Consumers or citizens?

This is the text of a talk I was invited to give to a group of managers from the Prudential insurance group in London in October 2010. I'm not sure what they made of it, but I'd be surprised if they invite me back

What is globalisation?

It’s long been a cliché to say that we live in a fast-changing world. But cliché or not, we are currently undergoing rapid and all-consuming change – economic, social, political, technological – which is sweeping away traditional political structures, old economic models, social certainties and cultural assumptions.

The great clash of ideologies that defined the twentieth century died with the collapse of the communist bloc in the early 1990s. Capitalism won the Cold War, and has since been ramming home its victory by triumphantly raising its flag on the political battlements of every nation on Earth.

Everything is up for grabs. On a newly interconnected planet, ‘politics’ has taken on a whole new meaning. From Brazil to Britain, South Africa to Germany, Russia to Mexico, New Zealand to Japan, politicians from left and right have morphed into a managerial class of hemmed-in technocrats who see no choice but to make their peace with the triumphant global market. There is nowhere else to go. There is, we are often told, no alternative.

The spread of Western-style market economies to all corners of the Earth is often referred to by the vague euphemism ‘globalisation’. It is a term that is as widely used as it is loosely defined. The word tends to conjure up vague mental images in people’s heads – pregnant Thai women working twelve hours a day in sweatshops with no toilet breaks; grinning Maasai warriors e-mailing each other on laptops in the middle of the Serengeti – which help determine whether you are for or against ‘globalisation’ without ever having to explain what it actually is.

For the purpose of this talk, I’m going to define globalisation as the spread of neoliberal market economics around the world. Often this is presented as some kind of natural process, like evolution or gravity – just something people do when they’re left alone. It is not that.

This is a political and economic ideology – a utopian ideology - just like communism before it. It started life in the 1970s, with Milton Friedman and his Chicago School of radical economists issuing a challenge to an increasingly unloved Keynesian consensus. It spread out from Chicago to Chile, where the dictator General Pinochet first employed Friedman to put his ‘shock doctrine’ into practice. It failed disastrously in Chile, but its takeup by first Margaret Thatcher and then Ronald Reagan in the 1980s propelled it into the big time. After the Cold War ended in 1990, the doctrine of neoliberal economics began to spread rapidly around the world until it became a global ideology – even a global movement – as powerful as communism had been a century earlier. We have been living through the triumphant high point of this ideology.

The ideology

This ideology, like all others, has core beliefs. They are:

• This is not an ideology at all, simply the natural way of things
• Free trade benefits everyone
• Markets are the best way to organise societies
• Left to its own devices, an ‘invisible hand’ distributes society’s wealth fairly
• The West/USA is a global model for ‘development’
• ‘Protectionism’ is always and everywhere a bad thing.
• Private is always more efficient than public
• The business of society is business

The reality

The reality of the globalisation process is somewhat different.

1. Increase in inequality

• In 1960, the 20% of the world’s population that lived in the rich, industrialised countries of the West had thirty times the income of the poorest 20% of humanity. Today, we have seventy-four times as much.
• 2.8 billion people – almost half the world’s population – live on less than $2 a day, and this figure is 10% higher than it was in the late 1980s. 7
• The richest 10% of the world’s population receives as much income as the poorest 57%
• The richest 10 % of the population of just one country – the USA – have a combined income greater than the poorest 2 billion people on Earth.
• The assets of the three richest people on the planet are more than the combined GNP of all the least developed countries put together. 9

2. Globalisation is used by wealthy countries to cement their power

All Western nations grew rich not through ‘free trade’ but through protectionism. Britain’s industrial revolution was successful because of high import tariffs and imperialism which busted open markets in India, the far east and America, and destroyed their production processes whilst protecting ours. Britain, for example, deliberately destroyed the Indian cotton industry in order to boost that of Lancashire. The same countries who grew rich by doing this now preach the virtues of open markets to poor countries. Open markets tend to benefit those countries with strong, established industries.

The globalisation process has been pushed forward by international institutions set up and controlled by the world’s richest countries. The World Bank and IMF, set up in 1944 to rebuild a shattered post-war world, morphed in the 70s and ’80s into the attack dogs of advanced capitalism. They loan money to ‘developing’ countries to build infrastructure projects, stabilise their economies or, more recently, promote social programmes. In return, they demand that countries ‘restructure’ their economies according to models drawn up by their in-house economists.

Typically, in return for Bank or IMF help, a country has been expected to slash its public spending, begin a process of privatisation, open its borders to trade and investment and focus its economy on export-led production.

This makes more sense when it is understood that it is the world’s most powerful countries which run the Bank and the Fund, both of which apportion votes to government representatives according to how much money they receive from them. Both institutions are thus effectively run by rich countries, but operate only in poor ones.

3. Growth of corporate power

Over the past two decades of rapid globalisation, multinational corporations have become politically and economically dominant in a way that is unprecedented in human history. Together, the world’s ten biggest corporations control 85% of all pesticides, 60% of all veterinary medicine, 35% of all pharmaceuticals and 32% of all commercial seed. 12 Of the world’s 100 biggest economies today, 51 are corporations; only 49 are nation states.General Motors is bigger than Thailand. Mitsubishi is bigger than South Africa. Wal-Mart is bigger than Venezuela. 13

Corporations in the USA and the UK have the same legal rights as individuals. Many of the trade laws that now govern the world as a whole, through the WTO, and in areas like Europe and North America, were written by representatives of multinational companies.

4. Race to the bottom

The iniquities of sweatshop labour and massive environmental pollution in places like China and the far east, where human and environmental suffering in the name of cheap T-shirts is widespread, is well known. The World Trade Organisation, which sets the rules under which globalisation operates, is also responsible for this process. The WTO’s vast dossier of international laws are aimed at knocking away all and any ‘barriers to trade’ by banning countries from subsiding their industries, protecting vulnerable economic sectors, passing laws that inhibit trade flows and corporate freedoms or generally preventing competition from doing its work.

Unfortunately, a corporation’s ‘barrier to trade’ is often a citizen’s environmental protection law, social programme, public health regulation or community support scheme. WTO rules have already been used to force the USA to rewrite its Clean Air Act to allow dirtier imported gasoline, and drop import bans on shrimp caught without turtle-friendly nets. The WTO has instructed the European Union to stop favouring banana imports from small Caribbean producers over those of the US-based Chiquita corporation, which operates vast, chemical banana farms in Latin America. It has declared the EU’s ban on hormone-injected beef from the USA illegal. It has instructed Japan to raise the legal level of pesticide residues in its imported foods. 14 Every time that the WTO has been faced with a choice between upholding the interests of corporations and upholding environmental or social protection laws, it has ruled in favour of corporations.

5. The market trumps democracy

A unipolar world with no competing ideologies, combined with the opening or borders to investment and finance capital, has left state actors increasingly powerless in the face of globalisation. Back in 2001, researching my first book, I saw this happening in South Africa

In 1994, the ANC won power. Its economic programme was called the ‘Reconstruction and Development Programme’ (RDP). ‘The first priority,’ it stated, ‘is to begin to meet the basic needs of people – jobs, land, housing, water, electricity, telecommunications, transport, a clean and healthy environment, nutrition, health care and social welfare.’ This was to be achieved through ‘programmes to redistribute a substantial amount of land to landless people, build over one million houses, provide clean water and sanitation to all, electrify 2.5 million new homes and provide access for all to affordable health care and telecommunications.’ 5

This was unequivocal stuff. It was also short-lived. By 1996, the RDP was dead In its place, the government unveiled a new economic programme – the ‘Growth Employment and Redistribution’ programme, or GEAR.

GEAR had been drawn up by a cabal of fifteen economists and launched on the party, and the country, with no consultation. Two of the economists were from the World Bank, and a lot of the rest were from South African banks and conservative thinktanks. GEAR publicly realigned the ANC’s entire economic approach. It moved the party from a government of social democrats to a government offering up the most unashamedly neoliberal policy platform in Africa. GEAR accepted that growth was more important than redistribution, and that widespread privatisation and foreign investment was necessary for that growth. It accepted the impossibility, in a market-led world, of carrying out many of the government’s proposed social programmes, including widespread land reform, public works schemes, state housebuilding projects and free utilities for the poor. Rather than the language of national reconstruction, GEAR talked the language of the markets – the language of ‘greater labour market flexibility’, ‘economic stability’, ‘sound fiscal policy’, ‘foreign direct investment’ and ‘strong export performance’.

I went to interview an ANC representative, a man called Michael Sachs, to ask him why the ANC had changed its approach so radically. His response was telling:

‘Not since the creation of the Soviet Union has any movement taken power in such unfavourable global conditions – such an unbridled victory for finance capitalism … Globalisation blows horrible, stinging winds across your economy. You can’t just go and redistribute things, in this era … you will be defeated.’

In other words, though South Africans could now control their politics through the vote, they could not control their economy, because the people they voted for were not actually running it. Or, in the words of financial speculator George Soros, a man who should know:

‘South Africa is in the hands of global capital. That's why it can't meet the legitimate aspirations of its people.’

Globalisation in Britain

The death of the global left/right clash at the end of the Cold War led in many countries to the death of the national left/right clash in politics too. This can be seen clearly in Britain, where all main political parties have now bought into the Thatcherite settlement, just as in the US all parties are now Reaganite. A political consensus exists across British politics, which holds that:

• The global market is the only game in town
• We must compete with other nations to gain wealth
• Constant economic growth is an unquestioned good
• The public realm and the public sector are old-fashioned and inefficient
• The business of Britain is business
• The language and assumptions of business are the language and assumptions of society as a whole

Have a look at the language used across public life to see these assumptions in action:

Lord Browne on the purpose of Higher Education:

‘Graduates go on to higher paid jobs and add to the nation’s strength in the global knowledge-based economy … However, our competitive edge is being challenged.’

George Osborne on reasons for investing in road and rail:

‘Private money will be put to work building for this country the economic infrastructure our businesses need.’

The Countryside Agency on rural life:

‘The experiences the countryside will provide will determine how well it competes.’

Gordon Brown on his vision for the future:

‘I want a Britain where the whole country is committed to enterprise and flexibility.’

Have a look at the media to see how this works. Every story is constantly examined for what its ‘impact on business’ will be. The unspoken assumption throughout public life now is that every aspect of our society, from our universities to our hospitals, our public parks to our broadcasting systems, must compete in a marketplace whose ultimate value is measured in growth and shareholder value. How many times have you heard the phrase ‘UK PLC’ used without irony by politicians or journalists? How many times have you heard the people of Britain referred to not as ‘citizens’ but as ‘consumers’ – defined not by who we are or what we do, but by what we buy?

The impact on the ground

Two years ago I carried out an investigation into how this process was playing out on the streets, in the communities and on the landscapes of England – in the places where it matters in everyday life. On the basis of that investigation I wrote a book called ‘Real England’ which laid out the casualties of the march of big business in this country. Just a few of the resulting losses over the last decade include:

• 30,000 independent shops
• Fifty specialist shops a week
• 25% of bank branches
• 25% of post office branches
• 50% of independent bookshops
• 40% of dairy farms
• 56 pubs per month

Meanwhile, just a few of the beneficiaries are:

• Superstores. The number of out of town shopping centres has doubled. £1 in every £3 spent on groceries is spent at Tesco
• PFI consortiums. The NHS alone must pay £65bn to private companies over the next 30 years
• Banks. They bankrupted the nation but have not suffered greatly as a result. We are now paying the price for their profligacy with the biggest peacetime budget deficit in history
• Business in general. Markets have been introduced into healthcare, education, higher education and provision of council services
• Property developers. From former pubs to market squares, development has been a boom industry. Here’s just one story that shows how far the corporatisation of our public sphere has gone:

Liverpool One

in 2008, Liverpool city council proudly unveiled a massive new shopping mall in the town centre. In one sense it looked like any other shopping mall in the country: same chainstores, same street furniture, same McDonalds and Starbucks. One of the most noticeable impacts of globalisation on the British landscape has been its homogensing impact – everywhere now looks the same as everywhere else.

But Liverpool One is different. Liverpool City Council has sanctioned the corporate enclosure of the 43-acre city centre site, which encompasses 34 streets and a public park. Previously public space is now private. The development company Grosvenor, owned by the Duke of Westminster, the country's third-richest man, has been given a 250-year lease on this area. At the centre of the development, on Paradise Street, is a 280,000 ft.² John Lewis department store and ‘a host of major high street names’ comprising 1.6 million ft.² of new shopping space.

And it’s all been branded. Hanover Street is a ‘lifestyle-focused district with an eclectic atmosphere’, while Peter's Lane is a ‘designer-led area’ with ‘a range of shops that will attract fashion-conscious consumers’. South John Street is the ‘family orientated district’.

This is, in other words, the privatisation and reinvention, from the top-down, of a public space. It is not the only one, and will not the last. Liverpool City Council has got itself an expensive, flashy renovation of a rundown area, costing almost a billion pounds, for which it has had to pay virtually nothing. In return, however, it has had to give up – in other words, the public has given up – their rights to it. This is the end result of the inevitable logic of globalisation – everything is for sale, up to and including the streets themselves.

The reaction, and the future

The public and the private spheres have merged, across the world, as a result of a nearly forty-year experiment in market supremacy. Politicians see their jobs now as primarily representatives of the interests of business in the global economy. All other considerations are increasingly secondary. ‘Growth’ trumps all else. Democracy is hampered – you may control your politics, but you don’t control your economy because you can’t vote finance and business out of office.

All areas of life are increasingly opened up to the logic and the language of business. I have watched this happening over the last fifteen years in this country. We have now got to a stage where it seems quite natural to see everything as a market, everyone as a consumer. Where it seems quite natural to assume that what is good for business is good for the nation. Quaint ideas like the public realm and the public good are starting to sound old-fashioned and past-it.

All around the world, people can see this happening, and are reacting accordingly. Globalisation has created enormous wealth over the last few decades. It has spread a global culture around the world. It has pushed technology forward fast. It has also created massive inequalities, vast environmental destruction and a growing sense – based on reality – that the global economy is increasingly out of control and not accountable to the people it is supposed to serve.

As a result, trust in politicians, businesspeople, bankers and corporations has never been lower. This crosses old political divides. ‘Anti-elite’ politics, on right and left, are becoming increasingly popular all across the world as a result of the powerlessness engendered by globalisation.

In my first book, ‘One No, Many Yeses’, which is nearly ten years old now, I catalogued movements of resistance to globalisation all over the world. They included:

• The Zapatistas – the first anti-globalisation revolution, which began in 1994, when indigenous guerrillas in southern Mexico took up arms against the government in protest at the signing of NAFTA, which would destroy their livelihoods by flooding Mexican markets with cheap US corn. The Zapatistas now control much of Chiapas state, and are running their own autonomous economy.
• Protesters in South Africa, taking the ANC to task for abandoning the poor to the chill winds of the market. These movements are still in operation also
• Bolivian water war – a similar situation to those in Africa. Bolivia, in exchange for accepting help from the IMF in 1985, was forced to restructure its economy along US-designed neoliberal lines. Bolivia followed globalisation’s recipe for prosperity to the letter: it opened its markets to foreign corporations, slashed government spending, and privatised everything that wasn’t nailed down. The result, after eighteen years of this, was that Bolivia was the poorest country in Latin America. In 1999, the city of Cochabamba saw its water system leased to the US engineering mammoth Bechtel Enterprises. In January 2000, the first private water bills arrived in the homes of the Cochabambans. All the bills had gone up, some by as much as 300%. People living on the minimum wage of $60 a month were expected to spend $15 of it just to keep their taps running. A huge citywide rebellion began which eventually forced the water company to literally flee the country. The contracts were cancelled. Several years later, the indigenous leader Evo Morales, who had played a key part in the protests, was elected Bolivia’s first indigenous president.
• The Landless Workers Movement in Brazil – the world’s biggest social movement in which hundreds of thousands of landless poor people forcibly take over land owned by big business and estate owners and put it to practical use.

Many of the movements I catalogued in that book are still around, but they have since been joined by others. Their politics are by no means all the same, but I think a plausible case can be made that they are all reactions against the uncertainty and unfairness which result from corporate globalisation.

All can be seen as reactions to a world increasingly fast-moving and seen to be out of the control of people and their chosen representatives. All emphasise values of cohesion, solidarity, tradition or community over the placeless, rootless, ‘globalised’ world in which price trumps value.

These movements include the indigenous radical movements of South America, some of which, in countries like Bolivia and Venezuela, are now in government. They include the Tea Party movement in the US, which is both very right wing and very anti-elitist. They might even be said to include the far right in Europe and the Islamist far right in the middle east, both of which emphasise the destructive power of capitalist globalisation and set themselves up against it in different ways.

Many of these movements are not pretty, but they are all the result of a global experiment This has been the story of the last few decades. Between 1990 and 2008 – which in retrospect will probably be seen as globalisation’s high water mark which in many ways has failed. Now, after the crash, it may be that globalisation’s last card has been shown to be worthless also. The 2009 crash was a direct result of precisely the kind of deregulated, footloose, finance-led economic system which globalisation’s disciples always insisted would lead to economic utopia. The flip side of globalisation’s creation of wealth and innovation is its creation of insecurity, instability and inequality.

This has now played out in global terms, and some economists now believe that the first decade of the 21 st century was the high point of the globalisation process. Global trade talks have been stalled for years, the economy is in dire straits, governments are re-regulating finance capital. The rising economy – China – is a command economy, not a market economy. So is Russia. So is Venezuela. The IMF and World Bank are being increasingly sidelined by the rise of Asia. The USA is in far too much economic and political trouble to provide much leadership. It is a declining empire. The environmental problems being stored up by unfettered growth are becoming increasingly clear.

But perhaps most importantly, the idea that unfettered global markets are an ineffable good has been shown to be demonstrably false.

What happens next is anybody’s guess. But I would not put my money on more of the same. Globalisation has failed. Its opponents were right. The world is just now starting to wake up to that fact.