Of course, it works!

January 05, 2005
By Bukka Rennie

Who the hell, given world history, would want to suggest that "globalisation does not work?"

Someone even suggested recently, quoting another source, that "the market is the most powerful institution for raising living standards ever invented..." The question is: who in their right mind would want to suggest otherwise, it being a truism?

Every single fundamental development known to humanity arose out of the interplay of market forces. But there is a history to the nature of the market.

There was a time when the market was a purely localised place of trade to which neighbours of said regions would gather to barter goods, ie, direct producers of goods exchanged surpluses for other goods that they did not produce. The question of measuring value in order to equate exchange was the major problem.

It was therefore logical to establish a common unit measure of value to facilitate transaction in the market place. Various forms of "money" were instituted as units of measure.

The whole process was revolutionised when a new person turned up at the market place with units of measure, ie, money with which to purchase goods not for direct and immediate consumption but for the sole purpose of reselling the very goods in the market place. Such a transaction would be meaningless unless that person derived a profit.

Accumulated profits to be ploughed back not merely in the further purchase of goods but in the actual process of producing goods is the social force we know as capital and the system that emerged around this objective social force is known as capitalism.

That system driven by the demands of the market is the system that projected humanity forward to another level of existence away from dire want and scarcity. That is a fact of history.

Another major fact is that capital by its very nature has to be a global force. It cannot exist without constant aggressive deepening and expansion of the market, it cannot grow as a social force if it is limited to narrow boundaries.

It has to seek global trade and the world has to be made into a massive integrated market place in which there is free interplay of direct producers, entrepreneurs, financiers, market facilitators, etc, who are all involved in some aspect or the other of the process of distribution and circulation of goods and services.

Interestingly, in the 16th and 17th centuries, this system found its best expression within the parameters of the democratic nation state. The prevalent ideology then was that of nationalist mercantilism, which required the constructing of a closed-shop economy of nation state (mother country) and dependent colonies.

In this context the colonies were the markets for surplus goods produced by the mother country as well as being the main sources of new, raw and exotic materials and mineral wealth.

In other words, early capitalism required stringent protectionism. That's another fact of history.

Those of us familiar with Caribbean history will recall the Navigation Acts of the 1650s that sought to guarantee that all trading between Britain and her colonies would be handled by British cargo ships manned by British crew at the expense of all outsiders.

It was this stringent protectionism that triggered fierce trade wars in the Caribbean and led even to the sanctioning of pirates and privateers as a means of attack and counter-attack.

Territories in the Caribbean would change hands regularly but with the advent of African slavery the plantation system of sugar production settled down and flourished within the closed economy of mother country and colonies. Caribbean civilisation began as a result of capital globalisation.

We have had 500 years of experience with this phenomenon. According to Joel Colton in his book History of the Modern World:

"... the opening of the Atlantic in the 16th century reoriented Europe... a global economy had been created... the first to profit had been the Portuguese and the Spanish, and they retained their monopoly through much of the 16th century but (their decline) paved the way for the triumph of the British, French and Dutch..." who in their turned concentrated on building up settler-colonies and developing trade rather than the mere extraction of precious metals and commodities.

The next stage of globalisation debunked forever the mercantilist concept of closed shop economy and stringent protectionism.

From the 18th century to the middle of the 19th, Europe and the world experienced what became known as the age of enlightenment, the Age of Reason which brought to the fore a tolerance of different political opinions, rational thought, religious revelations and reformations, new philosophies, a general emancipation of the mind and the idea that society is, indeed, a social contract between free citizens, all of which had to have a bearing on the way people were organised to produce and on the production process itself.

World free trade as a result became the order of the day. It opened up trading relations and economic collaboration that transcended nationalist protective barriers.

What was necessary now was the very opposite of what obtained in the previous period of globalisation. The closed shop economy had served its purpose and now could only be a hindrance to a greater level of profits, expansion and capital accumulation.

Free trade opened up all the existing markets to every single enterprising capitalist or group of capitalists.

It meant that competition would be more extreme, prices would be forced down and products would be more affordable to a lot more people.

It meant that labour had to be made more productive quantitatively and qualitatively, that the production process itself had to be continuously revolutionised through technology, now in its take-off stage, being more readily applied to the shop-floor of the factories, so that accumulation could be increased ten-fold and a greater percentage of re-investment could be actualised.

How then, dear friends, can anyone claim that globalisation does not work?

To be continued >>>