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March 29, 2001 Globalization creates rollercoaster economy





by Sigalit Hoffman

“Globalization is a tidal wave,” said Professor Margie Mendell, director of Concordia’s Karl Polanyi Institute. “You have to make sure you have a life jacket or else you’ll drown.”

In an interview, Mendell warned that globalization has created a “casino culture” that has destabilized national economies and changed the nature of investment.

“In order to invest in the prosperity of an economy, time is critical,” she said. “The concept of time has evaporated. Investment has become highly speculative. The whole notion of an enterprise has shifted.”

The recent stock market nosedive and the plummeting of Nortel stocks are some examples of the roller-coaster economy globalization has created, the professor of economic theory and public policy said, and individuals bear the brunt of this instability.

“People don’t have the flexibility to move in and out of high-profit areas,” she said. This leads to money flowing in and out of countries without granting citizens an opportunity to profit from the investments in their country.

“As long as there is trade, you need to have some capital remaining in your country to keep it going,” Mendell said. “Financial markets that exist exclusively to generate capital [are] not about productive investment.”

She noted the paradox in the concept of a free-market economy. “What you’re told is that it’s a big world. We can buy things from Mexico or Thailand [with] no nasty governments creating problems. This is a lie,” Mendell said.

“There are more people involved in steering this free-market global economy than the number of people fine-tuning the economy in the [protectionist] postwar period.”

Financial instability is only one of the many drawbacks of globalization. Multinational plants in developing countries have played a role in preventing their advancement, said Concordia Religion professor Fred Bird.

“They’ve created a bubble that might make developing societies worse off,” he said. Bird explained that these multinationals often operate a plant for a certain number of years and then relocate, leaving local employees with no long-term skills such as literacy.

Mendell agreed, and added that developing countries do not share the profit from the goods they produce. “Capital flows out to earn profits elsewhere. It is not available in the country of origin,” she said.

Globalization also enforces the status quo of exploiting workers in poor countries that have lower labour standards.

The challenges of globalization can be overcome, according to Political Science professor Everett Price. He gave the example of the Council of Canadians’ defeat of the Multilateral Agreement on Investment.

“As long as you can continue to be perceived as a thorn in power’s side, you must be doing something right,” he said. “If you have the will and determination, you can affect the political agenda.”

Price agreed with Mendell in her view that globalization is not an inevitability, but a political choice. “We’ve got to really consider how our society is organized politically to ensure that the citizenry have greater say on the things that interest them directly,” he said.

Mendell affirmed the power of the people to dictate government policy. Despite the severe cuts made to social programs in Canada, she is sure that the citizens will not allow them to disappear.

“Despite the cuts, there was a certain limit below which the Canadian population would not have been willing to [allow programs to sink],” she said. “Markets are important, but when societies are determined by them, that’s when people have to wake up — and they will.”

This is part of a series of articles about globalization and the views of Concordia faculty and students.