Adverse Effects of Globalization
BY TRANSCEND MEMBERS, 29 October 2012
by John Scales Avery – TRANSCEND Media Service
Today, economic globalization aims at increased trade throughout the world. At first sight, this might seem to be a benefit. However, laws preventing the exploitation of labor are not universal. The same unspeakable conditions experienced by workers in factories and mines during the early phases of the Industrial Revolution in Europe can be found today among factory workers in Indonesia, or children weaving oriental carpets in Pakistan; and it is estimated that in India alone there are 80,000,000 child laborers.
In many developing countries today, industrialization involves slave-like working conditions. Meanwhile, in the industrialized countries, workers may lose their jobs because they cannot compete with underpaid labor in the Third World. Large multinational corporations are tending to move their operations to regions where salaries and living standards are very low. For free trade to be truly beneficial to all the peoples of the world, universal laws must be established to regulate business and industry globally, and to ensure that multinationals act in a way that is both socially and ecologically responsible.
Adam Smith’s followers advocated complete freedom from governmental restraint, but the history of the Industrial Revolution demonstrates the need for regulatory social legislation. The historical perspective makes it clear that laws establishing minimum wage levels and laws prohibiting child labor are needed to avoid horrors such as those described by John Fielden in “The Curse of the Factory System”. Today, birth control is also necessary on a global scale, just as it once was needed in England, to raise workers above the starvation level. Finally, unions must be permitted everywhere in the world. If trade is globalized, the hard-won reforms achieved by Charles Knowlton, Annie Besant the Fabians and others must also be globalized.
The story of globalization has until now been a story of escape from regulatory legislation. For example, many Danish farmers have moved their operations to Poland or to the Baltic nations in order to escape from Denmark’s strict environmental regulations. Another example is escape from taxation: One might think that taxation of foreign resource-extracting firms would provide developing countries with large incomes. However, there is at present no international law governing multinational tax arrangements. These are usually agreed to on a bilateral basis, and the industrialized countries have stronger bargaining powers in arranging the bilateral agreements. As a result, such agreements are usually very unfair, and multinationals escape all but the mildest taxation.
We can also consider the “non-discrimination” principle adopted by GATT (the General Agreement on Terrifs and Trade). This principle states that participating countries “cannot discriminate between like products on the basis of the method of production”. This single principle allows multinational commerce to escape from all the humanitarian and environmental reforms that have been achieved since the start of the Industrial Revolution. No matter if the method of production involves destruction of a tropical rain forest, no matter if forced labor was used, we are not allowed to discriminate “on the basis of the method of production”.
The present situation is that agriculture, trade and industry have become global, but the world still lacks adequate institutions at the global level to watch over what is happening and to insure respect for human needs and respect for the natural environment.
Today’s global economic interdependence, instantaneous worldwide communication, and the need for peaceful resolution of international conflicts all call for strong governmental institutions at the global level, but the United Nations today lacks many things that would be necessary if it is to perform such a role: It lacks a legislature with the power to make laws binding on individuals and corporations. It lacks mechanisms for enforcing such laws. And it lacks a large and dependable source of income.
It would be logical to improve the United Nations by giving it the things just mentioned, and by giving it at the same time the task of regulating multinational corporations to ensure that they act in a socially and ecologically responsible manner. It would also be logical to entitle the UN to a fee for acting as a referee in relationships between multinationals and the developing countries. These reforms must come someday because of the logic of our present situation. I hope that they will come soon.
Suggestions for further reading:
- John Fielden, “The Curse of the Factory System”, (1836),
- Charles Knowlton, “The Fruits of Philosophy”, (1832).
- John A. Hobson, “John Ruskin, Social Reformer”, (1898).
- John A. Hobson, “Imperialism, A Study”, (1902).
- E. Pease, “A History of the Fabian Society”, Dutton, New York, (1916).
John Scales Avery, Ph.D. is a member of the TRANSCEND Network and Associate Professor Emeritus at the H.C. Ørsted Institute, University of Copenhagen, Denmark. He received his training in theoretical physics and theoretical chemistry at M.I.T., the University of Chicago and the University of London. He is the author of numerous books and articles both on scientific topics and on broader social questions. His most recent book is “Crisis 21: Civilization’s Crisis in the 21st Century.”
This work is licensed under a CC BY-NC 3.0 United States License.