Social Text

From Summits to Limits

The Bretton Woods protocols, which advanced institutions to coordinate what would be meant by development (the World Bank) and how nations would be made fiscally accountable to one another (the International Monetary Fund) by pegging all currencies to the dollar, had dissolved by 1973. While Bretton Woods is survived by the institutions it begat, its demise is a convenient marker to use in periodizing what is now called globalization. The dollar’s expiration as a formal world standard actually allowed it and other currencies to be freed in myriad ways. In the United States, depression-era legislation (especially the Glass-Steagall Act of 1933) that partitioned commercial and investment banking also restricted revenues on interest and speculation. A plethora of financial institutions and new product lines (mutual funds, hedge funds, derivatives, hybrid bonds, and securities) were spawned to thwart these restrictions on accumulation.

The spectacle of capital unbound, free to pursue its own devices, constitutes the globalizing imaginary. Perhaps the most vivid statistic of this world order is the eclipse of the production and distribution of goods and services by that of credit, debt, and currency exchange. The shadow of finance over industry was first detectable in the mid-1970s (Guttmann 1994). By the end of 1998, $1.5 trillion worth of currency was exchanged daily (four-fifths of it denominated in dollars), as against $6.6 trillion annual world trade in merchandise—less than passes through the exchanges of London, New York, and Tokyo in a week (Clinton 1999, 224, 300).

Yet this image of money flowing unattached from other dimensions of economic activity—as much as it is repeated by writers of various stripes and spots—proves remarkably unhelpful to understanding what is taking place (Greider 1997; Sweezy 1994). If globalization is most conventionally voiced in but never exhausted by the economic register, at least an approximation of the cultural politics of this emergent financial regime must be attempted. The language and practices of unfettered finance need to be addressed in their own terms. Doing so can remind us that the economic never appears alone. Its presence may be ubiquitous but ever accompanied by a mode of experience and a disciplinary regime meant to regulate a constitutional indiscipline, a culture and a politics intrinsic to globalization itself. [End Page 3]

To think globalization through the supremacy of finance is properly an account of a combination of elements whose differences foment systemic indigestion. Integration without assimilation is the acid test. When imperialism was the term of preference for the regime of border-crashing capital, V. I. Lenin (1995 [1917]) and Rudolph Hilferding (1981 [1910]) each took finance capital to be the coalescence of monopolies in industry and banking. The earlier part of the twentieth century was the last time that international flows of money and goods comprised as big a chunk of total exchange as they do today. When globalization was taking off in the mid-1970s, Nicos Poulantzas made a similar point about finance being a principle for the integration of different kinds of wealth making (Poulantzas 1975, 53–54). David Harvey, writing a few years later, stresses that this integration only heightens tensions between different requisites for amassing wealth by advancing credit on goods that have yet to be produced and sold. Finance permits production to be speculative and therefore generative of fresh stuff and new affiliations needed to make and use it (Harvey 1982, 321–29).

By drawing general social creativity into the calculus of profitability, finance joins political economy and culture, albeit at a price. The gamble of business is that anyone will want and be able to purchase what is made to be sold so that money is amassed. The anticipation of gain without benefit of prediction constantly calls wealth to places where people have yet to arrive. Persistently the commitments to produce overwhelm the ability to buy (but certainly not the need to consume); as cash and credit appear to be in scarce supply, the result is excess capacity or overproduction. When business has been organized nationally, like car making and banking, those boundaries become more permeable. Mergers result. Two and a half trillion dollars worth in 1998. More on the way. Yet more often than not, stock prices of the newly formed firms decline while the sellers profit (Holson 1999). The rhetoric of free trade insists that government step out of the way of economic activity. Yet facilitating the increasingly complex movements of capital requires a widening scope of state intervention. Barriers to new investment need to be eliminated by pressing changes on other governments, and wealth has to be detached from those specific places where it had been generated. Indeed, two-fifths of the world’s nations are experiencing negative growth rates. Russia has witnessed a net population loss of nearly a million people per year as life expectancy for men has fallen from 64 to 58 in ten years (Economist 1996). For every three of the world’s workers with a job, another can’t find one, an estimated one billion unemployed (ILO 1996).

But for the slimming constituencies riding out prosperity’s ripples, the hurt of monetary policy takes the form of fighting inflation. When it was OK to admit that capital couldn’t advance without state action, inflation [End Page 4] was taken as an effect of government subsidies. Such was the case for social benefits—from welfare to wage hikes—and for federal beneficence to industry like road building and weapons manufacture. All these activities were financed by printing money and then using it to absorb excess commercial capacity and to address social demands. The guile of this Keynesian “pump priming” was trumped by the inflation-slaying wizardry called monetarism, federal banking policies aimed at limiting the flow of new money and keeping interest rates low. These policies were first administered by Federal Reserve Chairman Paul Volcker (1979–1986) and modulated by his successor and present head of the nation’s central bank, Alan Greenspan. The priority of low inflation justified depressing wages, while creating an environment in which the returns to investments tied to interest rates would not be eroded over time.

The logic of money management has, in the past twenty years, emerged as a general rubric of governance for rich and poor, national polity and individual citizen-consumer alike. Tax cuts and redistribution of revenues from social to corporate needs generated annual deficits and mounting debt that made scarcity of public funds a self-fulfilled prophecy. Expanding availability of consumer credit not only compensated for declining wages but adhered the fate of individual workers to the same market discipline faced by corporate investors. Net wages also decline when newly created jobs pay less than the ones they replace. Further, when currency devaluations are medicine for errant economies, wages are suddenly worth less. Such are the costly cures meted out in Mexico, 1994; Thailand, July 1997; Russia, August 1998; and Brazil, January 1999. Reducing the underlying worth of a particular currency increases the amount of it needed to buy something and suddenly presents it in general oversupply. This monetary excess capacity engenders industrial merger solutions like the European Monetary Union, or the proposed Argentine adoption of the dollar as its official currency. Financial speculation thrives in this gap between so much to lose and to gain, as each of the above-mentioned currency collapses triggered massive monetary flow.

The officiating narratives to emerge from the 1997 financial debacles of Thailand, Indonesia, Malaysia, and Korea combined cold war and orientalist tropes to explain why “Asia” had failed to keep up with the promise of globalization. In the annual economic policy document for the United States, Clinton’s council of advisors free their trade directives from any culpability for what transpired. Accordingly, the East Asian “recipe for success” was to opt for capitalism over state planning and by so doing become “the shining example for the rest of the world.” But outward success masked a tragic inner flaw: “Asian governments relied too much on centralized state coordination rather than decentralized market incentives to maintain their progress” (Clinton 1999, 228). In the [End Page 5] same paragraph, the report bemoans insufficient state presence in markets that were “poorly supervised and inadequately regulated.” The copresence of too much and too little state attention is not meant to be a logical error on the part of the authors, but an absence of cool reason from Asian globalizers that might have averted the whole mess. “Crony capitalism” and “relationship-based banking” are epithets that speak to the hazards that ensue when affect prevails over interests properly tended to at “arms length.” The report proposes further foreign ownership of national Asian banks to check such cultural deficits.

According to the president’s economists, the precipitates of the Asian contagion were these: “excessive corporate leverage, financial fragility resulting from poorly designed capital market liberalization, foreign indebtedness, a slowdown in export markets, worsening terms of trade, and the development of overcapacity in many sectors” (Clinton 1999, 233). The naive question at this point is, If Asia’s sins of irrationality were so abundant, why the rush to invest? Here the orientalist veil descends. The flaws were invisible to even the keenest-eyed investor, because financial institutions of the East lack what is called “transparency.” As policy, transparency is one of the central tenets promulgated by the latest confab of self-declared guardians of the globe, the G-22. This working group of the most globally active economies, convened by the IMF in the spring of 1998, generated the position papers that would become the IMF’s own policy platform for a new financial architecture with itself nominated as the global “lender of last resort” (Fischer 1999).

Technically, the idea of transparency is to merge accountancy techniques with those of economic forecasting. To raise themselves from the depths of opacity, globally aspiring economies are to supplement annual budgeting with multiyear, medium-term “frameworks” of financial planning. The expectation is that forecasting parameters of capital flows (here an acceptable form of state planning) leads to predictable stabilities in monetary movements, where the commitment to low inflation simulates a constant environment throughout the duration of the scheme. Without inflation to distort the relation between present values and future prices, information can deliver sanity to the markets. Beyond the structural adjustments enjoyed by those who are the targets of inflation fighting, transparency wields a new disciplinary ax. In the plans of these new architects, the estimates for the medium-term budget frameworks become contractual hard-budget constraints for nations seeking international loans, credits, and underwriting (IMF 1998b). This new deal for the indebted was trotted out on 17 November 1998 by the IMF as the New Arrangements to Borrow (NAB).

Whereas under the ancien régime of the 1980s, postcolonial nations [End Page 6] had to cut domestic social expenditures in exchange for new loans, now they must apply increasing self-discipline to even be worthy of consideration for further debt. The United States was at first reluctant to help ameliorate the crisis its free-trade policies had abetted. Aid would only foster what economists call “moral hazard”: the assumption of unmanageable risk on expectation of bailout. Yet the treasurers and secretaries of finance soon came to appreciate the cost-effectiveness of this new insurance policy on U.S. privilege. Of the NAB, the president’s economic councilors chortled, “Through the IMF . . . the United States succeeds in leveraging its own contributions toward crisis resolution” (Clinton 1999, 249). Because the U.S. contribution is an interest-bearing claim on the IMF that can be cashed in or liquidated, the $18 billion ponied up by the United States does not get treated as an outlay in the federal budget (Clinton 1999, 250).

Leveraged hegemony, the key to globalization’s kingdom, requires leveraged participation (making a pinch go a very long way by defining the terms under which contributions combine). Yet leveraging is also the name of the game for that other pillar of financial stability, risk management. Derivatives, hedges, and repurchases are meant to insure the buyer against some future deviation from the expected price of a currency, raw material, or other factor of production. When, for example, goods from one country are contracted for delivery in another through a bill of sale and delivery is scheduled for three months hence (after manufacture is complete), exchange rates may have gone up or down. An option to buy the currency at that time can be secured for a fraction of the trade’s total value. The risk of a larger loss is hedged, and the option itself becomes a commodity that can be traded (few such futures contracts are held to maturity). Hedge funds can focus their wealthy clients’ capital on highly leveraged but putatively low-risk and low-return investments at huge volume and constant turnover to reap returns of over 40 percent per year. Big losses are also possible as the venerable Yale University discovered after tendering some of its endowment portfolio to Bermuda-based Everest Capital, Ltd., a hedge fund that lost nearly half its $2.7 billion equity (CNN 1998). Such was also the case with Long-Term Capital Management (LCTM), the failed hedge fund driven by the complex mathematics of 1997 Nobel prize-winning economists Robert C. Merton and Myron Scholes. With $4.8 billion in capital, LCTM put down payments on contracts that leveraged $120 billion to their balance sheet that was in turn connected to $1.3 trillion worth of assets through derivatives. Massive currency fluctuation in Russia and Asia due to sudden capital flight in the summer of 1998 forced it to pay out half its funds, which in turn instantly doubled the ratio between its actual capital and its obligations ($2.3 billion to cover the $120 billion)(IMF 1998a, 54–56). [End Page 7]

How had risk management turned into its opposite? Bum luck perhaps. Mathematical rapture more likely. The IMF report notes almost coyly that the econometric models used globally provide a “false sense of precision” because the historical data they extrapolate from cannot predict departures from what has happened (IMF 1998a, 57). The future is betrayed by the past. The report goes on to recommend “a balanced (lack of) respect for statistical models” (IMF 1998a, 59). Shortly after designing a new policy based on forcing transparency on those contagion stricken nations to the east, it became clear even to the IMF that if opacity was the enemy, it lay within:

The argument often heard in the aftermath of the Asian crisis was that no one could see through the opaque financial structures and markets. Yet the markets and institutions that experienced the turbulence this summer [1998] are the most open and transparent in the world. Why then were potential dangers not more accurately perceived at an earlier stage?

(IMF 1998a, 65)

Here is where transparency and risk management tug at each other nastily. The former pertains to budgetary accounts and the latter to transactions off the books. The mathematical models of the financial centers and the close encounters of the Asian contenders add to the same disordering effects. Regulatory mechanisms mushroom, but regulatory control is pushed farther from reach. The Basle Committee on Banking Supervision, the closest thing to a global regulatory body for banks and the “highly leveraged institutions” like LTCM that supplement them, recognizes this. They admit they’re not able to define what it is they are supposed to be regulating, and if they could the elusive entity could pick up shop and move “offshore” where their activities would again become invisible (Basle Committee 1999). Beyond the prospect of capital flight, leveraging introduces systemic confusion as to who owns what risks because discretion must be maintained so as to avert panic. When parties to contracts are strangers to each other’s credit worthiness, logics of accountability cannot be applied.

That the negativities attributed to the other are an internal feature of the colonial self is a discovery only for the IMF. Sociological commentary on globalization has for some years insisted that it is a reflexive phenomenon (Beck and Giddens 1995; Robertson 1992). In light of the recent financial shenanigans, we could add that self-awareness hurts. Irrationality cannot be displaced elsewhere. Now that globalization is inside us and we inside it, it becomes possible to speak of its limits. This is not to entertain the pernicious notion that all the world has become the same, joined together through protocols of risk management and transparency into a vast personal responsibility seminar. There does, however, need to be a [End Page 8] way to address the unsettling triumph that now reigns in the United States. The indices of victory are legion: high growth rates, low inflation, strong stock markets, budget surpluses, strong business investment rates, more jobs, higher wages. Wealth abounds. Stocks have increased tenfold since the 1982 recession (Clinton 1999, 436). Corporate profits have doubled since the recession of 1991 (Clinton 1999, 431). The United States still funnels in more credit from abroad than it metes out (the current account deficit in which the rest of the world subsidizes U.S. expenditure now increasingly goes to private portfolios rather than government bonds) (Clinton 1999, 263).

Yet it is far from evident that aggregate growth can still deliver the balm of optimism. Even the happy numbers betray a tremulous quality. The crush of new-business start-up would seem to celebrate the American dream, while burgeoning failure rates (double in the last twenty years what they were in the previous twenty) put a damper in the pride (Clinton 1999, 437). Wages have begun to creep up in the last two years of a record-shattering expansion but are still really not up to earning levels of twenty-five years ago (Clinton 1999, 366). Since 1970, consumer credit has increased tenfold (Clinton 1999, 418). Consumer confidence, an economists’ index of general good feeling, is measured by people’s “willingness” to go into debt. Mounting consumer debt implicates populations in policies of low rates of interest and inflation and invites people to subject themselves to discipline without the expectation of protection against risk. Countries and companies don’t get bailed out (unless they are considered, tautologically, “too big to fail,” like Russia or LTCM), so why should citizens, workers, or consumers? Moral hazard is bad theory for the many but good practice for only a few.

The political responses, cultural meanings, and material resources are as uneven as ever and more highly differentiated, but globalization does introduce certain terms of exchange becoming well-nigh universal: a stable future for an anxious present. For most living in the zones of victory, the pleasures of triumph have already been mortgaged. But no sooner have these achievements been consolidated than their very defining features have been cast into doubt. Low inflation is unhelpful if it deflates actual demand. Modest, even growth rates can’t anticipate misapplied investments. Discipline garnered through regulatory logics of the market is ineffective if it damages the social body. Expanding speculative resources are impoverishing if they undermine productive creativity. Just when neoliberalism seems to achieve its unrivaled glory, the luster begins to fade. Cruel irony that globalization would eat one of its own. [End Page 9]

Tackling Neoliberalism

The preceding discussion of the financial crisis has been offered to test the waters for a sea change away from neoliberal truth effects and to complicate some of the ways in which globalization has typically been discussed. In place of the unreason fostered by managed risk and transparency, we can begin to detect other modes of account and evaluation that shift the measure of critical politics from scarcity to abundance. To show that globalization as subject or as object admits of no unity or can’t be sealed within a black box, it may be useful to focus on a complex of practices to see how they globalize. This is the perspective of the initial essay by Toby Miller, Geoffrey Lawrence, Jim McKay, and David Rowe, a quartet hailing from Australia, Canada, England, and Malta strategically placed to monitor the pathways of sport as a means to think about globalization. They negotiate a series of processes that overwhelm and disrupt each other: history, commerce, media, governmentality, nationalism, civil society, as each is inflected by sport on a world scale. Contemporary athletics lie at a juncture between privatization and regulation, market-driven competition and socializing cooperation, and for these authors, that is the very space from which globalization itself springs.

The Internet is the icon of the global. Claims that it dissolves distance through simultaneity are as fast and furious as those that imagine cultural unanimity. Yet in actuality information and communication technology (ICT) has aided a spatial unevenness characterized by densities of access and vast exclusions. Contrary to the notion of a world made one, Gerald Sussman finds in the development of ICT a strong case for the persistence of place precisely because of the way it reinscribes boundaries among those strata with “high-regime status.” The concentration of communicational resources has been a medium for accumulation of wealth more generally. The info-poor and huddled masses are a spatial effect of technology and not merely those next in the queue to get on-line.

If globalization’s triumphant promise is only realizable in a few metropolitan centers and select social strata, can these select instances serve as a model for politics and development elsewhere? Saying no too quickly ignores the seductiveness of yet another of globalization’s popular narratives, the collapse of the nation-state. Arguably, the question of state default has passed from socialist countries to the nations of Africa with a range of experts in the field weighing in (Davidson 1993; Zartman 1995; Young 1997; Olukoshi and Laakso 1996; Hashim 1997; Azarya and Chazan 1997; Villalon and Huxtable 1997; Wunsch and Olowo 1990). Rwanda and then Congo (née Zaire) in equatorial Africa have assumed pride of place in this discussion. Mahmood Mamdani’s critique of the common notion of African state collapse as a failure to imitate Europe [End Page 10] returns the legacies of colonialism to the forefront of discussion. He reminds us that the artificiality of boundaries per se may be less salient than the colonial bifurcations of citizenship into racial/ethnic and civic/native divides. The local, nonmetropolitan identities that result are the consequence of an earlier array of globalizing forces.

Rural amnesia appears to be a syndrome of globalization. Not just in Africa, but, as Michael Dutton points out, in China as well. He mines an array of informal, tactical expressions that barely achieve visibility yet are the creative arsenal of China’s recent migrants to the cities. These subalterns are the placeless floaters in a society claiming to find a spot for all. This mobilized population is an effect of what amounts to neoliberal reform initiated by China’s leaders. More than the dissident acts of lone human rights advocates, Dutton sees an emergent counterrationality to the officializing commodity reign that also asks that we shift our means of imagining who constitutes globalization’s others. This entails focus on the intranational displacements of population that by far eclipse the transnational migrant flows that garner such attention. The individual human rights dissident may fit the bill for an ideal citizen, but a far greater and less visible aspect of societal transformation may be lost in the mirror’s bright reflection.

Attention to nonconventional forms of evidence has been a hallmark of the ethnographic enterprise, itself the entanglement of an earlier globalizing thrust. Barbara Cooper offers the pilgrimage song of a ninety-year-old Hausa woman from the Maradi region of Nigeria as a kind of audible evidence for an enlargement of the space for women’s status and agency within an Islam that has initiated its own version of globalization. The woman, Hajjiya Malaya’s, trip to Mecca is patronized by a local ruler, and her efforts to recalibrate the value of women’s positions in the Muslim world cannot be referenced as actions about or against the West. Cooper suggests that what is audible in her song both decenters the axes of world making today and counters the demonization that assumes every move toward Mecca to be a threat on the steps of the Capitol. Despite the technological complexity of this woman’s hajj song, there is nothing here to suggest something as grand as uniformity of time and space. The enthusiasm for such uniformities would have to assume that time and space drew only blanks and were empty of the very cultural politics that Cooper is able to document.

Whatever are taken to be the object lessons of globalization, as reconfigurations of space and time from new media technologies and altered relations of exchange, its subjectivities and constitutions of the self no less require attention. Michael Shapiro plays off the juxtaposition of archetypal secular-sacred practices of accounting, ecumenical Christianity, and political theory to examine the ways in which these putatively [End Page 11] diverse practices share an ontological dilemma. What Clinton called “inexorable” changes in the world present a field of disintegrative forces that make it all the more difficult to collect a coherent self-presentation. These various discursive strategies are haunted by prior incarnations of self-making that are now incoherent or inaccessible. Contrary to the modernist canon of separate spheres of technical reason, these discursive strategies lack the ability to rationalize themselves. Shapiro treats the antimony of globalization as a means of extending the domain of the political by seeing the basis for new claims and foundations where they would otherwise be disavowed or denied.

The sacred-secular couplet has enjoyed new life in the globalization discussion (Barber 1996; Maffesoli 1996) as an encounter between market rationality and fundamentalist unreason. Arvind Rajagopal rearranges the couplet into a different sonnet in his reflection on the relation between the marketing of soap powders and Hindu fundamentalism in India. He renders with precision the mutual imbrication of the political and the economic at the same time that he allows one to tell the story of the other—a linkage that allows them to appear distinct. What was supposed to be economic liberalization of national markets also was deployed to address the failures of the political. The consumers that resulted lacked loyalty to what were hitherto standard brands. Seeing in fundamentalism an effect of competitive politics offers a framework that may outlast Hindu nationalism and the speculative soap bubble. The countereffect of liberalization is to force on national and subnational communities a demand to develop their own intelligence about self-constitution. Such politics can only be imagined, however, once globalization loses its unanimity of purpose. At the end of the day, as with this issue, the question is of course still with us. Globalization? Or neoliberal ends?