Why Globalization Works - Wolf

Why Globalization Works by Martin Wolf - 4/5

Why Globalization Works (WGW) presents clear and concise arguments as to the benefits of globalization and the need for a more integrated global economy. "Globalization," says Wolf "is no fanatical ideology, but a name for the process of integration, across frontiers, of liberalizing market economies at a time of rapidly falling costs of transport and communication." Wolf is clearly aware of the pros and cons of both sides of the argument and while he is not shy to agree with criticism of current globalization methodologies, he is also not afraid to reject anti-globalization claims on the negative impact of economic integration.

Wolf's main thesis is that liberalization of the global economy has lifted more people out of poverty in the past few decades than ever before in history. To support these views Wolf relies strongly on evidence from South and East Asia (China and India) to support his claims that globalization works. He also draws a lot on South American economies when explaining failures in different economies. It would have been interesting to see some deeper analysis of economies in Eastern Europe and specifically Russia that, layman such as myself, understand to have purportedly had a market economy for nearly two decades now.

The most powerful chapters in WGW are those where Wolf defends globalization against the criticism of the myriad of interest groups that are opposed to an integrated economy. Some of these criticisms include claims that globalization has a negative impact on the environment (at the local level he shows it actually improves the environment) and that localization is better (which Wolf argues is actually more dangerous than globalization since being able to purchase food anywhere in the world provides states with more security than if they were relying their own crops at home).

For me his most eye opening defense was against critics of child labor and the so called sweatshops that transnational companies use in the developing world. Wolf argues that to prevent child labour in these countries would border on the criminal and suggests critics in rich countries compare the plight of the poor to the alternatives they have in their own countries rather than the alternatives in the countries where victims suffer extreme poverty. Wolf suggests that child labour in multi-national companies enhances the livelihoods of these countries and suggests that if they were not employed in these companies with comparatively high working standards (when compared to local companies) these children would work find work in more dangerous, local factories, starve or become child prostitutes.

The same is said of the working conditions in labor intensive industries where companies have been accused of employing people in sweatshops. Wolf argues that many of those employed are women and this provides them with status and independence in patriarchal societies and provides them with freedoms they never previously had. He also argues these types of practices are pulling these people out of the grip of extreme poverty.

Although Wolf clearly advocates globalization, he is not averse to challenging some of the assumptions, pitfalls and difficulties in the way globalization has been implemented. For example, even though he argues that liberalization of capital accounts is probably a good thing, he acknowledges that done incorrectly and without proper consideration, the system can tank and lead to both economic and fiscal crisis. Wolf also finds it disgraceful that rich countries levy disproportionate costs on poor countries who wish to export goods and services into developed markets. He argues that rich countries do not impose such high costs on each other and argues these actions inhibit economic growth in the poorest nations on earth.

Why Globalization Works is a great introductory book on the topic. It is well structured, well argued, covers all the bases and answers many of the critics' questions. Wolf has compiled an impressive array of data to support his views and the critics would need to counter with equally compelling evidence. Added to this the book is well written and fairly accessible. WGW just may be, to quote the Economist, "the definitive treatment of the subject."

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