Economy and social affairs

Economy instead of humanity

Utopia and large-scale experiment "globalization"

(Published in Grail World Special Issue 3/1999)

Nobody likes to be cramped, hindered in their freedom of movement or even locked up. Freedom through open borders began to become a reality in the 20th century; Since then, the term “globalization” has also been on everyone's lips. It is about more than just the rights of the individual, e.g. B. To be able to go on vacation anywhere in the world: The aim is to create a global economic area in which the productivity of people of all peoples should develop. But the realization of this utopia is uncanny for many people. We investigate the question of whether the much-vaunted globalization is actually necessary, sensible and unstoppable, whether it really brings "prosperity for everyone" - or whether economic thinking is not already displacing all humanity.

"Incidentally, it does not depend on the goodwill of the individual capitalists whether they want to get involved in this struggle or not, since the competition forces even the most philanthropic among them to join their colleagues and make working hours as long as the rule these." Friedrich Engels (1820-1895).

Politicians, scientists, entrepreneurs, and the mass media all seem to agree: the globalization of the economy will come; no one can stop it, and it should bring opportunities for all peoples. The necessary opening of the borders, the removal of customs and trade barriers, is not a natural phenomenon, but political will.

That means: Globalization represents a "large-scale experiment" that people have decided on - and people can also revise their decisions ...

The demand for globalization of the economy comes neither from consumers, who are promised better goods at lower prices, nor from workers, who fear for their jobs. The globalization propagandists come primarily from industry (along with industry-friendly scientists, media and politicians); because producers are under a globalization compulsion that has two main causes:

The product lifespan decreases:

Today every consumer expects that new or improved products will come onto the market continuously. I. E. the “product lifespan”, i.e. the time during which an industrial product can be sold profitably, decreases. In 1974 the average life of an industrial product was around 12 years; today it has fallen to less than 6 years.

The innovation costs are increasing:

The cost of developing a new product or improving an ongoing product has risen sharply. The increasing costs for research and development can only be earned during the ever shorter product lifetimes if sales increase to a degree that only appears to be achievable in huge international markets.

Industry is therefore under pressure to either “grow” or “give way”; Global expansion on the "world market" is the magic word that should help to cope with the rising costs of innovation.

Incidentally, the “world market” was not first invented in the 20th century. There was already trade between Europe and China in Roman times, and in the Middle Ages the “Silk Road” was an important trade route between the Far East and the West, on which Marco Polo (1254-1324) also traveled. This exchange of goods was important, but relatively low, if only because the transport costs (not to mention other risks such as shipwreck or robbery) were very high.

Since the invention of the steam engine, transport has become cheaper and cheaper, as the following comparison between 1930 and today can show:

Sea freight: approx. ½ the cost of 1930
Air freight approx. 1/6 of the 1930 costs Telecommunications approx. 1/1000 the cost of 1930

These prices continue to fall and make it possible not only to transport beer (over 90% water) from East Frisia to Bavaria, but also to ship steel from India, cars from Korea and toys from China to all continents. The economy has long been on the way to global networking, as some selected aspects can show:

Exchange of goods:

On the way to globalization, world trade doubled between 1984 and 1996; Between 1950 and 1993, cross-border trade grew three times as fast as the production of goods.

Capital movement:

A particular problem is the transfer of capital, which has long since assumed unimaginable proportions: around 1,500 billion dollars are turned over on the foreign exchange markets every day. That is around 70 times as much as the daily export of goods or services. This capital movement takes place primarily on electronic media. For the most part, it is pure speculation that can shake the currency markets and trigger financial crises. When it comes to investments, the necessary chapter flows into the country where the highest returns are expected.

Global sourcing and outsourcing:

Corporations are looking for the cheapest sources of supply (global sourcing) all over the world. They want to source everything “from outside” that can be bought more cheaply than produced in-house (outsourcing). Without cheap transport, without cheap oil, without free movement of goods and capital, neither would be possible.

Globalization bonus:

According to the prevailing doctrine, globalization should bring advantages as a whole: goods are becoming cheaper, for the benefit of the consumer. (But how does the buyer want to pay for the goods if his job has been relocated to a distant country?).

The international competition also forces every market participant to make the utmost efforts and perform at the highest level. The ability to innovate, ingenuity, service, product quality and value for money are increasing all over the world, so that the gross national product must increase in all countries.

If one follows these neo-capitalist theories, then globalization would be to be welcomed because it is supposed to bring advantages overall. Whether people want this form of global economy, whether it is “good” when smallholders give way to competition from large estates and migrate to the slums of big cities, is not an issue for economists; they are fixated on the gross national product.

In the near future, every - at least every larger - company will have to face an increasingly tough global competition; because the desired open borders, some of which are already in place (e.g. within the EU), bring about "limitless" competition.

The competing economies have very different technical and civilizational requirements. They have different cultures, religions, ethical values and social standards that cannot be compared. But such “subtleties” are irrelevant for the commodity markets. Which consumer asks under what conditions carpets in Nepal, textiles in India or toys in China are manufactured. You are happy about the low prices and you are satisfied as long as you still have enough money in your pocket.

Sooner or later - when globalization is complete - all economies will be in merciless competition with each other: Less developed countries with low wages and no social security, and industrialized countries with top wages and comfortable social standards.

How can this “fight of all against all” look like? Will it be a blessing or a curse? Or will - to paraphrase Darwin - only the fittest survive?

In any case, one will look for humanity in vain in an unreservedly liberalized market economy. The state governments should actually set limits to the ruthless profit-making thinking of international corporations; but it may be too late for that ...

The rapid development of our civilization over the past two centuries is understood as a "technical revolution". Now we are in the midst of a new process of change that is changing the world in two ways at an unprecedented speed:

Globalization of the economy:

The necessary prerequisites for this were created by people, and globalization is wanted by those responsible. However, like all revolutions, this “global revolution” develops an uncontrolled dynamic of its own, the results of which nobody knows.

Globalization of the problems:

Important world problems, such as the preservation of a life-giving environment or the containment of the population explosion, also require global solutions. The globalization of problems is an unwanted and unexpected consequence of the technical revolution.

The world will never be the same as it was in past epochs, and its traditional habits, recipes, theories do not fit the world problems of the 21st century.

For centuries the technically and civilizationally superior "north" had benefited first from colonialism and then from world trade to the detriment of the less developed "south". The achievements of the technical revolution have recently become accessible to all peoples:
* The technical knowledge is spread all over the world. There are highly trained scientists on every continent. B. develop missiles in North Korea, atomic bombs in Pakistan, computer software in India, etc., etc. The technological lead of the West is shrinking and in some areas (e.g. compared to Japan) no longer exists.
* Capital is abundant and has accumulated with relatively few capital owners. They are looking for cheap investment opportunities and do not hesitate to invest in exotic countries, provided that interesting returns can be expected.
* In many countries there is an army of unemployed people who will work “starvation wages” for almost everyone.
* The corporations are forced to take advantage of all possible savings in order to remain competitive. This includes the outsourcing of jobs to low-wage countries.
* Less developed countries expect production to be relocated to their own country. Not only to gain jobs, but also because of the associated technology transfer. Those who resist, lose the relevant market to the more flexible competition.
* Modern technologies, the use of industrial robots and computers in the manufacturing process create "deserted" factories that only require a few, highly qualified technicians. What should happen to the "released from production" millions of people?
Do we have to expect that the “global” revolution will soon also turn against the north, from which it originated, according to the motto “the revolution eats its children”? The social cuts that are also beginning here are perhaps just the beginning of a trend that is difficult to stop.
The locational advantages may shift to the south. There are raw materials, low wages and hardly any social charges.
It will not be possible to control these developments with regional approaches by individual states. The political tools for global solutions that do justice to the globalization of problems are lacking; because the social development of the peoples proceeds very differently in important areas:
* The globalization of Science and the business is in full swing; and she will keep running
* The politics is still national. However, when faced with global problems, the national approach fails, as is regularly shown (just think of the various conferences on climate protection).
* The Religions are more or less confessional and so far have not been able to develop a functioning, globally responsible ethic. Although this problem has been recognized by scientists like Hans Küng, it is still a long time before major approaches are taken. Without a common ethic it is difficult if not impossible to find universally valid norms for human rights, forms of government, social standards etc. In the absence of recognized ethical norms, the globalization of markets can degenerate into a battle of all against all.

Some economic theorists - I call them market fetishists - want to persuade us that “the market will fix everything”.
They are happy to refer to this Adam Smith (1713-1790), who saw free trade as one of the most important prerequisites for the prosperity of nations. But in many areas (e.g. environmental protection), the free play of competition is clearly proving to be unsuitable for even addressing the problems. Incidentally, Adam Smith already recognized that the market cannot regulate everything. The doctrine of the founder of the free market economy stems from the fact that free markets in free competition can serve the prosperity of the whole; but he also addressed the limits of the market economy and made the state responsible:
* for the legal order of the market
* For the poor
* for public infrastructure
* for internal and external security
What he could not yet see was responsibility for an intact environment. The indispensable social component of the economy, which Adam Smith called for and Ludwig Erhard (1897-1977) is often overlooked in the fever of globalization and free trade. But a look at the current capitalist chaos in Russia shows how important legal norms are for a functioning economy.
In order to save Adam Smith's honor, one has to say that he was not an “everything is allowed capitalist” but also a moral philosopher who by no means advocated the primacy of the market over humanity.

Even today, a boundless, free market encompassing the whole earth will not bring the hoped-for golden times if it does not succeed in setting the limits that lead to it not only serving the owners of capital but all people. No matter how free an economy it may be, it will never be able to replace humanity.

The “major globalization experiment”, which affects more or less all of humanity, can only succeed if it succeeds on the basis of global ethics worldwide ecological and social minimum requirements enforce. This will not work without effective institutions that introduce comprehensive survival programs, without which neither North nor South, neither man nor nature have a future.

(1) Boxberger, Gerald: "The ten globalization lies", DTV, Munich, 1998.
(2) Dhonanyi, Klaus v .: “In the yoke of profit”, DVA, Stuttgart, 1997.
(3) Engemann, Hubertus: "Globalization - Threat or Opportunity", Deutscher Institutsverlag, Munich, 1998.
(4) Forrester, Viviane: “Der Terror der Ökonomie”, Goldmann, Munich, 1993.
(5) Greider, William: “Endstation Globalisierung”, Wilh. Heyne, Munich, 1998.
(6) King, Alexander: “The First Global Revolution”, Goldmann, Munich, 1993.
(7) Küng, Hans: “Global ethos for world politics and world economy”, Piper, Munich, 1997.
(8) Spiegel, Peter: "The Terra Principle", Horizonte, Stuttgart 1996.

Addendum 2022: 
Meanwhile, the Corona Crisis starting in Wuhan in December 2019 has exposed serious drawbacks of unchecked globalization by tearing down supply chains.
Then, the massive attacks of Russian troops since February 24, 2022, triggered the Ukraine war and, as its consequence, an energy crisis that may turn into a world economic crisis.