Globalization (2009)

Book Review from the September 2009 issue of the Socialist Standard

Globalization in Question. By Paul Hirst, Grahame Thompson and Simon Bromley. Polity Press, 2009

Globalization is one of the key concepts of our time, accepted by both the right and left as the cornerstone of their analysis of the international economy. In both political and academic discussions, the assumption is often made that globalization of the past few decades is a qualitatively new stage in the development of international capitalism; that integration of national economies into the international economy is an inevitable process to which national governments are largely powerless. This book challenges these notions.

The authors, using detailed evidence, argue for the following conclusions. The present highly internationalised economy is not unprecedented. In some respects, the current globalized economy has only recently become as open and integrated as the regime that prevailed from 1870 to 1914. Genuinely transnational companies are relatively rare. Most companies are based nationally and trade regionally or multinationally on the strength of a major national location. There is no major trend towards the growth of truly global companies. Foreign direct investment is still highly concentrated among the advanced industrial economies, and the Third World remains marginal in both investment and trade. The emergence of India and particularly China has disrupted this picture, though it has not significantly shifted the centre of gravity from the already advanced countries. Investment, trade and financial flows are concentrated in the Triad of Europe, Japan/East Asia and North America, and this dominance seems set to continue. Supranational regionalization (e.g. European Union, North American Free Trade Agreement, Asia-Pacific Economic Cooperation) is a trend that is possibly stronger than that of globalization. The major economic powers, centred on the G8 with China and India, have the capacity, especially if they coordinate policy, to exert powerful governance pressures over financial markets and other economic tendencies. Global markets are therefore by no means beyond regulation and control, though this will be limited by the divergent interests of states and their ruling elites.

The authors show some awareness of the historical development of capitalism, though they view this largely as the history of technological innovation. As the above shows, the emphasis in this book is on the institutional arrangements (social, economic and political) and their interrelationships within capitalism, with no real comprehension of the underlying dynamic of capitalism. As a result they do not explain that it is the competitive accumulation of profits which is the driving force of capitalism’s inherent tendency towards globalization.

Lew Higgins