Problem: Globalization and Countervailing Forces

Recall our definition of globalization: the breaking down of national boundaries to allow free interchange of people, communications, services, goods, businesses, investments, and ideas. Understanding what globalization is not may be as important as knowing what it is: It is not homogenization. The goal is not to make us all the same. But the goals do include increased choice through the sharing of diversity, as well as appropriate protection of historical, social, and cultural identities. It is also not just about free trade. Consider again some of the issues on the table in the TTIP and TPP negotiations, such as standards for food safety, of Internet freedom, for labor, and for acceptable environmental practices. The WTO's own website acknowledges, "[T]he WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers-for example, to protect consumers or prevent the spread of disease. ... The system's overriding purpose is to help trade flow as freely as possible-so long as there are no undesirable side-effects."8 What has also become clear is that the process of globalization has not been uniformly beneficial. "The real question isn't whether free markets are good or bad. It is why they are producing such wildly different results in different countries."9 One reason for disparate results may be whether the local government develops in tandem with the economy and is able to and does capture an appropriate portion of the wealth created to put to use on behalf of its population. Where that is not occurring, it has been argued that "multinationals-which account for the bulk of direct cross-border investment and one third of trade-have social responsibilities in nations where the rule of law is weak. And this view dispenses with the erroneous notion that open markets will magically produce prosperity in all conditions."10 The global impact of multinationals is a thread that runs throughout this chapter.

Questions

1. Consider the critics from the United States and elsewhere who have expressed concern about continued globalization. What do you think they are most concerned about-the free interchange of people, businesses, goods, services, investments, communications, or ideas? Explain.

2. If multinational corporations have affirmative social responsibilities in "nations where the rule of law is weak," who should select and impose those responsibilities? If you believe that it is a matter for corporate management, what forces might cause management to act more responsibly? What forces exist that might impede more corporate social responsibility on the part of multinationals? On the other hand, if you believe that social responsibilities should be imposed on multinationals, what body should do so? How will that body obtain the power to legislate and enforce such responsibilities?