Globalisation: it's all theory

Of socialism, it used to be said that it worked in theory but not in practice. The same may reasonably be said of globalisation, against which thousands of people will be protesting (or trying to protest) in Genoa as you read this. What could be more reasonable than the idea that increased global trade will reduce poverty? Or that foreign investment into the least developed countries will improve the lot of their people? Or that free markets offer a better route to growth than the bureaucratic leadership of sclerotic and often corrupt governments? Or that continued growth in the G8 countries, the priority for the leaders meeting in Genoa, is essential if the less developed world is to prosper? The supporters of globalisation have reason and economic theory on their side. The facts, alas, are against them.

Just as socialism was often ruined by the greed, viciousness and short-sightedness of its revolutionary vanguard, so globalisation is damaged by those at its cutting edge: big business and the governments of rich countries. For all their protestations, neither can regard the fate of the world's poor as more than a marginal matter, since one is mainly concerned with profit and the other with the votes of their own, mostly affluent citizens. As John Pilger's The New Rulers of the World showed on ITV on Wednesday, they will support the most monstrous dictator, such as President Suharto in Indonesia, if he cooperates with western business.

Their attachment to free trade, moreover, is very much in theory, just as was the attachment to equality and justice among the Soviet elite. They demand the removal of government subsidies, but support their own farmers to the tune of $350bn a year - seven times what the developing world gets in aid. They demand the end of tariffs, but retain their own barriers to manufactured products, at a cost to developing nations, according to the UN, of $700bn a year. They insist on the free movement of capital, but set all kinds of limits on the movement of labour. If the developed world were really concerned about the poor, it would remove all barriers to migration tomorrow. This would not only allow many poor people to better themselves - and lead to a flow of money directly back to poor relatives in their native lands - it would also force multinational firms in Indonesia and elsewhere to improve working conditions and wages for fear of losing too many employees to the next boat. That, after all, is how a globalised market should work. In theory.

What we have is not a genuine global free market, but a new form of colonialism. The World Bank and the IMF often insist on the privatisation of public services as a condition of loans or grants. Most frequently, these services are then taken over by foreign firms, not by local business people. And the consequence of privatisation is that the poor pay more for water (it is estimated that many families in Mauritania now have to spend a fifth of their household income on water), more for education, more for healthcare. This is the flaw in the argument that what is really wrong with the least developed countries, particularly in Africa, is that they have too little globalisation, not too much. In the 1990s, many of them liberalised their economies precisely as instructed, only to find themselves falling even further back. Without adequate infrastructure - not just transport and power supply, but also the skill levels and health of its people - a poor country is in no position to compete. All that the openness to global markets does is to disrupt those few sectors of the economy, such as subsistence farming, that may just about work.

Such problems are now tacitly admitted, even by President Bush, who proposed last Tuesday that "up to 50 per cent" of World Bank funds for developing countries be in grants for education, health, nutrition and so on. But "up to 50 per cent" may mean as little as 1 per cent, and you may be sure that the level of grant, like the level of debt forgiveness, will be conditional on the opportunities offered to western multinationals.

Like communism, globalisation derives much of its power from its supporters' fervent belief that history is on their side; those who oppose it are ignorant, reactionary or sinister, and enemies of the people, to boot. If some people are cruelly treated now, runs the argument, they are just regrettable but necessary casualties on the road to a greater good. After all, globalisation, we are told, has already made most of the world's citizens better off. True, but most Russians were better off under the Soviets than they were under the tsarist regime (or, for that matter, under the more recent capitalist order). What matters - and what the Genoa protesters want - is a better, more democratic, more humane alternative; in practice, here and now. Globalisation, like socialism, is just a word. It should not be used as a cover for the greedy and the powerful to do whatever suits their interests.

How to make tax sound nice

The Inland Revenue, it is reported, is discussing a name change as part of its new "communications strategy". This looks like an opportunity for Daily Telegraph leader- and letter-writers to indulge their hatred of the principle of taxation and to suggest such names as Daylight Robbery, Inland Revenge and Bloodsuckers, Inc. The left must offer alternatives. The Community Fund would be a strong candidate, but the word "community" has been damaged goods since the Tories used it as cover for their poll tax. More fanciful possibilities include Sharing and Caring, Togetherness, and Fair Deal. Or, in tune with the character of the occupant of No 11, Dr Brown's Necessary Medicine. The best rebranding for a troubled company or institution, however, comes up with a meaningless name that gives the public no idea of what it actually does. (Think Consignia, Corus, Accenture.) So, with apologies to Ed Balls, the Chancellor's adviser, the Inland Revenue should henceforth call itself Endogenous.

This article first appeared in the 23 July 2001 issue of the New Statesman, In the line of fire