George Soros and his views on globalization: A review Essay
George soros and his views on globalization:
One of the most powerful books ever written on Globalization, in my opinion at least, is the one by George Soros. Soros is the author of eight books, including The Bubble of America Supremacy: Correcting the Misuse of American Power and The Alchemy of Finance. However, his book entitled George Soros on Globalization sparked a lot of interest in this very controversial topic.
I believe that it is worth noting that the word, “globalization” and its effects to the international community has been the subject of many debates all over the world. It has become a buzzword for everything that is happening in the world economy or even in international relations generally. Many people have gone out into the streets to express their opposition against globalization policies which, they claim, are making the rich richer and the poor poorer. Protestors also note that the advancement that is being promised by Globalization also threatens environmental safety. Thus, I feel it is very timely for someone like George Soros to write about this topic and make an analysis on its effects to the international community.
George Soros on Globalization is basically an assessment of both economic and social implications of the phenomenon that is globalization. It seeks to assess not merely how well the world’s financial institutions have fulfilled their larger mission of helping the entire world strive for prosperity, but also to point the way toward fixing the problems that have emerged in the globalization regime as a whole. In fine, Mr. Soros tries to send a warning through this book that proponents of globalization should also study the claims of protestors lest everyone of us will perish.
In his book, George Soros described globalization as being lopsided. He explains this description by saying that international financial markets are well developed. (Soros, vii) But international institutions and political arrangements are not. He further presented his vision of a “globally open society” which he believes will not only produce extra wealth but more importantly, will likewise foster freedom. (Soros, 7) Mr. Soros also presented his four-point reform agenda on globalization as he presents a realist’s approach as well as limited and reachable objectives. This agenda is based on his reasoning that the so-called lopsidedness of the economic pie can be reduced by some changes in financial policy. His four-point agenda include the following:
1. To contain the instability of financial markets;
2. To correct the built-in bias in our existing international trade and financial institutions (IFTIs) that favor the developed countries that largely control them;
3. To complement the World Trade Organization (WTO), which facilitates wealth creation, with similarly powerful international institutions devoted to other social goals, such as poverty reduction and the provision of public goods on a global scale;
4. To improve the quality of public life in countries suffering from corrupt, repressive, or incompetent governments. (Soros, 8)
Since his main assumption is that the wealth of the capitalist world is being unevenly distributed. In other words, what he is trying to point out is this: wealth is being generated by free global markets but there is no adequate distribution of it. (Soros, 10) A point which, in my opinion, is a valid one. Come to think of it, one need not do much analysis to see the discrepancy between the financial conditions of first world countries in the West as opposed to the situation of 3rd world countries in the East. This is precisely the reason why Soros, a known philanthropist, is calling for the development of stronger social and political institutions to “parallel global economic institutions”.
Another important facet of this particular book on Globalization is its focus on a deeply moral theme. From the text of the book, one might arrive at the conclusion that the main concern of the author is how to alter the economics of globalization for the benefit of the whole human race under conditions of global interconnectedness. As noted by some analysts, this particular concern of George Soros on the issue of globalization led the author to review the dismal record of development assistance from rich countries to poor.
Analysts have also identified the centerpiece of Soro’s proposal which is to use an existing program in the International Monetary Fund as a medium for the distribution of funds. Doing so, according to Soros, would overcome the other defects of traditionally dispensed foreign aid. These defects include (1) The interests of donors would be subordinated to the needs of the recipients. (2) Recipients would own and manage the development projects, not outsiders. (Soros, 22-24)
How will this all work? Mr. Soros explained the possible role of the IMF in addressing the ill-effect of globalization. According to his book, the IMF issues international reserve assets to its members. They are called Special Drawing Rights (SDRs). SDRs are part of a country’s official foreign exchange reserves. They serve as a means of payment among Fund members. IMF creates SDRs “through a process of allocation and distribution to IMF members.” Soros said the last SDR by the IMF was done in 1981. In 1997, the IMF members “agreed to…allow a single special ‘equity’ allocation of SDRs that would channel a bigger share to the former Soviet republics and other transition countries as well as poorer member countries….” (Soros, 77)
Soros sees in this pending SDR allocation a readily available means “to finance the provision of public goods on a global scale as well as to foster economic, social, and political progress in individual countries….” In fine, richer countries would donate their SDR allocations to specific improvement projects in poorer countries. Poorer countries would keep their allocations as an addition to their monetary reserves. Soros further explained that only projects that are worthy of funding proposed by poorer countries would win a place on a so-called approved list created by an independent international board to be set up by the IMF. To avoid biases and unnecessary influence to be exerted, Soros identifies the need for “eminent persons” appointed for fixed terms and free of any control by their governments. (Soros, 73-74)
He goes on by saying that donor countries, using their SDR allocations, would choose to fund any program from the list created by the international board. But unlike the usual practice in traditional foreign aid, the donor countries would not control the programs. An audit commission, separate from the international board, would monitor and evaluate. Donors’ choices would be made public. Soros would limit the initial round of eligible programs to a few high-priority areas such as public health, education, information technology, or judicial reform. (Soros, 79-80)
In the book, Soros has expressed his strong belief that this kind of system will be able to create a kind of market in which programs compete for donor’s funds. (Soros, 78) He said the virtues of market competition to some degree would infuse the process. This would crowd out the geo-political motives of donors and the vulnerability to corruption at the local level, characteristics of traditional foreign aid that give it such a bad name. His experience in distributing his own wealth to international “open society” programs, executed largely along such lines, makes Soros believe that this IMF-sponsored system could work. He acknowledges the risks of failure. But he encourages an entrepreneurial attitude like that found among venture capitalists and discourages traditional bureaucratic attitudes. Aside from the IMF, Soros is also tapping the participation of the World Trade Organization and the World Bank. However, unlike the IMF, these two institutions operate in a climate “generated by three persistent problems”: (1) Global financial markets tend toward disequilibrium not equilibrium; thus they contradict the prevailing fundamentalist market beliefs that dominate thinking and practice in the US and elsewhere. (2) The global marketplace is a “very uneven playing field” favoring the richer over the poorer countries and cannot be made more even without intervention. (3) Richer countries, led by the richest one, the US, are unreceptive to even moderate solutions to the system. (Soros, 147)
After the reading the book on Globalization by George Soros, I feel relieved that a man of his stature was able to see the problems of the free market world –a world where he benefits from. It is very comforting that a wealthy and powerful man like George Soros has found a way of looking at the bigger picture and trying to present a solution to the problems that are surfacing as a result of globalization.
I am of the opinion that globalization in theory is a very nice and tempting notion. We must bear in mind that globalization is the ultimate result of the world being a global village. Sharing the world’s wealth to the rest of the world is the whole idea of globalization. However, that is not what is happening right now. Instead of bridging the gap between the rich and poor nations, globalization has widened the gap between these two worlds. Instead of feeding the world, globalization has spawned more problems in terms of world food supply. The rich countries are able to provide adequately for their citizens but third world citizens of the world are getting hungrier. The reason is simple. Third world countries are being suppliers for industrialized countries in terms of natural resources and food supply. This problem should make every citizen of the world pay attention to the closer issues being borne out of globalization. Thus, the fact that people like George Soros are looking into the problem makes the whole situation much easier to bear.