Gorby on Globalization
Mikhail Gorbachev, the man who changed the world by ending the cold war, plans to change it some more.
The former Soviet leader wants to see economic globalization better managed.
Globalization is the rapid growth in international trade, investment, and other money flows that is both troubling and blessing the world. It is behind the East Asian financial crisis that is trimming the profits of some American corporations and riling their stock prices.
Visiting Boston last week, Mr. Gorbachev still got whisked about in a limousine, escorted by a phalanx of motorcycle police. But this man no longer wields any state powers. In Russia, he's unpopular, with little political clout. He's blamed for the breakup of the Soviet Union.
The only power the Nobel Peace Prize-winner exercises today is through his efforts to influence world thought. For that goal, he set up the Gorbachev Foundation of North America last April. It has raised $500,000 so far.
The new foundation, located at Boston's Northeastern University, has chosen to study globalization.
Clashing with sovereignty?
Gorbachev and a small group of notables looked at one key issue - the clash between globalization and national economic sovereignty - at a two-day conference last week in Boston.
The topic was hot.
The International Monetary Fund, the Washington-based headmaster of global finance, was telling South Korea how to manage its economic affairs.
"The IMF is much too severe with Korea," said economist James Tobin, a winner of the Nobel Prize in economics attending the meeting. "They are punishing them for offenses they didn't commit. I don't see the need for putting Korea through a depression."
Asia's crisis has affected the economic well-being of 350 million people in South Korea, Indonesia, the Philippines, and Thailand. And the crisis has rippled to Russia, lopping $5 billion off Moscow stock prices, Gorbachev said.
The troubles also have renewed a debate over the role of the IMF and, more generally, whether globalization should be left to unfettered capitalism or subject to firmer management.
Gorbachev is clearly on the side of more management.
People in developing countries, he told the press, are "cautious and wary and skeptical of globalization." They see in it a "new form of colonialism," with a danger that more-advanced countries will use globalization to exploit their nations.
"Unless ... the process of globalization is properly managed, the world may face unpredictable consequences - including global economic upheavals," he stated.
Need for oversight
Nonetheless, Gorbachev sees globalization as an "inescapable process, one that cannot be wished aside." It could be very beneficial "if managed," he said.
The conferees plan to submit recommendations to the United Nations in 1999. So far, their work has produced questions rather than answers. Such as:
* Should the growth and reach of multinational corporations raise concern about global monopolies?
* Are the costs and benefits of globalization being distributed in a way that increases inequalities between nations? Might some countries be marginalized?
Some conference participants called for specific steps to avoid future debacles:
Yale University's Mr. Tobin revived his idea that international financial flows and transactions should be lightly taxed to discourage sudden, destabilizing flows of funds, as happened in east Asia.
And he wondered if foreign-currency borrowing by banks should be more closely monitored. In Thailand and Korea, commercial banks couldn't repay such debts. The central banks in effect bailed them out, but that worsens the crisis.
Lawrence Klein, another Nobel economist, saw a need for high-frequency IMF "surveillance" of nations' financial and economic positions to detect early signs of trouble and then find remedies.