Globalization and the Race to the Bottom
Jeremy Brecher and Tim Costello
Introduction
The theme of globalization is that everyone benefits. When free market forces are able to transcend national boundaries, tariffs, subsidies, and other artificial barriers are removed and efficient firms are rewarded. Unfortunately in the real world, argue Brecher and Costello, this cheerful theory has a problem: as corporations transcend national boundaries, they can force workers, communities, and countries to compete for lower labor, social, and environmental costs--force them into a "race to the bottom."
Key Points
- Brecher and Costello provide five examples of how multinational corporations can force a "race to the bottom" (page 128). Please read these examples.
- We all benefit when competition results in lower prices for goods and services. When corporations and governments lower costs by reducing worker benefits, environmental protection, and social welfare contributions, then the results can be malignant.
- Mass production requires mass consumption. As each workforce, corporation, and country lowers wages, then less money is available for consumption and economies become stagnant, leading to recession. "As each country tries to solve its own problems by producing and exporting still more products still more cheaply, the result is a 'downward spiral.'"
- Globalization has depressed the real earnings of low-wage workers, which has increased gaps between rich and poor. This gap is increasing worldwide.
- The "new world economy" has transformed the nature of work for employees of multinational corporations.
- According to Brecher and Costello, the power of capital to pick up and leave
for lower cost locales undermines the ability of local people to shape their futures
through democratic processes. Trade agreements further weaken "local" control,
even at the level of the nation state.
- Global corporations have become powerful economic actors. Global corporations have become unaccountable because of a greater concentration of power within fewer and larger corporations.
- Globalization engenders a destructive global rivalry that might result in global conflict.
- Globalization and its economic effects are exacerbating racism and extremist nationalism because of the increased level of aggressiveness needed in an increasingly competitive marketplace.
- Globalization is promoting global pillage rather than a global village because the environment is being ignored for the sake of lowering production costs.
Discussion Questions
- From a structure-functional perspective, how does "downward leveling" benefit society as a whole?
- From a structure-functional perspective, how does "downward leveling" harm society as a whole?
- From a conflict perspective, who encourages the race to the bottom and benefits from it?
