Globalization and Global Financial and Economic Chaos
Aug 19, 2011
As social and political upheaval and civil unrest have spread across the globe, it has become clear that the problems facing Western countries are neither transient nor temporary. Europe, the United Kingdom and the United States share a common set of problems over and above economic decline and sovereign debt issues linked to problems of the global financial system. The issues surrounding civil unrest comprise a lack of economic opportunity, political disenfranchisement, erosion of individual rights, a systematic lack of accountability from local authorities to national leaders, deteriorating credibility of political and financial leaders and disintegrating national government legitimacy. The reason that the above problems are common to Europe, the United Kingdom and the United States is that they are all linked to globalization.
National governments have become increasingly subordinated to international bodies, such as the World Trade Organization (WTO), International Monetary Fund (IMF), Group of 20 (G-20) or the European Central Bank (ECB), as well as to large multinational corporations. Large multinational corporations, which are a central feature of globalization, enjoy privileged status granted to them by governments. The bailout of large multinational banks by Western governments in the face of the financial crisis that began in 2008 illustrates that the well being of sufficiently large multinational corporations preempts national interests. The rationale that large multinational banks cannot fail stems from the fact that they make up the infrastructure—the valves, pipes and pumps, so to speak—of the international financial system. What is important is that the same rationale can be applied to virtually any international industry. The precedent of bank bailouts ushered in a new paradigm wherein the agendas of international industrial cartels take precedence over the laws, regulations, economic and trade policies of national governments. Although the world financial system is at a more advanced stage of globalization relative to most other industries, the bank bailouts revealed, with startling clarity, a new world order.
The financial crisis of 2008 and the global recession that followed suggest that globalization may fail for basic economic reasons. Globalization, as opposed to promoting sustainable, economic communities, advances an agenda of central economic planning designed to optimize global output, mainly for the benefit of multinational corporations. Policies or regulations that benefit multinational corporations do not necessarily promote economic stability or sustainability and may run counter to the interests of local or regional commercial concerns.
The law of unintended consequences states that when a simple system attempts to control a complex system, unintended consequences are the result. Globalization places the relatively simple, rigid bureaucracies of international bodies and large multinational corporations in a position of oversight and policymaking over the affairs of roughly 196 countries and 6 billion human beings around the world. Unintended consequences are, therefore, endemic to globalization. What is more important than the economic failure of globalization, however, is its imminent political failure.
International trade and capital flows are emergent phenomena that exist as a consequence of the individual human actions that form the basis of every local and regional economy in the world. Economies, like biological ecosystems, are spontaneously self-organizing systems that develop naturally in a local or regional context. Breaking down naturally occurring local or regional economies in order to reassemble their components, e.g., capital, labor or natural resources, in a wholly artificial, centrally planned system, is a profoundly flawed and politically dangerous concept. Specifically, the political structures required for globalization breed unrest. Political systems that require human beings to behave in ways contrary to human nature are, by definition, oppressive. Since political structures arise in a social context, replacing local and regional economic relationships, characterized by ethnic and cultural social structures, with an abstract concept, such as the global economy, requires oppressive political structures.
Globalization and Individual Liberty