Kenneth Lee

The World Trade Organization held a summit in Seattle, Washington. It was met with anti-globalization demonstrators, environmentalists, and labor union members. Each individual had their own reason to demonstrate, to stop the integration of national economies. Each member of the World Trade Organization also had their reasons and beliefs to support an integrated world. However, one must look at the past of globalization to understand the future.

Globalization is not a new phenomenon. To state that globalization is a new concept is to state that international trade is a new phenomenon. It has been a concept, and a major precept of Classical economists, ranging from the physiocrats to David Ricardo. Mercantilism was a prevalent economic strategy during the sixteenth century and up till the seventeenth century, because it supported the political structure and the economic circumstances of that time. Mercantilism is an economic strategy that makes the assumption that wealth is finite. To become wealthy, a country must colonize to search for new sources of species (precious metals), expropriate other countries’ wealth, and maintain a favorable balance of trade. This meant the government must dictate economic activities, internally and externally, making the country into a closed economic system. However, the physiocrats believed that government intervention not only artificially inflates prices; government intervention is also a detriment to the development of higher quality products. Reforming economic choices towards free market was the first step to globalization. Ricardo also wrote about a world where countries should specialize in a particular industry and trade with each other for the greater good. The shift from mercantilism to classical economic ideas caused the British, French, and Germans to trade openly with each other, which is a perfect model of globalization.

As free market system became the prevalent economic model, imperialism grew as an economic strategy. Imperialism was greeted with harsh criticism. Dependency theorists asserted that underdeveloped countries were being raped by the major economic powers. Dependency not only stripped the underdeveloped country of resources, it also subjugated them to the industrialized country and to their product dumping. According to Lenin, imperialism was the systematic exploitation of undeveloped countries by the Financial Capitalists, wanting to gain profits off their quasi-colony. But more recently, labor jobs are being exported to third world countries, where wages are exponentially lower and occupational hazard standards are non-existent. The corporations are gaining a profit off exploiting the cheap labor pool, while the extent to which labor is being exported is only minimal. With increasing globalization, service industry jobs like accounting and stock analysis are being exported to India and other newly industrializing countries. This is only the beginning of a long trend of job exportation.

With the historical context of exploitation with globalization, most are opposed to it. Human Rights activists are against globalization, because the World Trade Organization would integrate countries that pursue economic expansion at the expense of human life. Environmentalists are against globalization, because it will allow corporations free reign on the environment. The labor unions are against globalization, because it would systematically allow jobs to be moved to other nations with lower standards of living.

Moreover, Globalization comes with great risks. With integration of economies, two events occur: sensitivity and vulnerability. As countries become interdependent, one nation is subject to other economies’ fluctuation. An example of such a downward spiral is the oil shock of 1973. OPEC, during the Arab-Israel conflict, increased the price of oil exponentially. Oil, being almost an inelastic good, caused prices to go up dramatically, without any sort of economic growth, called stagflation. And this phenomenon severely effected Japan, United States of America, and Europe. This economic downturn caused high level of unemployment, and shows the effects of interdependency.

However, if globalization is not a new trend, is the future already set in stone? Will we see governments rejecting trade negotiation and isolating their nations to achieve economic self-sufficiency? Or was globalization a goal, but never truly obtainable? The interpretation, especially in history, is that today is different from yesterday. Current trends are not just to achieve free trade. Rather, regional trade treaties are becoming more prevalent. The idea of globalization is still on the fountainhead of economic goals, but regionalism is becoming a realized dream. The European Union, The African Union, The North American Free Trade Agreement, and many others are already implemented, or are in the works of being implemented.

Kenneth Lee is a student at Santa Monica College.