The processes associated with globalization have unleashed energies that are catapulting the world economy to a qualitatively new trajectory of development. New technologies are already yielding productivity gains, as also greater availability and flow of information worldwide with potential benefits for education, health and social development in general. Greater access to markets has provided new opportunities to countries and individuals to participate in the global division of labour and creation of wealth. Increased competition and new forms of business have also benefited consumers in many ways.
While providing opportunities for many, globalization has also been disruptive to large categories of society - poorer countries with weak and underdeveloped economies, unskilled labour, subsistence farmers and other vulnerable groups, i.e., those who lack the capacity to exploit such opportunities for reasons that have as much to do with levels of development as capacity to compete. The benefits of globalization have been unevenly spread. In the process, it has tended to split those plugged into the world economy from those who are not, thus opening a breach that has contributed to poverty, inequality and marginalization.
Despite the trends towards insecurity, marginalization, concentration of economic power and erosion of social capital outlined above, the international community has a strong stake in the technological advances and market-led growth and economic integration that propel globalization and that has opened opportunities for those equipped to exploit its potential. The unprecedented opportunities opened by globalization also need to be harnessed in aid of the eradication of poverty, full employment, inclusion, equity and long-term social progress espoused by the World Summit for Social Development. There is therefore, an urgent need to "manage" the process of globalization better so as to minimize its negative effects, make the opportunities provided by globalization available to all and spread its benefits wider, oversee the operations of the market in order to attenuate its extremes and reduce market failure, combat unemployment and poverty, and ensure a stake for the poor and the marginalized in the process. Developments since the recent World Trade Organization (WTO) meeting at Seattle and the outcome of the tenth session of UNCTAD in February 2000 suggest a greater recognition of these problems. Some active intervention will be necessary to tilt the global market from its current form of corporate globalization to a more democratic globalization.
To this end, it is imperative to reconcile the competitive economic philosophy of the market and the social philosophy of inclusion, however difficult this may seem. It may be necessary to reframe, wherever necessary, the rules of the market economy so that they incorporate and integrate better the concerns of both those on the forefront of the technological and entrepreneurial revolutions and the goals of the Summit to eradicate poverty; provide gainful employment to all; facilitate access to basic social services; promote equity, inclusion and social integration; and reduce inequalities between and within nations. It is also necessary to improve the mechanisms for the concerns of poorer countries and the poor, the vulnerable and the marginalized to be adequately reflected in the decision-making processes that affect them.
Economic globalization has revealed a mismatch between current systems and institutions of regulation and accountability that are national and the global nature of economic and financial transactions that pose a major challenge for economic governance in the twenty-first century. The issue of accountability has typically been cast in terms of the responsibility of business or corporations to the public. But in fact it goes well beyond that to the accountability of Governments for the operations of the market. The greater autonomy given to the economy under pressure of free market policies since the mid-1980s has led to a virtual separation of economic and political life, resulting in reduced accountability for economic decisions that are attributed to the market. One of the foundations of democratic governance is its expression of the public interest and the protection of the vulnerable. This requires some degree of public oversight in the interests of attenuating the often harsh features of the market. Representative and regulatory bodies together perform this function. Yet one corollary of freer markets is that the exercise of such a democratic and regulatory function is frequently called into question as an unnecessary interference in markets.
This is happening as government involvement in the economy, intended to fulfil this function, has been shrinking and that of the private sector in the provision of social services has been rising. There are good civic and economic arguments for the private provision of social services, including health, education and public television, primarily on grounds of efficiency. But with loss of public funding comes loss of public control over social priorities and the ability to pre-empt to prevent exclusion by the market.
These and other developments illustrate the challenge posed to the goals and commitments adopted at the Summit by free market-oriented economic policies and a reduced role for government in the economy through policies of liberalization, deregulation and privatization.
The need to reconstitute the social parameters of the market economy underlies thinking in certain quarters, including the World Bank, to devise a set of principles of social policy that ought to be kept in the foreground in the handling of crises as well as longer-term development strategies supported by the International Monetary Fund (IMF) and the World Bank. The pros and cons of developing such a set of principles was discussed in some detail at a two-day workshop convened in December 1999 by the Carnegie Council on Ethics and International Affairs in the immediate aftermath of the ministerial-level WTO trade talks at Seattle.
A variety of concerns and views were expressed, including the feasibility and relevance of a common set of principles across societies at different levels of development, whether and how they would apply to different categories of actors, and their possible translation into conditionalities. The seminar nevertheless served to focus attention on the need to establish certain social fundamentals that could act as a countervailing force to the inequalities, imbalances and social disruption attendant to free-market-driven globalization. They could also form the basis for broader social development.
These principles were seen as operating at different levels and in different ways: through an internalization of a set of values that could limit the extremes of the market from the inside; through greater democratization of economic governance, especially at the international level, where there is a greater deficit, to act as a counter-foil to technocratic and corporate decision-making; through improved regulatory mechanisms that may require a more effective role for the state and greater international cooperation; and through the anchoring of policies advocated by international financial and economic institutions around such principles. In doing so, it could serve as a basis for economic policies that integrate social concerns a priori rather than a posteriori.
If the goals of the World Summit for Social Development - poverty eradication, equity, full employment and inclusion - are to shape the market, they must be integrated into the full range of core economic and other public policies. These include those relating to trade, structural adjustment, fiscal policy, taxation, macroeconomic management, environmental management, employment, competition, patents and intellectual property rights, foreign investment, capital flows and debt relief. They should animate all public negotiating, decision-making and regulatory bodies, national and international, and exert influence on the corporate, financial, business and trade organizations that play a dominant role in shaping markets. Policies should be judged not only by their efficacy in promoting the dynamism of markets but also by the extent to which they promote social development or at least do not undermine it. Where some conflict is inevitable, remedial measures should be integrated as far as possible at the outset in the design of the policy itself. The Preparatory Committee may wish to initiate a process at the level of the United Nations to develop guidelines integrating the goals of the Summit into all economic and social policy.
Second, the impact of policies on the exacerbation or alleviation of poverty should be an area of special concern. Though the rules governing the modern market have generally been guided by the needs of enterprise, to some extent, social concerns, such as the impact of policies on employment or worker's rights, have under the pressure of workers always played a role in their elaboration. There is a need to go further and place the objective of poverty eradication into the mainstream of economic policies at both the national and international levels. To take an example, trade policies that are sensitive to the goal of poverty eradication would favour access to precisely the types of lower-technology, labour intensive, pro-poor activities, such as agriculture and textiles, that tend to face restrictions in international markets at present. A pro-poor trade policy would provide greater space for the comparative advantages of the poor and poorer countries.
Third, partly in order to address the problem of poverty per se and the marginalizing effects of globalization, it would be desirable to develop and strengthen a pro-poor, market-based growth strategy that builds on the capacity of the poor to exploit the potential of the market to escape from poverty. Most approaches to poverty eradication have focused on redistributive strategies, while most market-based economic growth strategies have tended to rely on those who already have the capital necessary for investment. While redistributive policies are important and will continue to be required, successful strategies for poverty eradication that enable those who do not have assets and capital to use the market profitably have attracted lesser attention. Such strategies focus on enabling the poor to act as active agents capable of utilizing the market to their advantage. They include easier access to productive resources and assets, development of rural infrastructure and public goods, development of entrepreneurial and other skills, and microfinance and support for cooperatives, small-scale business and industry and other forms of economic organization of the rural and urban poor. Investment in rural non-farm growth is a particularly promising approach to poverty reduction. The thrust of such an approach would be to expand the opportunities and scope for private initiative "downward" to the grass-roots level.
However, none of this will happen automatically or without public pressure. It will require institutions that can channel such concerns at the level of public policy-making and the market, which may be a multi-layered process. It is crucial to meet the challenge of exclusion posed by globalization by improving existing structures of democratic governance so that the views of those excluded and marginalized by the market are effectively heard and accommodated in the process of decision-making. However, in an era of globalization in which the consequences of actions are felt well beyond the borders of any one country, greater democratization of international economic relations is also required so that the views of countries affected by economic decisions of global market players are taken into account. Only within such inclusive forums can the views of all those concerned and affected by the decisions of the few be heard. More inclusive membership is also essential if international cooperation is to be matched with implementation.