Selling Globalization: The Myth of the Global Economy

Michael Veseth

Lynne Rienner Publishers, Inc.

1998

Preface

 

This book began as a project to explore the application of chaos theory—the analysis of nonlinear dynamical processes—to international political economy, especially to the study of international financial movements. For a variety of reasons, I thought that international capital flows might be an especially interesting area to hunt for nonlinear dynamics. This hunch was correct. In fact, exchange rates and international capital flows display elements of both crisis and chaos, which are analyzed, illustrated, and discussed in the critical central chapters of this book.

Once the case for chaos in international finance was established, the question I faced was, “so what?” One answer was globalization. Many people tell the story that global financial markets are the driving force behind the globalization of production, consumption, culture, politics, and more. The existence of crisis and chaos, however, makes truly global finance impossible, as a close study of the data indicates. This drew me into the globalization literature, which I found in need of a critical analysis. Much of what is written about globalization turns out to be nonsense and is accepted mostly because the story is appealing and because there are strong political and intellectual interests supporting it. Globalization, at least as it is conceived by some, is a myth. But like good myths, it is difficult to forget even after its illusive properties are revealed.

The notion that globalization is a myth, at least on some level, and that international financial chaos necessarily limits globalization was a very radical idea when I first began talking about it to friends and colleagues. They thought I was nuts. As I began the final revisions of this book, however, the full impact of the financial collapse in Asia was beginning to be realized. And my ideas no longer seemed so outrageous. The globalization myth, however, lives on. It seems to have a life of its own—quite apart from the new information about the financial structures that simultaneously make global expansion possible and limit its growth. Why?

In trying to explain the persistence of the globalization myth, I have found myself moving in two directions. One path leads to the concrete world of case study. Case studies of four “global” firms—Boeing, Microsoft, Nike, and the world’s largest pension fund management company, the Frank Russell Company—let me think creatively about what actual globalization is and what it means, which led me to the truth behind the myth.

But I am also concerned about the interests that are served by the myth of globalization and those interests that are threatened by its debunking. These concerns led me to the political economy of global finance. Here I discuss which political interests are furthered by the threat of global business and what intellectual interests within the economics profession are threatened by the possibility that something so important as global financial markets might not behave according to the simple laws of supply and demand.

I have intentionally tried to avoid an academic writing style in this book. I have tried to make the text interesting and the opinions clear and provocative. I have tried to prompt reaction and dialogue. I hope readers are not put off by my occasional brashness. I have spent a lot of time reading authors who try to “sell globalization,” and I guess a bit of their style has rubbed off on my work.

Although the focus of Selling Globalizationhas shifted, its real core is still chaos theory. International political economy is complex and dynamic. It is tempting to oversimplify issues that are multidimensional and complex, but it is often wrong to do so. We need to be wary of what we “buy” when simplified visions of complex processes like globalization are presented to us.

* * *

I am an authority on debt, and I have run up more than the usual number of professional debts in writing this book. I am grateful to the University of Puget Sound, which has supported my work for many years, and to the Bologna Center of the Johns Hopkins University School of Advanced International Studies, where work on Chapters 5, 6, and 7 took place. David Balaam deserves special thanks for the help he provided me during the process of revising the manuscript. I am also grateful to an anonymous reviewer for a number of useful revision ideas. Finally, I would like to thank Leon Grunberg, Sunil Kukreja, David Sousa, Matt Warning, Ed Greenberg, Felix Martin, Jamie Ledford, Jon Westerman, Aadip Desai, and most of all, Sue Veseth. The errors and outrages that remain are all mine.

I dedicate this book to Ernie Combs—teacher, colleague, and friend.