Globalization and Technology
Schaeffer, Robert K
Technology plays an important role in contemporary globalization. Most observers argue that technology is a force for integration, making the world a smaller, better place. Technology, it is said, brings “good things to life.” This is true, but only in part. New technology also plays a role that few people consider. It may contribute to integration, but it also may result in economic and political disintegration, a process that distances people living in different parts of the world. A brief review of some recent developments illustrates the diverse social consequences of contemporary technology.
Consider the technological developments associated with the communications revolution. Fiber-optic cable and wireless technologies have transformed telecommunications in recent years. By most accounts, these technologies have made it easier and less expensive for people to talk with family, friends, and business associates, and to do so while on the move, from great distances. Many have argued that they have contributed to what Marshall McLuhan called the “global village.” But these technologies have had other, less obvious consequences. The introduction of new communications technologies contributed to the substitution of these technologies for old ones and resulted in the dematerialization of the raw materials used in their manufacture. And this trend in turn has resulted in falling prices and a whole series of economic and social problems for the producers of raw materials in the periphery, that is poor countries across Africa, Latin America, the Middle East, and South Asia.
EXAMPLES OF SUBSTITUTION AND DEMATERIALIZATION
For more than a century, communication technology relied on copper cable to carry the electric impulses generated by telegraph and telephone machines. Then in the 1970s, scientists at Corning Glass began developing glass fiber that could transmit laser light efficiently enough to make wave guides, what we now call fiber-optic cables, that could carry telephone, television, and computer transmissions. More recently, in the 1980s and 1990s, microwave cell-phone and satellite technologies made it possible to communicate without wires made of either copper or fiber-glass. Fiber-optic and wireless technologies contributed to the process of technological substitution, replacing old, copperwire-based systems with new glass and microwave mediums.
Not surprisingly, the advent of new communications technologies reduced the demand for copper, a mineral mined in countries such as Chile and Zambia. At about the same time, during the 1970s and 1980s, environmental advocates and business leaders began worrying about the use of nonrenewable resources such as copper and oil and adopted recycling technologies as a strategy to preserve and prolong the use of natural resources. Although recycling is a relatively unheralded technology, nowhere near as sexy or as interesting as cell phones, it is extremely important. By 1985, businesses and consumers in the United States obtained half of the copper that they needed from recycled scrap. Of course, as industry began to recycle copper from wire cable and the pipes used in plumbing, it needed less copper from mines overseas, a process of dematerialization. Think of recycling, conservation, and the elimination of waste as technologies that dematerialize, vaporize, or eliminate the need for mined copper and other metals. In Japan, for instance, businesses “mine” metals by recycling discarded cell phones. From a lode of 16,000 cell phones, recyclers can extract 255 pounds of copper, 205 pounds of steel, 83 pounds of aluminum, 2.6 pounds of silver, .4 pounds of gold, and .02 pounds of palladium.
Communications technologies may be the most prominent new inventions, but other important technologies also have resulted in substitution and dematerialization. During the 1970s and early 1980s, successive oil embargoes and skyrocketing oil prices stimulated the development of myriad new technologies that created alternatives to oil or reduced the need for oil in some uses. Technologies that used alternative fuels – wind, sun, and water, but also natural gas, coal, and uranium – were introduced in some industries, for some uses, as alternatives to oil. Today, governments and industries in the wealthy core (countries in Western Europe and North America, plus Japan and Australia) are exploring ways to develop hydrogen as a substitute for oil in transportation, which is its primary use.
While technologies designed to create substitutes for oil were useful, more important were technologies that dematerialized oil, by making it possible to do more with less. Automobile manufacturers built more fuel-efficient engines and cars, architects redesigned homes and offices to heat and cool with less energy, homeowners put fiberglass blankets in their attics to conserve energy, and engineers developed new lighting and refrigeration systems to reduce energy consumption. In the United States, refrigerators alone consume one-sixth of the electricity used by consumers, much of it generated by oilburning power plants. But between 1987 and 1997, new technology had reduced energy consumption in new refrigerators by 75 percent. Taken together, new technologies helped dematerialize oil. Between 1973 and 1985, U.S. demand for energy fell 20 percent. Of course it did not last. As oil prices fell in the late 1980s, the introduction of new technologies slowed and consumers abandoned fuel-efficient cars and embraced new, inefficient, oil-dependent technologies called minivans, pickups, and SUVs.
One last example will serve to illustrate the process of technological substitution and dematerialization. In the 1960s, scientists in Japan and the United States developed two important food technologies: 1) enzymes that produced fructose sugar from the starch in corn, resulting in High Fructose Corn Sweetener (HFCS), and 2) artificial chemicals that mimicked the taste of sugar, aspartame the chief one among them. These technologies enabled the food industry to replace cane and beet sugars for many uses, particularly in beverages and candies. (Hard candies still need cane sugar to set or harden properly.) The major cola makers had long used cane sugar to produce their products. But their decision in the early 1980s to use HFCS in their beverages was a turning point, leading to widespread substitution of HFCS for cane sugar. By 1985, the consumption of HFCS equaled the consumption of cane and beet sugar for the first time ever, and it has since continued to grow. Likewise, dietary sugars have replaced natural sugars in many beverages and chewing gums. In this case, consumers have played an important role in the substitution process, either because they grew worried about the weight-gain associated with drinking high-calorie, sugar-laden sodas or because they were concerned about the cavities associated with chewing sugared gums.
While technologies have encouraged a massive substitution process, they have not resulted in a significant dematerialization of cane and beet sugars. But health-conscious consumers have embraced new technologies that promote the substitution and dematerialization of other foods. Increasingly consumers have switched to foods using technologies based on temperate oil seeds (canola, cottonseed, flaxseed), which are low in cholesterol and saturated fats, and abandoned technologies based on yummy tropical oils (coconut and palm oil), which are high in cholesterol and saturated fats.
No one doubts that new technologies have provided real and substantial benefits: mobile and inexpensive phone systems; fuel efficiency and energy conservation; cheap and, in some cases, healthier food products. It is easy to imagine, then, that because these new technologies benefit businesses and consumers in the core, they must also benefit others. But this is not necessarily the case. To appreciate why this difference might be so, it is important to consider the economic and social consequences of technologies that allow widespread substitution and dematerialization.
In general, new technologies have weakened or reduced the global demand for many minerals, raw materials, and agricultural products. As demand for these goods has fallen, either as a result of substitution or dematerialization or both, prices have fallen. Since the 1980s, worldwide commodity prices for raw materials have fallen by more than half. This is the biggest decline since the Great Depression of the 1930s.
EFFECTS ON COUNTRIES INTHE PERIPHERY
Of course, falling prices are a problem for producers in any country, but they are a particular problem when these revenues are a country’s only source of income. Zambia does not produce and export anything of value besides copper. The Dominican Republic and the Philippines rely almost exclusively on sugar cane and tropical oils to earn money overseas. Oil is the only export of value for Nigeria and Saudi Arabia. So when world demand for raw materials weakens and prices fall, these countries face a series of problems.
First, the industries that mine, pump, or grow raw materials shrink or go out of business. Firms that have higher costs – ones that have to mine or drill deeper or use more fertilizer to coax a crop out of infertile soils – go bankrupt first. But others follow if falling prices reduce profitability. Employment in these industries shrinks and wages decline as businesses go bankrupt or try to reduce one of the few costs (labor) that can be cut. Once you know that 50 million people worldwide work in the cane and sugar-beet industry, the impact of HFCS technology becomes apparent. Nearly all of them are vulnerable to the substitution and dematerialization process. In Brazil, the world’s largest sugar producer, employment in the industry fell by half in the 1990s. The Philippines experienced a comparable decline. And in the Caribbean, where sugar cane was first introduced in the 1500s, job loss has been so severe that one prime minister argued that he could foresee a “situation that could lead to the destruction of the sugar industry in most developing nations.”
Falling prices and the decline of raw-materials industries also contributed to a second set of related problems. Countries sell goods abroad not because they enjoy it, but because they use the money that they earn from sales of copper, oil, or sugar to purchase goods which they cannot make themselves. So when export earnings decline, they have to reduce their purchases of foreign goods, some of them – food, medicine, machinery, or oil – essential to their health and well-being. They might try to borrow money from international banks and lending agencies to purchase goods that they need, but their ability to repay their debts depends on their capacity to sell the stuff that they can export. The problem is that the value of their exports has steadily fallen in recent years. Under these conditions, it is difficult for them to borrow money or repay debt.
Of course, governments in the periphery depend on tax revenue from export industries – severance taxes, taxes on business income and wages – to fund public services. So when important industries decline, government tax revenues fall. Therefore, in a pinch, governments lay off public-sector workers – teachers, policemen, and health workers – and reduce spending on schools, roads, and hospitals.
Across the low-income periphery, people have been deeply affected by changes associated with the introduction of new technology and falling commodity prices. (Commodity prices have fallen for other reasons, too – rising supplies of some goods, fluctuating exchange rates – but those reasons are beyond the scope of this article.) Although the pace of recent change has accelerated as a result of contemporary globalization, these developments are not entirely new. Some economists and government officials have long worried about the prospect of declining prices for the goods that poor countries export.
ATTEMPTS AT SOLUTIONS
Following the advice of economists such as Raul Prebisch, many governments in the periphery tried in the 1950s and 1960s to practice a kind of substitution of their own, building and then protecting domestic industries so that they could replace goods manufactured in foreign countries with products made by domestic firms. But “import-substitution industrialization,” as it was then called, was swept away by the great debt crisis of the 1980s and by new free-trade agreements in the 1990s. So as an alternative, economists and government officials in many poor countries have tried to replace declining raw-materials industries with new service industries, particularly tourism.
In the Caribbean, for instance, hotels and resorts now stand where sugar cane once grew. Unfortunately, the tourist industry will not be able to make good the losses experienced by the decline of raw-materials industries in many countries for two reasons. First, tourists from the wealthy core prefer to vacation in the core, not the periphery. The top-five tourist destinations worldwide are France, the United States, Spain, Italy, and the United Kingdom. And since September 11, tourists have demonstrated an increasing preference for these countries (if they travel at all) over destinations in the periphery, which are now regarded as unsafe as a result of terrorism or crime, or unhealthy as a result of infectious diseases such as AIDS and SARS.
A second reason why economic development based on tourism will not be the panacea that many government officials imagine is that most of the money spent by tourists in the periphery is captured by high-tech service industries – airlines, hotels, and cruise ships – based in the core. For example, 97 percent of all tourists flying to the Bahamas arrive on American or British airlines, 90 percent stay in American or European hotel chains, and most of the food and drink that they consume during their visit is imported. Tourists spend a very small percentage of their vacation money on local goods or services, which is particularly true when they travel on cruise ships or stay in all-inclusive resorts, which prevents their dollars or deutsche marks from leaking out into local economies.
In short, the problem is that the changes associated with new technologies developed in the core have had adverse consequences for people in the periphery. Moreover, the economic alternatives available to people in the periphery are relatively unpromising. Producers and consumers in the core need less of the stuff – copper, oil, sugar – that peripheral producers make. As a consequence, technological change has not resulted in integration but instead in a disintegration of long-standing economic ties between rich and poor countries. Some observers of contemporary globalization worry that if the wealthy countries do not need what former colonies make, their interest in the economic and political fortunes of people in the periphery will diminish, a process that may lead to declining investment and aid. And without new investment or aid, the economic, political, and social conditions in the periphery will deteriorate.
This perspective on contemporary globalization differs from that of many scholars who argue that global change – particularly technological innovation – has a singular, positive, universal social meaning. Instead, I take the view that global change has diverse social meanings. Here’s an analogy. Picture a weather satellite view of North America and the Pacific. Then scroll it forward. As a low-pressure system from the Pacific sweeps west across the continent, it has very different meteorological consequences for people living along its path. It brings fog to people on the coast, rain to people in the interior, snow to people in the mountains, and drought to people in the high desert beyond. So it is with economic, political, cultural, technological, and environmental changes that sweep across the contemporary global landscape. Some people benefit from change, as farmers do from rain, while others are disadvantaged by it, such as people living in flood plains. The storm of change associated with new technology wreaks different kinds of havoc around the world.
Robert K. Schaeffer is a professor of global sociology at Kansas State University. He is the author of Understanding Globalization: The Social Consequences of Political, Economic, and Environmental Change (Rowman and Littlefield, 2003).
Copyright National Forum: Phi Kappa Phi Journal Fall 2003
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