Human Rights for Workers Bulletin

Vol. II, No. 7: May 14, 1997 

Globalization's Ills: An Economist's Diagnosis

A mainstream economist who recognizes globalization's negative impact on workers and worries about it -- is there be such a person?

Yes, there sure is.

In fact, Dani Rodrik, professor of international political economy at Harvard University, has written a book expressing those concerns and has even had it published by the Institute for International Economics under the title of Has Globalization Gone Too Far?

As Rodrik points out, the characteristic approach of many policy-makers, economists included, is to downplay the social tensions sparked by globalization and to brand "all concerned groups as self-interested protectionists." Instead, Rodrik believes that "the most serious challenge for the world economy in the years ahead ensuring that international economic integration does not contribute to domestic social DISintegration."

A major source of social tension identified by Rodrik is that globalization "fundamentally transforms the employment relationship." The labor of ordinary workers in one country can now more easily be substituted for the labor of workers in other countries. Owners of capital, highly skilled workers, and many professionals--fortunate in being able to take "their resources where they are most in demand"-- are not disturbed by this transformation, but most people are. As a result:  

Nurturing Class Divisions Across Borders

Another trend detrimental to workers: while the global economy is expanding, the social obligations of governments are contracting. This happens even though "the need for social insurance for the vast majority of the population that remains internationally immobile has not diminished." The cumulative consequence of these and other tensions risks "solidifying a new set of class divisions--between those who prosper in the globalized economy and those who do not...and between those who can diversify away its risks and those who cannot."

"This is not a pleasing prospect, even for individuals on the winning side who have little empathy for the other side. Social disintegration is not a spectator sport--those on the sidelines also get splashed with mud from the field. Ultimately, the deepening of social fissures can harm all."
The major argument of this book is that complacency about the social consequences of globalization is generating a widespread backlash that could undermine political support for an open world economy. "Markets are a social institution, and their continued existence is predicated on the perception that their processes and outcomes are legitimate," he writes. "Institutions that lose their legitimacy can no longer function, and markets are no different."

Rodrik defends the need for social insurance to help workers whose jobs have moved to other lands. He urges greater international cooperation to cope with "the ability of [multinational] firms to play national tax authorities off each other" and thus escape taxation. He even gives a brief, tentative endorsement to linking trade and labor standards: "It may also be legitimate to restrict imports from a country whose labor practices broad segments of the domestic population deem offensive."

Global Economy Still Partly a Mystery

All in all, Rodrik's prescriptions are not as detailed as his diagnosis. This is understandable, given the paucity of serious research devoted to cures. "Contrary to what many economists believe, we lack a full understanding of how globalization works."

The Institute for International Economics plans to do further work reassessing "the case for and against globalization," as Institute Director C. Fred Bergsten writes in the book's preface. But that's barking up the wrong tree. The case for globalization needs no reassessing. That case is closed. Globalization is a fact of life. But its potential for human progress is far from being realized. The issue is not whether globalization should proceed, but how.

In the May 19 New Republic, Jagdish Bhagwati, a giant among mainstream economists, calls for "a far-seeing, unpanicked intellectual and institutional response" to the new challenges posed by the global economy. Rodrik has initiated such a response. It urgently needs to be enlarged.

(You can find many insights in "Has Globalization Gone Too Far?" The Institute can be reached by phone at 1-800-229-ECON or through the Web at

Myths and More Myths (Part I)

...About Sanctions

The U.S. decision to impose limited sanctions on Burma (see our previous bulletin "Sanctions for Burma") triggered the usual flak from the usual sources. Malaysian Prime Minister Mahathir Mohamed reacted negatively, predicting that the sanctions would harm the people of Burma, not the Burmese government.

It is admirable for Malaysia's Prime Minister to express compassion for the Burmese people, though he does not possess the best credentials for doing so. Aung San Suu Kyi, Burma's pro-democracy leader and Nobel Peace laureate, is far better qualified. From her home in Rangoon, she praised President Clinton and the U.S. congress for their action. In a video smuggled out of Burma last year, she dismissed the claim that sanctions would hurt ordinary Burmese. "The only people whom sanctions will affect," she said, "are the privileged ones."

...About Imposing 'Western Values'

"Why are children, who should be playing with bats and balls, making them?" The head of the South Asian Coalition on Child Servitude, Shri Kailash Satyarthi, posed this question April 10 at a meeting in New Delhi. The answer: no good reason. And yet the employment of children in India's sports goods industry is increasing as world-wide demand for soccer balls, basketball, bats, and other athletic equipment is increasing.

An initiative against that trend has been launched in India by Indians. A leadership committee of 10 Indians, with equal representation from the industry and from non- governmental organizations, will "work in all possible ways to make the sports goods industry child labor-free."

That's one of many recent examples of Asians fending against human rights violations fostered by the global economy. Worth mentioning to the next person who repeats the canard that "Western" values don't apply to Asia.

Robert A. Senser
Editor, Human Rights for Workers
(Send e-mail)

 Bulletin No. II-7: May 14, 1997


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