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Globalization and National Defense
Herman E. Daly
School of Public Affairs
University of Maryland
What are the implications of globalization for the national military? Globalization,
considered by many to be the inevitable wave of the future, is frequently confused with
internationalization, but is in fact something totally different. Internationalization refers
to the increasing importance of international trade, international relations, treaties,
protocols, alliances, etc. Inter-national, of course, means between or among nations. The
basic unit remains the nation, even as relations among nations become increasingly
necessary and important. Globalization refers to global economic integration of many
formerly national economies into one global economy, mainly by free trade and free
capital mobility, but also by easy or uncontrolled migration. It is the effective erasure of
national boundaries for economic purposes. What was many becomes one.
The very word “integration” derives from “integer”, meaning one, complete, or whole.
Integration is the act of combining into one whole. Since there can be only one whole,
only one unity with reference to which parts are integrated, it follows that global
economic integration logically implies national economic disintegration. By disintegration I do not mean that the productive plant of each country is annihilated,
but rather that its parts are torn out of their national context (dis-integrated), in order to be
re-integrated into the new whole, the globalized economy. As the saying goes, to make an
omelet you have to break some eggs. The disintegration of the national egg is necessary
to integrate the global omelet. It is dishonest to celebrate the latter without
acknowledging the former. Of course the world is highly interdependent, but
interdependence is to integration as friendship is to marriage. It is hard enough for
nations to be friends, and would be foolish to attempt multilateral marriage. A necessary
condition for friendship is a healthy respect for differences. All of this points to
internationalization, not globalization.
In the US economic inequality and class conflict grow as the old national social contract
for a fair division of total product between capital and labor dissolves, along with the
power of the nation to guarantee it. In the US we have had an implicit social contract that
says that, in the interest of maintaining a middle class the US, our distribution of income
between labor and capital should be more equal than the world’s distribution. This
condition is impossible to fulfill in a globally integrated economy.
Many people, nevertheless, welcome globalization. I oppose it because I think the nation,
for all its grievous sins, remains the primary locus of community in a world of
increasingly licentious and large-scale corporate individualism to which globalization
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gives free reign. Also I think global economic integration is a policy choice
masquerading as destiny. But that is just by way of personal confession. For public
discussion I want simply to return the question raised at the beginning: What are the
consequences of globalization for the military?
As nations cease to be separate, loosely connected units, and become nodes in a tightly
integrated global network, as their boundaries lose economic significance, then do we
really need to defend those boundaries? Defense of national boundaries is presumably the
military’s first obligation. We will no longer need customs officials at our borders since
flow of goods and capital will be free. But what about the flow of people, of labor and
human capital, will they be free under globalization? The same efficiency arguments that
support free trade in goods have already been illogically extended to support free
capital mobility. No additional illogic is involved in the extension of this argument to
support free migration of labor. Indeed, consistency would demand it. So the border
patrol can soon go the way of the customs official.
But what about the military proper? What precisely are they going to defend in a
globalized “world with no boundaries”? The globe itself is not under threat of invasion
from outer space. Do we imagine that national boundaries will long retain any political or
cultural significance once their economic significance is gone?
With increasingly free trade in weapons and militarily relevant technology, and with
migration of key military and scientific personnel, could the military defend anything-even if it knew what it was defending? Would anything still count as treason in such an
integrated world? For example, Hughes and Loral contract with China to send their
expensive communications satellites into space on cheap Chinese rockets. But it costs
them a lot whenever a Chinese rocket blows up. To reduce that risk they transfer
advanced rocket technology to the Chinese-- technology that the Chinese can use in their
own missile guidance systems and sell to other countries. Within the US Government the
Commerce Department favors of such deals, while the State Department has serious
doubts. A more recent example is the free trade in nuclear technology conducted by Mr.
Kahn of Pakistan, which has been treated as only a slightly shady business transaction.
Can the technical and industrial part of the military-industrial complex globalize while
the military part remains national?
With the global mobility of capital comes the mobility of both the industrial base and the
tax base that support the national military. National defense is a public good, just like
public health or environmental protection. Will not globalization undercut a nation’s
ability to tax its now highly mobile capital to support its military, just as it undercuts a
nation’s ability to tax capital to support welfare and environmental programs? What’s the
big difference? Taxing capital less means shifting the tax burden on to labor, the least
mobile factor internationally. This further increases inequality and class conflict. Is this
good for the social cohesion required for national defense by military action?
Perhaps it is considerations such as these that lead some people to favor globalization. It
is good, in their view, precisely because it makes the national military, an admittedly
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dangerous institution, obsolete. How does the military respond to this view?
While globalization seems to make national militaries obsolete, it does not remove the
need for appeal to force. Laws, contracts and property rights still must exist and be
enforced, even if they are global rather than national. Do the globalizers envisage a global
government to enforce global laws with a global police force? Or do we, to avoid really
big government, follow the privatization and deregulation model all the way, letting the
military devolve into private contractors (Pinkerton guards, or Blackwater mercenaries)
hired by each global corporation to protect its property and enforce its contracts in a kind
of Global Corporate Feudalism? Or is it easier for the corporations simply to capture
national governments and indirectly control the military in a form of Global Corporate
Fascism, financed by taxing labor?
Neither of these alternatives looks good to me. Are there other options for the military
under globalization?
I know that we have not arrived at this point yet. But make no mistake about the fact that
globalization is being pushed hard by powerful transnational corporations, and that the
weakening and capturing of the nation is part of the agenda. Maybe globalization will
stop before it completely disintegrates nations. But who or what will stop it? Our
politicians, their academic advisors, and the PC thought police, dismiss any opposition to
globalization by reference to the sanctified doctrine of “comparative advantage”, or by
ritualistic chanting of the scare words “protectionist”, “xenophobe”, or even “racist”.
But in a world of capital mobility, comparative advantage and mutual benefit give way to
absolute advantage and the possibility of winners and losers. Some cosmopolitan and
libertarian economists consider free trade justified as long as there are more individual
winners than losers, regardless of whether the losers are all Americans and the winners
are all foreigners (or vice versa). The traditional defense of free trade requires that no
nations be net losers from trade, that winners’ gains exceed losers’ losses in each country.
The cosmopolitans want to say that trade is justified if global gains exceed global losses,
regardless of the balance for individual countries. If a decline in the welfare of citizens is
acceptable, as long as foreigners enjoy a compensating benefit, then there is not much
reason for a nation in the first place, let alone a national military. Cosmopolitan and
libertarian economists who make this argument honestly will not likely get elected
president. But then in a cosmopolitan world it would be meaningless to be president of
anything except the World. I used to think that World Government might not be such a
bad idea---but that was before my experience of working for the World Bank led me to
respect the principle of subsidiarity—solving problems at the most local level that is
feasible, and shifting them to a higher level of federation only as necessary. If we insist
on globalization instead of internationalization then we will surely need a World
Government.
The topic of “national security” is broader than just the issue of the military—it involves
“ecological security” as well. Is the care of our biosphere, the giant terrarium that
nurtures all of us, and that we must nurture in turn---is that care best entrusted to a regime
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of globalized corporate individualism in which national boundaries are abolished; or to a
world of nations, federated on the principle of subsidiarity, in which national and subnational boundaries remain basic? In short, Bretton Woods 1944, or WTO 2000? It is
both ironic and tragic that the current leadership of the Bretton Woods Institutions
has subverted their internationalist charter and joined in globalizing alliance with the
WTO. This is what people, at least some of them, are fighting about in the streets of
Seattle and Cancun.
Let me shift to a general reflection on the proper role of boundaries, which necessarily
both include and exclude. An organism isolated from its environment by impermeable
boundaries will soon die either from asphyxiation, starvation, or constipation. Isolating
boundaries are not an option for living things, either organisms or economies. But an
organism with no boundaries, one that is totally integrated with its environment, is
already dead. Not only dead, but also decayed—disintegrated with respect to its own
organizational structure. National boundaries, like living membranes, must be selectively
permeable. Nature runs on highly selective exchanges of matter and energy---it abhors
both isolation and indiscriminate “free trade”. I think our biosphere, our economy, our
collective security, and world community would be better served under the original
Bretton Woods model of international federation with selectively permeable borders, than
under the borderless WTO model that disintegrates real national communities in the name
of a hypothetical global community.
In conclusion let me offer a few tentative policies for reducing globalization and fostering
internationalization.
Tariffs are legitimate instruments of national policy. US companies that out-source
production to low-wage countries and then import the product for sale in the US, should
be faced with a tariff that would make them pay for the privilege of selling in the US
market when they no longer contribute to the maintenance of that market’s purchasing
power by paying US wages and taxes. Tariffs should also be used, not to protect
inefficient industries, but to protect efficient national policies of internalizing
environmental and social costs into prices. Standards-lowering competition with
countries that do not internalize such costs is an inefficient race to the bottom. The first
rule of efficiency is “count all costs”, not “maximize global trade”.
International capital mobility is not only frequently speculative and destabilizing, but also
fundamentally inconsistent with the theory of comparative advantage on which the policy
of free trade rests, and should therefore be, if not eliminated at least reduced.
This could be accomplished by several policies.
First, a tax on foreign exchange transactions, as suggested by James Tobin, would slow
down speculative short-term capital movements.
Second, a minimum residence time for foreign capital in the country in which it is
invested would reduce the mobility of capital and tie its interests more closely to the
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community in which it resides.
Third, and most powerfully, we need a revival of J. M. Keynes’ idea of an international
union for multilateral clearing of balance of trade surpluses and deficits. The most
important feature of Keynes’ plan was to promote balance on current account by charging
“interest” on both deficit and surplus trade balances, giving all countries a strong
incentive to balance their current accounts. With balanced current accounts the capital
accounts would be automatically balanced as well. There would be no need for short-term
IMF lending to finance trade deficits. Also it would become very expensive to have
massive increases in the world’s reserve currency (dollars) that finance both US deficits
and rest-of-the-world surpluses, both of which1, when coupled with fractional reserve
banking systems, lead to large credit expansions and boom and bust cycles. Under
Keynes’ plan long-term lending and borrowing would also be made difficult since the
transfer of real assets corresponding to a capital account surplus would ultimately require
a balance of trade deficit for the borrower and surplus for the lender, both of which would
now be expensive.
Many will object strenuously to any slowing of international capital flows as a
“hindrance to development of poor countries”. I think, much to the contrary, that it would
be a boon to developing countries. Poor countries are not helped by large interest-bearing
loans that frequently result in unrepayable debts. They are helped by small
grants, and by the free transfer of knowledge and technology. The latter after all is a nonrival good that simply cannot be efficiently allocated by markets. Yet one of the WTO’s
main functions is to force knowledge, a non-rival good, into the excludable straight jacket
of a rival market good by the enforcement of “trade-related intellectual property rights”.
But this is another story. My point for now is that globalization is not inevitable; it is a
policy choice that could be reversed by limiting international capital mobility, which,
ironically would also restore the most basic precondition for comparative advantagebased free trade in goods and services. Limiting capital mobility would also reduce credit
bubbles based on excessive printing of dollars to finance the continuing US trade deficit
(and indirectly the US national budget deficit as well by foreigners purchasing US
Treasury bonds with their surplus trade account dollars).
“Both of which” because balance of trade surpluses increase domestic reserves when the central bank
purchases the dollars, thus leading to a credit expansion by domestic commercial banks. The central bank
in the surplus country then invests these dollar reserves in the US creating a US capital account surplus to
match its current account deficit. But the purchase of US assets by foreigners also increases reserves to the
US banking system leading to a credit boom. Another more familiar way to ensure total balance of
payments equilibrium (as opposed to trade account balance) is to move
to a regime of freely fluctuating exchange rates.
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