There are a few things that I think make this 'modern' era of globalization different from previous eras:

1. The rise of multinational (or transnational) corporations;
2. Increasing interdepedence between countries, economies, societies;
3. Increasingly global flow of labor and capital, mainly to feed consumption in industrialized countries
4. Environmental impacts of these processes whose effects may be global in scope.
5. Is globalization a social problem?

The rise of multinationals (TNCs)

What is a multinational? It is a company that does business in different countries. Consider some of the following (taken from an article by Anderson and Cavanagh):

1. Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs).
2. The Top 200 corporations' combined sales are bigger than the combined economies of all countries, minus the largest 10.
3. The 1999 sales of each of the top five corporations (General Motors, Wal-Mart, Exxon Mobil, Ford Motor, and DaimlerChrysler) are bigger than the GDP's of 182 countries.
4. While the sales of the Top 200 TNCs are the equivalent of 27.5 percent of world economic activity, they employ only 0.78 percent of the world's workforce.
5. Between 1983 and 1999, the profits of the Top 200 firms grew 362.4 percent, while the number of people they employ grew by only 14.4 percent.
6. A full 5 percent of the Top 200s' combined workforce is employed by Wal-Mart, the top private employer in the world, with well over 1,140,000 workers--more than twice as many as No. 2, DaimlerChrysler, which employs 466,938.
7. U.S. corporations dominate the Top 200 TNCs, with 82 slots (41 percent of the total). Japanese firms are second, with only 41 slots. Between the two--60% of the top 200.
8. Of the U.S. corporations on the list, 44 did not pay the full standard 35 percent federal corporate tax rate during the period 1996-1998. Seven of the firms actually paid less than zero in federal income taxes in 1998 (because of rebates). These include: Texaco, Chevron, PepsiCo, Enron, Worldcom, McKesson and the world's biggest corporation, General Motors.
9. In 1999, more than half the sales of the Top 200 were in just 4 economic sectors: financial services (14.5 percent), motor vehicles and parts (12.7 percent), insurance (12.4 percent), and retailing/ wholesaling (11.3 percent).
10. Sony's economic worth is bigger than Pakistan's. General Motors' is now bigger than Denmark.
11. The 82 U.S. companies on the Top 200 list made contributions to 2000 election campaigns through political action committees (not including soft money donations) that totaled $33,045,832. According to the Center for Responsive Politics, corporations in general outspent labor unions by a ratio of about 15-to-1. The group also found that candidates for the U.S. House of Representatives who outspent their opponents were victorious in 94 percent of their races. In the last Congressional elections just completed, 98 percent of the incumbents won.

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Some things to ponder:

• Economic clout = political power--how might TNCs get what they want, from governments, for instance?
• In the U.S., TNCs don't have to report layoffs, environmental problems, wage rates overseas, employee breakdowns by country, or locations of overseas plants. That is, the government's ability to get information out of them is limited.
• TNCs often work to eliminate competition. How?
  • absorbing other companies
  • vertically integrating (buying up different parts of the production process--for instance, if WalMart owns the factories that supply its goods, the distribution mechanisms (e.g., trucking companies), etc., they are 'vertically integrated.' If Monsanto owned its laboratories that do genetic engineering research, its own seed companies, petrochemical companies that produce fertilizer and pesticides, maybe even having a stake in retail grocery, they would be vertically integrated (they do own much of this, by the way).
  • undercutting competitors to drive them out of business (WalMart's strategy --their next tarket here in La Grande is the retail grocery business)
• Are TNCs a threat to democracy? If so, in what way(s)?
• Post-modern multinationals-Al Qaeda. Al Qaeda operations much like a multinational corporation--its 'headquarters' was likely in Afghanistan (where bin Laden, trained by the CIA, fought with the Mujahadeen against the Soviet Union), but there are 'cells' located all over the world. They communicate via email and various other forms of media (e.g., video, audiotape, played over television, radio). They seem to splinter into smaller groups, not unlike 'subsidiaries,' and since one of the main corporate goals is to avoid detection, this seems like an effective strategy. They have political relations with various governments, although we're not sure which ones, how formal, or with what groups in the government they deal. In a sense they're using insurgency techniques, taking advantage of others' infrastructure, with a corporate/bureaucratic style of organization (there are specialists in warfare, communications, terrorist training, financing, etc.). This is a new phenomenon, a rather disturbing outgrowth of globalization.

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Increasing interdependence

What is meant by interdependence? For the government, essentially, anything the U.S. wanted to do in the world could be affected by its relationships with other governments. If we want to go it alone in Iraq, for instance, there may be consequences. If we pull out of international treaties--which the Bush Administration has done on the Kyoto protocols, the World Court's International Criminal Court, the international treaty to ban chemical or biological weapons, and the anti-ballistic missile (ABM) treaty with Russia. Here are a few things to consider:

1. There are people in the U.S. from all over the world (hundreds of victims of the World Trade Tower attacks were foreign nationals--the largest number were from the United Kingdom);
2. There are U.S. citizens all over the world (think multinational corporations, embassies, tourists, etc.)
3. China is the largest producer of steel in the world (think warfare, steel production);
4. Where does most of the oil, the life blood of the American economy, come from?
5. What does much of the world think about the U.S. having gone to war in Iraq without the backing of the United Nations? What consequences might this have for American citizens, at home and/or abroad? We've already seen a few suicide bombings since the war 'ended.'

General Wesley Clark was the Commander of NATO forces in the Kosovo Conflict of a few years ago, which tried to prevent Slobodan Milosevic, the president of Serbia, from killing ethnic Albanians. His article about the comparisons of that effort with the U.S.'s current philosophy under the Bush Administration is thought-provoking. He makes the following assertions:

On the importance of a coalition:

• greater reliance on diplomacy and law and relatively less on the military alone. Soon after September 11, we should have helped the United Nations create an International Criminal Tribunal on International Terrorism.
• We could have forged a legal definition of terrorism and obtain the indictment of Osama bin Laden and the Taliban as war criminals charged with crimes against humanity (the Bush Administration is moving in the opposite direction).
• Like would have increased support in the Islamic world. We could have used the increased legitimacy to raise pressure on Saudi Arabia and other Arab states to cut off fully the moral, religious, intellectual, and financial support to terrorism.
• We could have used such legitimacy to strengthen the international coalition against Saddam Hussein.

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Having gone it alone in Iraq:

• Is the U.S. perceived as arrogant, as not needing the support of other countries, or unwilling to listen to them?
• Will there be an Arab / Islamic backlash?
• Are we perceived in parts of the world as bullies (we have lots of military, political, economic leverage)? We are currently
• How do we get cooperation to hunt down Al Qaeda, after having thumbed our noses at the U.N.? It's not an easy task to gain cooperation …
• How does this affect our image in the Arab/Islamic world (especially now that the U.S. is perceived as an occupying, rather than a liberating force by most Iraqis)?
• Where did the terrorists plan 9/11? Germany, our biggest Western opponent of war in Iraq;
• After 9/11, we sent a list of suspects and European countries froze their assets; 6 months later, they ignored a second list because we had detained so many prisoners from the war in Afghanistan in Cuba without due process (see a conservative view, and one from the Human Rights Watch organization);
• Will we find countries willing to allow us to establish military bases in the region? Turkey refused during the Iraq war, creating difficulties for the military's approach;

Interdependence, politics and trade

Consider some of the following issues related to trade:

1. Russia--does business with Iraq (a lot of business), already has an economy in crisis; Russia has some of the largest untapped reserves of oil in world; Russia is still a nuclear power, and everyone has an interest in making sure that the government and its scientists act responsibly in safeguarding the world from people who might want to gain access to their arsenal; Russia also has been accused of ruthless political repression in Chechnya, and President Vladimir Putin has cited the Bush Doctrine in his own efforts to crush political opposition in Russia and surrounding areas. In addition the U.S. opposed the Soviet invasion of Afghanistan in 1980, and in the process trained members of the mujahadeen opposition group in insurgency and counterterrorism tactics, among those trained by the CIA was Osama bin Laden.
2. China--where all our multinationals are (there are even 4,000+ WalMart employees in China); It produces most of the steel in the world, which we would need for a major war campaign; China is a major human rights violator, having crushed dissent in Tibet, broken up the Falungong, crushed domestic oppostion, for instance in the Tiannamen Square massacre in 1989. China also has over 1 billion inhabitants, which American corporations see as a gold mine of commercial potential, as well as sources of cheap labor;
3. Venezuela--the country is a large oil producer; it also has a democratically-elected leftist president; the Bush Administration (representing the U.S.) was the last member of the Organization of American States to condemn an overthrow of the government by a pro-business group, and in fact supported the coup leader before unaminous condemnation by other OAS members forced it to reconsider; Venezuelan president Hugo Chavez had proposed increasing taxes on the petrochemical multinational corporations that developed and operate the oil fields;
4. Middle East---the world's largest producer of oil; Al Qaeda highjackers came mostly from Saudi Arabia; we supported Saddam in the 1980s, even helped him with biological weapons in Iraq's war against Iran and looked other way when he used them against Iranian soldiers (see Saddam and current Defense Secretary Donald Rumsfeld shaking hands in 1988);
5. Pakistan--we helped them acquire nuclear weapons technology; they are in constant conflict with India (who has nuclear capabilities as well); India is democratic, and has a population of over 1 billion, representing a huge market for U.S. products, and has many students who study in U.S.; Pakistan is haven for Al Qaeda and Taliban refugees, as well as Afghan refugees who left as a result of the Taliban takeover. In addition, there is strong evidence that Pakistan has sold nuclear weapons technology to other countries, including North Korea.

How does economic and political interdependence affect our image in the world, or relations with other countries, our ability to 'go it alone' without consequences somewhere else in the world?

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Immigration -- another dimension of interdependence

Here are some statistics and some information on immigration within the U.S.

How do people become permanent residents?

• Family-sponsored immigration (immediate family, 250-300,000, family preference-260,000);
• Visa lottery
• Employment-based (140,000)
• Refugees, asylees (applying for political asylum, protection)

For the year 2002, refugees (granted refugee status because of fear of persecution, often with only the clothes on their backs):

• Africa-22,000
• Eastern Europe-9,000
• Former Soviet Union-17,000
• East Asia-4,000
• Near East/South Asia-15,000
• Latin America and the Caribbean-3,000

The countries with the most refugees were Bosnia and Hercegovina, the Former Soviet Union, Somalia, Iran, Vietnam, Sudan, Cuba, Iraq, Croatia, and Liberia.

Where do immigrants come from?

In 1998, the "Top Ten" countries from which the U.S. received legal (75%) immigrants were:

1. Mexico (130,661),
2. China (41,034),
3. India (34,288),
4. Philippines (33,176),
5. Dominican Republic (20,267),
6. Vietnam (16,534),
7. Cuba (15,415),
8. Jamaica (14,819),
9. El Salvador (14,329), and
10. Canada (14,295).

Total for 1998: 737,000

In addition, four out of ten illegal immigrants enter legally (student visas, etc.). The percent of the U.S. population that is foreign-born has decreased from 15% in 1900 to 10% today.

What does this suggest about interdependence? Yes, the United States has always been a haven for immigration. But we haven't always had so many interdependent relations with other countries in the world with respect to politics, economics, culture and even the military.

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Globalized labor and capital flows

William Greider's article was a good example of how labor flows are becoming global. In a globalized economy, it is often cheaper to box up factories when wages get too high, and take them to other countries where wages are low, taxes and environmental and working condition regulations are low or non-existent. Greider documents the flow of labor from the U.S.-Mexico border to China, where the wage rates are .20-.25 per hour (and in places in Mexico up to $1.50/hr). This is mostly in the name of 'free trade,' and many countries have set up 'free trade zones,' essentially 'ports designated by the government of a country for duty-free entry on any non-prohibited good. Merchandise may be stored, used or manufactured in the zone and reexported without duties being paid' (from Michigan State University, GlobalEDGE Website). Greider points out that most of the production doesn't benefit the countries directly--it is being shipped to the industrialized countries' consumers. In other words, it is being driven not by the needs of these countries, but by the demand from first world countries. In such a case, is globalization likely to lead to industrialization of these countries where factories and free trade zones are located? Read Greider's article and see what he thinks. He suggests that some process of succession is more likely--countries are desperate to attract investment. They make concessions to multinationals. Labor is cheap, and they'll take what they can get--garment factories, toys, etc. But there is always some other country willing to make the deal even sweeter, and TNCs often relocate where labor is cheaper--in other words, the flow of labor is global, and TNCs are always looking for the cheapest rates, and they take their capital with them. This may cause high unemployment rates in the countries that might have been working toward higher wages for their workers, only to see the industrial base dry up. In essence, Greider says it isn't development--it is multinationals exploiting cheap labor in free trade zones.

Capital is somewhat different. With respect to immigration, yes, labor can go anywhere. But more often it's the case that corporations go in search of cheap labor. Capital can go anywhere in the world. What is capital? Money accumulated from past enterprise, savings from profits or wages, stored wealth available to finance new enterprises. Some examples:

• Physical capital: factories, machines;
• Financial capital: wealth invested-stocks, loans, etc.
• Capital, according to Marx, is accumulated, 'dead' labor (in otherwords, all capital was in some way made from human labor);

How does capital roam the world?

Yes, corporations are on the lookout for opportunities. But where does their money come from? Do you own any stock? Mutual funds? 401K? Do you know how or where it's invested? Much of the growth of mutual funds in the 1990s was in overseas investment-in factories, etc., in emerging, growth markets.

• According to Greider, 'the American middle class 'has hundreds of billions of its savings roaming the world, possibly without fully appreciating the risk exposure (these are not federally insured like banks-as we heard in the video, when the middle class gets swept up in the market, it usually means they're getting in at the peak, before the crash . . . );
• Major governments have removed controls on finance capital in the last 15 years;
• Finance is growing in value faster than economies-what does this mean? In essence, we have a lot of paper wealth, or are borrowing from the future (fossil fuels, pollution now, problems later, etc.).

And how does WalMart sell at such danged low prices?

Partly because they're able to 'externalize' some of the costs of production. An 'externality' occurs when two parties transaction affects a 3rd party, who had nothing to do with it. For instance, WalMart pays low wages, wages often too low for its workers to live on. So it has also been accused of encouraging employees to apply for public assistance--paid for by taxpaying citizens, the 3rd party. If globalization stimulates factory growth in poor countries to take advantage of cheap labor, one of the lures might be that companies won't have to adhere to strict regulations on pollution, either into the air or water. People living in the region will pay that price. If workers in Mexico organize to increase wages, and companies decide it would be more cost-effective to just leave and go to China, where labor costs are still under .50/hr, it lowers costs to WalMart shoppers, but the workers who lost their jobs in Mexico pay a price, and some may seek other job opportunities in the US, visa or no. When WalMart ships its goods from China to the US, it requires lots of fossil fuels. The cost in terms of the greenhouse gases dumped into the atmosphere doesn't get paid by WalMart or passed on to its customers--the costs are 'externalized.' If all that stuff WalMart buys ends up breaking, and we all know it's cheaper to buy a new one that find someone to do repair, then consumers just throw the stuff in the garbage, and it ends up in the landfill, which emits methane gas (a greenhouse gas), and causes other environmental problems. Who pays that price? It's not reflected in the everyday low prices. The price of gasoline, for instance, doesn't reflect that many people drive to work because it's relatively cheap, increasing congestion in large cities, increasing pollution and respiratory ailments, increasing the consumption of health care, etc.

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Environmental impacts

We've previously discussed the greenhouse effect, one way in which the industrialized countries of the world contribute to global-scale environmental problems. Remember the three general functions of the environment--waste dump, living space, and resource repository. Can you think of ways in which the use of these functions might become more global in scope? For instance, might industrialized countries be willing to pay to send toxic waste to other countries desperate for foreign capital? Is it possible that multinational corporations are cutting down tropical forests to feed the demand for tropical woods and furniture in the industrialized countries? Next time you go check out furniture, see how much of it claims to be some sort of high quality tropical wood, and imagine where it might have come from.

We discussed in class the resource process. This is the process by which natural resources are used and transformed by humans. In a globalizing economy, the resource process can get quite complicated, and have major environmental impacts.

Here are the general stages of the process (we discussed this in the environment part of the course also):

1. Discovery-All resources are socially defined--they're not considered 'resources' until we find some economic use for them. Not all culture define resources in the same way. For instance, we discussed how human feces are a valuable resource for paddy rice farming in China (referred to as 'night soil'--we won't get into details of how this particular resource process works). Petroleum had to be discovered, and then much research done before many people realized its potential value as a highly concentrated source of energy;
2. cultivation/extraction-the raw material--in the case of agriculture, we cultivate. In the case of timber, we log. In the case of petroleum, we drill.
3. transportation-this entails getting it from the source, where it was extracted, to a place where it can be consumed, refined, etc. With timber, we've used rail, trucks, rivers, etc. With petroleum we use pipelines, huge oil tankers that can carry well over 1 million gallons of oil, and require quite a bit of fuel just to run.
4. processing-what does it get turned into? For whom? In the case of petroleum, heating produces different grades of fuels. Some of the stuff that is left in the process may be used as tar on roads, or as low-grade lubricants. Refineries are often located near ports, where tankers can navigate, but in the U.S. we have lots of refineries (and our own sources of oil);
5. Distribution-getting it out to consumers. How do we get the refined product(s) out to the consumer markets? Take the case of Iowa Beef Pocessors. They may buy cattle from all over the U.S., and have it shipped to the Midwest for slaughter and processing, and then ship it back to various retail/wholesale chains (and don't forget our discussions of vertical integration and multinationals here ... ).
6. Transformation-Matter, like energy, can't be created or destroyed. Just transformed. Thus consumers don't really 'consume' the stuff they buy, just transform it. In some cases, in China for instance, food consumed may become 'night soil.' Lumber in a house may be transformed slowly--housese tend to last a while. Paper degrades more quickly, but can be recycled. You should be getting the idea.

So, now think in global terms. If I were you, I'd try to think up some examples. How to table grapes from Chile get here in the dead of winter. And why? What sort of demand creates a system in which we need to have year-round access to fruits/vegetables, rather than seasonal variety? And what are the environmental consequences of a global system of production and consumption? In terms, for instance, of fossil fuel consumption (think of it another way--if you bought your food locally from a farmer's market, how much fossil fuel would be consumed versus buying grapes from Chile, or South Africa, in the middle of the winter?). If you're having trouble taking some resource through this process, or understanding how globalization increases the environmental impacts of the resource process, ASK.

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Is globalization a social problem?

Some would say globalization has many benefits. It gives us access to products we wouldn't have had access to before. It lets us view cultures we didn't know about. It does 'shrink' the globe in many respects. Could it be that we need to think in narrower terms? In other words, globalization may be too large and unwieldy to be a useful concept. What about free trade? Or political globalization? Spread of Western pop culture? There are some basic questions that apply here, as they have for other topics in the class.

Who has the power to define globalization? We mostly hear about the economic dimensions, don't we? Why?

Who benefits?

• Multinational corporations (and their investors), or workers around the world, or both?
• Governments who host TNCs (tax revenue, although often they offer corporate welfare), or their citizens, or both?
• Workers in other countries (example of Mexico)? Do we know for sure that, for instance, a woman working in a factory in Thailand is worse off there than she would be back in her village transplanting rice?
• In terms of the 'developed' and 'developing' countries, which we often refer to as the 'North' (developed) and 'South' (underdeveloped), who benefits? What about consumers? Which consumers benefit most from global trade? I mentioned in class that even in remote African villages, women now can get MSG (monosodium glutamate), which they can use in their cooking. How are the benefits of globalization distributed?

Who's hurt?

• High wage workers in industrialized countries? What happens to the jobs, the structure of the economy?
• Workers in other countries, when cheaper workers are found elsewhere (e.g., the migration of jobs from Mexico to China)
• Countries that can't compete (bifurcated development-factories in cities with agrarian countryside); globalization of capital means there isn't much money being plowed into reinvestment-someone somewhere else in the world is benefiting from foreign investment, but it may not respond to the needs of the people who live outside the free trade zones; The terms of trade may not favor third world governments, and in fact may favor in some cases multinationals over any government. For instance, if developing countries are producing raw materials for industrial processing elsewhere (or even in free trade zones), and the price of those commodities drops, they'll receive less foreign currency for them (that is, less dollars, yen, Euros) and have less money to invest or import goods. Many of these countries are already at a disadvantage, because their own currencies aren't valued and aren't traded on world commodity markets. The terms of trade are often stacked against developing countries. Large powerful countries can wield great leverage with respect to terms of trade, as can multinationals. Put simply, free trade isn't always that free. Some countries, like the migrants in Steinbeck's novel, are not in a position to refuse, even when the terms of trade seem stacked against them.

Some other issues:

• What about the environment? Which groups are harmed by environmental problems related to globalization?
• What are implications of global system of production, distribution? (need lots more fossil fuels, for what?)
• Genetic engineering-'contamination' of seed stocks, more engineering to facilitate global production and distribution (square tomatoes, for instance--it's not easy getting things from the field in South Africa to the grocery store in New York, without those pesky natural processes that characterize perishable goods causing problems);
• Climate change issues;