Rivista di etica e scienze sociali / Journal of Ethics & Social Sciences


Nowadays globalization is one of the most relevant concepts for describing phenomena within the arena of economic problems, and not only of these ones. On the one hand, the globalization of today refers to an aspect of economic reality which amplifies an already active system of multilateral international economic exchanges; on the other hand, it displays entirely new features which need to be ascertained as to their effects on both the wealth and welfare of different people.

It is understood that, when we speak of the effects of globalization on the "wealth of people", we are referring to problems which are of specific concern for economists. When we speak of its effects on "the welfare of people", we are being concerned with making value judgements in order to be able to appraise such effects.

Let me say at the start that, as for my personal scientific outlook, I adhere to an economic theory of Keynesian ascendancy. This means that I make reference to an economic theory which, first, is what I personally call an open theory as regards its fundamental feature of being "indebted" to an external source of thought in order to "supplement" and "close" itself and, thus, to be able to "yield" a comprehensive explanation of the actual world of economic facts. Secondly, an economic theory of Keynesian ascendancy implies that, in any type of economic system, the "initial" forces at work are the exogenous forces on the demand side; then, further "endogenous" demand factors interact with the forces working on the supply side in such a way as to "govern" the resulting behaviour of an economic system in its unfolding in space and time.

It goes without saying that, as for value judgements, I subscribe to the principles of Christian ethics, and more specifically to moral values that pertain to the social teachings of the Catholic Church, such as in particular the four "criteria of action" of personal responsibility and initiative, of subsidiarity between institutional groups, of solidarity among people, and - most important of all - of the principle of the common good.

As to the wealth effects of globalization, the starting point for an analysis may be the recognition that we must go as far back as to "the case" made by Adam Smith at the time in which economics became a fully "autonomous" discipline. By thinking over the consequences for the capitalist economy of the philosophical, scientific, technological, and industrial "revolutions", Smith (1776) elaborated his famous doctrine of the homo oeconomicus, and so an independent and specific economic viewpoint became for Smith the overwhelming principle of each agent’s behaviour. In particular, since Smith’s analysis, the basic principle of the economic outlook has been that the division of labour, the specialization of production, and the increase in exchanges will push up productivity and efficiency for all factors of production; and this would be true for both domestic and international exchanges. In the presence of more than two hundred years of elaboration and refinement of Smith’s principle, mainly of the formal and "technical" type, and in spite of the alternative opinions of different minorities of various thinkers, such a doctrine has dominated the scientific outlook of economists.

On the other hand, as to the welfare effects of globalization, again the starting point of the economists’ argument has been a Smithian "revolutionary" idea, that is to say the idea that, if everybody pursues his/her own interest, then - since all people have the very same aim - this by itself implies that the general or common good will also be attained. Again, most of subsequent elaborations and refinements in this respect have reinforced such a conclusion, although the strength of the argument and the width of consensus have been smaller than those referring to the previous aspect.

Nowadays, as, by the way it is well known, the point is that those "fundamental" Smithian positions, which have been summarized as the two so called "theorems" of the efficiency of the free market and the optimality of the invisible hand, suffer from two basic shortcomings.

First, in order for the above implications to work, one must make the very "heroic" assumption of having to deal with a world of perfect competition; but such a world has never been nor will ever be an actual one owing to various so called market failures. Thus, as for the real world, one has to recall such relevant problems as (at least) the existence of public goods, externalities, monopolistic and oligopolistic competition, asymmetric information, incomplete markets, unemployment, polarization in the distribution of income and wealth, and - most of all at the global level - underdevelopment, poverty and hunger. All these are very relevant facts in the world as we know it and they prevent any "reasonable" working of the market in the ways required for the Smithian deductions to hold in reality. Hence, we cannot rely on the "free" market in order to solve the relevant economic problems for each and every "agent", nor can we appeal to an "invisible" hand in order that the "convergence" between individual and social welfare be reached. Instead, the market would have to be supplemented by the intervention in the economy of different social bodies and, in particular, of the political body that is the State (notice that it has recently been shown that the State has its own failures too).

Secondly, Smith’s argument, as well as any such line of thought, is based on the individualistic outlook or methodological individualism whereby the common good would be the one which would be attained on the basis of individualistic values and attitudes. The common good would be that which - so to say - is agreed upon by people each of whom is thought of as completely "autonomous" in his/her desires, preferences and choices, without any reference to the role played by human discernment to be based on the rational understanding of the "true" nature of human beings. However, it is by now well understood that no consistent and stable common good may actually be reached unless human discernment be exercised or, at any rate, unless the so called "informational structure" of agents’ choices be enlarged in order to be able to "overcome" the difficulties and limitations of the individualistic paradigm.

Of course, the "human discernment" hypothesis is the position that an ethically motivated economist will accept and subscribe to in any case where - as I personally do - as a social scientist he/she draws his/her own value judgements from the moral principles of Christianity and the social teachings of the Church. On the other hand, the acceptance of such value premises seems to me to be - as can be expressed in technical words - a sufficient condition, but it need not be a necessary one; indeed, one should look for some sort of "convergence" between commonly shared value judgements, independently of their "ascendancy", provided that they are based on "objective" ethical premises, that is to say on premises which recognize the role played by the rational understanding of human nature.

Clearly, the previous observations are not meant to imply that - independently of the specific theorizations and elaborations that one "subscribes to" in analysing the real world - the mercantile and in particular the industrial capitalist economies have not brought about radical changes and positive effects on mankind’s wealth and welfare. On the contrary, it is well understood by now that we have to "credit" the institutions of capitalism (the "firm", the "market", the "law and order" background guaranteed by the State, its various structures and measures of "economic policy", etc.) with the modern experience of economic growth and its enduring character. On the other hand, we cannot deny the various difficulties and pains which have also been brought about by the "working" of the capitalist system of productive processes and social values and which have been dependent on the fundamental nature of the distributive and qualitative aspects of the growth process the system itself has given rise to. In this respect, let me remind you how much the various critical currents of thought have had to say in the last two hundred years and in particular what the Church has repeatedly stated starting - as is well known - from that remarkable "watershed" in Catholic social teaching represented by Pope Leo XIII’s Encyclical Rerum novarum and carrying on through the many social Encyclicals of the recent great Popes of our time.

As I hinted at above, globalization must be seen both as an "old" and a "new" phenomenon as much as it may be said to have both "positive" and "negative" connotations.

As an old phenomenon, it followed suit - at a certain time in modern economic history, that of the "great" sea navigations and geographic discoveries at the end of the XVth century - a very long period in human civilization during which people only moved from their homes and embarked on even long travels in search of particular markets for their products as well as of specific territories which could give them the needed raw materials or represent places where they could settle and live. Along these lines, Phoenicians, Carthaginians, Greeks were daring navigators and explorers, whereas the Romans were less inclined to navigate, but did expand their domination by means of territorial annexations, to be thought of as sort of larger and larger concentric circles (around Rome) which made up a wide political, juridical and economic unity.

After the long mediaeval "parenthesis", the mercantile "revolution" took place in Europe; then, after some pioneer cases (such as Polo’s travels to the Far East) and a few fundamental innovations in the technology of navigation, a "new wave" of sea travels and discoveries started. In the years between the 2nd half of the XVth century and the lst half of the XVIth century, there was an "explosion" of such undertakings whereby the discovery of new territories and the search for new markets would proceed as a general outlook and trend in international economic relations. From those years onwards the world witnessed the parallel development of European capitalism - first commercial and then industrial capitalism - and of the international exchanges of goods and services, at first, and then, in time, of capital, labour and technologies.

This was the first type of globalization, the globalization of markets, which took shape and place gradually but at continuously increasing rates, in particular between the European industrializing countries and the rest of the world. The basic point which underlay both developments was the idea that further and further intensification of international economic exchanges would bring about a continuous increase in domestic production and the diffusion of wealth between countries and among different classes and people within each country as well. Of course, as I have already argued, even within each growing economy, such an "inclusive" aim could not and would not be reached on the basis of the automatic working" of market forces, but it would have implied an active role for the intervention in the economy of public policies as well as, more generally, of actions by "lower" social groups and institutions. Moreover and more specifically, modern economic growth would not have become "spread out" all over the world, unless proper steps had been taken in order to get it, in particular in the form of endogenous commercial and industrial "revolutions" on lines which would have to be similar (although not identical) to those experienced in Europe.

As we know, this has not happened in the historical development of capitalism for as long a period as four centuries; rather, until recently (in our XXth century and particularly in its 2nd half) the world has experienced a sort of actual "divarication" between two equally relevant trends. On the one hand, capitalist economies have obtained further and further increases in their industrial and commercial wealth, although with pronounced cyclical fluctuations and heavy inequalities in the distribution of incomes and the levels of consumption. On the other hand, the world has seen a parallel increase in the concentration of production and trade, as well as of the gains from trade and production, and hence in the distribution of income and wealth, in the hands of few countries and people, so that the diffusion and the "fair" distribution of welfare among countries and people have not materialized at all for centuries and - as is tragically known - they are still a long way off.

As is also known, starting in the 2nd half of the last century and up the 1st World War, the modern process of industrialization and economic growth gradually moved from the North-European countries to Central Europe (including Northern Italy), to the United States of America, to other Anglo-Saxon countries such as Canada and Australia, and to Japan. Actually, the USA slowly but consistently undertook such a rapid and intensive growth process as to become by the end of that war the most industrialized country in the world. Owing mainly to the so called Taylor-Ford principles of industrial labour organization, the American economy thus came to display in the highest degree all "benchmarks" of the developed capitalist economy: the strong division of labour and standardization of production, the key role played by advanced technologies and salaried workers, the continuous enlargement of productive capacity and distributive basis, the high levels of consumption. It also contained in itself, though, certain germs of weaknesses and difficulties, such as the lack of any social security, protection mechanisms, the extreme volatility of the money and capital markets, the relatively small size of international economic relations, and more generally the very low role played by the State in the economy. Such a situation could not last and, in fact, it did not last for a long time after the war, as it was brought to a sudden end by the famous Great Crisis of the 1930’s which, indeed, involved all the other capitalist economies too.

Meanwhile, also on the front of economic theory a similar "watershed" or better a "paradigmatic revolution" was taking place in the 1930’s. While most academic economists, particularly in the United States, still appeared to "cling" to the marginalist, neoclassical, "laissez faire" economic theory - which, by the way, had become the dominant theory after the "fall" of the classical school - the British economist J.M. Keynes performed his great analytical "revolution" (1936). Keynes’s position, which has since become one of the two main alternative paradigms in economic theory (the Keynesian and the neoclassical-monetarist ones), led to the argument that no market economy can by itself achieve conditions of "full" employment, "normal" utilization of productive capacity, "reasonable" distribution of income and wealth, unless it is supplemented by the "intrinsic" role of State intervention.

Moreover, working - so to say - in parallel with Keynes’s novelties, two further crucial advancements in economic theory came from the elaborations by Pìgou (1932) and by Beveridge (1942), whose analytical positions were at the basis of the famous "Welfare State" policies. It should also be recalled that in the same years, apart from the various "strands" of socialist thought, Catholic social doctrine provided original and important contributions to the understanding of the "crisis" conditions in capitalist economies and to the proposal of an alternative based on a "modern" reading of the traditional Church standing for the defence of human dignity and the advancement of the common good. Such contributions came both at the level of magisterial pronouncements (the reference here is to the encyclical of Pope Pius XI Quadragesimo anno) and from the insights of individual thinkers (such as particularly J. Maritain’s position, 1936).

On the practical side, President Roosevelt’s New Deal in the United States (1933) anticipated the new waves of "Keynesian" macroeconomic policies, with particular reference to those aimed at the maintenance of "full" employment, which spread out all over the capitalist world after the 2nd World War. On the other hand, on the international front, the interwar period witnessed both the emergence of the USA as the new leading economic power in the world (as is well known, they would become the leading world power "tout court" after that war) and the collapse of the multilateral system of international exchanges with, in its stead, the dominance of bilateral economic relations, of generalized high tariffs, of inconvertible and managed and even multiple exchange rates, and of real commercial wars between countries. It is clear enough that all that was the exact opposite of globalization and "marked" a period of high turbulence in international economic relations among capitalist countries as well as of a low and unstable growth experience in each country. Finally, let me remind you that the evil system of imperialistic occupation of the larger part of the world by a smaller number of colonial powers remained strongly "in the saddle", with all the consequences that are well known in terms of imposed "preferential" trade, socio-economic underdevelopment, and increasing unrest in the occupied territories.

After the tragedy of the 2nd World War a double side-effect of the war itself and of its end should be mentioned and underlined here. On the one hand, the world which came out of the peace treaties was at first divided into the two "blocks" of the capitalist and the communist countries; but, then, in a sort of "crescendo", there was the success of the de-colonization process which brought about the emergence of the so called Third World, that is the "block" of underdeveloped countries, later on to become, although not as regards all of them, the developing countries.

On the other hand, among the capitalist countries - which often, by the way, could now be called the "mixed economy" countries, owing to the substantial role which public intervention in the economy had come to play - a process started towards the gradual liberalization and the progressive intensification of international exchanges of goods, first, and later of services, currencies, short-term and long-term capital movements (notice that, as to labour movements, there have never been "clear" positions in capitalist countries in favour of a free international migration of people).

There is no time here to deal with the various aspects of the interrelated processes which took place in the different and parallel directions of multilateralism in international economic relations, of the rapid growth of average per capita product in "rich" capitalist countries, and of the initial development of average per capita income in "poor" countries of the third world - moreover to be looked at within the deep conflict between the capitalist countries of the "first world" and the communist countries of an also substantially growing "second world" - in the long period from the end of the 1940’s to the end of the 1980’s. Surely, such a long period of time has seen quite a number of events which (as usual in human things) has displayed both positive aspects and negative aspects, ups and downs in the process of overall economic growth in the world economy, and in particular forward leaps and backward slips in the experience of modern development in poor countries. In particular, after an initial "leap forward" in the process of per capita product growth in the 1950’s and the first half of the 1960’s, most developing countries experienced serious stops and strains in their development efforts in the 1970’s and the 1980’s, and some of them suffered from substantial setbacks in their minimum living standards and even real famines.

Actually, from time to time and in different forms, several analyses and proposals have been put forward in support of the "basic needs" problems of the millions and millions of poor people; more specifically, mention should be made of the surveys done and the requests advanced in various papal Encyclicals such as, in particular, Pacem in terris (1963) by John XXIII, Populorum progressio (1967) by Paul VI, and Sollicitudo rei socialis (1987) by John Paul II, but mention is also to be made of the famous document approved by Vatican Council II Gaudium et spes (1965). However, in spite of all such pronouncements, no real steps have been taken, at any rate at the international level, towards ways to tackle those enormous problems in a radical and comprehensive manner. On the contrary, the tragedy and shame of such problems as hunger, famines, chronic diseases, wars and exploitation are still there, after so many talks and so much time since poor countries’ "independence", as - only to mention a single terrible instance - the problem of the overhanging foreign debt of the so called highly indebted least developed countries abundantly shows.

A point to be underlined here is that, anyhow, the process of multilateral international exchanges has never experienced a stop or a "moment of tiredness", even in the "dark days" of the two oil crises of 1974-75 and 1979-80. One further and important move that should be made explicitly refers to the appearance and the affirmation of a "new actor" in the world of both the domestic economies and the international economic relations: I am referring to the new knowledge and new technologies in the sphere of electronics, cybernetics, computer science, and data processing and transmission. Apart from any other consideration, emphasis is to be placed here on the key role that such technologies have increasingly come to play in the practice of "twenty-four-hour-a-day" transmission of orders concerning movements of goods, services, and especially all types of capital and currencies from one country to another, from one continent to another, every day and, at times, in one way and the opposite one several times a day.

It should be clear from what I have been saying that, in the long period after the 2nd World War up to the end of the 1980’s globalization of markets has resumed and expanded the key role it had already had in the century before the 1st World War. As a matter of fact, its relevant positive aspects, in terms of gains from international trade and from the specialization of production, have continued to accrue mainly to industrialized countries and partially to a small group of industrializing ones. I am referring to those few countries - as, in particular, the so called "newly industrializing countries (NIC)" of the Far East - which have experienced a process of rapid industrial growth typically based on export promotion, but which (a point not to be neglected) have been suffering most from the very recent "turbulence" in the international financial markets. On the other hand, the negative aspects of market globalization, in terms of falling "terms of trade" between exported and imported goods as well as of the maintenance of "polarization" in the so called international division of labour, have definitely penalized the larger group of the less developed countries which - it must be remembered - may be called developing countries only by the use of an euphemism.

In addition, in the course of this period, the phenomenon of the globalization of information services, information, and news has appeared and started to impose itself as a new, pervasive, and "incumbent" phenomenon of our age. As can easily be understood, the distribution of its positive and negative effects among countries and people will be generally related to their respective capacity in the acquisition, possession, and manipulation of both the information or knowledge and business. Thus, the "reasonable" conclusion here is that, for a long time to come, such different effects will be distributed along the same "lines" as those followed by the distribution of the positive and negative effects of market globalization.

The year 1989 may rightly be taken as a fundamental "watershed" in general as well as in economic history, owing to the famous "fall of the Berlin wall" and the beginning of a three-year period (1989-91) which saw the dissolution of most communist States, including the two crucial multiethnic and multinational States of the Soviet Union and the Yugoslavian Federation. Actually, the 1980’s had been years of substantial changes in the capitalist mixed-economy countries as well, owing to the "triumph" of the monetarist and neoliberalist ideas both in the dominant academic world and in the implementation of economic policy measures, particularly of monetary policies, in several countries, and especially in the United States and the United Kingdom. According to the newly pervasive "credo", a vast programme of liberalization and deregulation was pursued and accomplished in both countries, mainly to the effect that firms, banks, other financial intermediaries, the money and capital markets, and a substantial share of the "Welfare State" institutions, became private structures meant to pursue their own particular maximum profit only, even at the expense of any social obligation or coordination links.

It seemed that "the clock had turned 360 degrees" again, as had happened in the 1930’s-1940’s, but now against the Keynesian policies and back to Adam Smith’s and his followers’ positions. More important from the point of view of the present argument is the fact that such winds of liberalization and deregulation breathed strongly over the realm of international economic relations too. Furthermore, a rather widespread opinion was gaining prevalence according to which "the end of communism" would have also implied "the end of history" - meaning by that "the triumph of the capitalist way of life" - and that that would have meant the tendency of each economy to "converge", in due time, towards similar economic systems. These would be characterized by conditions of completely free, highly competitive, fully mobile markets, as to all sorts of products and productive factors, both material and immaterial ones (in the last case, mainly of the informational kind), both real goods and services and financial assets, and both at the national and international levels.

Out of all these changes it has been a short step to the emergence and the affirmation of two new forms of globalization concepts and processes, each, as new directions of an "old" phenomenon seem to be at least as equally pervasive as the globalization of markets and the globalization of information which I have analysed above. I am referring, on the one hand, to the globalization of production and, on the other, to the globalization of finance. Both such cases are becoming more and more relevant phenomena from day to day, or rather so penetrating that several "opinion makers" have been talking of those cases as "premises" for the emergence of the really pervasive phenomenon of globalization "tout court", that is to say a new general category which would be a "legitimate" one even at the cultural and existential levels.

Let us proceed to an analysis and appraisal of the nowadays "incumbent" cases of globalization of production and globalization of finance.

As for the first, the point is that more and more firms - both large, multinational firms and also small and medium-sized, transnational ones - are interested in and "supported" by neoliberalist economic theory in pursuing the task of a geographical distribution of their plants and productive activities over different territories, thus moving those from one region to another, from one country to another, aiming at realizing the minimum costs and the maximum profits at each point in time. It is clear that, from such a perspective, the idea of realizing the unceasing transfer of plants and entire factories from place to place is the consequence of a short-run approach to making profit which - even at the level of a "pure" economic theorizing - is a typically shortsighted outlook. Instead, if the firm aimed at the maximization of long-run or through-time profit, it would have to include the stability and growth of markets for both "inputs" and "outputs" in its consideration and, thus, it would not chase every "single" changing event but - so to say - would primarily take root, consolidate and enlarge its position in a certain territory.

Moreover - at a deeper, value-loaded level - the point is that one cannot move plants or factories as if they were goods; for that means that people would be "involved" and people cannot be moved without taking into account their needs, their families, their links with a certain territory and country. Otherwise, when some plants are shut in one place and other plants are installed in another place, then different labourers (from workers to technicians, even to managers) will find themselves "thrown out in the gutter" any day. In fact, as the opening of a factory often means a sudden new opportunity for jobs, so the often unexpected decision of shutting it will imply a sudden and sad loss of work, income and welfare for different people and, thus, entire communities and territories may fall back into poverty and distress as much as they had come to enjoy wealth and relief in the previous happy circumstance.

It may also be the case that communities and territories "of origin" of the firms in question are places of "old" industrialization - as it has been happening in some zones of Northern Italy or even in certain areas of more recent industrialization in Southern Italy. In such cases the shutting down of plants and the transfer of factories from those places to certain areas of cheap labour and no social security costs (and benefits) in the third world will bring about conditions of particular uneasiness and anxiety there, since the labourers concerned will feel as if the "clock of history" had been turned back to a more or less distant past of unemployment and poverty.

Surely, the industrial development of "poor" countries is always to be taken as an uppermost goal in the present conditions of the world economy. However, what is required for the purpose is the genuine creation of net additional industrial capacity, factories, and firms, since so many different countries are in need of an intensive and stable process of modern economic growth. On the contrary, one cannot understand and accept a sort of "war between poor people" which would come up as a consequence of a dis-placement of plants and factories from one place to another, thus creating unemployment and distress in some places whereas new, but likely temporary, employment and industrialization are brought about in other places.

This is particularly objectionable when such displacements take place from one to another underdeveloped or developing country - as it has recently been the case with an American medium-sized firm in the field of the production of tennis shoes which is reported to have moved its factories from North America to Indonesia first and then from Indonesia to Vietnam in the time span of a few months, just because of small differences in the wage costs per worker per day. But displacement of existing plants and factories from one area to another is also globally inefficient, if one looks at global efficiency - as it should be done - from a social viewpoint, in those cases in which the transfer takes place from previously industrialized to industrializing countries. Then, what really is needed in the "first world", vis-à-vis the third world’s needs, is an overall change in the patterns of consumption and in the international specialization of production, so that certain sectors and the respective employment be localized in the "advanced" countries and certain other sectors and the relative jobs be created in the "backward" countries. Furthermore, it is strongly needed that substantial and stable flows of medium-term and long-term capital be directed from the same "rich" countries to the "poor" ones, in order that the latter countries’ scarce resources be supplemented with the inflows of resources taken from the surpluses of the former countries. This could be realized just because such surpluses are actually available in rich countries, but the proper "conditions" should obtain.

In conclusion, globalization of production is to be looked at unfavourably, in particular from the point of view of an ethically motivated economist, if it means - as it is the case - that firms are intended to be fully "autonomous" in the choices and decisions to move their productive capacity from one place to another at any rate and time. In fact the negative effects on the wealth and welfare of different people seem to overcome abundantly the positive effects which would accrue to firms in the form of higher private short-run profits or even to workers as regards greater temporary employment. This is because there is no constraint or guarantee as to any "integration" of firms’ decisions within an overall, long-run, coordinated action which should be realistically undertaken, in support of the urgent development and employment needs of so many "poor" countries in the world, without, though, any unrealistic "burdens" on the general living conditions in "rich" countries.

Even stronger objections have to be moved by an ethically motivated economist towards the globalization of finance which - in spite of the recent "unfavourable" events in the international financial markets - has been taking root at a very rapid pace.

The point here is that globalization of finance is intended to be the process of massive and continuous movements of capital funds (which can even take the form of a certain movement of funds in one direction and an instantaneous subsequent movement back in the opposite direction) from one economy to another one, and more specifically from one to another financial or stock market of the world, having the following main features. First, generally speaking, these are not meant to be medium-term or long-term capital movements, and so they do not concern the transfer of real resources, available in the surplus countries, to be utilized for growth purposes by the deficit countries, and in particular for development purposes by the developing countries who specifically need such additional resources for stable periods of time. On the contrary, it is a question of the international movements of short-term capital, often of very short-run funds, actually of the movements of so called "hot money", which are linked to the progressive "finanziarization" of the world economy and for which the monetarist and neoliberalist doctrines claim the absolute and complete freedom of action to be "exercized" at any rate and time. Secondly and particularly, it must be underlined that the international "hot money" movements refer to speculative operations on foreign financial assets which, nowadays, consist more and more of the so called derivative assets or derivatives and, even, of derivatives from derivatives or the so called "synthetic assets". Now, it is known that, in general, financial assets may well "live their own life", in so far as their prices, values and returns may display their own behaviour, quite independently from that of "underlying" real investments. It goes without saying, then, that financial assets such as derivative and synthetic assets are to be seen as very far "removed" from any real phenomenon, and hence that real phenomena are far removed from such financial assets, in spite of the really fanciful contrary tenets subscribed to by monetarist and neoliberalist theories according to which the behaviour and trends of financial markets are always "governed" by the so called fundamentals, that is real phenomena, of an economy.

How much such a situation, which has been prevailing in the international financial markets for some years, rightly had to be seen as an increasing source of volatility and instability of such markets - as well as of sudden, enormous concentrated, enrichment for some wealthy speculators, but also of "equivalent" impoverishment for others - has been understood and affirmed by some of us, mainly brought up in the Keynesian "tradition", for a long time. This opinion has now received strong "support" from the recent and heavy "turbulence" in those markets, in particular in the case of the so called "emergent" capital markets of several industrializing countries in the Far East, Latin America, and Eastern Europe, in the last few years.

On the other hand, most economists and "observers", and not only those "entrenched" in monetarist and neoliberalist positions but even several "open-minded" colleagues, did not subscribe to such critical opinions which - allow me to repeat the point - were maintained by the few of us who have never "defaulted" from a realist and open approach to economics and economic problems. Anyhow, the "contrary", monetarist and neoliberalist, opinion was based on two sets of arguments, neither of which, I am convinced I can show to be "well grounded".

First, there was the "general" argument that freedom of markets is always to be an overall aim in itself. This is so in particular in the case of international movements of all kinds of capital funds, since also the very short-run financial capital movements and even those of "hot money" would provide alternative "uses of funds", in and out of different (domestic and foreign) assets, such as to be able to "furnish" the right signals with respect to the behaviour of the fundamentals or the "underlying" real variables of any economy. Secondly, the monetarist and neoliberalist favourable position towards absolute freedom for all kinds of international capital movements, even for the extreme speculative ones, has been motivated by the fact that it is true that - as I mentioned above - the sudden and substantial gains which may be realized in the financial markets do tend to be concentrated in the hands of a few and rich agents, mainly speculators who act on behalf of different "institutional investors’ groups" belonging to rich countries. But - the argument goes - such enrichment for some agents in some instances would then be (more or less) compensated for by "corresponding" impoverishment for roughly the same number of agents at some other times; and so, any "speculative" movements of international financial capital will have performed their "function" at roughly no net cost for the general "people of investors" or for the economy concerned.

However, both lines of arguments can and must be "reasonably" and "easily" be rebutted in the following ways. As to the first argument, it is the case that - as several great "anti-monetarist" economists, like (to mention only the greatest ones) Schumpeter, Kalecki, and Keynes, specifically argued, contrary to the monetarists’s tenets according to which money and credit are only to be seen as a "veil" - even if (I may add) they may well be like a very "thick veil" so that same agents can make high gains from their management - financial flows are meant to play two specific and essential roles. These are the role of "transferring" real resources (of which finance gives the "nominal" values) from surplus sectors that do not "use" them to deficit sectors that are in their "need", particularly for investment reasons, and at times also the role of "anticipating" the formation of real resources through the process of creation of financial funds which are needed by entrepreneurs for investment and production purposes "in advance" and which will be "counterbalanced" by the later formation of real savings which the agents who have taken advantage of the investment and production processes previously financed. But these two processes have nothing to do with the continuous, instantaneous, speculative "in-takes" and "out-takes" of financial funds which are only looking for short-run gains and profits, are purely concerned with the "nominal" value of assets, and hence are specifically interested in "chasing" such assets that, the farther their values are "removed" from the behaviour of the "underlying" real magnitudes, the higher the levels of gains that they may provide will be. This is because, with such assets, the interplaying of speculative forecasts and forces will be stronger, hence the behaviour of assets’ prices will be more and more "autonomous", both in the favourable and the unfavourable cases, and the same will be true of the behaviour of capital gains. Really, one cannot understand how it is that - "starting" from such premises - monetarists and neoliberalists still maintain that, in any financial market, the predominant forces are represented, after all, by the fundamentals of the real economy, that is, by the behaviour of production, real saving and real investment.

As to the second argument, it is true that professional speculators make gains and losses which, by and large, do compensate themselves over time. But surely this is not the case as far as "small" savers and investors are concerned who are usually induced to "gamble" on the stock and financial markets by the ascending and descending waves in assets prices (which, instead, are mainly "led" by professional speculators) without having the expertise to play their "autonomous" games, thus always buying assets in the case of positive waves and selling assets in the case of negative waves. It follows that they are "compelled" to enter the markets in the first situation and again "forced" to leave the markets in the second one, thus usually incurring heavy losses in conditions of "turbulence" and "crisis" on the markets which are unlikely to be compensated for by their "normal" earnings in conditions of tranquillity.

Notice that such two points become particularly relevant in the case of developing countries, first of all owing to the more volatile and less efficient "working" of their financial markets. Secondly and primarily, this is because of the fact that their greater "need" of funds brings them to offer "direct" assets - that is to say those assets which are "representative" of real investments and which constitute the "underlying" basis for the calculation of derivatives - with higher returns which, however, may not, or at any rate not always, be regularly paid owing to the less stable and profitable process of capital accumulation and thus to the more risky behaviour of profits. The recent heavy financial crises in such different, but all "emerging", economies such as the Far East "tigers", Russia, or Brazil - as already hinted at above - give the points I have intended to argue a salutary support.

In conclusion, globalization of finance does not at all seem to be able to "pass the test" of a comprehensive argument which attempts to be both careful in analysing finance’s trends and consequences on the economic front as well as watchful in ascertaining its implications for the welfare of the different "actors" in the scene. Actually, in this case perhaps more than in previous instances, my conclusion cannot but be that its negative aspects and effects come to exceed by far the positive ones. This is particularly so if we add the further crucial consideration that, since globalization of finance "demands" absolute and full freedom of action for any kind of international capital movements in any country and we know that shortsightedness and egoisms of all sorts bringpeople to concentrate their choices on activities which "promise" to bring about immediate and substantial gains, it will be a specifically dangerous form of globalization for the less developed economies of the world, as it is at the present. In this respect, full account is to be taken not only of the previous arguments I have tried to make, but also of the fact (just mentioned above) that, in the "working" of continuously widening and deepening financial markets all over the world, a really "excessive" amount of real resources come to be assigned to the sheer "functioning" of the international capital movements of any kind, so that the amount left for the process of real accumulation and development will certainly be reduced.

Coming to the end of my reflections, I cannot refrain from briefly and conclusively tackling the following final problem. Globalization - we have seen - is both an "old" and a "new" concept and phenomenon; but I must now underline that it is not a process that we can neglect, or overlook, or underestimate. Really, the point then is not "yes or no to globalization" as a matter of principle, independently of what sort of globalization processes will go on, but whether or not - from the point of view of an ethically motivated economic outlook – we are able, each one of us (and, I would dare to say, will be able to say, and to work in order to push or to bring people to say) ,"yes" to certain kinds and "no" to certain other kinds of globalization.

In any case, we should be scared by, and hence say "no" to, any form of globalization which will imply either the concentration of wealth, welfare, power, freedom of action in the hands of a few people in the world at large - as it seems has been happening recently - or the tendency towards open or hidden forms of "homogenization", "integration", "marginalization", "manipulation" of increasing masses of people by means of the few who will "lead" the globalization processes in any field, from markets to production, to finance, to the particularly "subtle" field of automation and information processes - as there is a dangerous tendency for that to happen too at the present.

On the other hand, my opinion is that we should collaborate and hence say "yes" to globalization of markets, production, finance, information and automation services, when and in so far as globalization is intended as a process and a trend meant to increase the amount of world’s resources devolved in favour of those who are most in need of them with a view to undertaking an experience of modern development as a process directed to the fulfilment of equal human dignity for all.

From this latter outlook, on the one hand, a sort of "democratic control" is to be envisaged and sought after at the global level whereby any possible and likely concentration of wealth and power is to be avoided. On the other hand - as Pope John Paul II has underlined numerous times - such "control" may start to be exercised at the local level, so that any form of marginalization and manipulation be excluded, in particular through what may be taken to be different processes of globalization. However, when people speak of globalization, very little is said about such processes, in particular about an important one among them, that is, the process of globalization of labour migration flows. I myself have not dealt with this here, but I am totally convinced of its relevance, in the presence of that phenomenon - international labour migration - which is becoming a "key problem" for the world nowadays from several points of view and which certainly is a "good candidate" for being looked at within a context of globalization.

Finally, in general, we all are called to "make a proper choice" on the matter of globalization. More particularly, in my opinion, there is an urgent need that a "fair" distribution of the welfare and freedom effects of globalization be attained. What anyhow seems to be an "incumbent" process of "multilateralization" in various and crucial fields within the present "global village" may thus include the further aspect of the "globalization of solidarity" - as our present great Pope has more recently asked for.


H. Alford: La tecnologia incentrata sull'uomo

P. Kulczycki: In Politics as a Christian: An Outline of the Life and Thought of G.Lazzati

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