Ending Isolationism

The perfect battle can’t be picked. However flawed politically, the confrontation inspired by the World Trade Organization (WTO) in Seattle this past December had enough going for it to be worthy of progressives’ support. The growing hegemony of business, the rising power of Wall Street, and the disregard for democratic decision making by international bodies like the WTO, all made Seattle fair ground for a fight. Now, however, socialists have to refine the terms on which they oppose and support globalism. Some of the tendencies represented in Seattle were progressive while others were patently reactionary.

Seattle wasn’t the perfect battle because issues were not drawn neatly along class lines. Globalism may have become monolithic, but the interests of the same class tended to differ depending on the country—low income, high income, and middle income (“emerging economies”).

The low-income countries were possibly the most disappointed by the failure of the WTO to advance the cause of free trade. Without a manufacturing sector to fear foreign competition, these countries have everything to gain from open markets for their agricultural exports, which continue to meet protectionist barriers in the advanced countries, whether Japan, the European Union (EU) or the United States.

The middle-income countries, ranging from Argentina, Brazil, and Mexico; Turkey, India, and China; and Korea, Thailand, and Taiwan, have experienced an industrial revolution since the 1950s based on protectionism, government interventions disciplined by performance standards, and exporting. While real manufacturing earnings in some countries have stagnated (between 1969 and 1990 they fell by -0.1 percent in Argentina and -0.8 percent in Mexico), in other countries wages have soared at annual rates unprecedented in world history: for example, 5.1 percent in Indonesia, 5.6 percent in Brazil, 7.8 percent in Korea and 8.5 percent in Taiwan. The emerging economies now produce not only a large share of the world‘s labor-intensive manufactures, such as textiles (36 percent) and shoes (44 percent), but also a large and rapidly growing share of its more technologically advanced and capital-intensive products, such as semiconductors (market share depends on the type of chip) and steel (around 30 percent). These more sophisticated products are made in the world’s newest, most efficient factories, many of them owned by nationals of emerging economies. Nationally owned firms have staged the first serious competitive challenge to entrenched multinational companies.

The American government’s knee-jerk response to “The Rise of the Rest” was to force open their markets and buttress trade barriers at home. Threatened with real foreign competition in textiles, steel, automobiles, machine tools, and semiconductors, the U.S. government imposed “voluntary” export restraints on trading partners. If insufficient, a threatened industry co...