The Global Economy
Lately I’ve been following Argentina’s struggle to recover from the economic collapse of its economy in 1999. With ballooning external debts, corruption in high government, and the worldwide economic downturn at the end of the century, Argentina could no longer sustain the open-ended subsidy of consumerism that had flourished for years when the Argentine peso was pegged to the U.S. dollar. During the last couple of weeks the Argentine and international press has paid close attention to efforts by Argentine President Nestor Kirchner to renegotiate the country’s external debt. In 2001 Argentina defaulted on its privately held debt, and more recently forced the International Monetary Fund to offer new conditions in response to Argentina’s default on its public international debt. During this last week Spanish President José Maria Aznar told his Argentine counterpart that Argentina lacked the support of Argentina, apparently meaning that the Latin American country had to do much more to pull itself out of a problem of its own making. Kirchner responded, saying that Argentina was helping itself by defending its own interests. But his minister of the Interior, Aníbal Fernández commented much more bluntly that "los presidentes serios de los países serios, nunca advierten a los presidentes de otros países.”
The Argentine meltdown, and its recovery, provide further evidence to support John Ralston Saul in this months Harper’s Magazine [March 2003: 33-43] In “The Collapse of Globalism and the Rebirth of Nationalism” Saul traces the rise of globalist economics to the creation of the G6 in 1975. The proponents (Saul might even call them prophets, since throughout the article he makes the point that a quasi-religious moralism motivated the leaders who constructed the globalist vision) of globalism believed that modern methods in business and economics had become universal, and so could be relied on in place of decrepit, incompetent, market-protected regulatory machinery. Or, put another way, the global market took the place of public debate and democratic process. Public sectors shrank, markets grew with de-regulation; taxes were cut as corporations found newer and cleverer ways of creating debt. Treaty after treaty during the globalist heyday opened markets while ignoring working conditions and the environment. By the end of the 1990s, however, globalism faced growing protests from activists concerned for the environment and for the rights of workers, and growing evidence that the globalist vision had missed a few important details. Furious racial and nationalistic conflicts erupted in the Balkans and Rwanda. The Malaysian economic crisis of the late 1990s ended when the Malaysian government took the country out of its international agreements and instituted state-protectionist policies. And then there was Argentina.
International monetary wise men, at the International Monetary Fund and in tenured university positions in the developed world, all applauded the notion that Argentina’s currency should match the U.S. dollar. Fiscal integration in Europe, however, went carefully forward with strict requirements for members of the European Union that wanted to adopt the Euro. The Peronist governments of the 1990s apparently made no such scrupulous arrangements for convertibility. When the underlying economy could no longer sustain the peso, collapse followed quickly and harshly. Today half of all Argentines live in poverty; employment by the end of 2003 had fallen to about 15%, down from a high earlier in the year of 27%. If the Argentine recovery indicates a trend, it means the decline of global institutions and corporations, and the return of nation-states as the arbiters of world economic systems. Yet, there are other trends that currently don’t appear headed in that direction. Saul’s understanding of the world economy may be correct but miss developments that push us toward an anti-utopian globalism.
Since the appearance in 1992 of Benjamin Barber’s essay, “Jihad vs. McWorld,” in the Atlantic Monthly, and his subsequent book by the same name, it has become more and more evident that integration of world markets and a market-driven cultural hegemony of the west could co-exist with, and even fuel the spread of parochial enthusiasms. A tourist today can find CNN in Singapore and Malaysia, McDonald’s in both Red and Tiananmen Squares, and Starbucks in Riyadh. Rap has become the most popular form of music in the world. Go to any discothèque anywhere in the world and you will hear a lot of American and British music. Yet, if the world’s metropolises have gained more and more of the look of Kansas City, they also shelter a populace with little sympathy for western values, let alone for the hegemonic goals of western capitalism. In spite of the regional adventurism of Saddam Hussein, and the widely-held belief that he possessed weapons of mass destruction, when the U.S. invaded Iraq the Arab world, and to a large extent the Islamic world, almost unanimously sympathized with Hussein and the Iraqis. Cultural globalization continues apace along with growing antipathy for the west.
Many Moslems think locally and act globally. In the old days of nation-states, repressive monarchies like the one in Saudi Arabia would have had to face off with the discontented created by its policies. Instead, Saudi Arabia has pushed many of its reactionary opponents into the wide world, following the trail of Saudi money that have created schools to indoctrinate Moslems in the Saudi-preferred form of Islam known as Wahabbism. As discontent over the presence of American and Western soldiers, corporations, and music grows, many Moslems have found a global movement that fosters their local resistance. It provides a world view and a rationale for action. And it puts the tools of resistance into their hands and provides opportunities to act against the Great Satan all over the world.
One of the strangest marriages of convenience that I’ve heard of in years came to my attention thanks to a presentation at Seton Hill University by students at the U.S. Army War College. Officers and other students from the War College have come to SHU for the last four years, and have given outstanding presentations on world affairs. I’m impressed at how much more moderate and realistic the Lt. Colonels are than their civilian leaders in the White House. Senior military officers need to know major developments in the world since they might find themselves on the ground, almost anywhere, with people shooting at them. For the army especially, anyplace can become “Indian Territory.”
During the presentation this year, one officer said that it appeared that Al-Qaeda had formed alliances with Colombian drug cartels. On the Al-Qaeda side, the drug lords could provide funds for further terrorist operations. On the cartel side, Al-Qaeda’s network in the Islamic world provided a new path for drug trade. On the face of it this scenario strikes me as bizarre. Why would Al-Qaeda, striking out at the West in defense of Islam, facilitate the growth of a potentially serious social problem in Islamic countries? But my point here is not to attack or defend this idea, since I have no evidence concerning it either way. Rather, my point is how well this illustrates the global integration of markets, whether the commodity is computers, cell phones, terror, or drugs. And it also shows that international organizations, even those without legal standing and facing legal and military aggression, can gain strength from operating across borders and without national sponsorship. Globalization’s utopian phase seems to have passed. Its anti-utopian phase shows no sign of decline.