The challenge before scholars and political leaders today is to minimize the disruptive and contentious aspects of globalization, and maximize its benefits, especially for those who are as yet outside the pale of development.
Neither the developed economies nor the developing can afford to either ignore or reject globalization. These are not realistic options. Rather, we must learn to deal with it, cope with it and manage it. We have to manage both the economics of globalization and the politics of globalization. I would go one step ahead and say that we must also manage its cultural and intellectual consequences. These have to be managed in a democratic manner. And, when we talk of democratizing global governance, we must also accept the obligation of democratizing national and local governance.
Joseph Stiglitz has put forward several interesting ideas on each of these issues, especially on bridging the “democracy deficit” in global governance. These ideas deserve careful consideration. Some of these ideas were proposed in the Report of the South Commission. But so far they remain proposals, because the political and intellectual leadership of the developed world has not yet shown a willingness to grapple with them.
Competition is a double-edged sword. Left to itself, it helps the strong and can hurt the weak. In social and economic phenomena, the biblical saying “to him that hath shall be given” has a wide applicability. Hence, the role for state intervention and the need for “rules of the game” that ensure that the costs and benefits of competition and of globalization are spread out as evenly as possible.
Even in a wholly globalized and integrated world, states have a role to play. People in democratic societies expect governments to deliver on their basic needs, both economic and social needs. While the private sector will increase its role and bring prosperity to newer generations of entrepreneurs, professionals and workers, the government will be expected to step in and provide a range of services. These include, apart from law and order and internal and external security, the provision of basic education, public health and basic medical care, the protection of the environment and such like.
If the government has to provide such services, then the nation state must be able to mobilize and deploy both financial and administrative resources. Thus, even in a “borderless world”, to use Francis Fukuyama’s evocative concept, governments will have a role to play and will be expected by the people to play that role.
Moreover, private capital flows will go only where risk is quantifiable and reward is tangible. While globalization has enabled increased flows of capital from the developed to the developing world, states will continue to have a role. People expect governments to invest in public goods. Official development assistance must be extended to bridge the development gap between the world’s haves and have-nots.
When we talk of globalization and of a borderless world, the focus so far has largely been on the movement of goods, capital and, largely, financial and logistical services. There is as yet no framework for the movement of people. On the other hand, developed economies are becoming more restrictive with respect to immigration and the movement of labour. Even economic theory has largely focused on merchandize trade and capital flows, paying little attention to the economics and politics of managing migration in the uncertain world that we live in.
Doha mission
Even in the area of trade, we have still not been able to find an acceptable basis for making globalization more development oriented. This was the great mission of the Doha Development Round of multilateral trade negotiations. The Doha Round was explicitly called a development round because of the anxieties generated by the globalization process.
If the Doha Round is to have a successful outcome, and we sincerely wish this, then it must remain true to its original mandate of being a development round. We cannot continue to live in a world of “butter mountains” and “rivers of milk”, liberally funded by government subsidies, when the poor starve in the villages of the Third World. We all know subsidies distort trade. In the case of the agricultural subsidies offered by developed industrial economies, these not only distort trade but destroy lives.
We must find ways in which trade aids development to ensure that globalization works for all. This is the challenge before the leadership of the developed world.
While economists have paid some attention to the economic consequences of globalization and the management of economic globalization, not much attention has been paid to the politics of globalization and its political management.
The United Nations could have been a political instrument for managing globalization, but so far it has not succeeded. Indeed, it will not be able to succeed unless it reforms itself as an institution, and its own management is more democratic and more representative.
Globalization in an increasingly multipolar world requires global “rules of the game” not just for trade and capital flows, but for the management of peace and security, the management of the environment and of resource use. Just as nation states are unable to command the forces of economic globalization, nation states are also proving ineffective in dealing with the social, cultural, political and environmental aspects of globalization. Governments find themselves constrained in dealing with “cross-border” threats, be they HIV Aids or Avian Flu, be they global warming or terrorism. When such threats emanate from non-state actors, governments are even less well equipped to deal with them.
Asian response
In Asia, too, we need regional institutions that will enable us to deal with regional challenges and opportunities. While regional associations and arrangements are here to stay, we cannot neglect the need to strengthen global institutions and multilateral arrangements.
We are at a crossroads once again in the evolution of human history. The world in the 21st century cannot be managed in the way we have tried to manage it in, what Eric Hobsbawm dubbed, “the short 20th century”. The rise of Asia, the rise of other new nations and political movements, the emergence of new technologies, especially information, communication and entertainment technologies, global pandemics and global environmental challenges, all these present new challenges. We need new responses. Old ways of managing global affairs, wherein a single-digit “Group of Nations” could constitute itself into a global board of management, are over.
There are, of course, a few big powers, and these will continue to exercise global influence. But we must learn to work with nations big and small. That is the challenge and the opportunity before us. The sooner we learn to deal with this challenge, the easier it will be for us to turn globalization into an opportunity.