Market-based Solutions to Globalisation Problems

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Liberal and Regulatory Approaches

The core dissension within the current debate over (economic) globalisation is the conflict between competition and regulation. Advocates of liberalism, free market and globalisation in general argue for the benefits of competition, free interaction of independent, private players, and against the deleterious governmental interventions and inflexible state bureaucracies; for the capacity of the market to allocate limited resources most effectively among the competing needs; and last but not least, they mention the historic victory of liberal democracy and capitalism over communist totalitarianism and planned economies (see Francis Fukuyama’s The End of History and the Last Man).

However, the general liberal and pro-globalisation approaches often fail to offer tangible solutions to global problems. Not infrequently are they blind to broader contexts and the preconditions for the concerned countries or individuals to be able to benefit from globalisation. They neglect the costs (externalities) of the whole process, and underplay the need for collective action and conservation of global public goods.

Advocates of globalisation typically tend to view problems of globalisation as internal problems of the countries that complain about globalisation. They presume that globalisation is a naturally occurring, objective, and irreversible process. They denounce the poor countries for their inability to respond to globalisation adequately: for insufficient activity, weak reforms, and bad politics. First and foremost, they criticise their corruption and clientelism permeating state administration and the public life. Even wealthy countries such as France or Germany, where ever more voices are heard opposing globalisation, are accused by the neo-liberals of inflexibility, over-regulation, and undue protectionism. It has been said that the old EU has grown too accustomed to a high standard of living, social security, and nursing government. The fear of globalisation (E. Lafontaine) is then clear as daylight.

Structural Adjustment Programmes

Recommendations long prescribed by advocates of globalisation have become known in the global context mostly as so-called Structural Adjustment Programmes. Under the influence of M. Thatcher and R. Reagan, they were promoted in the 1980s and 1990s, above all by the USA, International Monetary Fund, and World Bank (so-called Washington Consensus); they have also been known in the post-communist transformation of the Eastern Bloc countries. The main objectives of the neo-liberal policies were as follows:

  • secure macroeconomic stability (and stabilise the political and social situation, and provide security),
  • establish the rule of law, independent and effective judiciary, guarantee property rights,
  • conveyance of property rights to private owners (privatisation),
  • liberation of markets and prices (deregulation),
  • opening up of trade to international competition, and deregulation of capital flows (liberalisation),
  • pro-export orientation (often accompanied by massive devaluation),
  • more transparent, leaner and more efficient state administration,
  • sound economic policy (low inflation, competitive currency, low interest rates, low taxes),
  • investment in physical infrastructures (roads, airports, seaports, dams, distribution networks, etc.).