The one unchallenged premise uniting all the G20 attendees was the desirability of globalisation. For them all it was an article of faith. And in one sense they are of course right. Given the advance of IT technologies and the enormous expansion of worldwide travel, the global economy in one form or another is here to stay. But that does not necessarily mean that the present kind of global economy is either desirable or inevitable. There are very good reasons for thinking it is neither.

First, a system which has given unprecedented power to the biggest corporations to scour the world looking for the highest profit return has led to a drastic hollowing out of the manufacturing base of the US-UK economies. Even before the current meltdown began in 2007, the US had a current account deficit of 8% of GDP and net foreign debt of over $4 trillion amounting to more than 35% of US GDP. In the UK we were losing 130,000 manufacturing jobs a year, and the proportion of manufactured goods sold in the UK which were made abroad rose from less than a quarter thirty years ago to more than 6)% now. These trends are unsustainable. No economy can survive on the service sector and high tech alone.
Second, the global economy in its present form is not all that it’s cracked up to be. It has not improved economic performance. Since 1980 when an integrated world economy really got under way, world GDP has grown only slightly more than half as fast as it did in the period before 1980. And in some respects its impacts have been quite malign. Stiglitz, as Chief Economist at the World Bank, identified the uncontrolled flow of ‘hot money’ as the main culprit in the East Asian tiger economy crisis of 1997-8, since footloose capital so often exacerbates the underlying cycles and generates instability. The same instability of a global economy operating to a single set of monetary criteria lay behind the recurrent crises over the last decade in Mexico, Argentina, South Korea, Indonesia and Brazil.
Nor have the poorer developing countries benefited as the advocates of the Washington Consensus like to pretend, especially those still pushing the Doha trading round against all the evidence. The share of the global income of the poorest fifth of the world has actually halved since 1960 to a paltry 1.1%. World inequality has grown drastically. The richest 20 countries now have 125 times higher GDP per head than the 20 poorest countries. Not only have 2-3 decades of globalisation increased the numbers forced to subsist on $2 a day to 3 billion people, but they have left 46 countries actually poorer by 2007 compared with a decade before. The major reason for this impoverishment is that a global economy dominated by international capital has locked developing countries into the subordinate role of primary producer of basic commodities, forced to open up their markets to trans-national competition they cannot resist as the price of receiving the investment they cannot do without.
And then there is the darker side of globalisation. This is the global drugs trade, the global trafficking of women and minorities, the more rapid transmission of diseases like AIDS, malaria, TB and perhaps avian flu, increasing emigrant flows, the increasingly global operation of criminal activity, and the relentless intensification of climate change. None of these was caused by globalisation per se, but it has exacerbated all of them.
What is needed is a very different kind of global economy. It should permit the poorest countries to erect tariff walls to protect their infant industries, at least until they are strong enough to meet the full force of international competition – exactly as Britain, the US, Japan, Germany and South Korea did to achieve their own take-off. We need a new model which limits the unbridled power of international capital (whether hedge funds, the wholesale financial markets, or sovereign funds), and the current global financial-economic crisis 2007-10 seems likely to open the way to that. Such a model must radically change the power relations across the globe, rewriting the Bretton Woods rules to achieve a more equitable balance between creditor and debtor countries, between rich and poor nations, and between industrialised and emerging economies. Above all, it must entrench all economic activity within the limits of planetary sustainability, which has dramtic implications for localisation and for small scale versus mega scale.

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