Globalisation, Neoliberalism and Inequality in Australia
Quiggin, John, The Economic and Labour Relations Review : ELRR
In every era, there are 'vogue' words that suddenly become ubiquitous. These vogue words often emerge from academic discourse into the public debate, where they take on a life of their own. Unlike the typical technical jargon of academic specialties, however, vogue words are used in different ways by different disciplines, and even by members of the same discipline. In the 1960s, 'alienation' was such a word, used in distinct, but related ways by economists (primarily Marxian), psychologists and sociologists. 'Systems' and 'structural' had their vogue in the 1970s, and 'sustainability' in the 1980s. At the height of their popularity such terms are often seen as capable of explaining all the issues of the day. In retrospect, it is often judged that having been used to explain everything, they really explained nothing.
Undoubtedly the vogue word of the late 1990s is 'globalisation'. Although it has economic, cultural and political dimensions, the economic aspects of globalisation are dominant in most discussions. The central claim associated with economic uses of the term 'globalisation' is that the world economy now transcends national boundaries in a way that reduces or eliminates the scope for national governments to influence economic outcomes.
This paper has two main objects. The first is to discuss the nature of (economic) globalisation and the extent to which it can be considered an exogenous development. It is argued that globalisation is simply the international manifestation of the swing towards neoliberal policies of market-oriented reform that has taken place throughout the world since 1970. The second object is to consider the increase in inequality evident in a number of developed countries, and its relationship, if any, to globalisation. It is argued that increased inequality is the result of the neoliberal reform program as a whole, and that the role of globalisation per se has been overstated.
The paper is organised as follows. The first section compares two eras of globalisation: that of the global economy before 1914, based on the gold standard, and that of the period since 1970, based on floating exchange rates. These two eras were separated by the collapse of the gold standard, leading to the Great Depression and the long boom from 1945 to 1970, in which national governments pursued Keynesian macroeconomic policies within the co-operative international framework of the Bretton Woods system. The next two sections deal with explanations of globalisation and with the relationship between globalisation, wages and inequality. In each case, three approaches to the problem, focused on trade, technology and neoliberal economic policies respectively, are considered. Finally, some concluding comments are offered.
Two eras of globalisation
Much of the discussion of globalisation, particularly that put forward by right-wing advocates of globalisation, is based on the assumption that we are dealing with a wholly new phenomenon, to which the old responses of the social-democratic welfare state are inappropriate. For example, Latham (1998) contrasts the tasks of the 19th-century labour movement, which supposedly sought to civilise national capital, with his proposed 'third way', aimed at civilising global capital. As will be shown in this section, the 19th century was one of global capitalism. The progressive social reforms of the 20th century rested on an assertion of state control over the economy, including previously unrestricted international capital movements. Conversely, the resurgence of global capital has been closely intertwined with the retreat of the social democratic welfare state from the 1970s onwards.
The global economy before 1914
On many measures, the world economy was more integrated during the period before 1914 than it is today. There were few restrictions on the movement of goods, labour or capital. In particular, the reliance of colonial countries like Australia and of the newly independent nations of Latin America on overseas investment was greater than that of developing countries today. …