Sunday, 10 March 2013

"Liberal" myths about Globalisation (Critique of John Green's 1st Crash Course video on Globalisation)

[Click here for the original video]

Transcript and slides (with larger text for references)...

* Hi, today I will be critiquing the first video on globalisation by John Green in his Crash Course on World History.
* I consider John’s video to be analytically in line with mainstream so-called “liberal” commentary on globalisation, found in the news media and in academic scholarship. I therefore feel that critiquing it will show up some of the distortions and biases that we are regularly fed.
*So let’s starts
*To begin, John does not provide a clear definition of globalisation. This is slightly problematic but John does at certain points in the video explain that globalisation includes increased global economic interdependence over the last 30 years, so we’ll use this as his definition.
*With this in mind he states the following: *(1  3:15) ”Global Trade is now anarchic and unregulated, at least by international institutions and national governments. Much of this has to do with academic economists, mostly in the US and Europe who have argued with great success that governmental regulation diminishes prosperity by limiting growth. “
There are many problems with this statement.
Firstly, John’s use of the words anarchic and trade are somewhat misleading when describing today’s international movement of goods.
For one thing, about a third of so-called trade is simply the centrally planned cross-border movement of goods and components within corporations and conglomerates. Another third is thought to be covered by centrally planned outsourcing.  
We also still have significant government interference in international transactions. One example is so-called anti-dumping legislation, which is used by many of today’s richest countries, such as the United States, to protect domestic companies from foreign competition.
With these points in mind, it is difficult to use the word’s “anarchic” or even “trade” to describe today’s movement of goods. 
A second problem with John’s statement is that it is very misleading to say that economists have argued with great success that government trade regulation diminishes growth.
Pro-trade liberalisation economists have certainly not one the argument within the economics field. The most prominent studies arguing that trade protectionism reduces growth have been completely discredited by leading economists such as Harvard’s Dani Rodrik. One former Harvard economist, Paul Bairoch, has stated that the theory that trade liberalisation increases growth is one of the biggest myths in economic history. Cambridge economist Ha-Joon Chang has pointed out that nearly all of today’s richest countries, such as the United States, developed under protectionist economic regimes. The leading theorist on economic growth, nobel prize winner Robert Solow points out that the where growth has occurred alongside trade liberalisation, the causal direction is unknown.  These are just some of eminent economists which reject the view that trade protectionism limits growth.   
It is also unclear that pro-trade-liberalisation economists have influenced policy-makers. Where trade liberalisation has occurred, it seems that there are two more significant influences. Firstly, in poorer weaker nations, particularly in Africa over the last 30 years and Latin America from around 1980 until around 2000, liberalisation was largely the result of bullying by rich countries and the IMF. John actually acknowledges this.
Meanwhile, where trade liberalisation has occurred voluntarily, it seems that this has reflected rational calculations of interests amongst influential economic groups within nations, rather than some widespread religious commitment to free trade. This can be seen by how selectively free-market doctrine is applied. Let us look at the United States as an example. Tariffs have reduced drastically from 50% in the 1950s, but US companies are still strongly supported against foreign competition. This farm subsidies, oil subsidies, anti-dumping legislation, government-supported research and development, government-procurement, and many other processes. But protectionism is by no means unique to the US. Hence the latest World Trade Organisation negotiations have been unable to produce even a limited deal on liberalisation since beginning in 2001 because almost all parties refuse to drop their own protectionist measures.  Meanwhile the WTO talks themselves even have protectionist intellectual property rules built into them.  
With these points in mind, we can see that John’s statements range from unhelpful to misleading when it comes to understanding global economic developments in the last 30 years.
Now, let us move onto another key point in John’s video.  
·         (1  5:52) “While die-hard Marxists deny this – global capitalism has been good for a lot of people”
·         *He puts forward two arguments in favour of this statement... (Clip of John mentioning economic growth and poverty reduction)
There are major problems with these statements
Before considering John’s arguments in favour of global capitalism, it should first be acknowledged that he somewhat misrepresents Marxism, by implying Marxists don’t see positives in capitalism. In fact, central to Marxism is the idea of history as progress, with societies going through economic stages from feudalism, to capitalism to communism. In this context, Marx and Engels praised capitalism and saw it as progressive for non-industrial countries to go through a period of industrial capitalism. It is therefore somewhat misleading for John to imply that die-hard Marxists would deny that capitalism has been good for a lot of people. There may be many non-Marxists who disagree that capitalism has been a good thing, but this is a separate discussion.
Now, let us look at the arguments that John puts forward in favour of capitalism, which happen to be very similar to those put forward by Marx and Engels.  He points to (1) increased economic growth and (2) material poverty reduction, which are usually intertwined. 
 The first problem here is that John uses unclear terminology to describe the current global economic system. What we have around the world is not capitalism but varying types of state capitalism. We mentioned some of the state-capitalist elements of the United States above and state capitalism is also prevalent in East Asia, the region of most economic growth and poverty reduction in the last 30 years. As just one example, whilst China has made some pro-capitalist reforms in the last 30 years, Chinese state-owned enterprises are still responsible for between a third and a half of economic output.
 Furthermore, whilst John does state that he does not want to confuse correlation with causation, this is empty after he has just said that it is clear that global capitalism has been good for a lot of people – the clear implication being that capitalist reforms have led to growth and poverty reduction throughout the world. However, this is an extremely contentious claim.
Firstly, if John is still referring to the last 30 years, it is misleading to imply that it has been a period of economic success. East Asia is the only region in the world where economic growth and poverty reduction have not slowed or reversed in the last thirty years. Total world economic growth has actually been lower than it was during the preceding 30 years. For example, one measure of the economic problems in Russia since the fall of the Soviet Union is that life expectancy actually dropped in the 1990s and only reached the level of the late 1980s again in 2009. Another example is that Sub-Saharan Africa has suffered a near complete economic disaster in the last 30 years after moving towards arguably the most purely capitalist economic regime in the world under IMF supervision. This is following a comparatively promising period up until the mid-1970s under more state-led policies. Latin America is only now recovering in the last decade after pro-corporate reforms in the 80s and 90s, which the region is now moving away from. In the United States, since the 1980s real wages have stagnated or declined for most workers.  Economic growth has also slowed in many European countries. All of this is overlooked in John’s celebration of the last 30 years.
Furthermore, in East Asia, where there has been growth alongside pro-market reforms, it is unclear what the causal direction is. That is, respected economists have argued that East Asia’s integration into the global economy has happened in response to productivity growth rather than the other way around. This is the opposite causal direction John suggests.

Setting all this aside, many oppose the idea that economic growth and material poverty reduction necessarily justify social systems, as John implies. For example, due to its oppressive nature, many reject the view that Stalinism was justified despite its record-breaking economic growth and widespread material poverty reduction. This is even setting aside the mass murders. Similarly, many reject that slavery was justified by economic growth. Furthermore, slave owners argued that slaves often lived healthier, longer, more secure lives than wage labourers. How often this was true is debated to this day, but even if it was true 100% of the time, many would still argue that this would not justify slavery.  If John is one of these people, in order to be consistent he needs to put forwards another argument for the current global order than economic growth and material poverty reduction. 

To conclude, as with many mainstream so-called liberal commentators, John puts forwards a misleading image of world order, and spurious arguments in favour of this order.
We will see more of this in part 2, when we will be looking at Johns’ second video on globalisation.
Thanks for listening.
See you soon.

I have written the references in larger text in these slides. Click to expand the slides...

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