Can Globalization be made more democratic and more responsive to local cultures?

Question for Discussion: Can Globalization be made
democratic and more responsive to local cultures?

Readings: Friedman, pp. 451-459 and 467-475;
Korten, "Civilizing Society" and "Cultural Crisis" ;
All That Money you've Lost--Where Did it Go? ;
Brown, Out of the Ashes of the Financial Crisis

Video: Commanding Heights, vol. 3, Chap. 12:
The Asian Meltdown and chap 22:The Battle Resumed

Debating Globalization in Sewall 2000

Debating Globalization for the Exam
Global Problems not being Solved by Globalization
( in-class)
Two Models of Globalization ( in-class)
Friedman vs. Korten vs. Lewis on Globalization
( in-class)
Friedman on making Globalization Work ( in-class)
Friedman on the Power of the Global Market
Friedman's Model of Globalization Positions
( in-class)
Korten: Diagram of Civil or Capitalist Society
( in-class)
Korten: Principles of an Ecological Revolution
Korten: Summary of Political & Economic Reforms
( in-class)
Korten on the Anti-Globalization Opposition
( in-class)
Korten's Example of the Collapse of
Communism for his Global Reform
Movement
Police Fire on Hungary Protestors ( in-class)
Korten, Civilizing Society
Korten, Myth Busting ( in-class)
Korten, Cultural Crisis and the Future ( in-class)
Debating Globalization: Friedman vs. Korten
( in-class)

Debating the Third Way

The International Forum on Globalization ( in-class)

The Global Costs of Crony Capitalism

The Global Cost of Crony Capitalism ( in-class)
Long-term Capital Management Bailout in 1998
( in-class)
IMF Financing and "Moral Hazard": Bailing out the
Bad Lenders and Bad Borrowers ( in-class)
"Moral Hazard" and the Global Financial System
( in-class)
Kuttner, The Bubble Economy -- Risks of
Economic Depression
2004 Political Campaign Spending ( in-class)

Debating the Larger Issues in Globalization

Is there any alternative to Globalization? ( in-class)
Globalization is Greatttt
The Key Questions on Globalization ( in-class)
Debating Globalization: Thinkers
Global Civil Society: The Path ahead
Alternative to Economic Globalization:
Introduction ( in-class)
The anti-Thomas Friedman Home Page ( in-class)
Susan George: Another World is Possible
( in-class)
Edward Hermann:The Threat of Globalization
( in-class)
The Washington Consensus: A Definition
( in-class)
Washington Consensus or Washington
Confusion?
Debating Globalization Websites
Who are the Players in Globalization?
The World Economic Forum
The World Social Forum
The Group of 77: Third World Countries
Resources for building the Alternative
Global Economy

Can Globalization be Made More Democratic?

U.S. National Debt Clock
U.S. National Debt Graph: $10T+
All That Money you've Lost--Where Did it Go?
Brown, Out of the Ashes of the Financial Crisis
Bush to Host Meeting on Global Financial Crisis
Global Problems not being Solved by Globalization
( in-class)
Two Models of Globalization ( in-class)
Debating the Larger Issues in Globalization
Susan George: Another World is Possible
TINA vs. ATTAC ( in-class)
Debating the Third Way: Alternatives to Corporate Globalization ( in-class)
The Global Costs of Crony Capitalism ( in-class)
The Bubble Economy -- Risk of Economic Depression ( in-class)
Friedman on making Globalization Work ( in-class)
Friedman on the Power of the Global Market and the U.S. as Benign Hegemon ( in-class)
Friedman's Model of Globalization Positions ( in-class)
Korten: Diagram of Civil or Capitalist Society ( in-class)
Korten: Principles of an Ecological Revolution
Korten: Summary of Political & Economic Reforms ( in-class)
Korten: Getting Corporations out of Politics (in-class)
Korten on the Anti-Globalization Opposition ( in-class)
Korten's Example of the Collapse of Communism for his Global Reform Movement ( in-class)
Police Fire on Hungary Protestors
Korten, Civilizing Society ( in-class)
Korten, Myth Busting ( in-class)
Korten, Cultural Crisis and the Future ( in-class)
Debating Globalization: Friedman vs. Korten
Friedman vs. Korten vs. Lewis on Globalization
( in-class)

Friedman on making Globalization Work

In this chapter, Friedman keeps talking about "sustainable globalization" and the United States needs to do as "the benigh hegemon" to globalization sustainable. However, many argue that the present system of globalization is not sustainable because it is financially unstable, environmentally destructive, creates poverty and social conflict, and undermines local and national democratic governments.
(Chris Lewis, Ph.D.)

"Sustainable globalization requires a stable super-power structure, and no country is more essential for this than the United States."
(Friedman, 464

"The big geo-economic question we need to address is: How do we stabilize this global economy to make it less susceptible to bad borrowing and bad lending."
(Friedman, 452)

"I believe globalization did us all a favor by melting down the economies of Thailand, Korea, Malaysia, Indonesia, Mexico, Russia, and Brazil in the
1990s because it laid bare a lot of rotten practices and institutions in countries that had prematurely globalized." (Friedman, 452)

"The Electronic Herd is the energy source of the twenty-first century. Countries have to learn to manage it; restraining it is futile, and shutting it
out for long will only deprive a country of resources, technology, and professional advice, and prolong crony capitalism." (Friedman, 453)

"To use some of the IMF, or other assistance, to maintain minimum social safety nets in these countries and provide public works jobs to soak up
some of the unemployed. These minimum safety nets are often the first things to get shredded in any [IMF] rescue program."
(Friedman, 456)

"At the beginning of 1999...the top five hundred banks from the thirty largest industrialized democracies still had outstanding loans to
developing countries totalling 2.4 trillion dollars."
(Friedman, 457)

"Some of the worst lenders in recent years have been big banks....Banks make money by lending, and each bank assumed that Asia was a
no-brainer, and each did not want to lose that market to the other [other big banks]."
(Friedman, 457)

"I would just point out that the American banking industry has one of the most powerful lobbies in Washington, and these banks will strongly resist
any new lending limits which curb their ability not just to lose money, but to make it." (Friedman, 459)

Friedman, The Power of the Global Market

"And in a world of networks, Supermarkets and Super-empowered individuals--including Super-empowered investors--there are some
things that governments cannot stop and some forces that government cannot totally control."
(Friedman, 462)

"Sustainable globalization requires a stable super-power structure, and no country is more essential for this than the United States."
(Friedman, 464)

"All this is happening in a world stabilized by a benign superpower, with its capital in Washington, D.C....The presence of American power and
American willingness to use that power against those who would threaten the system of globalization." (Friedman, 466)

"This doesn't mean that America needs to be everywhere, all the time, or pay for everything everywhere....But the very reason we need to
support the United Nations and the IMF, NATO, the World Bank, and the various world development banks is that they leverage and magnify our power and our aid." (Friedman, 466)

"[We need] to form a twenty-first-century coalition that can defend free trade and American internationalism." Friedman, 466)

"America truly is the ultimate benign hegemon and reluctant enforcer." (Friedman, 467)

Too Big to Fail: Long-term Capital Management Bailout by the
Federal Reserve in 1998

As a result of the Asian Financial crisis in 1997 and 1998, Long-term Capital Management faced bankruptcy, which threatened some of the largest
banks and investment firms in the world with collapse.
[Chris Lewis]

NARRATOR: [in 1998] In Greenwich, LTCM faced bankruptcy, but if the company went down, it would also take with it the total value of the positions it held across the globe - by some accounts $1.25 trillion, the same amount as the annual budget of the US government. The elite of Wall Street would suffer heavy losses. The Federal Reserve Bank called upon the world's top financial regulators to discuss the crisis.

ROGER LOWENSTEIN: Suddenly they seemed to be staring at this nightmare where one firm linked up to every major firm on Wall Street was going to be seized up and markets might just stop working. That was the great fear.

NARRATOR: Fearing a global economic collapse, the Federal Reserve organized a bailout of LTCM with Wall Street's biggest power brokers. 14 firms put up $3.6 billion to buy out the fund. This consortium would now oversee all trading and had power to veto decisions made by the partners. Meriwether, Merton, and Scholes lost millions. So did their investors. Then the public recriminations began.

BERNIE SANDERS: We expect that they're going to explain to the members of this Committee why the Federal Reserve has organized the $3.5 billion bail-out for billionaires, why Americans should be worried about the gambling practices of the Wall Street elite.

PBS: Long-term Financial Management's
Trillion Dollar Bet

Korten's Example of the Collapse of
Communism for his Global Reform
Movement

"Experience teaches that often the underlying forces for powerful social change build silently and invisibly over decades, even centuries, until at a moment of dramatic breakthrough the seemingly impossible dreams of mil-lions of people become a new social reality. We have seen it, for example, in the collapse of the Soviet Union and in South Africa in the sudden dissolution of apartheid and the peaceful election of Nelson Mandela to the presidency. As late as 1988 no one was even considering the possibility that by 1991 the Soviet Union would peacefully dissolve itself, Germany would be reunited, the Berlin Wall would be gone, and the leadership of the former "evil empire" would invite the United States to help dismantle its nuclear arsenal. The extraordinary events in South Africa were similarly unanticipated as little as three years before they occurred. Born of a confluence of necessity and possibility, similar forces are now building toward the civilizing of global society."

"....We have the knowledge, the technology, and the necessity to rethink and intentionally recreate humanity's economic, political, and cultural institutions to achieve peace, justice, and prosperity for all as a collective creative act. This powerful combination of imperative and opportunity presents us with the most compelling creative challenge in all of human history--an unprecedented opportunity to create the truly civil society of which philosophers, religious prophets, and countless millions of others have dreamed for millennia."

.....Korten, Civilizing Society

Korten, Civilizing Society

" [T] he larger goal of the living democracy movement is to create a radically democratic global civil society of free and equal, civically conscious citizens. It is in this sense, that the term is used here."

"In the civil society, the cultural sphere is the dominant sphere of public life and is a product of the active community life of free, culturally aware people whose personal identity is grounded in a deep sense of the spiritual unity of the whole of life. Such a culture is authentically life affirming. Its values, symbols, and beliefs serve as the foundation on which the members of a civil society create and formalize the institutions of polity (governance) and economy.

The life-affirming values of authentic cultures lead naturally to the creation of authentically democratic polities based on a deep commitment to open, active, and equitable participation in political discourse and decision making. They also lead naturally to the creation of authentic market economies comprised of local enterprises that provide productive, satisfying livelihoods for all and vest in each individual an ownership share in the productive assets on which their livelihood depends."

"In the capitalist society, the economy is the dominant sector. Here power and values flow from money to economic institutions that in turn shape the institutions of government and culture to align society's rules, values, and symbols with financial interests. The key to capitalism's power over society is its ability to maintain a materialistic culture that denies the spirit and constantly reinforces the idea that humanity's capacity for greed, competition, and violence exceeds its capacity for sharing, cooperation, and love. Capitalism's dependence on an inauthentic and unexamined culture is also its key vulnerability, as such a culture is contrary to what most people know deep within their being to be true."

"The current contest between the forces of corporate globalization and those of the movement for a living democracy is by conventional calculations similarly mismatched. Corporate globalization has the money and the guns. But the exercise of raw power against an awakened populace almost always proves to be self-defeating. The more aggressively the institutions of global capitalism use their money, media control, and police powers to suppress the struggle for life and democracy, the more quickly they expose the illusions on which their power rests, thus accelerating the awakening and hastening their own fall."

Korten, Myth Busting

Capitalism builds its legitimacy on a foundation of cultural myths. Expose the myths and its legitimacy crumbles. Myth busting therefore becomes a simple, but powerful cultural strategy. It requires nothing more than speaking truths that resonate with the wisdom that resides in every human heart-truths of such self-evident validity that they require no special expertise or eloquence to articulate and defend. The following are examples:

• Life is more valuable than money.

• Life is the source of all true wealth.

• Destroying life to make money is a social pathology.

• Democracy is an obvious alternative to corporate rule.

• A market economy is an obvious alternative to both capitalism and socialism.

• True prosperity means every person has an adequate and fulfilling means of living.

• Most people are by nature cooperative and compassionate.

• Natural rights reside only in living beings.

• It is the right of all people to participate in the
decisions that shape their lives.

• Political democracy is inseparable from economic democracy.

• Human institutions have only the power we choose to yield to them.

• Laws made by people can be changed by people.

By sharing our truths we find and connect with one another, build communities of congruence, and reclaim the cultural sphere. "

"When corporate globalists say globalization is beneficial and inevitable, most people nod their heads and say` of course . " When protestors say they are against globalization they sound like marginal xenophobic crazies to those who, like Sen, aren't aware that globalization is a code word for global corporate rule at the expense of democracy, people, and planet. The resulting miscommunication is a dream come true for corporate spin doctors. "

"Entranced by promises of a material paradise of limitless luxury, humanity has too long ignored the mismatch between the imperatives of our existence as living beings on a finite planet and the imperatives of the institutions of money that chart our path to the future. Created to build colonial empires in service to kings, global corporations are ill suited to the task of building just, sustainable, and compassionate civil societies that nurture sufficiency, partnership, and respect for the whole of life. Corporate globalists and the corporate empires they serve may he at the cutting edge of technological innovation, but socially and environmentally they are relics of a bygone era of imperial colonial rule, elite privilege, and state-sanctioned plunder."

"We have the knowledge, the technology, and the necessity to rethink and intentionally recreate humanity's economic, political, and cultural institutions to achieve peace, justice, and prosperity for all as a collective creative act. This powerful combination of imperative and opportunity presents us with the most compelling creative challenge in all of human history-an unprecedented opportunity to create the truly civil society of which philosophers, religious prophets, and countless millions of others have dreamed for millennia."

Korten, Cultural Crisis

"Yet somewhere along the way something went terribly wrong, for the humans came to use their powerful technologies and institutions in ways that were increasingly destructive of life and ultimately of themselves . Indeed, in a mere 100 years-between their years 1900 and 2000--they destroyed much of the living capital it had taken billions of years to create."

"Never was human rejection of responsibility for society and nature greater than in the economic system humans called capitalism. Capitalists worshiped a god called the market. They believed the market had an invisible hand that miraculously turned acts of greed and ruthlessness to the benefit of the species. One of capitalism's defining features was a consumer culture. Capitalism cultivated this culture by saturating the communications media with the message that consumption of one or another advertised product would bring meaning and love to empty, lonely lives. Increasingly the creative energies of the species turned to building powerful institutions called corporations, which were dedicated to endlessly increasing consumption through a process called economic growth. Growth became such an obsession that few seemed to notice these corporations had taken over control of their lives and were destroying the life support system of the planet, the social fabric of the society, and the lives of billions of people."

"We are embarking on the most profound and exciting course change in human history---a challenge that calls us to awaken the full creative potential of our species, with the mutual caring and tolerance for diversity that are essential foundations of the healthy societies we hope to create. Engaged in a collective enterprise that requires the creative contribution of every individual, each of us must be prepared at any given moment to act as both courageous leader and humble follower-even at the same time. Engaged in an act of creation for which there is no blueprint, we must remember that we are each learners in an unfolding process that requires us to look with a critical eye and an open mind for the spark of goodness in each person and the kernel of truth in each idea. "

IMF Financing and Moral Hazard

Moral hazard" is a term frequently heard in recent debates over the reform of international financial institutions. In other words, critics argue that the knowledge that IMF financing will be made available in the event of a financial crisis makes the crisis more likely to occur. The idea is that creditors know that IMF financing helps crisis-prone countries stave off default and are therefore willing to lend to such countries at lower interest rate spreads than would prevail if the IMF did not exist. The IMF's presence thus weakens pressure on governments to pursue policies—such as sustainable fiscal policies and sound financial supervision and regulation—that could help prevent crises.

Associated with this view is the suggestion that moral hazard may have increased in recent years. It has been argued, in particular, that the IMF's response to Mexico's crisis in early 1995 signaled a new era of massive "bailouts" that inspired higher levels of risk taking and set the stage for crises in East Asia, Russia, and Brazil just a few years later.

Implications of IMF financing

The argument that IMF financing creates moral hazard cannot be lightly dismissed. If one believes that IMF financing helps some countries pull back from the brink of default and otherwise mitigates the costs of a crisis for the country affected, and if one believes that market participants and governments respond to incentives, some degree of moral hazard is an unavoidable consequence

Moral Hazard and the Global Financial System

The authorities claim these are temporary aberrations that will be corrected by the market. I contend they are symptoms of a deep structural problem. Until recently, the IMF was ready to bail out periphery countries. Taxpayers in debtor countries, such as Mexico, picked up the tab. This may have been unfair, but it kept money flowing to the periphery.

Then came the crisis of 1997-98, which was attributed to the "moral hazard" of IMF bailouts. Before 1997, the IMF would step in to assure private creditors they would be paid in full, perhaps encouraging them to lend too freely. This led to a U-turn from bailouts to "bail-ins." Since 1997, the IMF has tried to condition its financing on private creditors' also stepping up to risk real losses, and it has been willing to let countries like Russia and Argentina default on private loans. The moral hazard has thus been eliminated, but the risks of investing in emerging markets have increased.

"Today's markets are so big, so diverse and, with the advent of the internet, becoming so fast, that they can never be made immune from crises. Global financial crises will be the norm for the coming era. With the speed of change going on today...crises will be endemic." (Friedman, 462)

G-8 Information Center
The Group of 77
The World Trade Organization
Organization for Economic Cooperation
and Development (OECD countries)
Peoples' Global Action (PGA)

"Sustainable globalization requires a stable super-power structure, and no country is more essential for this than the United States."
(Friedman, 464)

"America truly is the ultimate benign hegemon and reluctant enforcer." (Friedman, 467)

"Without America on duty, there will be no America Online." (Friedman, 468)

"Balancing a Lexus with an olive tree is something every society has to work on every day. It is also what America, at its best, is all about.
America at its best takes the needs of markets, individuals, and communities all utterly seriously. And that's why America, at its best, is not just a country. It's a spiritual value and role model."
(Friedman, 474)

I think that Friedman is much too optimistic when he declares that "America at its best takes the needs of markets, individuals, and communities all utterly seriously. (Chris Lewis, Ph.D.)

"A healthy global society is one that can balance the Lexus and the olive tree all the time, and there is no better model for this on earth
today than America. And that's why I believe so strongly that for globalization to be sustainable America must be at its best--today, tomorrow, all the time." (Friedman, 475)

Korten on the Anti-Globalization Opposition

"The Global Movement for a Living Democracy announced itself to the world on November 30, 1999, in Seattle, Washington." (Korten, 307)

More than 700 organizations and between 40,000 and 60,000 people took part in the protests against the WTO's Third Ministerial on November 30th. These groups and citizens sense a cascading loss of human and labor rights in the world. Seattle was not the beginning but simply the most striking expression of citizens struggling against a worldwide corporate-financed oligarchy in effect, a plutocracy. Oligarchy and plutocracy often are used to describe "other" countries where a small group of wealthy people rule, but not the "First World" the United States, Japan, Germany, or Canada.

The World Trade Organization, however, is trying to cement into place that corporate plutocracy. Already, the world's top 200 companies have twice the assets of 80 percent of the world's people. Global corporations represent a new empire whether they admit it or not. With massive amounts of capital at their disposal, any of which can be used to influence politicians and the public as and when deemed necessary, all democratic institutions are diminished and at risk. Corporate free market policies, as promulgated by the WTO, subvert culture, democracy, and community, a true tyranny.

"By contrast, the predominant call of the living democracy movement, as reflected in the themes of its protest actions, is not to socialize the
corporation, but rather to exclude or dismantle it."
(Korten, 308)

"We are forging our own instruments and processes for redefining the nature and meaning of human progress and for transforming those institutions that no longer respond to our needs."
The People's Earth Declaration, 1992

"In an even more sinister development, business has now grown in dominance to an extent that is gradually overshadowing political power. To be more specific, there is now a revolving door between business and politics. This feature appeared first in the USA, but it is spreading fast to other regions. This is not the same as the well established tradition for some business people to move into politics which has been in evidence for centuries. The corporate and political spheres have now merged together into one continuum. It is becoming progressively difficult to know when governments are acting on behalf of the people and when they are merely responding to businesses dictates. No overt direction is necessary; politicians are also businessmen and women in their own right. "
from How Elites maintain control in a Democracy

"The Corporate Media further damaged their
credibility as sources of reliable information."

See Thomas Friedman: Senseless in Seattle (1999)
Media-lens: Correcting the Corporate Media.
Corporate Media: Who Owns What?
Independent Media Center

"Seattle 1999 was only the visible tip of a very
large iceberg." (Korten, 308)

"In Seattle, their shared quarrel was not with trade, but with the use of trade rules to strengthen corporate rights and power at the
expense of people and plant." (Korten, 314)

"There are true grassroots movements seekingto redefine society and transform national politics from the bottom up." (Korten 318)

[ The living democracy movement demonstrates] "the possiblities of local democratic control within a framework of commitment to creating
healthy, ecologically sound communities that work." (Korten, 318)

"The living democracy movement, capitalism's new challenger, measures progress not by increases in the aggregate consumption of the few, but by
the quality of life of everyone. It seeks not to capture state power, but rather to reduce and democratize it. It seeks not to eliminate the
market, but rather to restore it. It is driven not by the love of money, but by a love of life....Its defining goal is a civil society." (Korten, 323)

Definition of a Civil Society

"The task ahead is to transform a world ruled by corporations dedicated to the love of money to a world ruled by people dedicated to the love
of life." (Korten, 335-6)

The Earth Charter Initiative
International Forum on Globalization
People-centered Development Forum
Focus on the South
The Third World Network
People's Global Action against Free Trade
Corporate Watch
Public Citizen
The Alliance for Democracy

U.S. National Debt Clock

U.S. National Debt Graph: $10T+