Globalisation is old hat

There are good reasons why free markets and globalisation have become the prevailing orthodoxy and a 'hardened creed', around the world if not yet in South Africa. Free trade and liberty have conclusively proved themselves as engines of wealth creation and continuously rising prosperity for all. To put it simply, we are all better off when we can buy from anyone on the planet, because if everyone can sell to us this maximises the competition to offer us good-value goods and services.

But those who now sing the praises of globalisation make a fundamental mistake. Globalisation is not a new, untried and uncontrollable system replete with all sorts of potential flaws and problems.

On the contrary, from the Industrial Revolution until two generations ago the normal state of world affairs was the economically unregulated worldwide trade of global capitalism. Trade and technological development transformed the world in the greatest prolonged spurt of growth and prosperity in human history. Then, in almost a century of aberration, the forces of anti-globalism clamped down on international trade during and after the two World Wars, as interventionist nation-states were created and trade barriers were strengthened.

Only recently have we begun tentatively to re-emerge from this aberrant phase. But even the developed Western countries have not yet succeeded in restoring the degree of globalisation that our grandparents took for granted. It is the absence of globalisation which needs justifying, not its progress.

So it is curious to observe the left suddenly 'girding its loins' against internationalisation, which was long an integral part of the labelling of communism as in Comintern (Communist International). All Marxists and leftist writers since Marx have stressed international movement and the breaking down of borders and barriers. They have also called for the destruction of local monopolists, a call with which anti-monopoly free marketers can agree, noting that globalisation brings exactly that benefit.

Opponents of globalisation are shamelessly anti-Third World and anti-poor. Globalisation tends to pull Third World working conditions upwards and thus close the gaps with the First World, an example being Nike's employment of Indonesian workers. Trade unions try to close off this option by preventing companies from relocating and, failing that, by insisting that they pay as much as they paid First World workers, thus destroying the comparative advantage of Third World workers.

Sometimes cloaked by irrelevant euphemisms about 'economic security' or 'social justice', such anti-globalisation conspiracies are sinister and despicable, and government is right not to fall for their arguments. To its credit, government does sound fairly supportive of globalisation, while asserting that there is really no choice in the matter.

In fact, South Africa does indeed have choices about opening up to the global market, and the government seems to be gradually making the right choices. The problem is that the population and foreign investors are thus far unconvinced of government's real commitment to globalisation as the right way to go. What is needed is greater confidence by government in its own judgement, so that it can stop messing around with half-hearted measures and move ahead with vigour.

Source: Leon Louw is the Executive Director of the Free Market Foundation. This article may be re-published without consent but with acknowledgement. The views of the author of this article are not necessarily shared by the members, council or patrons of the Foundation.


FMF Feature Article / 08 August 2001 - Policy Bulletin / 11 August 2009