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The Globalization You Do Not Know About
By Yuzhong Zhai Translator SOL Tung
November 1, 2007


From the ancient free trade theory of the British Empire to the present day theory of globalization, the right to speak has been the basis for hegemony in human economic history.

 

To those economists who have adopted "globalization" as a pet slogan, globalization is a self-evident truth and looked on as a fetish just like God in a theocratic society. For example, the personal computer (PC) in front of us was assembled in China, which consists of American software and a central processing unit (CPU), and a liquid crystal display (LCD) with its core components from Japan. If this is not irrefutable evidence of globalization, what is?

 

Amid the great publicity generated by the book, The World Is Flat, authored by The  New York Times feature columnist and Pulitzer Prize-winner Thomas Friedman, a few disharmonious notes were bound to disturb the main melody of globalized mass production-just like the "two dark clouds in the field of physics" in the late 19th century (which refers to the conundrum that classical physics faced in the study of the ether and the dark body radiation, a crisis that eventually brought about the great revolution in physics of the twentieth century). Today, a pair of dark clouds also floats in the sky of the globalization theory. 

 

The first dark cloud is the roadblock faced by Chinese enterprises in their purchase of American firms. (Lenovo's purchase of the unprofitable and technologically unsophisticated IBM global PC division may be a lucky case). The most recent example is the rumor saying "Chinese firm acquires Seagate Inc.," which appeared in the August 25 edition of The New York Times. It reported that William Watkins, the CEO of America's Seagate Inc., the world's largest manufacturer of hard discs, had disclosed the intention of a Chinese firm to acquire Seagate. Thereupon an official of the U.S.-China Economic and Security Review Commission immediately pointed out: "This is clearly a key component of a computer system and the purchase intention of the Chinese or other nations merits a full review in order to determine what risks we are bearing."

 

This example cannot but remind us of the US$18 million bid by China National Offshore Oil Company (CNOOC) for the American oil company Unocal in 2005.  In the global market, a successful acquisition by the highest bidder such as China would be fully justified. But, this deal was vetoed by the U.S. House of Representatives by an overwhelming 398-15 vote. This puzzled many Chinese economists who had chanted "globalization"-it turned out that the decisive factor in the global market was not price, but political will. Recall that, following the oil price hike in the early 1970s, the cash-rich Saudis also foolishly sought to purchase American firms; the Americans clearly stated that only the purchase of American treasury bonds was acceptable, while the purchase of American firms was viewed as an unfriendly act. 

 

The second dark cloud of globalization is the increasing difficulty for Chinese to enter the United States. Not long ago, a professor of the Shaanxi Normal University who wished to attend an academic conference in the United States was denied an American entry visa. He protested by saying: "The visa officer immediately turned away to face the computer screen, then quickly threw all our information back to us and said: 'Sorry, there is no way for me to give you visas.'  We held our papers in shock. I returned to the window and calmly explained that 'I am one of the three organizers of this Los Angeles conference. Please take a look at the signatures of the invitation letter. My absence would seriously affect the proceeding of the conference.' In response, the visa officer exclaimed loudly: 'I have already made the decision!' This entire episode only took a few minutes, and we had no time for any discussions."

 

While terrorists may be blamed for causing the recent increasing difficulty of entering the U.S., our friends at international travel agencies have always complained of the difficulties in obtaining visas. The anti-immigration backlash has been increasingly serious in both the U.S. and other Western developed countries and despite bin Laden's great reputation, it is very difficult to scapegoat him for this widespread phenomenon.

 

So, behind the newspapers, magazines and TV talk shows, who has initiated the idea of "globalization" and what is its true meaning?

 

I. "Globalization" Is an Invention by the American Geopolitical Strategists

 

The modern theory of globalization was put forth in the early 1970s by the Trilateral Commission (TC, consisting of the United States and Canada, the European Union, and Japan as its three constituents) founded by American banker David Rockefeller and National Security Advisor Zbigniew Brzezinski of the Carter Administration, in order to advance the commercial and geopolitical interests of the United States and her allies. Later, this idea was extensively popularized by the American media, academics and the Council on Foreign Relations, followed by some scholars' parroting in the developing world, and it quickly became a common term in the global mainstream media.

 

From TC's introduction (About the Organization) on its website (www.trilateral.org), we can read the following: 

 

 The "growing interdependence" that so impressed the founders of the Trilateral Commission in the early 1970s is deepening into "globalization." The need for shared thinking and leadership by the Trilateral countries, who (along with the principal international organizations) remain the primary anchors of the wider international system, has not diminished but, if anything, intensified. At the same time, their leadership must change to take into account the dramatic transformation of the international system. As relations with other countries become more mature-and power more diffuse-the leadership tasks of the original Trilateral countries need to be carried out with others to an increasing extent.

 

So what is the Trilateral Commission?

 

The TC was founded in 1973 by America's most influential international banker and former Chase Manhattan Bank Chairperson David Rockefeller. It consists of three headquarters located in New York, Paris and Tokyo. Its first director was Zbigniew Brzezinski who descended from a noble family in Poland. He spent his adolescence in Canada, and obtained his Bachelor and Master degrees from McGill University in Montreal, and his Ph.D. from Harvard University. While at Harvard, his research interests included the Russian October Revolution, Lenin and Stalin. In 1959, Brzezinski accepted a faculty position at Columbia University in New York, and subsequently established close relations with the United States Council on Foreign Relations. Upon Jimmy Carter's election as U.S. President in 1976, Brzezinski was appointed as Carter's National Security Advisor. He and Carter were the first to publicize human rights as "the soul of the U.S. foreign policy."  In 1978, Brzezinski visited China and initiated the normalization of the Sino-U.S. relations (although he played an inglorious role). Both Republicans and Democrats regarded Brzezinski as one of America's leading geopolitical strategists. He has produced many publications including: The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, The Grand Failure: The Birth and Death of Communism in the Twentieth Century, and Out of Control: Global Turmoil on the Eve of the 21st Century.


On the surface, the TC is a non-governmental organization consisting of fourteen countries in North America, Western Europe and Japan. In reality, it is a policy coordination body servicing Western international financial enterprises and the multinational corporations under their control. It carries out consultations and discussions on issues concerning international economy, finance, trade, energy and international relations that are of common concern to the various countries in North America, Europe, and Japan, while coordinating their policies in these areas and exerting influence on their respective governments. During the Carter Administration, the President, Vice-President, the Assistant for National Security Affairs to the President, the Secretary of State, the Defense Secretary, and the Treasury Secretary all had been members of the TC, totaling as many as 26. The TC has played a decisive role in U.S. foreign affairs and also exerted varying degrees of influence on the governments of Western Europe and Japan. In the Reagan Administration, there were also seven ex-TC members who were among the administration's policy consultants and executive staff.

 

Since the founding of the TC, its recommendations have made significant impact on global affairs including the G-7 summit meetings from 1975 to the present, the flexible exchange rates in the international financial system, and the change in the Western policy towards China in the 1970s.

 

In November 2005, the TC convened its Asia-Pacific Regional Conference in Beijing.

 

II. "Globalization" Is a Cripple Standing on One Leg

 

The concept of globalization is so ambiguous that it is difficult for us to find a suitable definition.  According to general understanding, globalization implies, first, the free movement of production elements and goods. In reality, however, among the three production elements-capital, land and labor - only capital can move freely; the other two are bound inside each nation state.

 

Again, for example, the basic pattern of the worldwide flow of industrial products is: labor-intensive products, raw materials, and energy resources basically flow into Western developed countries from other nations, while knowledge-based products flow from Western developed countries to other nations. Specifically, in the process of industrial production, the intermediary products such as silicon and integrated circuits, which are essential for manufacturing end products, are all monopolized by developed countries. The Western developed countries maintain high welfare benefits and high wages by availing themselves of the material and human resources of the developing and under-developed countries; whereas the latter are compelled to sell their cheap labor and cheap energy resources to meet basic needs for subsistence. Moreover, a vast number of people in these countries are mired in abject poverty, as their national economy and environment are being devastated by operations of transnational corporations of the West.

 

The wealth polarization among and within the different nation states is now reaching a point where a healthy operation of the world markets is seriously affected. The rise of trade protectionism is nothing but a symptom of this social chronic disease that manifests itself in the economic sphere.

 

Originally, the free flow of labor was the most effective method of solving the problem of wealth polarization. It could help the complicated and gigantic economic system by taking from the rich to supplement the poor, thus producing an adjustment to ensure balanced development of the entire society. According to data provided by Dr. Yang Zhenwei, the Director of Office of Policy Research of the China Ministry of Commerce, since the 1980s, seven million Mexican workers have emigrated to the United States, an additional three million are working in the United States as unauthorized aliens. Their income has gone up eight times to reach an average weekly US$278 from US$31, while in the meantime the American unskilled workers have seen their average wage lowered by five percent. Likewise, after Indonesian workers migrated to Malaysia, their average daily wage grew from 28 U.S. cents to more than 2 U.S. dollars, representing a six-fold increase.  Between 1870 and 1913, when international trade was thriving, the number of world-wide immigrants skyrocketed; massive emigration from low income countries to high income countries contributed substantially to the income rise of the poorer countries and to the income decline of the wealthier countries. For example, the income of the Irish people grew by 32 percent, the Italian by 28 percent, and the Norwegian by 10 percent, whereas the Argentinean saw their income decline by 22 percent, the Australian by 15 percent, the Canadian by 16  percent, and the American by 8 percent.  According to an estimate by experts, the massive Trans-Atlantic migration can account for 70 percent of the convergence in real wages. (Please see The Overall Strategy for the Developing Nations over WTO and Economic Globalization by Yang Zhenwei
http://www.chinareform.org.cn/cirdbbs/dispbbs.asp?/boardid=12&id=17054).

 

In addition, according to World Bank data, from 1870 to 1913, the total number of immigrants could be as high as 10 percent of the world population. From 1870 to 1910, sixty million people emigrated out of Europe; but since the 1980s, the total number of immigrants accounts for only 2 percent of the world population. Namely, while communication and transportation developed rapidly, people had less freedom to move, instead of more-if we consider the free flows of the three key production elements-capital, land, and labor -as the three legs that support the world economic integration, then the so-called globalization today is at best a cripple standing on one leg.     

 

 III. The Fundamental Flaws of Western Civilization behind "Globalization"

 

According to Mr. Friedman, the world economic playground has been leveled and the world has become flatter primarily as a result of the development of information technology. But Friedman and Western economists cannot explain away the fact that outsourcing of information technology has only created job opportunities for about one million Indians out of a population of 1.2 billion and paid one fifteenth to one eighth of the American wages for the same work.

 

One hundred years ago, David Ricardo pointed out in his work, Principles of Political Economy and Taxation, that if worldwide free migration were allowed, then some countries would definitely be reduced to no man's land, because the regions where these countries are located are basically inhabitable. The populations of such countries would all emigrate to more habitable places. But since there is no migration freedom in the real world, these countries have to carry out international trade with other countries to acquire what they cannot produce. This fact has enabled David Ricardo to develop his theory of "comparative advantage" in international trade.

 

Here, Ricardo recognized the most fundamental force that led to the emergence of the international trade system: Labor cannot move freely across borders.

 

As we study the entire history of Western civilization, we discover that, since the era of ancient Greece, the ideal of equality and justice always retained a strong appeal. But in real practice, labor was prevented from moving freely by tying it to the land where it belonged. In ancient Greece and Rome, even the wisest philosophers would take it for granted that slaves were not entitled to the rights of the citizens; they, like beasts of burden, only have the right to labor but not to equal enjoyment of the economic fruits of labor. Therefore, the core concepts in Western civilization, such as class, citizens, and right to suffrage, all developed within this framework.

 

Chinese civilization, however, is different: it is one of the universalisms. The Chinese people never developed concepts like class and citizenry. In classical Chinese economic concepts, the term "classes" originally referred to social stratum whose shares in the distribution of wealth varied according to their respective contributions to the society; it was not a symbol for identifying individual nobility or economic status. Moreover, the social stratification of the traditional Chinese social system was fluid and constantly changing, while in the Western civilization it appeared rigid, as demonstrated more often within, but at times also between, nations/city-states. The verse "all land under the heaven are equally the land of the empire, all residents are equally the subjects of the emperor" as found in the Chinese ancient classic The Book of Songs vividly depicts the egalitarian values in the Chinese cultural tradition-the development of the Chinese nationality itself is the result of the five thousand year long process of free movement of labor and unrestricted intermarriage among people of different ethnical origins in this part of East Asia. 

 

In 1889, the distinguished scholar Liang Qi Chao, published an article entitled "On Commonalities and Differences between China and European Nations," in the journal QingyiBao, in which he compared the differences between the Chinese and European social structures. Mr. Liang made two observations: first, Europe was divided into various kingdoms after the fall of Rome, while China has remained unified ever since the Han Dynasty; second, European societies were divided into two classes while China was not. With regard to the second point, he stated explicitly that China never had pronounced class differentiation and in particular there was no such differentiation since the Han Dynasty. It was common practice for commoners to make it to the top echelons of the government. The nine great rating systems as instituted in the Wei-Jin period did have flaws to the extent that  "no people from poor families have been awarded upper grades while no people from noble families were stigmatized by lower grades." Nonetheless, this was not what the system was set up for. Ever since the civil service examination system was introduced in the Tang Dynasty, people at the bottom of the society could make it to the top of the official echelon. The examination system was open to everybody except for a very small number of people who were bound to a special kind of servitude, which could not be counted as an independent class. The class societies of the West only entitled a small portion of the population to the fruits of a political and economic development whereas a classless society could make the society far more egalitarian. Therefore Mr. Liang was firmly convinced that a classless society would be a more advanced society: "citizens in a classless country would generally be happier and therefore a classless society would represent a more advanced state in the evolution of world civilization." (The Collective Work from the Yin Bing Study Room, Volume 1, No. 4, by Liang Qichao, Zhonghua Publishing Company, 1989).

 

Today, as we witness the rising anti-immigration wave sweeping across the core regions of Western civilization from Western Europe to North America, that disharmonious "single-cell nature" characterized by exclusion and anti-immigration has resurfaced again. If the ultimate goal of economic development is to ensure equal benefit for all humankind, then freedom of movement should constitute the most fundamental human rights-only when Chinese manufacturing workers receive wages equal to their American counterparts and Indian software engineers to their American counterparts, should the political economy of globalization have the substance it is destined to have.     

 

The free movement of labor represents the genuine equality in political economy for mankind. Is this not the way to bring about the "world citizenry" as aspired by Adam Smith? Is this not the realm of Great Harmony dreamed by Confucius?-Let us be aware that such a world not only transcends the realm of Western economics, but also the framework of Western civilization itself. ...

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Yuzhong Zhai is a financial critic and columnist. Previously, he was the head of the international division of China Industrial Economic News, and head of the news division of Legal News magazine (a Hong Kong-China News Press). He is now the chief editor of the New Legalist website (http://www.xinfajia.net), and co-author of China's Strategy in the Age of New Imperialism (Beijing Press, June 2003)
Email contact: zggjzyz2002@hotmail.com.
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