Global Culture

It’s only fair to promote a real debate on the issues that concern us. Through this blog, I’ve always talked about the negative impact of globalization, so to fuel the debate I had to find a voice that cheers loudly for it: George Reisman is a well known economist, author of Capitalism: A Treatise on Economics. A new article posted on his website capitalism.net entitled Globalization: The Long-Run Big Picture provides a first-class defense of the theories behind globalization, saying that it that

has the potential to raise the productivity of labor and living standards all across the world to the level of the most advanced countries

It’s hard to argue against such a wonderful picture, with people in Africa, India & China enjoying the same quality of life than those in North America or Europe. He even makes such utopia seem very reachable

by incorporating billions of additional people into the global division of labor, and correspondingly increasing the scale on which all branches of production and economic activity are carried on, globalization makes possible the unprecedented achievement of economies of scale.

I have to admit my lack of formal knowledge in most economic theories, so someone will have to read the full article to determine its merits as an academic exercise. However, the statement that in 100 years, globalization would’ve accomplished its mission of raising the productivity of labor and per capita output in the rest of the world by a factor of 20, is naive at best.
The danger of doing math with such big numbers is that it is too easy to loose sight of the singularities that completely corrupt the results.

While no one can deny that the European Union and the U.S have some of the best standards of living, it is important to take note that they are also home to the wealthiest people on earth. If we were to analyze the ratio of GDP that comes from the top 100 richest people over the years, we would probably find that their influence on the global economy grows at a much higher pace than the rest of the population. This means that as the economy continues its amazing climb through the trillions, a higher proportion of it will belong to a selected minority, cancelling the positive effect that it should have on the rest of the population.

Division of labor is one of the fundamental principles that fuel globalization. The more people in the pool, the better such division can be performed. Ideally, the whole world would be cooperating to produce the maximum output possible. However, in the name of such utopia too many corporations run wild, careless of their environments, without cooperating with the societies in which they exist. So much for a wonderful theory.