Fear of Globalization: the Human Capital Nexus

All over the world “globalization has brought the fears that the social fabric of societies could be brought down by the market.“Anti-globalization” protest claim that the “world is not for sale”. French Prime Minister Line Jospin tried to draw a line in the sand by granting that he would go for a “market economy but not for a market society” and many more quotes from all quarters would point to the same idea. Globalization, these days, is not warmly welcome. The debate has a long tradition. Back in the Roman Empire Pliny the Elder already complained against ” India, China and Arabia robbing our Empire one hundred million sesterces every year”. Many more quotes since then would point to the prevalence of such fears all over the centuries. Nor should it be surprising either that complaints about globalization are heard both from the North and from the South. Globalization is a shock that alters the distribution of income across agents and sectors. Back in the 19th century, globalization has meant the end of peasantry on England, and the collapse of manufactured trade in the South. Some long run consequences as in Ceylon which became a producer of only one commodity, tea, had indeed been devastating. But the short run effect, even in the winning camp (the now industrialized nations) has been no less powerful.