Globalization and its discontents

lobalization and its discontents

       Neoliberalism is the inheritance and development of classical liberalism. Its advocates support extensive economic liberalization policies such as liberalization of the economy, privatization, free trade, and reductions in government spending so as to enhance the role of the private sector in the economy. During the oil crisis in 1970s, neoliberalism replaced Keynes’ state interventionism as the world mainstream economic ideology. In 1990s, with the advance of globalization, promoted by western developed countries, neoliberalism was rapidly spread around the world and became the theoretical foundation for the most economies of transition. Guided by neo-liberal theory, Russia and Central and East European Countries implemented extensive property regime, financial system and the transition of foreign trade system to be integrated into the globalization process in all directions.

The goal of neoliberal economic globalization is the removal of all barriers to commerce, and the privatization of all available resources and services. Neoliberals advocate to establish free-market global trade according to the Washington Consensus, urging all trading nations to deepen the reform of the trade system and reduce trade barriers. They believe that international capital flow without government intervention in the world will optimize the allocation of resources. Then the free trade and free investment could enter any country, especially developing countries, and thus accelerate economic globalization. In the next place, neoliberalism advocates privatization, which makes transnational corporations as the main trading body and provides opportunities for transnational corporations to buy or invest in the privatized joint-stock companies in economies in transition; so it extends the operating range of transnational corporations and broadened the s cope of globalization. What’s more, market-oriented economic theory provides an institutional guarantee for transnational corporations to build global production network.

However, with the deepening of globalization process, more and more criticism is arising toward globalization. One of the main critiques of globalization is environmental concerns. Depending on neoliberalism, technology progress and institutional change could liberalize air, ocean, public forest and river. Take the privatization of water rights in Latin America as an example. Chile was the first country in Latin America that privatized water right by enacting the Water Code in 1981, which admitted private decision-making on water. However, water right trades were very few during the practice of this neoliberal policy. Mexico also faced on the predicament after putting National Water Law into effect. Firstly, privatization and marketization are not omnipotent. Although privatization of water right inspired more participation, it did not raise the water supply efficiency in Mexico. On the contrary, privatization raised the inequality of water right and magnified the contrast between the rich and the poor. Also, guiding by private interests, private users executed predatory exploitation without paying attention on sustainable development, which endangered the balance of the local ecosystem. Argentina introduced foreign investment into the municipal water system in order to solve the efficiency problem of government management and environmental pollution problem. It helped Argentina build more 500,000m water-supply network and 300,000m sewage treatment pipes, increasing 25% of this country’s sewage treatment capacity. However, the external result did not hide deep contradictions, for-profit commercial operation making the water pollution even worse. As practice has proved, the effect of neoliberal economic policies on allocation of environmental resources is quite limited in the context of globalization. The sustainable development of social economic and ecological environment also needs strong national policy support based on circumstances within the country.