis” which was raising inside the Eurozone: the hope that has soon faded away!

The main dilemma in France is quite clear!”Failing to persuade French citizens” on his economic reforms, and Macron’s miscalculations about the support of French citizens for himself, were among the important factors in shaping this process. Macron had to give concessions to protesters to prevent further tensions in France.

 After the country’s month-long demonstrations, Macron was forced to retreat from his decision on raising the fuel price. Besides, he had no way but to make promises to the French citizens on issues such as raising the minimum wages and reducing the income tax. This had but one meaning: Macron’s economic reforms came to an end. Right now, European authorities know well that Macron is incapable of regaining his initial power in France and the Eurozone by 2022 (the time for the France general elections).

 Therefore, Macron has to forget the dream of EU’s economic leadership until the last moments of his presence at the Elysees Palace. Of course, this is if the young French president isn’t forced to resign before 2022! The European authorities and the Eurozone leaders have no alternative for Macron and his economic reforms in Europe. That’s why they’re so worried about the emergence of anti-EU movements in countries such as France and Germany.

 For example, they are well aware that if Marin Le Pen can defeat Macron and come to power in France during the upcoming elections, then the whispers of the collapse of the Eurozone, and even the European Union, will be clearly heard, this time with a loud voice, all over the Europe.

First published in our partner Tehran Times

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Economy

Economic integration: Asia and the Pacific’s best response to protectionism

Armida Salsiah Alisjahbana

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Deepening economic integration in Asia and the Pacific is a longstanding regional objective. Not an end in itself but a means of supporting the trade, investment and growth necessary to achieve the 2030 Agenda for Sustainable Development. It is a priority for all member states of the United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP). China has a valuable contribution to make so I am beginning 2019 with a visit to Beijing. One to discuss with Chinese leaders how we can strengthen our collaboration and accelerate progress.

The case for deeper integration in Asia and the Pacific is becoming increasingly apparent. Recent trade tensions highlight Asia and the Pacific’s vulnerability to protectionism from major export markets. UN ESCAP analysis shows how regional supply chains are being disrupted and investor confidence shaken. Export growth is expected to slow and foreign direct investment to continue its downward trend. Millions of jobs are forecast to be lost, others will be displaced. Unskilled workers, particularly women, are likely to suffer most. Increasing seamless regional connectivity – expanding the infrastructure which underpins cross border commercial exchanges and intraregional trade – must be part of our response.

We should build on the existing Asian transport infrastructure agreements UN ESCAP maintains to further reduce regulatory constraints, costs and delays. For instance, UN ESCAP members are working to improve the efficiency of railway border crossings along the Trans-Asian Railway network. There is great potential to improve electronic information exchange between railways, harmonise customs formalities and improve freight trains’ reliability. The recent international road transport agreement between the governments of China, Mongolia and the Russian Federation grants traffic rights for international road transport operations on the sections of the Asia Highway which connect their borders. We should expand it to other countries. There is also huge opportunity to develop our region’s dry ports, the terminals pivotal to the efficient shipment of sea cargo to inland destinations by road or rail. A regional strategy is in place to build a network of dry ports of major international significance. UN ESCAP is looking forward to working with China to implement it.

Sustainable energy, particularly cross-border power trade, is another key plank UN ESCAP member States’ connectivity agenda. Connecting electricity grids is not only important to meet demand, ensure energy access and security. It is also necessary to support the development of large-scale renewable energy power plants and the transition to cleaner energy across Asia and the Pacific. The fight against climate change in part depends on our ability to better link up our networks. ASEAN’s achievements in strengthening power grids across borders is a leading example of what political commitment and technical cooperation can deliver. At the regional level UN ESCAP has brought together our region’s experts to develop a regional roadmap on sustainable energy connectivity. China is currently chairing this group.

For maximum impact, transport and energy initiatives need to come in tandem with the soft infrastructure which facilitates the expansion of trade. UN ESCAP analysis ranks China among the top trade facilitation and logistics performers in our region. This expertise contributed to a major breakthrough in cross-border e-commerce development and ultimately led to a UN treaty on trade digitalisation. This has been adopted by UN ESCAP members to support the exchange of electronic trade data and documents and signed by China in 2017. Now, UN ESCAP is working to support the accession and ratification of twenty-five more countries who recognise the opportunity to minimise documentary requirements, promote transparency and increase the security of trade operations. Full implementation of cross-border paperless trade in Asia and the Pacific could reduce export costs by up to 30 percent. Regional export gains could be as has high as $250 billion.

As we look to the future and work to accelerate progress towards the 2030 Agenda’s Sustainable Development Goals, economic integration must remain a priority. A strong UN-China sustainable development partnership is essential to take this agenda forward and strengthen our resilience to international trade tensions and economic uncertainty. Working with all the countries in our region, we have a unique opportunity to place sustainability considerations at the heart of our efforts and build seamless regional connectivity. That is an opportunity, which in 2019, UN ESCAP is determined to seize.UNESCAP

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