Globalization of the World Economy: Gerard
Piel, Moderator
SYMPOSIUM
THE GLOBALIZATION OF THE WORLD ECONOMY
Introduction
Gerard Piel, Moderator
Your Committee on Meetings
put this morning’s symposium on the Globalization of the World Economy on the agenda
of this meeting more than a year ago. At that time, our concern was to make sense of what
we had all been hearing and reading about the relocation of power in the world to a new
global marketplace. It appeared that the famous U.S. standard of living had to measure up
to the test of whether it got in the way of our country’s international
competitiveness. Now, this morning and for the last two or three months, we are hearing
that the globalized economy verges on a collapse from which only the United States can
save it. In either case, the globalized economy is there, and it affects our lives one way
or the other.
In fact, this marketplace has been here for more
than a century. it came into being with the industrial revolution, and it has grown global
as the industrial revolution has gone worldwide.
This much the lay observer can tell about the
globalized economy:
It has its own currency exchange that establishes
the relative value of all the world’s currencies. Transactions on this exchange,
sustained by the high-tech, high-capacity international communications system, proceed 24
hours a day at velocity exceeding a trillion dollars a day. That is 10 times the rate at
which those transactions move consumer goods and investment capital across national
borders.
Since the end of the Second World War, a diminishing
number of ever larger transnational corporations have been doing the actual business of
the globalized economy. At last United Nations count, 350 such enterprises produced and
moved 30 percent of the total world output. That was bigger than the output of all the
developing countries combined. About half of the transnationals are domiciled in the
United States. They are transnational in that, characteristically, they have been doing
more of their business and making more and more of their profit outside their country of
domicile, In their respective realms of enterprise, they conduct, in much smaller number,
a much higher percentage of the world trade; thus, 15 of the 350 transnationals conduct
more than half the world food trade; three, four and, at most, five of these, the trade in
each commodity.
Accountable only to their shareholders, the perhaps
2,500 ultimate decision-makers in this system decide which technologies are to go on line
and where in the world to deploy its capital. They are the new captains of the worldwide
industrial revolution. Presently they are making 80 percent of their direct investment in
the developing countries in 10 of those countries, including China, with a combined
population of 2 billion. The 20 percent goes to the rest of those countries, the poorest
and least developed, with the combined and fastest-growing population of 3 billion.
That, in broad strokes and round numbers, is the
anatomy of the globalized economy. From this picture—subject to correction and
amplification—we turn now to the physiology of the system in its relation to the
sovereignty of nations and the well-being of a world population on its way to 10 billion
before the end of the century that is about to begin.
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