Let me begin by saying that from the point of view of a person from the South, things do not look as bleak as they seemed a couple of years ago. The United States is bogged down in Iraq, in an unending war that, as the November 2006 elections demonstrated, has lost the last shreds of legitimacy among the American people. The peoples of Latin America are on the move away from neoliberalism. Hugo Chavez baits the bear with impunity. The European Union and the US continue their inexorable drift from each other. The mighty Israeli war machine has been humbled by a most unexpected source: a few hundred guerrillas in Lebanon. Now, you and I may have disagreements on how to view some of these developments, but for us in the South, a significant weakening of the global hegemony of the United States such as that which has occurred since 2003 is a giant step forward, for it gives our societies more breathing space, more freedom of maneuver. In this regard, let me just say, contrary to those who extol the alleged benign effects of hegemonic power, that the alternative to hegemony is not chaos but space, creative diversity, and the possibility for a genuine multilateral order.
But let me go immediately to our topic here this morning: the retreat of corporate-driven globalization.
Crisis of Multilateralism
Let me speak from personal experience. Over ten years ago, in 1996, I attended the World Trade Organization’s first ministerial meeting in Singapore as an NGO observer. There was an air of triumphalism, a sense among government delegates that corporate-driven globalization was the wave of the future. The newly established WTO was toasted as the “jewel in the crown of multilateralism,” as one director general of the organization was later to put it, and at the meeting, the officials of the WTO, International Monetary Fund, and the World Bank saw the remaining major task of global governance as the achievement of “coherence,” that is, the coordination of the neoliberal policies of the three institutions in order to ensure the smooth technocratic management of the global economy. Those of us who dissented from this view of the future were definitely a minority at the conference. We were the token Luddites who had been allowed to crash the party so we could have a glimpse of the future.
Ten years later, in September 2006, the World Bank and the IMF held their annual meeting in Singapore behind the heavy protective shield of the Singaporean government. The two institutions had chosen Singapore because they wanted to make sure there would be no protesters in the streets, and if there was anyone in the world that could ensure that, it was the Singaporean state. 28 of us were banned from entering the country on various pretexts. In my case, the government said that the reasons for keeping me out were that I had led protests against the WTO, that I had spearheaded the seizure of embassies and consulates, and that I had broken into the World Bank to steal documents. These were all peaceful activities to which I plead guilty, but my point here is that the crisis of legitimacy that has overtaken the two institutions is so profound that they had to hold their annual conference under armed guard!
Seemingly triumphant just a decade ago, corporate-driven globalization is now in very deep crisis.
What are the indicators of this crisis?
Well, first of all, as noted above, the loss of legitimacy of the key multilateral institutions that serve as the political canopy of corporate-driven globalization-the ones that set the rules that facilitate the mobility and extractive capacity of global capital. Sebastian Mallaby, the influential pro-globalization commentator of the Washington Post, writes the globalist project is in trouble because “trade liberalization has stalled, aid is less coherent than it should be, and the next financial conflagration will be managed by an injured fireman.”
In fact, the situation is worse than he describes. The International Monetary Fund (IMF) is practically defunct. Knowing how the Fund precipitated and worsened the Asian financial crisis, more and more of the advanced developing countries are refusing to borrow from it or are paying ahead of schedule, with some declaring their intention never to borrow again. These include Thailand, Indonesia, Brazil, and Argentina. Since the Fund’s budget greatly depends on debt repayments from these big borrowers, this boycott is translating into a budget crisis. The upshot of these developments is that payments of charges and interests, according to Fund projections, will be cut by more than half, from $3.19 billion in 2005 to $1.39 billion in 2006 and again by half, to $635 million in 2009. These reductions have created what Ngaire Woods, an Oxford University specialist on the Fund, describes as “a huge squeeze on the budget of the organization.”
The World Bank may seem to be in better health than the Fund, but, having been central to the debacle of structural adjustment policies that left most developing and transitional economies that implemented them in greater poverty, with greater inequality, and in a state of stagnation, the Bank is also suffering a crisis of legitimacy. Robin Broad, one the of the leading experts on the Bank, claims, in fact, that the crisis of the Bank is really more profound than that of the Fund, but that, unlike the IMF, the Bank has a well-oiled PR machine that transmogrifies questionable research into sound-byte friendly factoids. But now that a high-level Commission of established economists has scolded the Bank for promoting a picture of the benign effects of globalization on the basis of inadequate research and ignoring evidence to the contrary, this act will be more difficult to pull off.
As with the Fund, unwillingness to accept the conditions attached to Bank programs is making more and more governments reluctant to borrow heavily from it. Since the Bank, like the Fund, is mainly supported from debt repayments, this is, as Woods points out, leading as to a budget crisis as well.
But perhaps the crisis of legitimacy is most acute at the World Trade Organization, where the Doha Round of global negotiations for more trade liberalization unraveled abruptly last July, when the talks among the so-called Group of Six collapsed in acrimony. A key reason for this is that developing country governments, under pressure from their citizenries, no longer want to open their agricultural markets to dumped goods from the European Union and the United States and to allow their manufacturing industries and services to be bankrupted or taken over by transnational corporations. The pro-free trade American economist Fred Bergsten once compared trade liberalization and the WTO to a bicycle: they collapse when they are not moving forward. That point of collapse may be nearer than it seems.
Dimensions of the Crisis of Globalization
But the crisis of the multilateral system of world economic governance is but the most noticeable sign of the crisis of the globalist project. There are other, deeper indicators.
A decade ago, the writings of the globalists celebrated the emergence of a functionally integrated global economy, the so-called borderless world. Ten years later, despite runaway shops and outsourcing, what passes for an international economy is still a collection of national economies-interdependent no doubt, but economies whose dynamics are still largely determined by internal factors. Indeed, the globalist theorists oversold globalization: As Paul Hirst and Grahame Thompson and others have demonstrated, truly global TNCs are relatively few, with most continuing to have the bulk of their production and sales in national or regional markets rather than spread out globally.
Ten years ago, we were told that state policies no longer mattered and that soon, corporations would dwarf states. In fact, states still do matter. The European Union, the United States government, and the Chinese state are today stronger than they were a decade ago as economic actors. Moreover, state policies, such as industrial policy and trade policy-that is, interfering with the market in order to build up industrial structures or promote welfare policies-still make a difference. Indeed, over the last ten years interventionist government policies have spelled the difference between development and underdevelopment, prosperity and poverty. Malaysia’s imposition of capital controls during the Asian financial crisis in 1997-98 prevented it from unraveling like Thailand or Indonesia. And it was also strict capital controls insulated China from the economic collapse engulfing its neighbors.
A decade ago, we expected the emergence of a transnational capitalist elite that would manage the world economy. Indeed, this was project of Bill Clinton and his Secretary of the Treasury Robert Rubin. The adoption of a strong dollar policy in the mid-nineties that would assist the recovery of the Japanese and German economies, even at the expense of US firms, was Washington’s way of saying that it had the long-term strategic interests of global capital, not just US capital’s interests, in mind. A strong dollar translated into cheaper Japanese and German products in the US and European markets relative to US products, thus acting as a boost to Japanese and German recovery, as Robert Brenner pointed out. But the Clinton project was aborted under Bush. The transnationalized fractions of the different national capitalist classes have been overwhelmed by the nationalist fractions, and what we have today are national elites in sharp competition with one another, seeking to beggar one another’s economy. For instance, the US elite does not sign the Kyoto Protocol in order to get the European and Japanese elites absorb most of the costs of global environmental adjustment and thus make US industry more competitive against them.
Causes of the Crisis
Pointing to the stalling of globalization leads to the question: what are the factors responsible for this?
I think we can identify six reasons. One, already alluded to above, is the preference of national capitalist classes for a strategy of shifting the burden of adjusting to the global crisis of overproduction and stagnation and the environmental crisis to each other rather than forging one common, cooperative response. While cooperation may be the rational strategic choice from the point of view of the system, that may not be the case from the point of view of national capitalist interests.
A second factor has been the corrosive effects of the double standards brazenly displayed by the hegemonic power, the United States. While the Clinton administration did try to move the United States towards free trade, its successor, the Bush administration, has hypocritically preached free trade while practicing protectionism. Indeed, the trade policy of the Bush administration seems to be free trade for the rest of the world and protectionism for the United States.
A third reason is the gap between ideology and reality. There has been too much of a dissonance between the promise of globalization and free trade and the actual results of neoliberal policies, which have been more poverty, more inequality, and stagnation. One of the very few places where poverty diminished over the last 15 years is China, and there, it has not been neoliberal policies but interventionist state policies that managed market forces that were responsible for lifting 120 million Chinese out of poverty. There are, of course, many major problems with China’s high-speed growth, but we will return to this issue later.
Another example of great dissonance was that between the prosperity promised by the elimination of capital controls and the actual collapse of the economies that took this policy to heart: The Asian financial crisis and the collapse of the economy of Argentina, which had been among the most doctrinaire practitioner of capital account liberalization, were two decisive moments in reality’s revolt against theory.
A fourth factor unraveling the globalist project is its obsession with economic growth. Indeed, unending growth is the centerpiece of globalization, the mainspring of its legitimacy. While the World Bank continues to extol rapid growth as the key to expanding the global middle class, global warming, peak oil, and other environmental events are making it clear to people that the rates and patterns of growth that come with globalization are a surefire prescription for ecological Armageddon.
A fifth factor is the weakening of the coercive capabilities of the empire. A crisis of legitimacy intersecting with a crisis of coercive capability on the part of the hegemon that protects the system has very damaging implications for the global structures of capitalism. The US state is today suffering a crisis of overextension that has made it weaker than it was before March 2003, that is, before the invasion of Iraq. There is, however, a view, recently expressed by Josef Joffe in an essay in Time, that a “decoupling of the world economy from world politics” is in progress. That is, the processes of globalization are proceeding just fine, even as the hegemon is suffering reverses military and politically. This is an illusion. Without their protective politicio-military canopy, global economic structures eventually, to borrow a Pentagon term, degrade. Just take a look at Latin America. With the US tied up in Iraq, it cannot stem developments that erode or evade the rules of capitalism. Nestor Kirchner tells his creditors he will only pay 25 cents for every dollar he owes them, and he gets away with it. Hugo Chavez is busy creating an alternative trading bloc, ALBA, or the Bolivarian Alternative for the Americas (ALBA), whose rules, which include huge discounts on the price of Venezuelan oil for poor Caribbean countries and barter-that is Argentinian heifers or Bolivian soybeans for Venezuelan oil-go “beyond the logic of capitalism,” as Chavez puts it. Such actions would have invited determined US-supported destabilization in the past, as Jacobo Arbenz found out when his agrarian reform policies were seen as a threat to United Fruit interests in Guatemala in 1954 and Salvador Allende discovered when he nationalized the Kennecott and Anaconda mining corporations in 1971.
There is a precedent here. The weakening of the British Empire that stood guard over the system of global free trade in the 19th century as new powers emerged to challenge it was a central factor in collapse of that system in 1914. Again, we must never forget that, as Paul Hirst and Grahame Thompson remind us, that before the retreat to nationalist economic policies after 1914, the 19th century global economy was, in many respects, more globalized or integrated than today’s. 
But perhaps the most critical factor has been resistance, people’s resistance. The battles of Seattle in 1999, Prague in 2000, Genoa in 2001, the massive global anti-war march in Feb. 15, 2003, when the anti-globalization movement morphed into the global anti-war movement, Cancun in 2003, and Hong Kong in 2005-these were critical junctures in the decade-long people’s counteroffensive that has resulted in the equivalent of a Stalingrad for the neoliberal project-though my friend Boris Kagarlitsky disputes this image and says we are still not at the Stalingrad junction of 1943 but at that of the successful defensive resistance in Leningrad of 1941. These struggles, it must be emphasized, were merely the tip of the iceberg, the summation of thousands of struggles in thousands of communities throughout the world involving millions of peasants, workers, students, indigenous people and many sectors of the middle class. We should never overestimate our influence, but we must never underestimate ourselves either.
In this regard, let me say that action is a condition for the emergence of truth. What I mean to say is that for over a decade before Seattle, the United Nations Development Program and other agencies had been publishing data showing the negative impact of structural adjustment programs, neoliberal reforms, and corporate-driven globalization. However, these remained lifeless statistics that were largely ignored by the media, the academy, and policymakers that held on to faith-based assumptions about the beneficial impact of these measures and processes. Seattle, by bringing the message of the protestors so forcefully to world attention, turned abstract statistics into brutal facts. It forced many influential actors to reconsider, then to backtrack on their assumptions.
In other words, to break through to world consciousness, truth needed a world-historic event like Seattle. It is doubtful if people like the Nobel Prize-winner Joseph Stiglitz or the star economist Jeffrey Sachs or financier George Soros would have detached themselves from the mainstream and begun to criticize corporate-driven
globalization so forcefully had Seattle not occurred. Paradoxically, Seattle made anti-globalization opinions respectable. We were no longer Luddites. We had perhaps graduated to being barbarians at the gate-people you feared but had a healthy respect for-but we were no longer out-of-touch, out-of-synch Luddites.
Down but not Out
But while corporate-driven globalization may be down, it is not out.
With things not moving at the WTO, the big trading powers are putting the emphasis on free trade agreements (FTAs) or economic partnership agreements (EPAs) with developing countries. These agreements are in many ways more dangerous than the WTO since they often require greater concessions in terms of market access and tighter enforcement of intellectual property rights.
Moreover, the massive flow of corporate investment from the US, Japan, and Europe to China continues, with the tremendously negative consequences for workers in these countries as well as workers in China.
The structures of global capitalism are far from being in that state wherein “all that is solid melts into thin air.”
However, things are no longer that easy for the trading powers and the corporations. When it comes to FTA’s, people in the South are becoming aware of their dangers and they are beginning to resist. The Free Trade of the Americas (FTAA)-the grand plan of George W. Bush for the Western Hemisphere-was derailed by the opposition of key South American governments-under pressure from their citizenries– during the Mar del Plata conference in November 2005. Also, it must be pointed out that one of the reasons many people came out to resist Prime Minister Thaksin Shinawatra in the months before the September 2006 coup was his rush to conclude a free trade agreement between the United States and Thailand. In fact, some people would date the beginning of the end for Thaksin to January 9 , 2006, when some 10,000 protesters tried to storm the building in Chiang Mai, Thailand, where the negotiations were taking place between US and Thai officials.
When it comes to China, a superficial view is that the flow of labor from the rural areas, where some 700 million Chinese make an average of $285 a year per capita, will ensure that wages will forever remain low and attractive to foreign capital. There is, however, another reality that is emerging: increasing resistance of migrant labor and peasants to the low wages, loss of land, and environmental poisoning that has accompanied the foreign-capital intensive export-oriented model of growth. In 2004, the Public Security Bureau reported that the number of “mass incidents” had risen to 74,000. In 2005, the number jumped another 13 percent. According to David Zweig, an expert on Chinese politics at Hong Kong University of Science and Technology, “A protest begins in China every five minutes. If the protests run longer than five minutes, then there are two going on at the same time.” All this has the leadership worried, and it is now apparently turning one ear to the so-called “New Left,” which is proposing a very different path. That path would be that of hitching China’s growth to the internal market, and in order for that to happen, local wages would have to rise significantly to create consumers with purchasing power. That could mean the end of China as the nirvana of cheap labor and the haven of transnational corporations. This could also be accompanied by measures to take China on a more environmentally sustainable path.
Of course, the odds are still against this sea change occurring, but it is by no means impossible, and our role is to support the voices within China urging this alternative path.
Indeed, with the crisis of neoliberal globalization, an alternative path is a project that we urgently need to come up with not only for China but our own societies. For although neoliberal policies have become discredited all over, neoliberalism continues to be the default mode that technocrats and academics resort to because they do not perceive a credible alternative. We are in a situation akin to that familiar scene in the old western movies: the outlaws have shot the engineer, but his hand remains on the throttle of the train. We’re like the passengers trying to break into the engine room in order to get his dead hand off that throttle. Meantime, the train picks up speed and is going to round the bend at high speed…Will we be able to get in there in time and peel those fingers off that throttle? Neoliberal policies are like that dead hand of the engineer.
Humanizing Globalization or Deglobalization?
Before we move to the question of alternatives, let me just venture my opinion in concluding this section that from today’s vantage point, globalization appears to have been not a new, higher phase in the development of capitalism but a response to the underlying structural crisis of this system of production. Fifteen years since it was trumpeted as the wave of the future, globalization seems to have been less a “brave new phase” of the capitalist adventure than a desperate effort by global capital to escape the stagnation and disequilibria overtaking the global economy in the 1970s and 1980s-developments stemming from the dynamics of overproduction and overaccumulation. The collapse of the centralized socialist regimes in Central and Eastern Europe deflected people’s attention from this reality in the early 1990s.
Many in progressive circles still think that the task at hand is to “humanize” globalization. Globalization, however, is a spent force. Today’s multiplying economic and political conflicts resemble, if anything, the period following the end of what historians refer to as the first era of globalization, which extended from 1815 to the eruption of World War I in 1914. The urgent task is not to steer corporate-driven globalization in a “social democratic” direction but to manage its retreat so that it does not bring about the same chaos and runaway conflicts that marked its demise in that earlier era.
Is the articulation of an alternative agenda to globalization really that distant or utopian a project? The key thrusts of an alternative program, I submit, are not difficult to discern, They have been articulated in many contexts and in different ways by people who have done work on alternatives to global capitalism over the last thirty years. I have labeled this alternative approach “deglobalization.” Others have used other terms, such as the solidarity economy or economic democracy, but we have one thing in common: we have shamelessly borrowed and lifted ideas from one another in blatant disregard of intellectual property rights. In my particular formulation, there are two levels at which what I call the process of “reconstruction” takes place: the global and the national or local.
At the global level, the aim is to disempower the centralized neoliberal bureaucracies-meaning the WTO, IMF, and World Bank-and empowering such institutions as the United Nations Conference on Trade and Development (UNCTAD), multilateral environmental agreements, and regional economic associations such as a transformed Mercosur in order to create a mutipolar system of global economic governance marked by checks and balances. The aim is to create the space for national economies to have space to devise strategies of development.
At the national or local level, the key elements for an alternative program would be:
- moving away from export-oriented production to production for the domestic market;
- maintaining production of vital agricultural and industrial products, as well as key services, at the local level instead of shipping them out elsewhere, if this can be done at reasonable cost; this is otherwise known as the principle of subsidiarity.
- undertaking income redistribution to create a vibrant internal market as well as promote ecologically sustainable development;
- institutionalizing fair, managed trade instead of free trade;
- democratizing economic decisionmaking, that is, letting the electorate make the key economic decisions, such as creating or phasing out industries, and not leaving this process to the market and to corporations;
- creating a system of regulating the market and the private sector that involves not only the state but civil society.
These are general principles. How they get articulated by different societies into specific strategies and policies will depend on their needs, their values, and their rhythms as societies, and this is why there will be internationally a diversity of economies, just as there is a diversity of individuals within a species. Elimination of diversity is pathological-yet this is what neoliberal economics does, and this is why we must junk its dystopian dream of one functionally integrated global economy.
I think the best way of describing this process of moving toward the alternative is
a movement from an arrangement where the market, to use the words for great Hungarian economist Karl Polanyi, has been disembedded from society and drives society to one where the market is reembbeded in society and is driven by society. We are taking about systematically subordinating the operations of the market to the higher values of justice, cooperation, and community. Often, when neoliberal economists and policymakers say we have no alternative to offer, they are really asking: what system can you offer that would be more effective than capitalism in promoting efficiency, that is reducing the unit cost of production? Well, no, that is not what we are offering. We are, in fact, talking about supplanting the economics of efficiency, where the key criterion is the reduction of unit cost, with effective economics, one that, instead of disintegrating national and local economies, like globalization does, reintegrates them, thus promoting stability, the general welfare, and happiness.
I would like to end by saying that we live in a period of great contradictions, where there are signs of despair as well as signs of hope. The future is not fixed. It is, as Michel Foucault and the post-modernists have so rightly asserted, contingent. Corporate-driven globalization is not irreversible since it is the actions of human beings alienated from themselves by the dynamics of global capital that have made globalization possible. We must replace our alienated selves subjected to man-made laws with our real selves as agents that consciously create our economic and social worlds. With this liberated consciousness, we can work across borders to bring about a different but all too possible world built on cooperation and not on a race to the bottom, on diversity and not on what Vandana Shiva describes as global monoculture. Only then, as an interesting thinker told us over 150 years ago in a for-my-eyes only document known as the Grundrisse, will we truly move from the realm of necessity to the realm of freedom.
*Walden Bello is the executive director of the Bangkok-based research and advocacy center Focus on the Global South and professor of sociology at the University of the Philippines at Diliman. He received the Right Livelihood Award-also known as the “Alternative Nobel Prize”-for his writings and activities on globalization in 2003. He is the author or co-author of numerous books, including Dilemmas of Domination: the Unmaking of the American Empire (New York: Henry Holt, 2005) and Deglobalization: Ideas for a New World Economy (London: Zed, 2002). He is also currently an editor of the Review of International Political Economy.
 The description is that of Mike Moore, the second director general of the organization. Sebastian Mallaby, “Why Globalization has Stalled,” Washington Post, April 24, 2006. Ngaire Woods, “The Globalizers in Search of a Future: Four Reasons why the IMF and World Bank Must Change, and Four Ways they can,” CDG (Center for Global Development) Brief, April 2006, p. 2. Personal communication, April 21, 2006; see also Robin Broad, “Research, Knowledge, and the Art of ‘Paradigm Maintenance,: the World Bank’s Development Economics Vice Presidency,” Review of International Political Economy, Vol. 13, No. 3 (August 2006), pp. 387-419. Eoin Callan, “World Bank Uses Doubtful Evidence to Push Policies,” Financial Times, Dec. 21, 2006. See Paul Hirst and Grahame Thompson, Globalization in Question (Cambridge: Polity Press, 1996)
 Robert Brenner, The Boom and the Bubble (New York: Verso, 2002) pp. 127-133.
 Josef Joffe, “Those Gloating Dismal Scientists,” Time, January 27, 2007, p. 64.
 Paul Hirst and Grahame Thompson, Globalization in Question (Cambridge: Polity Press, 1996), pp. 26-31.
 See Walden Bello, Deglobalization: Ideas for a New World Economy (London;Zed, 2004).