Globalization

 

The universe might be expanding, but our world is shrinking.

Globalization is one of the inescapable facts of modern life. It is shrinking the globe, erasing borders and bringing people and nations closer together. The reasons are familiar: a combination of technological advances in communication and transportation, along with economic and legal innovations that define how we use those advances, and who benefits. The technological advances are probably inevitable as long as people are free to inquire and invent. The economic and legal changes are the result of human decision-making and balance of power. As for who benefits, that is still an open question.

FACTS

There are many forces that drive the process of globalization, but four technological advances made it possible in its current form: jet travel, container shipping, computers, and satellite communication. All four arrived in the space of a quarter-century after World War II. The combination of the four effectively removed geography as an economic force by drastically reducing the time and cost of international transportation and communication. Goods could now be produced in one country and marketed in another country on the other side of the world nearly as cheaply and quickly as it previously took to manufacture and market in neighboring towns.

The result of this revolution was to internationalize investment capital. Investors are now freer than ever before to take their money and move it from country to country, establishing their businesses wherever they get the most generous treatment. The effect has been virtually to eliminate the bargaining power of labor, and drastically reduce the regulatory power of government. Capital, freed from geographic constraints, has retaken the reins of economic decision making, which had been shifting steadily toward government over the previous century. Earlier generations of technology — the railroad, the automobile, the telegraph and telephone — had nationalized the marketplace and increased governments’ bargaining power. The new generation of technology has done the reverse: globalized markets, putting capital in the driver’s seat.

During the three decades since then, governments in the industrialized West have been struggling to find new ways of attracting and keeping productive economic activity within their own borders. In the process, governments have become more and more responsive to the wishes of capital and less responsive to the popular will. Through all this, labor has been virtually frozen in time, unable to respond to the changing times and new challenges.