Globalization: A Moral Imperative
Bhagwati, Jagdish, UNESCO Courier
A leading international trade theorist argues that free markets and integration into the world economy are key to making a dent on poverty
"Globalization" has become today's buzz word. It has also become a battle ground for two radically opposed groups. There are the "anti-globalists" who fear globalization and stress only its downside, seeking therefore powerful interventions aimed at taming, if not (unwittingly) crippling it. Then there are the "globalists" (a class to which I belong) who celebrate globalization instead, emphasize its upside, while seeking only to ensure that its few rough edges be handled through appropriate policies that serve to make globalization yet more attractive.
Many anti-globalists consider the central problem of globalization to be its amorality, or even its immorality. But these critics have too blanket an approach to globalization. The word covers a variety of phenomena that characterize an integrating world economy: trade, short-term capital flows, direct foreign investment, immigration, cultural convergence et al. The sins of one of the above cannot be visited upon the virtues of another. Some are benign even when largely unregulated whereas others can be fatal if left wholly to the marketplace.
In particular, the freeing of trade is largely benign: if I exchange some of my toothpaste for some of your toothbrushes, we will both be better off than if we did not trade at all. It would require a wild imagination, and a deranged mind, to think that such freeing of trade leads to debilitating economic crises. But only ideologues would deny that the hasty freeing of short-term capital flows, under pressure from what I have called in Foreign Affairs (May 1998) the US-Treasury Complex, was what helped to precipitate the huge Asian financial crisis. Equally, it is illogical to believe, as non-economists who fear globalization do, that freeing of trade is bad because the freeing of short-term capital flows led to a debilitating financial and economic crisis and could do so again. In fact, while there are some obvious similarities between free trade and free capital flows--e.g. that segmentation of markets creates efficiency losses--the economic and political dissimilarities are even more compelling and policy makers cannot ignore them.
Anti-globalist critics are in fact often reacting viscerally to a much larger issue: the victory of capitalism over its arch rival, communism. For campus idealists who have always looked for alternatives to what they conventionally consider to be the greed and lack of social conscience that characterize capitalism, the situation is psychologically intolerable. Some have turned to street theatre, nihilism and the antiintellectualism that has been manifest in the last few years. The more sophisticated have succumbed to a stereotypical representation of corporations as the "evil" forces of capitalism that have captured the state, democratic institutions, and even international bodies such as the World Trade Organization.
What these critics often forget is that certain economic freedoms are basic to prosperity and social well-being under any conditions, and are thus of the highest moral value. Property rights and markets, for instance, provide incentives to produce and allocate resources efficiently, and can in turn strengthen democracy by allowing a means of sustenance outside pervasive government structures. …