The Bello critique
Walden Bello has seized on the global economic crisis that began in 2008 as an excuse to promote something called “deglobalization.” Presumably, it means a reversal of globalization, where globalization refers to a world of free trade in goods and services, and free movement of financial capital across national borders. Bello wants to restrict international trade and movement of capital.
According to Bello, “deglobalization” has 11 key “prongs” or doctrines:
• Production for the domestic market must again become the center of gravity of the economy rather than production for export markets;
• The principle of subsidiarity should be enshrined in economic life by encouraging production of goods at the level of the community and at the national level if this can be done at reasonable cost in order to preserve community.
• Trade policy – that is quotas and tariffs – should be used to protect the local economy from destruction by corporate-subsidized commodities with artificially low prices.
• Industrial policy – including subsidies, tariffs, and trade – should be used to revitalize and strengthen the manufacturing sector.
• Long-postponed measures of equitable income redistribution and land redistribution (including urban land reform) can create a vibrant internal market that would serve as the anchor of the economy and produce local financial resources for investment.
• Deemphasizing growth, emphasizing upgrading the quality of life, and maximizing equity will reduce environmental disequilibrium.
• The development and diffusion of environmentally congenial technology in both agriculture and industry should be encouraged.
• Strategic economic decisions cannot be left to the market or to technocrats. Instead, the scope of democratic decision-making in the economy should be expanded so that all vital questions – such as which industries to develop or phase out, what proportion of the government budget to devote to agriculture, etc. –become subject to democratic discussion and choice.
• Civil society must constantly monitor and supervise the private sector and the state, a process that should be institutionalized
• The property complex should be transformed into a “mixed economy” that includes community cooperatives, private enterprises, and state enterprises, and excludes transnational corporations.
• Centralized global institutions like the IMF and the World Bank should be replaced with regional institutions built not on free trade and capital mobility but on principles of cooperation that, to use the words of Hugo Chavez in describing the Bolivarian Alternative for the Americas (ALBA), “transcend the logic of capitalism.”
And its flaws
These doctrines have major flaws, theoretically and empirically.
One is the idea that trade is not okay across borders but is okay within a country. But national boundaries are historical accidents. Why should such accidents determine the solution to the basic economic problem of scarcity? And is there good empirical evidence to support the idea that trade across borders is worse (and in what sense?) than trade within borders? That we’ve had a near-repeat of the Great Depression does not prove that what we have today is worse than the counterfactual of where the world economy would be today without globalization.
The idea that the local economy gets destroyed “by corporate-subsidized commodities with artificially low prices” is simply not credible. Corporations or firms seek profits, so they would not “subsidize with artificially low prices.” If prices from a globalized economy are low it is typically because of increasing returns to scale or because some other country is much more efficient. It just means that the local economy is not producing the right goods and services as revealed by consumer preferences.
There is a thread of anti-consumerism in “deglobalization.” Bello would not let consumer demand signal to producers what to produce. Instead, production will be decided by “civil society” (i.e., the politically correct) or by “democratic discussion and choice.” While he does not favor “centralized socialism,” it is difficult to imagine how exactly his ideal society would solve the problem of what goods to produce and in what quantities. There must be a “decentralized socialism” concept, but that seems very much ill-defined. If what Bello means is that helping the poor ought to be practiced through voluntary charity, that would not be for or against globalization or capitalism. Of course, if helping the poor is decided by politicians or civil society, it would not differ from the failed “centralized socialism” model of the Soviet Union.
Bello’s proposals are also based on seductive “buzz words” that either mean very little or gloss over difficult social and political disagreements. They include: “maximizing equity,” “reducing environmental disequilibrium,” or “cooperation that transcends the logic of capitalism.” Equity is a difficult issue because it is not straightforward, competes with efficiency, and reduces in the end to internecine political struggles. The reference to the environment is fashionable today but it is irrelevant since damaging or fixing the environment can be done with or without globalization. Cooperation is set up as antithetical with capitalism, but without freedom of contract, “cooperation” is disguised dictatorship.
Does Manny Pacquiao fight? And what did Keynes want?
My problem with Bello’s position is that it is not internally consistent. If he believes that a country like the Philippines is not good enough to compete globally, then he should also support a ban on the deployment of Filipino labor abroad and he should tell Manny Pacquiao to fight only Filipino boxers. (Would Bello then accept the “credit” for making the Philippines an even poorer country?)
He should also tell us to close our minds to ideas from outside that betray our incompetence or ignorance. And yet the biggest authority he cites as supportive of his ideas is John Maynard Keynes, a prime mover of international cooperation and an architect of the IMF, an institution that Bello derides. Bello seems to forget one key lesson in the history of economic thought: Keynes did not propose what later became “Keynesian” economics to do away with the market or capitalism. Instead, Keynes wanted to fix the problem of market failures such as unemployment, and he wanted to moderate the booms/crashes that attended capitalism. But nowhere in Keynesian economics is any hint that a retreat from international trade or movement of capital would improve the quality of life, as Bello seems to claim.