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Monday, 27 April 2009 23:00

Books Review: Globalization and the Poor and The Shock Doctrine -

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Globalization and the Poor, by Jay R. Mandle The Shock Doctrine, by Naomi Klein A combined review of two books on trade globalization. I read these two books recently within a few days of each other, and was struck by how differently they treat the same issue of trade globalization. Both books are thoroughly researched and well written, and both argue in favor of changing current trade practices so that sweeping economic changes will inflict less harm on the poorest and most vulnerable segments of society. Jay R. Mandle is a professor of economics at Colgate University, author of several books on economic development and economic growth, and a political activist for election reform. Naomi Klein is a journalist first and foremost, a much published author, and a passionate reformer. Their different backgrounds are reflected in the two books: Globalization and the Poor is an academic treatise on globalization, its systems and institutions, whereas The Shock Doctrine is a scorching indictment of those who control its implementation. Globalization and the Poor (G&P). Dr. Mandle presents a detailed and cogent analysis of globalization, and the progress of international trade through the past several decades. While the presentation is detailed and somewhat technical, it provides sufficient tutorial information to be accessible to the layman. With his descriptions of the General Agreement on Tarriffs and Trade (GATT), the Generalized System of Preferences (GSP), the North American Free Trade Agreeement (NAFTA), and other 20th century systems of trade and international finance, Mandle has provided a fine overview of the fundamentals of world trade in our time. G&P describes the major arguments favoring globalization along with a detailed description of three primary sources of opposition. The forces for globalization are in search of market growth and increased profits through lower costs. Multinational corporations take advantage of advances in computerization, communication technology and information technology to move production, distribution, and, more recently, services to the most cost effective locations in the world. These migrations have been very effective in increasing trade, and have on the whole increased 3rd world exports and elevated the standard of living in many parts of the developing world. Mandle groups opposition to globalization in three categories. First there are those who would have the US act unilaterally to alter global trade practices. This group is not cohesive: many altruists in the “unilateralist” category insist on changes that will limit harm to the poorest populations, while many other “unilateralists” are primarily interested in protecting U.S. jobs. A second opposition group favors “the economics of localism”, moving entirely away from globalization and returning to a kinder, gentler world of local economies. The third is the Student Anti-Sweatshop Movement, which “seeks to improve the wages and working conditions present in the third world’s apparel industry,” by pressuring producers to pay higher wages and provide safe work environments. Mandle’s position is that globalization is a fact of life, and that the world in fact needs globalization in order to elevate the world’s poorest out of their abject poverty. But he also contends that the growth must be supplemented with adequate market controls and social protections to prevent driving millions into poverty as a result of the sweeping economic changes that globalization entails. The Shock Doctrine (TSD). In contrast to Mandle’s measured and dispassionate explanation of globalization’s fundamentals, Klein takes us on a tour of the dark underbelly of what she terms “disaster capitalism.” Her basic premise is that globalization has been used as a weapon by proponents of Milton Friedman’s “Chicago School of Economics,” waging economic war on defenseless governments and populations who are in shock after some cataclysmic change. The shock might be the result of a major political change, the end of a civil war, or a natural disaster such as a hurricane or tsunami. The “disaster capitalists” skillfully extract mineral wealth and privatize public resources, always leaving the population in much worse condition for generations to come. Klein cites case after case in which the core Chicago School principles of privatizing public resources, deregulating business, and slashing government services, have been applied to societies when they were most desperate for a hand up. The instruments for executing these programs have been the International Monetary Fund, the World Bank, and the World Trade Organization, which Klein sees as being in the service of disaster capitalism. One of the TSD case studies -Poland’s Solidarity movement - may resonate with readers because of the prominent media coverage at the time. During the 1980’s the western world watched mesmerized as Lech Walesa and Solidarity struggled and finally gained control of the Polish government with huge wins in democratic elections. The western world was ecstatic, and we expected Poland’s democracy to join ours as a junior partner. But when the excitement died down and the media moved on, a different plan unfolded. The communists had left Poland deeply in debt, in addition to which a great deal of investment was needed to give the economy a boost along its new democratic path. Instead of a hand up, however, Klein tells us that the IMF, run by Chicago School economists “let the country fall deeper and deeper into debt and inflation,” knowing that the weaker Poland became, the more amenable it would be to privatizing its public resources. Doing its part, the US Government under George H. W. Bush insisted that Poland repay all debts amassed during Communist rule. So, instead of giving Poland a well deserved helping hand into the western economy where they might have become healthy trade partners, we took advantage of the shock and disarray to sell off Poland’s mining, shipyards and factories at a fraction of their value. The buyers were primarily non-Polish multinational corporations who promptly fired huge numbers of workers. Poles lapsed into worse poverty than they had experienced under Communism, and have yet to recover even now. Those of us who naïvely wished the Poles well were left wondering whatever happened to Poland’s dream. There was of course no outcry on the major media outlets to notify us of the change in plan. TSD includes about twenty case studies of this sort, including our own New Orleans, which has been made over into a newer, wealthier, whiter model following hurricane Katrina and the ouster of most of the poor African American population. It is a painful book to read – I found that one chapter at a time was the way to do it, with breaks for light fiction in between. Summary. Both of these books are good reading and discussing with your friends. Globalization and the Poor is a much needed tutorial on how world trade works, and the Shock Doctrine is yet another wake up call for those who think that U.S. power should be used for good in the world. Although their books are very different, Mandle and Klein share a progressive, humanitarian world view, that trade should not be used to do harm. In their writing, both agree that we need to bring significant change to the practices of international trade before globalization proponents can claim to live up to that view.

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