Shipwreck - the facts
The case for corporate globalization depended on world (international) trade expanding faster than domestic (internal) trade, making it the ‘engine’ of greater prosperity everywhere. But between 2007 and 2009 world trade slumped – for the first time since World War Two – much faster than domestic trade, making it the engine of recession in those countries most reliant upon it. Empty ships at anchor littered the world’s coastlines. Unemployment soared at record rates. The entire system came to rest on guarantees, bailouts and ‘stimulus’ packages – perhaps amounting to $15 trillion in all – provided by governments. The globalization ‘paradigm’ was well and truly wrecked.
Between 2007 and 2009 manufactured exports fell more sharply than at any time on record since the 1930s.
Only a minority of countries with some sort of welfare system keep detailed statistics. These show record rates of increase, growing by a half in many countries and doubling or more in Iceland, Ireland and Estonia. The Government of China has admitted that the country’s unemployment has risen by at least 20 million. There are no figures for India. In the Majority World, formal jobs are scarce and relentless toil is generally essential to survival, so ‘unemployment’ – rather than harsher poverty – has little meaning.
Already sluggish, the economies of rich countries experienced a sharp reversal between 2008 and 2009, contracting on average by almost 5%. The contraction was particularly severe in the economies most reliant on exports, like Japan, Mexico and Russia. It was only slightly less marked in ‘developing’ countries and in Africa, which has been largely sidelined by corporate globalization. In China and India, though output seemed to grow fast, the relative decline was just as marked.
In some countries, like Iceland and Ireland, bank bailouts have cost more than double national income – in the US and Britain, four-fifths. Much less has been devoted to ‘fiscal stimulus’ to increase disposable income and forestall a self-propelled economic depression. However, paying for the debts dumped on the public by corporate finance will eventually mean higher taxes and reduced employment in public services, thereby reversing the stimulus and ensuring a prolonged period of ‘austerity’ at best.
- World Trade Organization, World Trade Statistics 2009.
- International Labour Organization, Labour Force Surveys, Department of Statistics, http://laborsta.ilo.org, periodic data, September 2009.
- UN Conference on Trade and Development (UNCTAD), Trade and Development Report 2009.