ANALYSIS GLOBALISING GLOOM TRANSCRIPT OF A RECORDED DOCUMENTARY Presenter: Diane Coyle Producer: Chris Bowlby Editor: Nicola Meyrick BBC White City 201 Wood Lane London W12 7TS 020 8752 6252 Broadcast Date: 15.11.01 Repeat Date: 18.11.01 Tape Number: TLN145/01VT1046 Duration: 27'27" Taking part in order of appearance: Mario Vargas Llosa Peruvian novelist Anita Roddick Founder of the Body Shop. Harold James Professor of History at Princeton University and author of The End of Globalisation. Ann Pettifor Former Manager of the Jubilee 2000 campaign Nicholas Crafts Professor of Economic History, London School of Economics Colin Hines Writer and Campaigner COYLE Are you sitting comfortably? I'm sure you are. A warm home filled with consumer goods, a decent meal under your belt, a glass of wine at your elbow perhaps - but do you ever ask yourself whether your comfort depends on the exploitation of others, on sweatshop labour in developing countries and the desperate poverty of three quarters of the world's population. Is your gain the product of their pain? RODDICK Human rights standards are universal. The right to have, you know, safety and health in the workplace, the right to organise, the right to be heard, the protection of kids - these are basic standards and they seem to disappear down the plughole when corporations are closing down their factories in, say, the West, pitting worker against worker, and just looking for the cheapest most docile passive workers in countries with no human rights standards. VARGAS LLOSA I think the movement against globalisation is what Karl Popper called the temptation of the tribe. This nostalgia of this secure past in which everybody was secluded in a very small world, the world of the tribe. Something that is objectively finished - but not in the mind, the soul, it is still there as a temptation which I think reappears periodically in history. COYLE As the world heads into a murky future of war and recession, questioning the international economic order has taken on a new urgency for both its defenders, like the Peruvian novelist Mario Vargas Llosa, and its critics, including Anita Roddick of the Body Shop. Is globalisation, to use the ungainly shorthand, a conspiracy of rich against poor? Many campaigners would answer yes, and in their passion to improve the lot of the most destitute people on earth are fundamentally hostile to the onward march of the globalised economy. Amongst them is Anita Roddick, whose Body Shop is an international business which prides itself on offering an ethical alternative to nasty, everyday capitalism. RODDICK We have facing us for the first time in our cultural history economic priorities, economic values superseding every other human value and that I feel is very dangerous when it comes, when it battles against local laws or national laws or as our rights as citizens. I do see solutions, I don't see that it will go away but I do see a sort of energy in reforming it COYLE She backed opposition to the World Trade Organisation in Seattle in December 1999, where the eruption of riots on the streets launched a series of increasingly violent protests against globalisation, an escalation only halted by the terrorist attacks on America. Both the demonstrations and the terror have placed a serious question mark against the global economy. So, is globalisation grinding to a halt as it's opponents hope? And are there credible alternatives to it? Harold James is Professor of History at Princeton University, and a specialist on the last great era of globalisation - and the backlash against it in the 1930s. Like many of its defenders, he sounds almost apologetic in his support. JAMES I'm definitely - if you were to describe it that way - in general, in favour of globalisation. There are problems obviously but it's been enormously beneficial, it's raised the standards of large numbers of people, there are fewer people starving today than there were in the 1960's or 1950's. And so, in general, the world has got better as a result of globalisation. COYLE But despite the benefits are we nevertheless getting to some kind of crisis or turning point in the process do you think? JAMES There may be a turning point. It seems to me that the movement towards integration and away from integration has been over centuries really, like a pendulum, that there's movement towards greater integration and then people get frightened about various aspects of that integration and the fears and the anxieties outweigh the feeling of benefit and then people move back. COYLE These anxieties are magnified by the threat now of a global recession. The strongest supporters of globalisation are inevitably the people who have benefited from it the most, the business elite and the rich. A downturn could put them on the defensive. Mario Vargas Llosa, a giant of modern literature who has helped give Latin America a cultural significance that far exceeds its economic importance, divides most of his time between Lima and Madrid. He has seen his home country, Peru, fail to reap much benefit from globalisation. He suggests the apparently haphazard nature of economic success or failure is what has created the opportunities for organised resistance. VARGAS LLOSA Globalisation has not been the result, you know, of an ideological crusade. It's more or less something that has resulted because the evolution of culture and history and economy are something unexpected, you know. It's there, it has happened because particularly the evolution of the economic practices linked to the capitalistic system, you know. And, I think this is the reason why there are militant reactions against globalisation because quite rightly, even if they don't say it, you know, the enemies of globalisation identify globalisation with this universalisation of this system which they hate. COYLE Echoes here of the old, old clash of ideologies between right and left, the defenders of capitalism and its critics. As ever, since we certainly live in a flawed and unfair world, that gives the critics, describing how things might have been much better, a kind of easy moral authority. So, what do they have to offer by way of alternatives? When it gets down to detailed proposals, the anti-globalisation campaigners fall into two camps, reformers and revolutionaries. Many of the reformers are sympathetic to closer economic links around the globe but believe that change is necessary and inevitable, especially in the hugely controversial areas of trade and finance. Ann Pettifor ran the Jubilee 2000 campaign for the reduction of third world debt, a campaign that has won her enormous respect within the powerful institutions like the International Monetary Fund. She's nevertheless an outspoken critic of their version of globalisation. PETTIFOR The notion that if we develop economic policies which will allow a small part of the population to grow richer that there will be a trickle-down effect, and that generally everybody will get better and that there will be faster economic growth. I think that notion has been flawed and is central to globalisation. And whether it can be reformed, yes, we can start looking at policies for capital liberalisation and trade liberalisation and we can look at whether we need to pace them and to pace them in a way which will better suit the interests of individual countries rather than the interests, say, of foreign creditors or big Western multi-nationals. COYLE But does your experience as a campaigner who's now taken very seriously by the IMF and world leaders and so on lead you to think it will be easy to introduce those reforms now? PETTIFOR I don't think it is easy at all but I also think that that the leaders of globalisation, so to speak, are willing to listen. My experience has been that the powerful are as self-interested as the powerless, if you like, and are willing to listen and are interested in dialogue. There has been a certain over-confidence amongst them all and that September the 11th has somehow battered that confidence. COYLE Last week's meeting of the World Trade Organisation in Doha was seen by politicians as crucial for getting the globalisation show back on the road and restoring confidence after the terrorist attacks. The key question facing that meeting was how to make trade between rich and poor countries fairer. PETTIFOR The three most vital sectors in every Western economy are, A, agriculture, B, construction and C, textiles, those sectors which feed, clothe and house the people of those economies and in every Western economy those sectors are protected. So it's not possible, for example, to sell maize to the Americans, or rice to the Japanese. It's not possible and it's not easy to sell shoes or textiles to the Spanish or to the Portuguese and it's certainly more difficult to move construction industries around the world. Those three sectors are the pillars of every Western economy and yet a poor nation which becomes indebted is given no choice. It's forced to compete in agricultural trade with the United States. So Rwanda becomes highly indebted, the IMF moves in and says, right, in order to repay your debts, or to get some help with repaying your debts, the first thing you need to do is to open up your markets to maize from the United States which will effectively be dumped on your markets. COYLE So for free trade to work in the interests of everybody, the poor and vulnerable countries should not be forced to open their markets to imported foodstuffs until they're given equal access to the rich American, European and Japanese markets. The vast majority of professional economists agree that, even though inequality is in some respects greater than ever, the opportunity to trade is what makes poor people in poor countries better off. Nicholas Crafts, Professor of Economic History at the London School of Economics. CRAFTS Globalisation has certainly been associated with increasing inequality; not quite the same thing as saying it caused it, but we know that the world globalised as it now is is much more unequal than it was a hundred years ago. In the 20th century essentially, if you made the right policy choices, you could grow quite fast, in many cases. If you made the wrong policy choices, the penalty was much higher than it had been before. COYLE You're saying the countries that, in a sense rejected global contacts, were those that did worse. CRAFTS Yes, very definitely, I mean the most extreme version of that was communism. If we look at the late, let's say the second half of the 20th century, we start to see a big pattern of losers and gainers. Africa loses out big time, Latin America, on the whole performs disappointingly, East Asia is a big success story, South Asia disappoints to start with, that's India of course primarily, but has been picking up quite strongly in the recent past. If you look, for example, at the point at which countries who've done badly pick up well, India and China, both at the point where they adopted much more outward looking policies. The inward looking policies of trying to rely on your own economy, particularly for small countries, essentially don't work. I think they get captured by political interest groups, the markets are too small to sustain appropriate scale of activity COYLE So is it fair to say that the inequality is the result of some countries not globalising enough. CRAFTS I think that's quite a big part of what we've seen. RODDICK It's a new slavery, it's an economic slavery so that we in the West, we're all complicit in this, every one of us. COYLE Critics like Anita Roddick are not persuaded that the economists' vision of development, jobs generated through trade and foreign investment, translates into any real gain at all in the living standards of most people in developing countries. RODDICK This competition about, well at least there's a job, which it is - at least they've got a job and the majority of cases they already had a job. There were rural communities that lived locally. They don't have a livelihood. You know, we're always looking for the cheaper product and it makes every company look for ways of cutting costs and the fastest way is to use child labour or sweatshop labour so we're all complicit. COYLE Now, I don't think there's any argument about the quality of working conditions in sweatshops at all, it's an argument about whether it's an improvement and if that is going to be the path by which these countries can become richer on average than they have been. Is it not a necessary . RODDICK It's not my experience you know. My experience in Africa and in Nicaragua and El Salvador where I've spent time in rural communities, my experience is that they don't share any of the wealth. COYLE There's a genuine dilemma. There's little doubt that imposing western standards in developing countries would destroy many jobs where they're badly needed. On the other hand, its equally certain that these are not jobs any of us would want to take, because of the low pay and grim conditions. Even so, in the countries which have succeeded in attracting a lot of investment from western companies, the levels of wages and working conditions have been improving. That's because of the economic pressure of demand for workers as well as the moral pressure from campaigners - and from western consumers who just don't want to buy products made by children or slave labourers. As a result people in the countries exploited by rich multi-nationals are a lot better off than their counterparts in the ones ignored by them. The fact that things are getting slowly better may well be as good as it gets. For Ann Pettifor, it's finance, not manufacturing and trade, that is at the heart of the problem. She sees a need for a system that will guard poor countries with big debts from being bullied by rich lenders. PETTIFOR It would require an informal arrangement between the debtor and the creditor which would have to possibly be endorsed by the IMF on the one hand which would have to give the debtor mandatory backing to declare an emergency standstill on its debt repayments. And it might also require the oversight of the UN to ensure that any arbitration process is conducted in a fair and proper way and in a similar way in different countries. COYLE It does sound a lot simpler that the idea some people would have of throwing away the institutions that we have and either doing without or starting again some sense? PETTIFOR No exactly, and I do not think we should throw away the institutions we have. Frankly, I think they are deeply flawed but I think they can be reformed and they can be made more accountable and more democratic and they are necessary. COYLE The anti-globalisation revolutionaries couldn't disagree more. The radical alternative dismisses such reforms of the system as a waste of time and would turn the clock back on all forms of international economic integration. Their creed is localisation and one of its apostles is writer and campaigner, Colin Hines. HINES The globalisation process basically pits country against country trying to ruthlessly grab every other country's market shares. What localisation does is to try and rebuild and re-diversify economies within nation states and groupings of nation states. So, for example, what you can produce yourself you do, if you can't produce it yourself then you get it from a geographical neighbour and if you can't get it from a geographical neighbour then and only then do you go for long distance trade which really returns trade to what it was. We didn't go to India looking for coal, we went to India for spices. COYLE But it sounds very unappealing in some ways because, surely one of the great merits to consumers of globalisation is all the choice it's brought us, the variety and if you're saying to me you must eat root vegetables because that's what we can grow locally and you can't have lemon grass and chillies any more, then that's a kind of austerity message that doesn't seem at all likely to become popular. HINES I think there's a lot of things that can be grown within this country. For example, as far as I understand it, Birmingham allotments are now the biggest source of coriander in Europe. So, there's quite a lot of potential for us to keep the diversity we're used to by growing things here. But, without doubt, there will be some things which we can't get. I mean, there's no question of us growing bananas or coffee or tea and clearly that kind of long distance trade is best governed by the principles of fair trade - which is that you discriminate in favour of producers who actually are small, you improve their income, the environment is protected in the process, whereas, at the moment, this sort of race to the bottom of everyone trying to grab everybody else's market by doing things cheaply and often in a way that isn't good for the environment is not a good idea and it returns to haunt us. I mean, many people think that foot and mouth came here through food imports. COYLE Many of us can easily relate to this. After all, concerns about food safety and genetic modification have sent anxious consumers in Britain flocking to local farmers markets. When you look into localisation in detail, though, other aspects look a lot less appealing. The vision is the exact opposite of globalisation. Which is so far removed from where we find ourselves now that Colin Hines has a lengthy list of ways the government will need to intervene in localising our national economies. It runs from banning companies from selling anything in countries in which they're not located, to government monitoring all the transactions we carry out on our personal computers. It's a lot more centralised, even authoritarian, than we have grown used to. But he sees a new market for his ideas in the post-September 11th world. HINES Well it's also quite a good way to ensure that terrorism isn't funded and that you don't get the money flowing from the adverse effects of open borders like guns, prostitution, drugs etc whizzing all round the world undetected. We have to remember one of the clich‚s of September 11th is that it's supposed to be a different world and for free traders it is a different world. President Bush becoming a Keynesian, giving out subsidies to many of the big companies. You're having a situation where there is going to be a war on the areas where you can put money aside without people really understanding where it's going, the tax havens. Now these things were once considered impossible under the, under the dictates of the free market but they're now becoming necessities under another dictate. Now that's an unpleasant dictate. Many of the things that I'm outlining here, things like import controls and curtailments on money will actually, I think, be seen as very positive because they will protect domestic industries. They will also ensure that there will be the money for those domestic industries and they will prevent sections of countries and economies of countries being adversely affected by cheap imports. COYLE But I don't think you're directly addressing the point which is that they do re-introduce a lot of government controls into our lives. HINES But we have . COYLE I mean do you remember exchange controls? There was a huge bureaucracy of people, you had to fill in a form every time you wanted to get some foreign currency that was handed onto the bureaucracy and it was stamped into your passport. HINE Yes but . COYLE Do you think we really need to give up the sort of freedom to get our own holiday currency or currency for business travel, to re-introduce exchange controls? HINES I think we're not likely to have our passports stamped for fifty quid as it used to be, but I think what is inevitably going to happen, there is going to be a realisation that haemorrhaging money all over the place is not a good deal. We're not talking about taking a couple of hundred quid out for a holiday, we're talking about large amounts of money disappearing into tax havens or disappearing into foreign investments rather than staying locally. COYLE Anita Roddick doesn't go so far as proposing to unwind international trade. She couldn't, given the global nature of her own business. However, she too emphasises the importance of ensuring that local economies are able to be self-sufficient. RODDICK I mean setting up local self reliance, working with co- operatives or fair trade associations where you keep that local community, either pre- industrial or farming community, together. I think that has been incredibly successful. One project that we've had for ten years now out of the thirty-odd projects we have around the world in Tamil Nadu in India, which is one of the poorest states, and the community, the campus, makes millions of these wooden massage rollers, footsie rollers . They determine the wages, it's their right, they say this is what's right for me, this is the money I want for this product. COYLE Well, we'd all like the right to set our own wages. If they can really do that, perhaps we should get ready to pay a lot more for our footsie rollers in future. As for Colin Hines, he'd rather we made our own in Britain than importing them from Tamil Nadu, no matter what rate the Indian workers get paid. Whatever it's for specifically, localisation is also clearly against profits, markets, and consumerism. This is controversial stuff - after all, the fall of communism was supposed to have pointed all our economies in the same free-market direction. HINES We're talking about changing the end goal of the economic decisions, not to gear Britain to be ruthlessly competitive with the rest of Europe under ever-lower barriers and then try and grab someone else's market in another part of the world. No. We're saying the purpose of an economy is to actually provide people's basic needs. It's not to be internationally competitive and I think the kind of policies of people realising that it's more sensible to buy local, more sensible to invest locally, more sensible to have a taxation system that protects the environment whilst provide what you need for health and education, is going to be very popular because what we've got now - ruthless international competition, the hope that shares are your pension future - that's all falling apart. COYLE Perhaps Colin Hines is right to argue that today's sense of crisis and the onset of a recession will encourage all forms of backlash, even if the alternative is something far more austere than affluent western consumers have grown used to. There is a sense now of nations looking inwards and putting up the shutters against a buffeting from fierce global storms, turning their backs on immigration, trade and international finance. Mario Vargas Llosa sees this as a retreat. VARGAS LLOSA Behind the anti globalisation movement what we have today is nationalism. A different face of nationalism, much more modern, much more subtle than the classical nationalism. But this fear to the integration of the world which globalisation is I think represents this nostalgia for nationalism, for a world divided with very rigid borders in unified nations deeply different one from the other. COYLE Yet at this point in history, globalisation is unloved. It causes severe short-term disruptions in return for long-term gains that are hard to pin down. Nicholas Crafts. CRAFTS I think it's perfectly possible to believe you could have another globalisation backlash, that again, capital movements become volatile, become very difficult for political groups to accept. And I think the situation in which it would most likely happen is, if somehow or other, mismanagement of the world economy generates some big, big world recession, a bit like the early 1930s. COYLE Harold James, the Princeton historian, has studied the 1930's backlash in his book, The End of Globalisation. Does he believe the world could once again turn its back on the economic gains from globalisation in a damaging reversal of the trend? JAMES I think people may see the benefits if they're faced by a really profound economic downturn and the degree of misery that would be caused by turning away from globalisation would, I think, be very shocking to very many people. The problem is that when you're in that kind of situation it's often very difficult to know what to do about it and that was precisely the world of the great depression. COYLE But don't you think it might work the other way, that if there is a severe economic downturn it will just prove to some people that we'd gone very badly wrong in the world economy? We spoke to one advocate of localisation who says that this is proof that what we need to do is draw back from trade, draw back from investment, re-introduce capitals control and look for greater self-efficiency? JAMES You're right to say that the voices against globalisation are getting more powerful but I really feel that people who take this position haven't considered the full implications of their arguments and that the world that would be localised would also be a world that was very very impoverished. We would do things in very much less efficient ways and the poorest would be the most vulnerable in that situation. COYLE Even if a radical reverse of globalisation would prove to be an economic catastrophe, could the politics of backlash prove strong enough to bring it about? Mario Vargas Llosa believes not. VARGAS LLOSA I don't think you can stop something that is the inevitable consequence of the evolution of science, technology, economy, communications and culture in general. No, I think this is absolutely inevitable, it's a trend of contemporary history. It may be exceptions, you know, countries, nations that, as the Afghanistan of the Taleban, decide to isolate completely itself from the rest of the world, yes. But I don't think it will last and, in any case, I think that this will be very eccentric to the main current of history. COYLE The forward march of technology may be unstoppable but sharing the fruits of globalisation will require just as much political determination as turning away from it would. Mario Vargos Llosa's native Peru has so far failed to reap the best of the globalisation harvest but the view from his apartment in Madrid is a better one. VARGAS LLOSA I came to Spain in '58 when I was a student, you know, and Spain was a third world country at that time, completely isolated, a dictatorship, the lack of communication with the rest of the world, particularly Europe, you know, was amazing - really unbelievable. You can't imagine what was poverty in Spain, it was a very poor country, you know. Madrid wasn't more than city, more or less, but when you travelled outside Madrid, you discovered a third world country. And look now, Spain is an example of how a society can modernise and develop and democratise itself very rapidly, you know. It was possible here, it was possible in Portugal - why not in Peru, in Bolivia or in Senegal? I think it's possible but it's a choice, you know, it's something that you have to decide that something good for the country, good for society and be decided to pay the price. There is always a price to pay. COYLE So forwards or backwards? Those who believe in the benefits of globalisation need to recognise that it's a choice not an inevitability. Making a convincing political case for it will depend on making it work better in future than it has in the recent past. And there is a rich agenda of proposals for reform, thanks in no small part to its critics. Even its most ardent supporters have to accept that events have brought us to a crossroads. The accidental globalisation of the late 20th century has loaded some of us with every comfort. Now it's the turn of the five billion others. 16 1