A Step too far...

Globalisation has typically, at least by liberals, been assigned the label of the 'more the better'. The amalgamation of different economies around the world to create one massive globally integrated economy does not seem too bad... at least I thought. But scratching the surface quickly discovers the brutal truth of globalisation and its potential danger if it is not properly maintained. Its development threatens state sovereignty and is nothing short of a curse for developing countries. Here is why:

Firstly, to understand globalisation we should be aware of its main forms: economic globalisation and political globalisation.

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Economic Globalisation:

Economic globalisation is the integration of different economies around the world to create one giant economy that is vastly interconnected by trade, technology, services, labour and capital. This form of globalisation is typified by complex interdependence in which countries produce according to their comparative advantages and import goods and services in which other countries specialise in.

The emergence of an economically globalised world has principally been driven by the continued rapid growth of TNCs (Trans-National Corporations), such as Apple, Google and Amazon. These agents are seen as the structures that tie countries from across the world together creating this signature integration, as they outsource and split up their production processes across the world in different countries. For example, the production of an iPhone comprises of parts made in China all the way to parts made in Taiwan. And the reasons for such behaviour is long known; to profit maximise. Hence the term flying 'geese' to describe TNCs is an accurate one, as it demonstrates the ability of TNCs to move around the world from one country to another in search of optimal outcomes. Consequently, there are a large number of winners. Us! We greatly benefit from this with increased access to safe and relatively good quality products at relatively cheap prices. Alternatively, attempting to replicate the same process domestically would be more expensive and would not be up to the same quality. Therefore, growth of TNCs has unquestionably brought about major advantages for developed economies such as the US and the UK, as we now have access to a greater pool of choice, at cheap prices and good quality items.

Further, this form of globalisation has led to the emergence of the 'knowledge' economy, whereby increased economic integration has led to spreading of technologies, innovative ideas and information across the world, and this is primarily because of Foreign Direct Investment (FDI). FDI is typically carried out by TNCs investment into foreign countries where they spread their new ideas. It is noticeably seen with the idea of 'Amazon Go', a check out free supermarket that allows you to pay via your phone, which is planned to enter UK markets beyond its existing stores in the US.

The developments of social media platforms and the internet, which has no geographical boundaries, have big impacts on states, specifically the crumbling and weakening of autocratic ones. This is because the rapid growth of these developments has meant states are unable to get to grips with these technologies. The Arab Spring (a series of anti-government protests in Arab countries) highlights this clearly because it was inspired and spread via social media. Similarly, the campaign to allow women to drive in Saudi Arabia was heavily fueled by social media influence and as a result, forced the regime, which is so oppressive of women, to give women the right to dive. Thus, it is strikingly obvious that economic globalisation has exposed the limitless potentialities of goodness a globalised world carries.

But, despite the above, economic globalisation is very far from perfect. It has created many losers and significantly threatens the existence of state borders and monopolised state powers, such as the ability to legitimately make laws that the state needs. In other words, it has threatened our state's economic sovereignty.

The rapid growth of TNCs has come at the cost of the state. TNCs, with their wealth and international operations, have become significant non-state actors that embody a great deal of structural power in the system. This is because (as mentioned above) these are businesses that behave totally irrespective of borders through setting up in multiple countries and it is this dynamism of these firms that allows them to simply relocate to seek higher profits. Such a combination of flexibility and power have seen increased desperation from states for TNCs to stay and invest in their country, providing jobs, sharing technology and contributing to developing the state. Inevitably these non-state actors are fully aware of this and therefore, exploit their position by coercing states into giving them tax breaks, tax cuts, subsidies and grants -often policies which the state cannot afford- in exchange for the 'carrot' of setting up and investing in in the state. An inability to promise this will simply make the state worse off because the TNC will fly away into another state where offerings are fulfilled. This has caused a race to the bottom in which states try to outcompete one another for TNC investment by attempting to offer the best deal, greatly benefiting the TNC, but deeply damaging the economic viability of the state and thus of those living within the state. For instance, even the so-called anti-establishment man Trump who made promises to rein in big business seemingly realised by decreasing corporation tax rate to 21% from 35% and in the UK, repeated decreasing of corporation tax from 22% to 19% and perhaps to new lower rate 17%. Further, Apple was caught paying corporation tax of just 0.005% in Ireland. This illustrates the growing power of TNCs at the cost of the decline of state sovereignty because it is clear that states no longer hold significant control over the policies they have in their territories. And this is very problematic because due to favourable deals for the TNCs, governments tax revenue will be severely limited from its potential, in turn causing decreased scope for investment into enhancing welfare provision such as education, healthcare and support services, much of which the population rely on. When already we have TNCs, like Apple, having a wealth equivalent to roughly 2/3 of the amalgamated GDP of World countries, it is easy to see why their investment is so valuable for states.

However, the situation is by far worse for developing countries such as Bangladesh and Taiwan. These developing economies are itching for FDI by TNCs, and so out of pure desperation offer even larger tax breaks and become powerless in combating cheap labour and deregulations because if they dared increase regulations these 'geese' would be scared away. The very nature of developing economies is such that it lacks some characteristics of a developed economy such as a steady uncorrupted state and official systems such as taxes. The lack thereof is what ultimately entices these TNCs, as it means they can exploit the labour force and through transfer pricing avoid paying their taxes of which developing economic massively rely upon to increase development in healthcare, education and infrastructure. Further, the ridiculously low wages that are paid to the workers of these TNCs are ethically degrading and not only destroys any real chance of household living standards rising but also forces child labour. This means that children rather than going to school and studying, a vital part of long-term development for a country, are in factories working in unsafe conditions and incredibly low pay. Subsequently, human capital remains low in developing countries and the future generations of labour stay uneducated and unskilled. Meanwhile, the climbing wealth of these TNCs in developing economies are scarcely shared with those who create it but rather scoffed by those at the top leaving crumbs for the workers working 60 hours a week. This contributes massively to increased inequalities in developing economies and thus increased Gini coefficients, as they so call "develop" because the majority are deprived of the wealth the country is making. This has drawn a vicious cyclical like structure in which developing countries are exploited for their resources to benefit the developed economies, meanwhile, the developing economies are left missing out.

One may beg the question can developing economies ever really develop substantially in such situations.

This very brief breakdown of economic globalisation has highlighted how there are many implications of the globalisation of economies. But most importantly, it has highlighted one fundamental thing; neoliberalism free-market ideas are not working. Economic globalisation is an attempt by hyperglobalists to advance and entrench capitalism and free-market economics, but unfortunately, thus far it has been of more harm than any good to countries. It has promoted self-interest individualism and led to the creation of a few dominate TNCs taking over governments, depriving countries of development and exploitation of labour.

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Political Globalistion

political globalisation is what I believe is the reactionary form of globalisation to economic globalisation, such that it is the growth of international (intergovernmental or supranational) organisations that involve states coming together and co-operating with one another.

For example, the growth of the WTO and the EU have positively correlated with increased economic activity among different states, and it is within these organisations that international relations remain controlled and somewhat peaceful. In particular, the rise in structural power and influence of TNCs discussed above has been to a degree balanced out through the creation of trade agreements, as seen with the EU. As the biggest single market, consisting of 28 countries, the EU is able to act as one face to TNCs all offering the same/similar economic incentives to invest, meaning TNCs are not so powerful.

EU also has its own currency market of the Euro which 19 members share, and it encourages free trade among all its members. It also, as a supranational institution, imposes laws that take precedence over domestic laws of each member state. This includes limits on fishing, setting standards of trade and workers' rights, meaning that if a state breaks EU law it will be subject to the ruling by the ECJ.

There is also intergovernmental organisations that unlike the EU do not involve members losing some sovereignty and thus these institutions cannot work independently of member states. The UN is a good example of this, as an organisation that tries to resolve state conflicts and civil wars within states. The five members of the security council including the US and UK and they all enjoy the ability to veto proposals they do not like. Under these organisations rather than states losing their sovereignty they pool it and are able to increase sovereignty and exert influence to other states.

In principle, these organisations and alike represent a movement towards a peaceful state co-existence and therefore represent goodness that lies within states to come together and resolve global issues, such as climate change. But in reality, these organisations are seemingly in place to accept the advancement of neoliberalism and its harmful ideas and merely try to balance off the increasing power of TNCs. However, these TNCs will continue to grow and states will simply be unable to pool enough sovereignty to balance this out, and exploitation will rise and developing economies will remain.

What is the point of having international organisations that aim to protect workers' rights and protect the environment when the entire system is built on free-market ideas which fundamentally evolves around self-interest and maximizing self-gain? It is because this free market system, why we have to create these organisations to ensure the balance of powers between states and non-state actors. Such a system does not account for morality. it accounts for competitiveness, and that is what all TNCs strive for.

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Overall, while globalisation may indeed possess positive consequences to all countries such as shared technologies and increased communication this is merely a facade to help cover the harsh reality. Scratching the surface will expose many brutal truths. It exposes the mere fact that globalisation is an attempt to advance and deeply entrench neoliberalism while creating a dangerously borderless world in which states no longer have much control over what goes on within their territory. However, there is no denying that globalisation had transformed lives and thus states for the good through developing and sharing of technologies greater access to jobs and increased choice of goods at fair prices, and so should not be abandoned. But the neoliberal form that is dominating these developments brings far too many disadvantages and has created concentrations of power in the hands of the wealthy few at the cost of the many. Therefore, action must be taken now to stop further developments under such a system, because eventually, it will become harder to solve. Instead, states and institutions need to pause and pledge to change their focus away from economic self-gain and towards a global society driven with the intention of collectivism, unity and solidarity. A society not built greed and accumulation of wealth which the hyperglobalists want to see, but a society built on co-operation and unity. This starts with countries such as the UK who have immense soft power (power of attraction) since if the UK shares this approach, they will heavily influence other economies to do the same. It is from this equal distribution of development can occur, and we can really begin focusing on solving global issues together, rather than constantly trying to fight one another to ensure we have power over one another.

Adam Ouarda