IN DEFENSE OF GLOBALIZATION
by Jagdish Bhagwati
Oxford Press, 308 pp, $28.00
Jagdish Bhagwati opens his new book, In Defense of Globalization, with an excellent question: "Does the world need yet another book on globalization?"
A blunt answer might well be "no." The pile of books published on the topic in the past decade sits on a centuries-old mountain of eloquent comment. Eighty years ago, Herbert Hoover claimed that low-wage competition from Europe and South America would ruin American manufacturers; Franklin Roosevelt, in response, made the classic defense of open markets as a force for growth and peace. A century earlier, one could find Daniel Webster sitting in for Ross Perot and Ralph Nader, pointing out that America could not survive competition with the "pauper" English workers who, he said, earned half the wage of a Pennsylvania mechanic.
What is new in the modern debate? Paleoliberalism has replaced paleoconservatism as the ideological fountain of anti-globalization thinking. But most of the argument is the same, and so are most of the appropriate responses.
Though the world may not need another globalization book, it can certainly benefit from a good one. And Professor Bhagwati's effort is a pretty good one. To the task, Bhagwati brings a remarkable combination of qualities. He has 50 years of experience, as an Indian civil servant, an adviser to the United Nations and the General Agreement on Tariffs and Trade director-general, and a Columbia University academic. His sympathies for developing countries, earnest young activists, and politicians operating in a democracy are manifestly sincere. And, unlike many economists, Bhagwati writes in prose that is clear and often lively. He notes, for example, that "New Hampshire has anti-adultery statutes on the books, but they are dead like a skunk in deep snow" -- a reference to the fact that legal reforms won through trade agreements sometimes mean little in practice.
Characterizing himself as "America's leading free-trader," Bhagwati argues that trade and globalization get a raw deal from well-intentioned but uninformed student activists. They are under cynical attack, meanwhile, from self-interested business and labor lobbies. And governments that should stand up to the critics provide only the lamest and weakest of defenses. So he takes up the cause himself.
Rather than put a human face on globalization, Bhagwati argues, its advocates need to explain that the human face is already there. A poignant example is the discussion of child labor, often viewed by student activists as associated with trade. Bhagwati notes, though, that the countries most integrated into the world economy typically see more children at school and fewer at work. A Dartmouth University study of Vietnamese rice farming is his case in point: Vietnam lifted rice export limits in 1993, its sales of rice doubled to 3 million tons by 1998, farmers earned more money as prices rose, and many rice-growing families seem to have used the extra money for extra schooling.
So Bhagwati proceeds through 10 common charges against globalization. Trade does not inflict poverty on poor countries; rather, it helps subsistence farmers and menial laborers escape from poverty by finding better jobs. World Trade Organization dispute settlement allows countries to settle differences peacefully and legally rather than through coercion. He continues, through a look at the weaknesses in allegations that trade undermines labor and environmental standards, a sophisticated response to fears of cultural homogenization, a nuanced defense of multinational firms, and an examination of the role of women in the global economy.
Bhagwati gains credence in this because he is no apologist for the status quo and no repeater of rote doctrine. He is as skeptical of rapid liberalization of capital flows as he is enthusiastic about agreements to open trade in goods, and he is (almost) as critical of India as of the United States. He is as angry about America's insistence on the inclusion of intellectual property rights in trade agreements as he is about its use of trade measures to force Malaysian shrimp boats to use "turtle excluder devices." One can disagree with him on copyrights or turtles (or both, as this reviewer does) without missing the strength of his feeling or the force of his argument.
Still, In Defense of Globalization is not perfect. Bhagwati's fondness for erudite quotation can be more bewildering than enlightening. On page 73, for example, his discussion of trade's effect on women cites Lex Luthor, Superman, Godzilla, Lady Murasaki, Marcel Proust, Junichiro Tanizaki, Sei Shonagon, and Winston Churchill. Elsewhere, and at unpredictable moments, are excursions into sexism in the Japanese civil service, the music of Tina Turner, and the O.J. Simpson trial.
Bhagwati's editors, meanwhile, leave some small but important factual errors uncorrected. Chapter 2, for example, places the Smoot-Hawley Act in 1934 rather than 1930. The dates may not be far apart, but the effect is to pin Hoover's trade policy on Roosevelt. The 1934 bill, known as the "Reciprocal Trade Agreements Act," was actually an attempt to undo Hoover's work.
This leads us to the most puzzling gap in the book. Bhagwati explains much about our network of trade policies and agreements. But his book never poses the basic question: Why are they there at all? Here is where a closer look at the 1930s might have helped.
Roosevelt and his successors believed that Smoot-Hawley and its analogues overseas not only prolonged the Depression but deepened the era's political tensions. Speaking at an inter-American conference in Argentina in 1936, Roosevelt observed sadly, "Every nation of the world has felt the evil effects of recent efforts to erect trade barriers of every known kind. Every individual citizen has suffered from them. It is no accident that the nations which have carried this process farthest are those which proclaim most loudly that they require war as an instrument of their policy," or that the citizens of such countries, because of "these suicidal policies and the suffering attending them I have come to believe with despair that the price of war seems less than the price of peace."
Postwar trade policy has, at its heart, been an effort to undo those policies and help to secure peace. This was the rationale for Harry Truman in creating the GATT system in the 1940s, for Schumann and Monnet in launching Europe's economic integration in the 1950s, and for Bill Clinton integrating China five years ago.
A book aiming to ease the fears of contemporary liberalism about trade would do well to explain this, as well as to respond to the critics. Bhagwati's book on globalization, with all its many virtues, somehow misses the opportunity. The world may yet need another one.
